Edgar Filing: CANADIAN NATIONAL RAILWAY CO

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of May, 2009

Commission File Number: 001-02413

Canadian National Railway Company
(Translation of registrant’s name into English)

935 de la Gauchetiere Street West
Montreal, Quebec
Canada H3B 2M9
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

Form 40-F X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes

No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes

No X

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes

No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

Canadian National Railway Company

Table of Contents

Item

1.	2008 Update – CN Investor Fact Book

Item 1

Ticker symbols

CNR

Toronto Stock Exchange

CNI

New York Stock Exchange

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 (U.S. GAAP). The Company’s objective is to provide meaningful and relevant information reflecting the Company’s financial condition, results of operations and operational performance. In certain instances, the Company may make reference to certain non-GAAP measures that, from management’s perspective, are useful measures of performance. In addition, certain statistical data are based on estimated data available at such time and are subject to change as more complete information becomes available. The reader is advised to read all information provided in this document in conjunction with the Company’s 2008 Annual Consolidated Financial Statements, Notes thereto and Management’s discussion and analysis (MD&A).

The Company makes reference to non-GAAP measures in this document that do not have any standardized meaning prescribed by U.S. GAAP and are, therefore, not necessarily comparable to similar measures presented by other companies and, as such, should not be considered in isolation. Management believes that non-GAAP measures such as adjusted net income and the resulting adjusted performance measures for such items as operating income, operating ratio and per share data are useful measures of performance that can facilitate period-to-period comparisons as they exclude items that do not arise as part of the normal day-to-day operations or that could potentially distort the analysis of trends in business performance. The exclusion of the specified items in the adjusted measures do not, however, imply that such items are necessarily non-recurring. The Company also believes that free cash flow is a useful measure of performance as it demonstrates the Company's ability to generate cash after the payment of capital expenditures and dividends. Free cash flow does not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies. The Company defines free cash flow as cash provided from operating activities, excluding changes in the accounts receivable securitization program and changes in cash and cash equivalents resulting from foreign exchange fluctuations, less cash used by investing activities and the payment of dividends. In addition, the Company believes that adjusted debt-to-total capitalization is a useful credit measure that aims to show the true leverage of the Company. Similarly, adjusted debt-to-adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) is another useful credit measure because it reflects the Company’s ability to service its debt. The Company excludes Other income in the calculation of EBITDA. A reconciliation of the various non-GAAP measures presented in this document to their comparable U.S. GAAP measures is provided in Appendix A.

Financial & statistical highlights

Financial highlights

$ in millions, except per share data, or unless otherwise indicated

	2006		2007		2008

Financial results
Revenues	$	7,929	$	7,897	$	8,482
Operating income	$	3,030	$	2,876	$	2,894
Adjusted net income (1)	$	1,810	$	1,725	$	1,778
Adjusted diluted earnings per share (1)	$	3.40	$	3.40	$	3.71
Weighted-average number of
shares diluted (millions)		534.3		508.0		480.0

Financial ratios
Operating ratio		61.8%		63.6%		65.9%
Debt-to-total capitalization		36.3%		35.6%		42.8%
Adjusted debt-to-total capitalization (2,4)		40.4%		40.4%		45.2%
Adjusted debt-to-adjusted EBITDA (2,3,4)	1.8 times		1.9 times		2.4 times

Other information
Dividend per share	$	0.65	$	0.84	$	0.92
Net capital expenditures	$	1,298	$	1,387	$	1,424
Free cash flow (4)	$	1,343	$	828	$	794

(1)	Adjusted to exclude items affecting the comparability of results. See Appendix A for a reconciliation of Non-GAAP measures.

(2)	Debt adjusted to include the present value of operating lease commitments plus securitization financing.

(3)	Earnings before interest, income taxes, depreciation and amoritization (EBITDA), and adjusted to exclude other income and the deemed interest on operating leases.

(4)	See Appendix A for a reconciliation of Non-GAAP measures.

Statistical highlights

unaudited

	2006		2007		2008

Route miles (includes Canada and the U.S.)		20,264		20,421		20,961
Carloads (thousands)		4,824		4,744		4,615
Gross ton miles (millions)		352,972		347,898		339,854
Revenue ton miles (millions)		185,610		184,148		177,951
Employees (average for the year)		22,092		22,389		22,695
Employees (end of year)		22,250		22,696		22,227
Diesel fuel consumed (U.S. gallons in millions)		401		392		380
Average fuel price ($ per U.S. gallon) (1)		2.13		2.40		3.39

(1) 2006 includes the impact of the Company’s fuel hedging program.

Canadian National Railway Company

Quarterly consolidated statement of income 2007 - 2008

unaudited
$ in millions, unless otherwise indicated
							2007															2008
		Q1			Q2			Q3			Q4		Year				Q1			Q2			Q3			Q4		Year

Revenues	$	1,906		$	2,027		$	2,023		$	1,941		$	7,897		$	1,927		$	2,098		$	2,257		$	2,200		$	8,482

Operating expenses
Labor and fringe benefits		485			430			446			340			1,701			461			392			424			397			1,674
Purchased services and material		276			263			247			259			1,045			285			283			268			301			1,137
Fuel		219			249			251			307			1,026			310			399			390			304			1,403
Depreciation and amortization		171			168			165			173			677			175			176			177			197			725
Equipment rents		66			62			59			60			247			64			60			59			79			262
Casualty and other		128			44			87			66			325			109			81			95			102			387

Total operating expenses		1,345			1,216			1,255			1,205			5,021			1,404			1,391			1,413			1,380			5,588

Operating income		561			811			768			736			2,876			523			707			844			820			2,894
Interest expense		(88	)		(85	)		(78	)		(85	)		(336	)		(86	)		(87	)		(92	)		(110	)		(375	)
Other income (loss)		4			1			2			159			166			(6	)		9			4			19			26


Income before income taxes		477			727			692			810			2,706			431			629			756			729			2,545

Income tax (expense) recovery		(153	)		(211	)		(207	)		23			(548	)		(120	)		(170	)		(204	)		(156	)		(650	)


Net income	$	324		$	516		$	485		$	833		$	2,158		$	311		$	459		$	552		$	573		$	1,895

Earnings per share
Basic		0.64			1.02			0.97			1.70			4.31			0.64			0.96			1.17			1.22			3.99
Diluted		0.63			1.01			0.96			1.68			4.25			0.64			0.95			1.16			1.21			3.95

Weighted-average number of shares
Basic		510.2			505.2			499.7			489.8			501.2			482.8			476.4			471.7			468.1			474.7
Diluted		517.8			512.3			506.4			495.9			508.0			488.6			482.0			477.1			472.5			480.0

Canadian National Railway Company

Quarterly consolidated balance sheet 2007 - 2008

unaudited

In millions

				2007											2008
		Q1			Q2			Q3			Q4			Q1		Q2			Q3		Q4

Assets

Current assets:
Cash and cash equivalents	$	106		$	241		$	214		$	310		$	334	$	161		$	288	$	413
Accounts receivable		508			425			641			370			621		843			657		913
Material and supplies		208			204			206			162			212		217			213		200
Deferred income taxes		83			73			69			68			67		67			69		98
Other		184			159			316			138			111		88			131		132
		1,089			1,102			1,446			1,048			1,345		1,376			1,358		1,756

Properties		20,988			20,401			19,883			20,413			20,754		20,864			21,472		23,203
Intangible and other assets		1,646			1,664			1,576			1,999			2,065		2,113			2,134		1,761
Total assets	$	23,723		$	23,167		$	22,905		$	23,460		$	24,164	$	24,353		$	24,964	$	26,720

Liabilities and shareholders’ equity

Current liabilities:
Accounts payable and other	$	1,510		$	1,489		$	1,261		$	1,336		$	1,333	$	1,289		$	1,329	$	1,386
Current portion of long-term debt		244			366			293			254			269		85			449		506
		1,754			1,855			1,554			1,590			1,602		1,374			1,778		1,892

Deferred income taxes		5,025			4,885			4,940			4,908			5,021		5,100			5,246		5,511
Other liabilities and deferred credits		1,532			1,443			1,410			1,422			1,404		1,381			1,378		1,353
Long-term debt		5,602			5,193			5,342			5,363			6,064		6,389			6,264		7,405

Shareholders’ equity:
Common shares		4,426			4,417			4,359			4,283			4,241		4,208			4,171		4,179
Accumulated other comprehensive income (loss)		(50	)		(180	)		(257	)		(31	)		9		(1	)		54		(155	)
Retained earnings		5,434			5,554			5,557			5,925			5,823		5,902			6,073		6,535
		9,810			9,791			9,659			10,177			10,073		10,109			10,298		10,559
Total liabilities and shareholders’ equity	$	23,723		$	23,167		$	22,905		$	23,460		$	24,164	$	24,353		$	24,964	$	26,720

Canadian National Railway Company

Quarterly consolidated statement of cash flows 2007 - 2008

unaudited

In millions

							2007															2008
		Q1			Q2			Q3			Q4		Year				Q1			Q2			Q3			Q4		Year

Operating Activities
Net income	$	324		$	516		$	485		$	833		$	2,158		$	311		$	459		$	552		$	573		$	1,895
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization		172			169			165			172			678			175			176			177			197			725
Deferred income taxes		7			43			75			(207	)		(82	)		25			89			73			43			230
Gain on sale of Central Station Complex		-			-			-			(92	)		(92	)		-			-			-			-			-
Gain on sale of investment in English Welsh and Scottish Railway		-			-			-			(61	)		(61	)		-			-			-			-			-
Other changes in:
Accounts receivable		176			38			(252	)		267			229			(235	)		(233	)		209			(173	)		(432	)
Material and supplies		(19	)		(1	)		(6	)		44			18			(48	)		(6	)		6			25			(23	)
Accounts payable and other		(428	)		2			(69	)		99			(396	)		(59	)		(39	)		(1	)		(28	)		(127	)
Other current assets		8			21			46			(9	)		84			29			22			(16	)		2			37
Other		23			(22	)		2			(122	)		(119	)		(33	)		(59	)		(43	)		(139	)		(274	)
Cash provided from operating activities		263			766			446			942			2,417			165			409			957			500			2,031

Investing Activities
Properties additions		(203	)		(344	)		(350	)		(490	)		(1,387	)		(177	)		(352	)		(415	)		(480	)		(1,424	)
Acquisitions, net of cash acquired		-			-			-			(25	)		(25	)		-			-			-			(50	)		(50	)
Sale of Central Station Complex		-			-			-			351			351			-			-			-			-			-
Sale of investment in English Welsh and Scottish Railway		-			-			-			114			114			-			-			-			-			-
Other, net		10			2			14			26			52			11			9			22			32			74
Cash used by investing activities		(193	)		(342	)		(336	)		(24	)		(895	)		(166	)		(343	)		(393	)		(498	)		(1,400	)

Financing Activities
Issuance of long-term debt		434			1,050			1,841			846			4,171			1,055			1,597			778			1,003			4,433
Reduction of long-term debt		(145	)		(904	)		(1,420	)		(1,120	)		(3,589	)		(580	)		(1,418	)		(798	)		(793	)		(3,589	)
Issuance of common shares due to exercise of stock options and related excess tax benefits realized		18			41			14			4			77			18			16			14			6			54
Repurchase of common shares		(343	)		(344	)		(452	)		(445	)		(1,584	)		(367	)		(323	)		(327	)		(4	)		(1,021	)
Dividends paid		(107	)		(105	)		(104	)		(102	)		(418	)		(111	)		(109	)		(108	)		(108	)		(436	)
Cash provided from (used by) financing activities		(143	)		(262	)		(121	)		(817	)		(1,343	)		15			(237	)		(441	)		104			(559	)
Effect of foreign exchange fluctuations on U.S. dollar-denominated cash and cash equivalents		-			(27	)		(16	)		(5	)		(48	)		10			(2	)		4			19			31

Net increase (decrease) in cash and cash equivalents		(73	)		135			(27	)		96			(131	)		24			(173	)		127			125			103
Cash and cash equivalents, beginning of period		179			106			241			214			179			310			334			161			288			310
Cash and cash equivalents, end of period	$	106		$	241		$	214		$	310		$	310		$	334		$	161		$	288		$	413		$	413

Supplemental cash flow information
Net cash receipts from customers and other	$	2,074		$	2,086		$	1,770		$	2,209		$	8,139		$	1,748		$	1,886		$	2,391		$	1,987		$	8,012
Net cash payments for:
Employee services, suppliers and other expenses		(1,237	)		(1,017	)		(1,090	)		(979	)		(4,323	)		(1,339	)		(1,215	)		(1,195	)		(1,171	)		(4,920	)
Interest		(114	)		(73	)		(86	)		(67	)		(340	)		(100	)		(90	)		(82	)		(124	)		(396	)
Workforce reductions		(9	)		(7	)		(8	)		(7	)		(31	)		(6	)		(6	)		(5	)		(5	)		(22	)
Personal injury and other claims		(20	)		(26	)		(12	)		(28	)		(86	)		(26	)		(18	)		(18	)		(29	)		(91	)
Pensions		(1	)		(22	)		(27	)		(25	)		(75	)		(22	)		(31	)		(24	)		(50	)		(127	)
Income taxes		(430	)		(175	)		(101	)		(161	)		(867	)		(90	)		(117	)		(110	)		(108	)		(425	)
Cash provided from operating activities	$	263		$	766		$	446		$	942		$	2,417		$	165		$	409		$	957		$	500		$	2,031

Canadian National Railway Company

Quarterly financial aand statistical data 2007 - 2008

unaudited

			2007							2008
	Q1	Q2		Q3	Q4	Year		Q1	Q2		Q3	Q4	Year
Revenues (millions of dollars)

Petroleum and chemicals	303	300		317	306		1,226	319	322		346	359		1,346
Metals and minerals	198	225		208	195		826	205	239		269	237		950
Forest products	410	414		392	336		1,552	330	357		383	366		1,436
Coal	89	99		99	98		385	99	107		140	132		478
Grain and fertilizers	309	322		330	350		1,311	340	334		327	381		1,382
Intermodal	313	346		361	362		1,382	351	393		446	390		1,580
Automotive	132	142		114	116		504	116	124		117	112		469
Total rail freight revenues	1,754	1,848		1,821	1,763		7,186	1,760	1,876		2,028	1,977		7,641
Other revenues	152	179		202	178		711	167	222		229	223		841
Total revenues	1,906	2,027		2,023	1,941		7,897	1,927	2,098		2,257	2,200		8,482

Statistical operating data

Gross ton miles (GTM) (millions)	81,741	88,344		88,498	89,315		347,898	84,327	87,287		86,369	81,871		339,854
Revenue ton miles (RTM) (millions)	44,093	46,423		46,481	47,151		184,148	44,959	45,264		45,346	42,382		177,951
Carloads (thousands)	1,131	1,204		1,204	1,205		4,744	1,132	1,188		1,217	1,078		4,615
Route miles (includes Canada and the U.S.)	20,263	20,219		20,219	20,421		20,421	20,421	20,421		20,421	20,961		20,961
Employees (end of period)	22,139	22,757		22,834	22,696		22,696	22,703	23,147		22,569	22,227		22,227
Employees (average for the period)	21,478	22,494		22,789	22,796		22,389	22,636	22,953		22,730	22,461		22,695

Productivity

Operating ratio	70.6	60.0		62.0	62.1		63.6	72.9	66.3		62.6	62.7		65.9
Rail freight revenue per RTM (cents)	3.98	3.98		3.92	3.74		3.90	3.91	4.14		4.47	4.66		4.29
Rail freight revenue per carload ($)	1,551	1,535		1,512	1,463		1,515	1,555	1,579		1,666	1,834		1,656
Operating expenses per GTM (cents)	1.65	1.38		1.42	1.35		1.44	1.66	1.59		1.64	1.69		1.64
Labor and fringe benefits expense per GTM (cents)	0.59	0.49		0.50	0.38		0.49	0.55	0.45		0.49	0.48		0.49
GTMs per average number of employees (thousands)	3,806	3,927		3,883	3,918		15,539	3,725	3,803		3,800	3,645		14,975
Diesel fuel consumed (U.S. gallons in millions)	96	98		96	102		392	99	96		92	93		380
Average fuel price ($/U.S. gallon)	2.18	2.30		2.39	2.70		2.40	3.02	3.82		3.84	2.88		3.39
GTMs per U.S. gallon of fuel consumed	851	901		922	876		887	852	909		939	880		894

Safety indicators

Injury frequency rate per 200,000 person hours (1)	1.6	1.6		2.2	2.1		1.9	2.1	1.2		2.1	1.7		1.8
Accident rate per million train miles (1)	2.7	1.7		3.0	3.6		2.7	2.7	2.7		2.2	2.8		2.6

(1) Based on Federal Railroad Administration (FRA) reporting criteria.

Certain statistical data and related productivity measures are based on estimated data available at such time and are subject to change as more complete information becomes available.

Appendix A

Canadian National Railway Company

Reconciliation of non-gaap measures

unaudited

$ in millions, except per share data, or unless otherwise indicated

Adjusted performance measures
				2006									2007									2008
	Reported			Adjustments(1)			Adjusted			Reported			Adjustments(2)			Adjusted			Reported			Adjustments(3)			Adjusted

Revenues	$	7,929		$	–		$	7,929		$	7,897		$	–		$	7,897		$	8,482		$	–		$	8,482
Operating expenses		4,899			–			4,899			5,021			–			5,021			5,588			–			5,588

Operating income		3,030			–			3,030			2,876			–			2,876			2,894			–			2,894

Interest expense		(312	)		–			(312	)		(336	)		–			(336	)		(375	)		–			(375	)
Other income		11			–			11			166			(153	)		13			26			–			26

Income before		2,729			–			2,729			2,706			(153	)		2,553			2,545			–			2,545
income taxes
Income tax expense		(642	)		(277	)		(919	)		(548	)		(280	)		(828	)		(650	)		(117	)		(767	)

Net income	$	2,087		$	(277	)	$	1,810		$	2,158		$	(433	)	$	1,725		$	1,895		$	(117	)	$	1,778

Operating ratio		61.8%						61.8%			63.6%						63.6%			65.9%						65.9%

Diluted earnings	$	3.91		$	(0.51	)	$	3.40		$	4.25		$	(0.85	)	$	3.40		$	3.95		$	(0.24	)	$	3.71

(1)	Adjusted to exclude a deferred income tax recovery of $277 million ($0.51 per diluted share) that resulted primarily from the enactment of lower corporate income tax rates in Canada and the resolution of matters pertaining to prior years’ income taxes.

(2)

Adjusted to exclude a deferred income tax recovery of $328 million ($0.64 per diluted share) that resulted mainly from the enactment of corporate income tax rate changes in Canada, as well as the gains on sale of the Central Station Complex of $92 million, or $64 million after-tax ($0.13 per diluted share) and the Company’s investment in English Welsh and Scottish Railway of $61 million, or $41 million after-tax ($0.08 per diluted share).

(3)

Adjusted to exclude a deferred income tax recovery of $117 million ($0.24 per diluted share), of which $83 million was due to the resolution of various income tax matters and adjustments related to tax filings of prior years, $23 million resulted from the enactment of corporate income tax rate changes in Canada and $11 million was due to net capital losses arising from the reorganization of a subsidiary.

Appendix A

Canadian National Railway Company

Reconciliation of non-gaap measures 2006 - 2008

unaudited

$ in millions, unless otherwise indicated

Free cash flow
	Year ended December 31,	2006			2007			2008

Cash provided from operating activities		$	2,951		$	2,417		$	2,031
Cash used by investing activities			(1,349	)		(895	)		(1,400	)
Cash provided before financing activities			1,602			1,522			631

Adjustments:
Change in accounts receivable securitization			82			(228	)		568
Dividends paid			(340	)		(418	)		(436	)
Effect of foreign exchange fluctuations on U.S. dollar-denominated cash and cash equivalents			(1	)		(48	)		31
Free cash flow		$	1,343		$	828		$	794

Adjusted debt-to-total capitalization ratio
	December 31,	2006			2007			2008

Debt-to-total capitalization ratio (a)			36.3%			35.6%			42.8%
Add: Present value of operating lease commitments plus securitization financing (b)			4.1%			4.8%			2.4%
Adjusted debt-to-total capitalization ratio			40.4%			40.4%			45.2%

Adjusted debt-to-adjusted EBITDA
	Year ended December 31,	2006			2007			2008

Debt		$	5,604		$	5,617		$	7,911
Add: Present value of operating lease commitments plus securitization financing (b)			1,044			1,287			787
Adjusted debt		$	6,648		$	6,904		$	8,698

EBITDA			3,680			3,553			3,619
Add: Deemed interest on operating leases			38			41			39
Adjusted EBITDA		$	3,718		$	3,594		$	3,658

Adjusted debt-to-adjusted EBITDA		1.8 times			1.9 times			2.4 times

(a)	Debt-to-total capitalization is calculated as total long-term debt plus current portion of long-term debt divided by the sum of total debt plus total shareholders’ equity.

(b)	The operating lease commitments have been discounted using the Company’s implicit interest rate for each of the periods presented.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Canadian National Railway Company

Date: May 29, 2009	By:	/s/ Cristina Circelli
		Name:	Cristina Circelli
		Title:	Deputy Corporate Secretary and General Counsel