For
the fiscal year ended: December 31,
2009
|
Commission
File Number: 1-2413
|
Canada
|
4011
|
E.I.
980018609
|
||
(Jurisdiction
of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
No.)
|
||
935
de La Gauchetiere Street West
Montreal,
Quebec
Canada
H3B 2M9
(514)
399-7091
|
||||
(Address,
including zip code, and telephone number including area code, of
Registrant’s principal executive
offices)
|
CT
Corporation System
111
Eighth Avenue
New
York, N.Y. 10011
(212)
894-8600
|
||
(Name,
address, including zip code, and telephone number, including
area code, of agent for service in the United States)
|
||
____________________
|
Title
of each class
Common
shares
|
Name
of each exchange on which registered
New
York Stock Exchange
Toronto
Stock Exchange
|
[X]
Annual information form
|
[ ]
Audited annual financial statements
|
Year
ended December 31,
|
2009(1)
(CAD$)
|
2008(1)
(CAD$)
|
||||||
Audit
fees
|
$ | 2,812,000 | $ | 2,794,000 | ||||
Audit-related
fees
|
1,134,000 | 1,170,000 | ||||||
Tax
fees
|
811,000 | 797,000 | ||||||
Other
fees
|
—— | —— | ||||||
Total
|
4,757,000 | 4,761,000 | ||||||
(1)Fees rounded to the nearest thousand. |
Annual Information
Form
|
Management's
Discussion &
Analysis
(as filed on
February 5,
2010)
Incorporated
by
Reference
|
||||
Item 1
|
General
Information
|
3
|
|||
Item 2
|
Incorporation
|
4
|
|||
2.1
|
Incorporation of the
Issuer
|
4
|
|||
2.2
|
Subsidiaries
|
4
|
|||
Item 3
|
General Development of the
Business
|
5
|
|||
3.1
|
General Development of the
Business During the Last Three Years
|
5
|
|||
3.2
|
Anticipated
Developments
|
12
|
46-48
|
||
Item 4
|
Description of the
Business
|
12
|
|||
4.1
|
Overview
|
12
|
|||
4.2
|
Commodity
Groups
|
12
|
52-57
|
||
4.3
|
Competitive
Conditions
|
12
|
87
|
||
4.4
|
Labor
|
13
|
88-89
|
||
4.5
|
Social
Policies
|
13
|
|||
4.6
|
Regulation
|
13
|
90-93
|
||
4.7
|
Environmental
Matters
|
15
|
79-81,
87-88
|
||
4.8
|
Legal
Matters
|
16
|
78-79
|
||
4.9
|
Risk
Factors
|
17
|
87-95
|
||
Item 5
|
Dividends
|
17
|
|||
Item 6
|
Description of Capital
Structure
|
17
|
|||
6.1
|
General Description of Capital
Structure
|
17
|
|||
6.2
|
Share Ownership
Constraints
|
18
|
|||
6.3
|
Ratings of Debt
Securities
|
19
|
|||
Item 7
|
Transfer Agent and
Registrar
|
20
|
|||
Item 8
|
Market for
Securities
|
20
|
|||
8.1
|
Trading Price and
Volume
|
20
|
|||
8.2
|
Prior Sales
|
20
|
|||
Item 9
|
Directors and Executive
Officers
|
21
|
|||
9.1
|
Directors
|
21
|
|||
9.2
|
Audit Committee
Disclosure
|
23
|
|||
9.3
|
Executive
Officers
|
25
|
|||
9.4
|
Cease Trade Orders, Bankruptcies,
Penalties or Sanctions
|
26
|
|||
Item 10
|
Interest of
Experts
|
27
|
|||
Item 11
|
Additional
Information
|
28
|
|||
Schedule A
|
Charter of the Audit
Committee
|
29
|
ITEM
1
|
GENERAL
INFORMATION
|
Forward-looking
statements
|
Key
assumptions or expectations
|
Statements
relating to general economic and business conditions, including those
referring to long-term growth opportunities and markets served by the
Company having hit bottom
|
·
Gradual recovery in the North American economy
·
Improving global economic conditions
·
Long-term growth opportunities being less affected by current
economic conditions
·
Improving production rates in specific industries
·
Improving carload traffic
|
Statements
relating to the Company’s ability to meet debt repayments and future
obligations in the foreseeable future, including income tax payments and
2010 capital spending
|
·
Gradual recovery in the North American economy
·
Improving global economic conditions
· Adequate
credit ratios
·
Investment grade credit rating
· Access
to capital markets
·
Adequate cash generated from operations
|
Statements
relating to the 2010 pension contributions
|
·
Reasonable level of funding as determined by actuarial
valuations
· Adequate
return on investment on pension plan
assets
|
ITEM
2
|
INCORPORATION
|
2.1
|
Incorporation of the
Issuer
|
2.2
|
Subsidiaries
|
Name
|
Jurisdiction
of
Incorporation
|
Grand Trunk
Corporation
|
Delaware
|
Grand Trunk
Western Railroad Company (“GTW”)
|
Delaware
|
Illinois
Central Corporation (“IC”)
|
Delaware
|
Illinois
Central Railroad Company (“ICRR”)
|
Illinois
|
Wisconsin
Central Transportation Corporation (“WC”)
|
Delaware
|
Wisconsin
Central Limited
|
Illinois
|
ITEM
3
|
GENERAL
DEVELOPMENT OF THE BUSINESS
|
3.1
|
General
Development of the Business During the Last Three
Years
|
·
|
Chemin de fer
de la Matapédia et du Golfe
(“CFMG“) :
|
·
|
New Brunswick
East Coast Railway (“NBEC“):
|
·
|
Ottawa
Central Railway (“OCR“):
|
·
|
Compagnie de
gestion de Matane inc. (“COGEMA“):
|
·
|
In June 2007,
CN and Kansas City Southern Railway (“KCS”) concluded a routing protocol
to streamline the interchange of traffic in a way that reduces both miles
and handlings.
|
·
|
In November
2007, CN and CP concluded a routing protocol to expedite the exchange of
interline freight traffic at key gateways in both Canada and the
U.S.
|
3.2
|
Anticipated
Developments
|
ITEM
4
|
DESCRIPTION
OF THE BUSINESS
|
4.1
|
Overview
|
4.2
|
Commodity
Groups
|
4.3
|
Competitive
Conditions
|
4.4
|
Labor
|
4.5
|
Social
Policies
|
4.6
|
Regulation
|
4.7
|
Environmental Matters
|
1.
|
To meet or exceed applicable
environmental requirements; to measure environmental performance; to
conduct regular environmental audits and assessments of compliance with
Company requirements and its Environmental Policy; and to timely provide
appropriate information to the Board of Directors, employees, the
authorities, and other
stakeholders.
|
2.
|
To develop, design and operate
facilities and conduct activities taking into consideration the efficient
use of energy and materials, the sustainable use of renewal resources, the
minimization of waste generation and the adverse environmental impact, and
the safe and responsible disposal of residual
wastes.
|
3.
|
To assess environmental impacts
before starting a new activity or project and before decommissioning a
facility.
|
4.
|
To develop and maintain emergency
preparedness plans in conjunction with the emergency services, relevant
authorities, and the local
community.
|
5.
|
To educate, train and motivate
employees to conduct their activities in an environmentally responsible
manner.
|
6.
|
To promote the adoption of the
principles of CN’s Environmental Policy by contractors and
suppliers.
|
7.
|
To conduct or support research on
the environmental impacts of its operations and on the means of minimizing
such adverse impacts, and to contribute to the transfer of environmentally
sound technology throughout the industrial and public
sector.
|
8.
|
To foster openness and dialogue
with employees and other stakeholders with respect to their concerns about
potential hazards and impacts of the company’s
operations.
|
9.
|
To contribute, along with public
and private bodies and organizations to the development of policies and
programs that will enhance environmental awareness and protection based on
sound scientific principles and
procedures.
|
4.8
|
Legal
Matters
|
4.9
|
Risk
Factors
|
ITEM
5
|
DIVIDENDS
|
ITEM
6
|
DESCRIPTION
OF CAPITAL STRUCTURE
|
6.1
|
General Description of Capital
Structure
|
6.2
|
Share Ownership
Constraints
|
6.3
|
Ratings of Debt
Securities
|
Dominion Bond
Rating
Service
|
Moody’s
Investors
Service
|
Standard &
Poor’s
|
|
Long-Term
Debt
|
A (low)
|
A3
|
A-
|
Commercial
Paper
|
R-1 (low)
|
Not rated
|
A-2
|
·
|
Long-term
debt rated A is of satisfactory credit quality. Protection of interest and
principal is still substantial, but the degree of strength is less than AA
rated securities. While “A” is a respectable rating, entities in this
category are considered to be more susceptible to adverse economic
conditions and have greater cyclical tendencies than higher-rated
securities. This rating falls within the third highest of DBRS’s ten
long-term debt rating categories which range from “AAA” to “D”. Reference
to “low” denotes a standing in the lower end of a rating
category.
|
·
|
Commercial
paper rated R-1 (low) is of satisfactory credit quality. The overall
strength and outlook for key liquidity, debt, and profitability ratios is
not normally as favourable as with higher rating categories, but these
considerations are still respectable. Any qualifying negative factors that
exist are considered manageable, and the entity is normally of sufficient
size to have some influence in its industry. This rating falls within the
third highest of DBRS’s ten short-term debt rating categories which range
from “R-1 (high)” to “D”.
|
·
|
Long-term
debt obligations rated A are considered upper-medium grade and are subject
to low credit risk. This rating falls within the third highest of Moody’s
nine generic long-term obligation rating categories which range from “Aaa”
to “C”. The modifier “3” indicates a ranking in the lower end of that
generic rating category.
|
·
|
Long-term
debt obligations rated A are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. The obligor’s capacity to meet its
financial commitment on the obligations is, however, still strong. This
rating falls within the third highest of S&P’s ten major long-term
credit rating categories which range from “AAA” to “D”. The minus (-) sign
indicates a standing in the lower end within a major
category.
|
·
|
Commercial
paper rated A-2 is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor’s capacity to meet its
financial commitment on the obligation is satisfactory. This rating falls
within the second highest in S&P’s eight short-term credit rating
categories which range form “A-1” to
“D”.
|
ITEM
7
|
TRANSFER
AGENT AND REGISTRAR
|
ITEM
8
|
MARKET
FOR SECURITIES
|
8.1
|
Trading Price and
Volume
|
MONTH
|
HIGH
|
LOW
|
VOLUME
|
January
|
48.68
|
38.90
|
26,746,593
|
February
|
47.18
|
38.98
|
20,278,242
|
March
|
47.00
|
37.85
|
33,005,559
|
April
|
51.24
|
44.09
|
28,113,478
|
May
|
51.47
|
44.35
|
23,451,430
|
June
|
51.00
|
45.60
|
25,167,409
|
July
|
53.23
|
44.31
|
20,776,882
|
August
|
55.00
|
52.00
|
15,567,537
|
September
|
55.39
|
51.05
|
18,897,861
|
October
|
55.19
|
50.75
|
18,573,095
|
November
|
58.20
|
51.25
|
14,495,822
|
December
|
59.14
|
55.41
|
14,596,475
|
8.2
|
Prior
Sales
|
Security
|
Notes
due 2019
|
Size of
Offering:
|
US$550,000,000
|
Maturity
Date:
|
March 1,
2019
|
Coupon
Rate:
|
5.55%
|
Net Proceeds
of Issue:
|
US$540,270,500
|
Public
Offering Price:
|
98.881% per
note
|
Application
of Proceeds:
|
Repay a
portion of outstanding commercial paper and reduce a portion of its
accounts receivable securitization program. The indebtedness being repaid
was incurred by the Company for general corporate purposes, including for
the financing of the Company’s recent acquisitions of the principal lines
of the EJ&E and three railway subsidiaries and a rail-freight ferry
operation of the QRC.
|
ITEM
9
|
DIRECTORS
AND EXECUTIVE OFFICERS
|
9.1
|
Directors
|
Name and Province or
State of
Residence
|
Date of First Election
to
Board
|
Principal Occupations
within the Preceding
Five
Years
|
||
Michael R.
Armellino, CFA
New Jersey,
U.S.A.
|
May 7,
1996
|
Retired
Partner, The Goldman Sachs Group, LP (investment
bank)
|
||
|
||||
A. Charles
Baillie, O.C., LL.D.
Ontario,
Canada
|
April 15,
2003
|
Retired
Chairman and Chief Executive Officer, The
Toronto-Dominion Bank (bank)
|
||
Hugh J.
Bolton, FCA
Alberta,
Canada
|
April 15,
2003
|
Chairman,
Epcor Utilities Inc. (energy and energy-related services
provider)
|
||
Ambassador
Gordon D. Giffin
Georgia,
U.S.A.
|
May 1,
2001
|
Senior
Partner, McKenna Long & Aldridge (law firm)
|
||
Edith E.
Holiday
District of
Columbia, U.S.A.
|
June 1,
2001
|
Corporate
Director and Trustee, and former General Counsel, United States Treasury
Department and Secretary of the Cabinet,The White
House
|
Name and Province or
State of
Residence
|
Date of First Election
to
Board
|
Principal Occupations
within the Preceding
Five
Years
|
||
V. Maureen
Kempston Darkes, O.C., D. Comm. LL.D.
Florida,
U.S.A.
|
March 29,
1995
|
Corporate
Director, and former Group Vice-President and President Latin America,
Africa and Middle East, General Motors Corporation
|
||
The Hon.
Denis Losier, P.C., LL.D.
New
Brunswick, Canada
|
October 25,
1994
|
President and
Chief Executive Officer, Assumption
Life (life insurance company)
|
||
The Hon.
Edward C. Lumley, P.C., LL.D.
Ontario,
Canada
|
July 4,
1996
|
Vice-Chairman,
BMO Capital Markets (investment bank)
|
||
David G. A.
McLean, O.B.C., LL.D.,
British
Columbia, Canada
|
August 31,
1994
|
Chair and
Chief Executive Officer, The McLean Group (real estate investment, film
and television facilities, communications and helicopter
charters)
|
||
Claude
Mongeau
Quebec,
Canada
|
October 20,
2009
|
President and
Chief Executive Officer, CN; Executive Vice-President, CN; Executive
Vice-President and Chief Financial Officer, CN
|
||
Robert
Pace
Nova Scotia,
Canada
|
October 25,
1994
|
President and
Chief Executive Officer, The Pace
Group (private holding company)
|
9.2
|
Audit Committee
Disclosure
|
Fees
|
2009(1)
|
2008(1)
|
Audit
|
$2,812,000
|
$2,794,000
|
Audit-related
|
$1,134,000
|
$1,170,000
|
Tax
|
$811,000
|
$797,000
|
Other
|
——
|
——
|
Total
Fees
|
$4,757,000
|
$4,761,000
|
(1)Fees rounded to the nearest
thousand.
|
9.3
|
Executive
Officers
|
Name and Province or
State of
Residence
|
Position
|
Principal Occupations
within
the Preceding
Five Years
|
||
Claude
Mongeau
Quebec,
Canada
|
President and
Chief Executive Officer
|
Executive
Vice-President; Executive Vice-President and Chief Financial
Officer;
|
||
Russell
Hiscock
Quebec,
Canada
|
President and
Chief Executive Officer,
CN Investment
Division
|
President and
Chief Executive Officer, CN Investment Division; General Manager; Manager
Common Stocks (Canada), CN Investment Division;
|
||
Mike
Cory
Alberta,
Canada
|
Senior
Vice-President,
Western
Region
|
Senior
Vice-President, Western Region; Senior Vice-President, Eastern Region;
Vice-President, Operations, Eastern Region; Vice-President, Operations,
Western Region; Assistant Vice-President, Network Operations; General
Manager, Operations, Michigan Sub Region; Network Operations
Superintendent; Director, Service Design;
|
||
Keith E.
Creel
Illinois,
U.S.A.
|
Executive Vice-President and Chief Operating Officer |
Executive
Vice-President, Operations; Senior Vice-President, Eastern
Region;
|
Name and Province or
State of
Residence
|
Position
|
Principal Occupations
within
the Preceding
Five Years
|
||
Sameh
Fahmy
Quebec,
Canada
|
Senior
Vice-President,
Engineering,
Mechanical and
Supply
Management
|
Senior
Vice-President, Engineering,
Mechanical
and Supply Management;
|
||
Sean
Finn
Quebec,
Canada
|
Executive
Vice-President
Corporate
Services and
Chief Legal
Officer
|
Executive
Vice-President Corporate Services and Chief Legal Officer; Senior
Vice-President Public Affairs, Chief Legal Officer and Corporate
Secretary;
|
||
Stan
Jablonski
Quebec,
Canada
|
Senior
Vice-President,
Sales
|
Senior
Vice-President, Sales; Vice-President, Sales;
|
||
Luc
Jobin
Quebec,
Canada
|
Executive
Vice-President and Chief Financial Officer
|
Executive
Vice-President and Chief Financial Officer; Executive Vice-President,
Power Corporation of Canada; President and Chief Executive Officer,
Imperial Tobacco;
|
||
Jeff
Liepelt
Ontario,
Canada
|
Senior
Vice-President, Eastern Region
|
Vice-President,
Eastern Region; Vice-President, Operations, Southern Region; General
Manager, Wisconsin Division;
|
||
Kimberly A.
Madigan
Quebec,
Canada
|
Vice-President,
Human
Resources
|
Vice-President,
People; Vice-President, Labour Relations – North
America;
|
||
Robert
Noorigian
Quebec,
Canada
|
Vice-President,
Investor
Relations
|
Vice-President,
Investor Relations;
|
||
Jean-Jacques
Ruest
Quebec,
Canada
|
Executive
Vice-President and Chief Marketing Officer
|
Senior
Vice-President, Marketing;
Vice-President,
Marketing;
|
||
Jim
Vena,
Illinois,
U.S.A.
|
Senior
Vice-President, Southern Region
|
Senior
Vice-President, Southern Region; Senior Vice-President, Western Region;
Senior Vice-President, Eastern Region; Vice- President, Operations; Vice-President,
Champlain District; General Manager,
Prairie;
|
9.4
|
Cease Trade Orders,
Bankruptcies, Penalties or
Sanctions
|
(i)
|
Mr. Baillie,
a Director of the Company, was a director of Dana Corporation, which filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on
March 3, 2006. Dana’s European, South American, Asian-Pacific,
Canadian and Mexican subsidiaries are not included in the Chapter 11
filing. Dana Corporation successfully emerged from Chapter 11
reorganization in February 2008. Mr. Baillie is no longer a director of
Dana Corporation;
|
(ii)
|
Mr. Lumley,
a Director of the Company, was a director of Air Canada when it
voluntarily filed for protection under the Companies’ Creditors
Arrangement Act (“CCAA”) in April 2003. Air Canada
successfully emerged from the CCAA proceedings and was restructured
pursuant to a plan of arrangement in September 2004. Mr. Lumley
is no longer a director of Air
Canada;
|
(iii)
|
Mr. Mongeau,
a director and the new President and Chief Executive Officer of the
Company, became a director of Nortel Networks Corporation ("NNC") and
Nortel Networks Limited ("NNL") on June 29, 2006. On January
14, 2009, NNC, NNL and certain other Canadian subsidiaries initiated
creditor protection proceedings under the CCAA in Canada. Certain U.S.
subsidiaries filed voluntary petitions in the United States under Chapter
11 of the U.S. Bankruptcy Code, and certain Europe, Middle East and Africa
(EMEA) subsidiaries made consequential filings in Europe and the Middle
East. These proceedings are ongoing. Mr. Mongeau resigned as a
director of NNC and NNL effective August 10,
2009.
|
(iv)
|
Mrs. Kempston
Darkes, a director of the Company, was an officer of General Motors
Corporation (“GM”) when GM filed for bankruptcy protection under Chapter
11 of the U.S. Bankruptcy Code on June 1, 2009. None of the operations for
which she was directly responsible in Latin America, Africa and the Middle
East were included in the bankruptcy filing. GM emerged from bankruptcy
protection on July 10, 2009 in a reorganization in which a new entity
acquired the most valuable assets. Mrs. Kempston Darkes retired as a GM
officer on December 1, 2009; and
|
(v)
|
Mr. Giffin, a
director of the Company, was a director of AbitibiBowater Inc. until
January 22, 2009. AbitibiBowater Inc. and certain of its U.S. and Canadian
subsidiaries filed voluntary petitions in the United States under Chapter
11 of the U.S. Bankruptcy Code on April 16, 2009. AbitibiBowater Inc. and
certain of its Canadian subsidiaries filed for creditor protection under
the CCAA in Canada on April 17, 2009. Mr. Giffin is no longer a director
of AbitibiBowater Inc.
|
ITEM
10
|
INTEREST
OF EXPERTS
|
ITEM
11
|
ADDITIONAL
INFORMATION
|
1.
|
Membership
and Quorum
|
|
·
|
a minimum of
five Directors appointed by the Board, one of whom must be the chair of
the Human Resources and Compensation
Committee;
|
|
·
|
only
Independent Directors, as determined by the Board of Directors
and following the Canadian and U.S. Securities’ legislation and
regulations, may be appointed to the Audit Committee. A member of the
Audit Committee may not, other than in his or her capacity as a Director
or member of a board committee and subject to the exceptions provided in
Canadian and U.S. laws and regulations, accept directly or indirectly any
fee from CN or any subsidiary of CN nor be an affiliated person of CN or
any subsidiary of CN;
|
|
·
|
each member
must be “financially literate” (as determined by the
Board);
|
|
·
|
at least one
member must be an “audit committee financial expert” (as determined by the
Board);
|
|
·
|
quorum of
majority of members.
|
2.
|
Frequency and
Timing of Meetings
|
|
·
|
normally one
day prior to CN board
meetings;
|
|
·
|
at least five
times a year and as
necessary;
|
|
·
|
committee
members meet before or after every meeting without the presence of
management.
|
3.
|
Mandate
|
A.
|
Overseeing
financial reporting
|
|
·
|
monitoring
the quality and integrity of CN’s accounting and financial reporting
process through discussions with management, the external auditors and the
internal auditors;
|
|
·
|
reviewing
with management and the external auditors, the annual audited financial
statements to be included in the annual report of CN, including CN’s
MD&A disclosure and earnings press releases prior to their release,
filing and distribution;
|
|
·
|
reviewing
with management and the external auditors, quarterly consolidated
financial statements of CN and accompanying information, including CN’s
MD&A disclosure and earnings press releases prior to their release,
filing and distribution, and reviewing the level and type of financial
information provided, from time to time, to financial
markets;
|
|
·
|
reviewing the
financial information contained in the annual information form and other
reports or documents, financial or otherwise, requiring Board
approval;
|
|
·
|
reviewing the
procedures in place for the review of CN’s disclosure of financial
information extracted or derived from CN’s financial statements and
periodically assessing the adequacy of those
procedures;
|
|
·
|
reviewing
with the external auditors and management, the quality, appropriateness
and disclosure of CN’s accounting principles and policies, underlying
assumptions and reporting practices, and any proposed changes
thereto;
|
|
·
|
reviewing any
analysis or other written communications prepared by management, the
internal auditors or external auditors setting forth significant financial
reporting issues and judgments made in connection with the preparation of
the financial statements, including analyses of the effect of alternative
generally accepted accounting principles
methods;
|
|
·
|
reviewing the
external auditors’ report on the consolidated financial statements of CN
and on the financial statements of CN’s Pension Trust
Funds;
|
|
·
|
reviewing the
external auditors’ quarterly review engagement
report;
|
|
·
|
reviewing the
compliance of management certification of financial reports with
applicable legislation;
|
|
·
|
reviewing any
litigation, claim or other contingency and any regulatory or accounting
initiatives that could have a material effect upon the financial position
or operating results of CN and the appropriateness of the disclosure
thereof in the documents reviewed by the
Committee;
|
|
·
|
reviewing the
results of the external audit, any significant problems encountered in
performing the audit, and management’s response and/or action plan related
to any Management Letter issued by the external auditors and any
significant recommendations contained
therein.
|
B.
|
Monitoring
risk management and internal
controls
|
|
·
|
receiving
periodically management’s report assessing the adequacy and effectiveness
of CN’s disclosure controls and procedures and systems of internal
control;
|
|
·
|
reviewing
CN’s risk assessment and risk management policies, including CN’s
insurance coverage (annually and as otherwise may be
appropriate);
|
|
·
|
assisting the
Board with the oversight of CN’s compliance with applicable legal and
regulatory requirements;
|
|
·
|
reviewing
CN’s delegation of financial
authority;
|
|
·
|
making
recommendations with respect to the declaration of
dividends;
|
|
·
|
while
ensuring confidentiality and anonymity, establishing procedures for the
receipt, retention and treatment of complaints received by CN regarding
accounting, internal accounting controls or auditing matters or employee
concerns regarding accounting or auditing
matters;
|
|
·
|
requesting
the performance of any specific audit as
required.
|
C.
|
Monitoring
internal auditors
|
|
·
|
ensuring that
the chief internal auditor reports directly to the Audit
Committee;
|
|
·
|
regularly
monitoring the internal audit function’s performance, its
responsibilities, staffing, budget and the compensation of its
members;
|
|
·
|
reviewing
annually the internal audit plan;
|
|
·
|
ensuring that
the internal auditors are accountable to the Audit Committee and to the
Board.
|
D.
|
Monitoring
external auditors
|
|
·
|
recommending
to the Board and CN’s shareholders the retention and, if appropriate, the
removal of external auditors, evaluating and remunerating them, and
monitoring their qualifications, performance and
independence;
|
|
·
|
approving and
overseeing the disclosure of all audit, review and attest services
provided by the external auditors, determining which non-audit services
the external auditors are prohibited from providing, and pre-approving and
overseeing the disclosure of permitted non-audit services by the external
auditors to CN or any of its subsidiaries, in accordance with applicable
laws and regulations;
|
|
·
|
reviewing
recommendations to shareholders on the continued engagement or replacement
of external auditors, for CN and CN’s Pension Trust
Funds;
|
|
·
|
ensuring that
the external auditors are accountable to the Audit Committee and to the
Board;
|
|
·
|
discussing
with the external auditors the quality and not just the acceptability of
CN’s accounting principles, including (i) all critical accounting policies
and practices used, (ii) any alternative treatments of financial
information that have been discussed with management, the ramification of
their use and the treatment preferred by the external auditors, as well as
(iii) any other material written communications between CN and the
external auditors (including a disagreement, if any, with management and
any audit problems or difficulties and management’s
response);
|
|
·
|
reviewing at
least annually, a report by the external auditors describing their
internal quality-control procedures; any material issues raised by their
most recent internal quality-control review of their firm, or peer review,
or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
audits carried out by them, to the extent available, and any steps taken
to deal with any such issues;
|
|
·
|
reviewing at
least annually, the formal written statement from the external auditors
stating all relationships the external auditors have with CN and
confirming their independence, and holding discussions with the external
auditors as to any relationship or services that may impact their
objectivity or independence;
|
|
·
|
reviewing
hiring policies for employees or former employees of CN’s firm of external
auditors;
|
|
·
|
ensuring the
rotation of lead, concurring and other audit partners, to the extent
required by Canadian Corporate Governance Standards and U.S. Corporate
Governance Standards.
|
E.
|
Evaluating
the performance of the Audit
Committee
|
|
·
|
ensuring that
processes are in place to annually evaluate the performance of the Audit
Committee.
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
|||
By:
|
/s/
Sean Finn
|
||
Name:
|
Sean
Finn
|
||
Title:
|
Executive Vice-President Corporate
Services and Chief Legal
Officer
|
||
Date:
|
February
5, 2010
|
Exhibit
No.
|
Description
|
|
99.1
|
Management's
Discussion and Analysis for the year ended December 31,
2009*
|
|
99.2
|
Audited
Annual Consolidated Financial Statements for the year ended December 31,
2009*
|
|
99.3
|
Consent
of KPMG LLP.
|
|
99.4
|
CEO
Section 302 Certification.
|
|
99.5
|
CFO
Section 302 Certification.
|
|
99.6
|
CEO
and CFO Section 906 Certification.
|
|
101
|
Interactive
Data File*
|