Consolidated Statements of Income – unaudited

	Three months ended				Six months ended
	June 30				June 30
In millions, except per share data		2018		2017		2018		2017
Revenues (Note 3)	$	3,631	$	3,329	$	6,825	$	6,535
Operating expenses
Labor and fringe benefits (1)		648		607		1,362		1,266
Purchased services and material		478		432		959		872
Fuel		436		329		829		671
Depreciation and amortization		330		326		653		649
Equipment rents		112		103		225		204
Casualty and other		108		117		248		234
Total operating expenses (1)		2,112		1,914		4,276		3,896
Operating income (1)		1,519		1,415		2,549		2,639
Interest expense		(124)		(123)		(246)		(245)
Other components of net periodic benefit income (Note 8) (1)		76		80		153		159
Other income (Note 4)		229		1		235		3
Income before income taxes		1,700		1,373		2,691		2,556
Income tax expense (Note 5)		(390)		(342)		(640)		(641)
Net income	$	1,310	$	1,031	$	2,051	$	1,915
Earnings per share (Note 6)
Basic	$	1.78	$	1.36	$	2.78	$	2.52
Diluted	$	1.77	$	1.36	$	2.77	$	2.51
Weighted-average number of shares (Note 6)
Basic		736.0		756.1		738.6		758.7
Diluted		739.1		759.7		741.6		762.1
Dividends declared per share	$	0.4550	$	0.4125	$	0.9100	$	0.8250
(1) The Company adopted Accounting Standards Update (ASU) 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost in the first quarter of 2018 on a retrospective basis. Comparative figures have been adjusted to conform to the current presentation. See Note 2 – Recent accounting pronouncements for additional information.
See accompanying notes to unaudited consolidated financial statements.

Consolidated Statements of Comprehensive Income – unaudited

		Three months ended				Six months ended
		June 30				June 30
In millions		2018		2017		2018		2017
Net income	$	1,310	$	1,031	$	2,051	$	1,915
Other comprehensive income (loss) (Note 10)
Net gain (loss) on foreign currency translation		90		(66)		197		(89)
Net change in pension and other postretirement benefit plans (Note 8)		51		45		101		91
Other comprehensive income (loss) before income taxes		141		(21)		298		2
Income tax recovery (expense)		7		(38)		19		(60)
Other comprehensive income (loss)		148		(59)		317		(58)
Comprehensive income	$	1,458	$	972	$	2,368	$	1,857
See accompanying notes to unaudited consolidated financial statements.

9CN | 2018 Quarterly Review – Second Quarter

Consolidated Balance Sheets – unaudited

	June 30		December 31
In millions		2018		2017
Assets
Current assets
Cash and cash equivalents	$	394	$	70
Restricted cash and cash equivalents (Note 7)		485		483
Accounts receivable		1,078		984
Material and supplies		558		424
Other current assets		327		229
Total current assets		2,842		2,190
Properties		35,479		34,189
Pension asset		1,216		994
Intangible and other assets		268		256
Total assets	$	39,805	$	37,629
Liabilities and shareholders' equity
Current liabilities
Accounts payable and other	$	1,972	$	1,903
Current portion of long-term debt		2,458		2,080
Total current liabilities		4,430		3,983
Deferred income taxes		7,320		6,953
Other liabilities and deferred credits		566		590
Pension and other postretirement benefits		704		699
Long-term debt		9,416		8,748
Shareholders' equity
Common shares		3,858		3,780
Common shares in Share Trusts (Note 7)		(137)		(168)
Additional paid-in capital		112		242
Accumulated other comprehensive loss (Note 10)		(2,467)		(2,784)
Retained earnings		16,003		15,586
Total shareholders' equity		17,369		16,656
Total liabilities and shareholders' equity	$	39,805	$	37,629
See accompanying notes to unaudited consolidated financial statements.

10CN | 2018 Quarterly Review – Second Quarter

Consolidated Statements of Changes in Shareholders' Equity – unaudited

	Number of					Common						Accumulated
	common shares							shares	Additional			other						Total
		Share	Common			in Share				paid-in		comprehensive			Retained		shareholders'
In millions	Outstanding	Trusts		shares				Trusts		capital			loss		earnings			equity
Balance at December 31, 2017	742.6	2.0		$	3,780		$	(168)		$	242		$	(2,784)	$	15,586		$	16,656
Net income																2,051			2,051
Stock options exercised	1.1				69						(10)								59
Settlement of equity settled awards					62						(120)								(58)
Stock-based compensation expense and other											31					(1)			30
Repurchase of common shares (Note 7)	(10.3)				(53)											(963)			(1,016)
Share settlements by Share Trusts (Note 7)	0.4	(0.4)						31			(31)								-
Other comprehensive income  (Note 10)														317					317
Dividends																(670)			(670)
Balance at June 30, 2018	733.8	1.6		$	3,858		$	(137)		$	112		$	(2,467)	$	16,003		$	17,369
	Number of					Common						Accumulated
	common shares							shares	Additional			other						Total
		Share	Common			in Share				paid-in		comprehensive			Retained		shareholders'
In millions	Outstanding	Trusts		shares				Trusts		capital			loss		earnings			equity
Balance at December 31, 2016	762.0	1.8		$	3,730		$	(137)		$	364		$	(2,358)	$	13,242		$	14,841
Net income																1,915			1,915
Stock options exercised	0.5				31						(5)								26
Settlement of equity settled awards					77						(149)								(72)
Stock-based compensation expense and other											36					(2)			34
Repurchase of common shares (Note 7)	(10.6)				(53)											(959)			(1,012)
Share settlements by Share Trusts (Note 7)	0.3	(0.3)						24			(24)								-
Other comprehensive loss (Note 10)														(58)					(58)
Dividends																(623)			(623)
Balance at June 30, 2017	752.2	1.5		$	3,785		$	(113)		$	222		$	(2,416)	$	13,573		$	15,051
See accompanying notes to unaudited consolidated financial statements.

11CN | 2018 Quarterly Review – Second Quarter

Consolidated Statements of Cash Flows – unaudited

	Three months ended				Six months ended
	June 30				June 30
In millions		2018		2017		2018		2017
Operating activities
Net income	$	1,310	$	1,031	$	2,051	$	1,915
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		330		326		653		649
Deferred income taxes		114		134		229		279
Gain on disposal of property (Note 4)		(223)		-		(223)		-
Changes in operating assets and liabilities:
Accounts receivable		(26)		(6)		(60)		(37)
Material and supplies		(33)		(44)		(129)		(94)
Accounts payable and other		216		102		15		241
Other current assets		18		4		(7)		(67)
Pensions and other, net		(24)		(42)		(92)		(125)
Net cash provided by operating activities		1,682		1,505		2,437		2,761
Investing activities
Property additions		(840)		(675)		(1,265)		(1,071)
Disposal of property (Note 4)		154		-		154		-
Other, net		(22)		(19)		(30)		(31)
Net cash used in investing activities		(708)		(694)		(1,141)		(1,102)
Financing activities
Issuance of debt (Note 7)		-		-		1,286		-
Repayment of debt		(600)		(29)		(1,031)		(39)
Change in commercial paper, net (Note 7)		451		(112)		426		(23)
Settlement of foreign exchange forward contracts on long-term debt		19		7		7		4
Issuance of common shares for stock options exercised		51		13		59		26
Withholding taxes remitted on the net settlement of equity settled awards (Note 9)		(12)		-		(46)		(52)
Repurchase of common shares (Note 7)		(385)		(505)		(1,000)		(1,004)
Purchase of common shares for settlement of equity settled awards		(12)		(1)		(12)		(20)
Dividends paid		(334)		(310)		(670)		(623)
Net cash used in financing activities		(822)		(937)		(981)		(1,731)
Effect of foreign exchange fluctuations on US dollar-denominated cash,
cash equivalents, restricted cash, and restricted cash equivalents		2		(6)		11		(8)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents		154		(132)		326		(80)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period		725		724		553		672
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	879	$	592	$	879	$	592
Cash and cash equivalents, end of period	$	394	$	131	$	394	$	131
Restricted cash and cash equivalents, end of period		485		461		485		461
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	879	$	592	$	879	$	592
Supplemental cash flow information
Interest paid	$	(95)	$	(110)	$	(235)	$	(244)
Income taxes paid	$	(179)	$	(169)	$	(454)	$	(333)
See accompanying notes to unaudited consolidated financial statements.

12CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

1 – Basis of presentation

In these notes, the "Company" or "CN" refers to Canadian National Railway Company and, as the context requires, its wholly-owned subsidiaries.

The accompanying unaudited 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 unaudited Interim Consolidated Financial Statements have been prepared using accounting policies consistent with those used in preparing CN's 2017 Annual Consolidated Financial Statements, except as disclosed in Note 2 – Recent accounting pronouncements, and should be read in conjunction with such statements and Notes thereto.

2 – Recent accounting pronouncements

The following recent Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) were adopted by the Company during the first half of 2018:

Standard	Description	Impact
ASU 2017-07 Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	Requires employers that sponsor defined benefit pension plans and/or other postretirement benefit plans to report the service cost component in the same line item or items as other compensation costs. The other components of net periodic benefit cost are required to be presented in the statement of income separately from the service cost component and outside a subtotal of income from operations. The new guidance allows only the service cost component to be eligible for capitalization. The guidance must be applied retrospectively for the presentation of the service cost component and other components of net periodic benefit cost in the statement of income and prospectively for the capitalization of the service cost component of net periodic benefit cost.	The Company adopted this ASU in the first quarter of 2018 with an effective date of January 1, 2018. As a result, the classification of the components of pension and postretirement benefit costs other than current service cost are now shown outside of Operating income in a separate caption entitled Other components of net periodic benefit income in the Company's Consolidated Statements of Income. As a result of applying this ASU, for the three and six months ended June 30, 2018, operating income was reduced by $76 million and $153 million, respectively ($80 million and $159 million for the three and six months ended June 30, 2017, respectively), with a corresponding increase presented in the new caption below Operating income with no impact on Net income. The guidance allowing only the service cost component to be eligible for capitalization did not have a significant impact on the Company's Consolidated Financial Statements.
ASU 2016-01 Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities	Provides guidance for the recognition, measurement, presentation and disclosure of financial instruments. Requires equity investments, except for those accounted for under the equity method or that result in consolidation, to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The guidance must be applied prospectively by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.	The Company adopted this ASU in the first quarter of 2018 on a prospective basis with an effective date of January 1, 2018. As a result of applying this ASU, the Company elected to measure all existing equity investments without readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The adoption of the ASU did not have a material impact on the Company's Consolidated Financial Statements.

13CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

Standard	Description	Impact
ASU 2014-09, Revenue from Contracts with Customers and related amendments (Topic 606)	Requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Additional disclosures are required to assist users of financial statements to understand the nature, amount, timing and uncertainty of revenues and cash flows arising from an entity's contracts. The guidance can be applied using either the retrospective or modified retrospective transition method.	The Company adopted this standard in the first quarter of 2018 with an effective date of January 1, 2018 using the modified retrospective transition method applied to contracts that were not completed as of January 1, 2018. The adoption of this standard did not have an impact on the Company's Consolidated Financial Statements, other than for the new disclosure requirements. See Note 3 – Revenues for additional information.

The following recent ASUs issued by FASB have an effective date after June 30, 2018 and have not been adopted by the Company:

Standard (1)	Description	Impact	Effective date (2)
ASU 2018-02 Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income	Provides entities the option to reclassify the stranded tax effects resulting from the Tax Cuts and Jobs Act ("U.S. Tax Reform") from accumulated other comprehensive income to retained earnings. The guidance also requires certain disclosures about stranded tax effects and a description of the accounting policy for releasing income tax effects from accumulated other comprehensive income. The guidance can either be applied prospectively from the beginning of the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the U.S. Tax Reform is recognized.	The Company is currently evaluating the new guidance and has not determined whether it will elect to reclassify stranded amounts, and which transition method to apply if the election is made. The adoption of the ASU is not expected to have a material impact on the Company's Consolidated Financial Statements and related disclosures.	December 15, 2018. Early adoption is permitted.
ASU 2016-02, Leases (Topic 842)	Requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet for all leases greater than twelve months. The lessor accounting model under the new standard is substantially unchanged. The new standard also requires additional qualitative and quantitative disclosures. The guidance must be applied using the modified retrospective method.	The Company expects that the standard will have a significant impact on its Consolidated Balance Sheets due to the recognition of new right-of-use assets and lease liabilities for leases currently classified as operating leases with a term over twelve months. The Company has begun assembling the data necessary to calculate the impact on transition. The Company is implementing a new lease management system and is making changes to processes and internal controls necessary to meet the reporting and disclosure requirements. The Company will adopt the requirements of the ASU effective January 1, 2019.	December 15, 2018. Early adoption is permitted.
(1) Other recently issued ASUs required to be applied for periods beginning on or after June 30, 2018 have been evaluated by the Company and will not have a significant impact on the Company's Consolidated Financial Statements.
(2) Effective for annual and interim reporting periods beginning after the stated date.

14CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

3 – Revenues

Nature of services

The Company's revenues consist of rail freight revenues and other revenues. Rail freight revenues include revenue from the movement of freight over rail and are derived from the following seven commodity groups:

· Petroleum and chemicals, which includes chemicals and plastics, refined petroleum products, crude and condensate, and sulfur;

· Metals and minerals, which includes energy materials, metals, minerals, and iron ore;

· Forest products, which includes lumber, pulp, paper, and panels;

· Coal, which includes coal and petroleum coke;

· Grain and fertilizers, which includes Canadian regulated grain, Canadian commercial grain, U.S. grain, potash and other fertilizers;

· Intermodal, which includes rail and trucking services for domestic and international traffic; and

· Automotive, which includes finished vehicles and auto parts.

Rail freight revenues also comprise revenues for optional services beyond the basic movement of freight including asset use, switching, storage and other services.

Other revenues are derived from non-rail logistics services that support the Company's rail business including vessels and docks, transloading and distribution, automotive logistics, and freight forwarding and transportation management.

The following table provides disaggregated information for revenues:

	Three months ended June 30				Six months ended June 30
In millions		2018		2017		2018		2017
Rail freight revenues
Petroleum and chemicals	$	616	$	549	$	1,180	$	1,133
Metals and minerals		447		389		835		750
Forest products		490		464		912		911
Coal		175		126		317		255
Grain and fertilizers		591		530		1,130		1,137
Intermodal		863		815		1,677		1,557
Automotive		236		238		433		443
Total rail freight revenues	$	3,418	$	3,111	$	6,484	$	6,186
Other revenues		213		218		341		349
Total revenues (1)	$	3,631	$	3,329	$	6,825	$	6,535
Revenues by geographic area
Canada	$	2,438	$	2,222	$	4,597	$	4,409
U.S.		1,193		1,107		2,228		2,126
Total revenues (1)	$	3,631	$	3,329	$	6,825	$	6,535
(1) As at June 30, 2018, the Company had remaining performance obligations of $90 million related to freight in-transit, for which revenue is expected to be recognized in the next period.

Revenue recognition

Revenues are recognized when control of promised services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services.

The Company accounts for contracts with customers when it has approval and commitment from both parties, each party's rights have been identified, payment terms are defined, the contract has commercial substance and collection is probable. For contracts that involve multiple performance obligations, the Company allocates the transaction price to each performance obligation in the contract based on relative standalone selling prices and recognizes revenue when, or as, performance obligations in the contract are satisfied.

Revenues are presented net of taxes collected from customers and remitted to governmental authorities.

Rail freight revenues

Rail freight services are arranged through publicly-available tariffs or customer-specific agreements that establish the pricing, terms, and conditions for rail freight services offered by the Company. For revenue recognition purposes, a contract for the movement of freight over rail exists when shipping instructions are sent by a customer and have been accepted by the Company in connection with the relevant tariff or customer-specific agreement.

15CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

Revenues for the movement of freight over rail are recognized over time due to the continuous transfer of control to the customer as freight moves from origin to destination. Progress towards completion of the performance obligation is measured based on the transit time of rail freight from origin to destination. The allocation of revenues between periods is based on the relative transit time in each period with expenses recorded as incurred. Revenues related to rail freight contracts that require the involvement of another rail carrier to move freight from origin to destination are reported on a net basis. Rail freight movements are completed over a short period of time and are generally completed before payment is due. The Company has no material contract assets or liabilities associated with rail freight revenues. Rail freight receivables are included in Accounts receivable on the Consolidated Balance Sheets.

Revenues for optional services are recognized at a point in time or over time as performance obligations are satisfied, depending on the nature of the service.

Rail freight contracts may be subject to variable consideration in the form of volume-based incentives, rebates, or other items, which affect the transaction price. Variable consideration is recognized as revenue to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Variable consideration is accrued on the basis of management's best estimate of the expected amount, which is based on available historical, current and forecasted information.

Other revenues

Other revenues are recognized at a point in time or over time as performance obligations are satisfied, depending on the nature of the service.

4 – Other income

Included in Other income are 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.

Disposal of property

2018

Central Station Railway Lease

On April 9, 2018, the Company completed the transfer of its capital lease in the passenger rail facilities in downtown Montreal together with its interests in related railway operating agreements (the "Central Station Railway Lease") for cash proceeds of $115 million. The transaction resulted in a gain of $184 million ($156 million after-tax) that was recorded in Other income on that date. The gain includes the difference between the net book value of the asset and the cash proceeds, the extinguishment of the capital lease obligation, and the recognition of a gain previously deferred from a sale-leaseback transaction.

Calgary Industrial Lead

On April 6, 2018, the Company completed the sale of land located in Calgary, excluding the rail fixtures (the "Calgary Industrial Lead"), for cash proceeds of $39 million. The transaction resulted in a gain of $39 million ($34 million after-tax) that was recorded in Other income on that date.

5 – Income taxes

The Company recorded income tax expense of $390 million and $640 million for the three and six months ended June 30, 2018, respectively, compared to $342 million and $641 million, respectively, for the same periods in 2017.

Income tax expense for the six months ended June 30, 2017 included deferred income tax recoveries of $18 million recorded in the second quarter and $5 million recorded in the first quarter, both resulting from the enactment of lower provincial corporate income tax rates.

16CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

6 – Earnings per share

	Three months ended June 30				Six months ended June 30
In millions, except per share data		2018		2017		2018		2017
Net income	$	1,310	$	1,031	$	2,051	$	1,915
Weighted-average basic shares outstanding		736.0		756.1		738.6		758.7
Dilutive effect of stock-based compensation		3.1		3.6		3.0		3.4
Weighted-average diluted shares outstanding		739.1		759.7		741.6		762.1
Basic earnings per share	$	1.78	$	1.36	$	2.78	$	2.52
Diluted earnings per share	$	1.77	$	1.36	$	2.77	$	2.51
Units excluded from the calculation as their inclusion      would not have a dilutive effect
Stock options		0.9		0.6		1.0		0.8
Performance share units		0.3		-		0.4		0.1

7 – Financing activities

Shelf prospectus and registration statement

On February 6, 2018, under its previous shelf prospectus and registration statement, the Company issued US$300 million ($374 million) 2.40% Notes due 2020 and US$600 million ($749 million) 3.65% Notes due 2048 in the U.S. capital markets, which resulted in net proceeds of $1,106 million.

On February 13, 2018, the Company filed a new shelf prospectus with Canadian securities regulators and a registration statement with the United States Securities and Exchange Commission (SEC), pursuant to which CN may issue up to $6.0 billion of debt securities in the Canadian and U.S. capital markets over the 25 months from the filing date. This shelf prospectus and registration statement replaced CN's previous shelf prospectus and registration statement that expired on February 6, 2018. Access to the Canadian and U.S. capital markets under the shelf prospectus and registration statement is dependent on market conditions.

Revolving credit facility

The Company has an unsecured revolving credit facility with a consortium of lenders which is available for general corporate purposes including backstopping the Company's commercial paper programs. On March 15, 2018, the Company's revolving credit facility agreement was amended, which extended the term of the credit facility by one year and increased the credit facility from $1.3 billion to $1.8 billion, effective May 5, 2018. The amended credit facility of $1.8 billion consists of a $900 million tranche maturing on May 5, 2021 and a $900 million tranche maturing on May 5, 2023. The accordion feature, which provides for an additional $500 million of credit under the facility, as well as the option to extend the term by an additional year at each anniversary date, subject to the consent of individual lenders, remain unchanged. The credit facility agreement contains customary terms and conditions, which were substantially unchanged by the amendment. The credit facility provides for borrowings at various interest rates, including the Canadian prime rate, bankers' acceptance rates, the U.S. federal funds effective rate and the London Interbank Offered Rate (LIBOR), plus applicable margins, based on CN's debt credit ratings. The credit facility agreement has one financial covenant, which limits debt as a percentage of total capitalization, and with which the Company is in compliance.

As at June 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under its revolving credit facility and there were no draws during the six months ended June 30, 2018.

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 5, 2018, the maximum aggregate principal amount of commercial paper that could be issued increased from $1.3 billion to $1.8 billion, or the US dollar equivalent on a combined basis.

As at June 30, 2018 and December 31, 2017, the Company had total commercial paper borrowings of US$1,096 million ($1,439 million) and US$760 million ($955 million), respectively, at a weighted-average interest rate of 2.05% and 1.36%, respectively, presented in Current portion of long-term debt on the Consolidated Balance Sheets.

17CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

The following table provides a summary of cash flows associated with the issuance and repayment of commercial paper for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30				Six months ended June 30
In millions		2018		2017		2018		2017
Commercial paper with maturities less than 90 days
Issuance of commercial paper	$	1,805	$	1,178	$	3,896	$	2,319
Repayment of commercial paper		(1,719)		(1,290)		(3,937)		(2,342)
Change in commercial paper with maturities less than 90 days, net		86		(112)		(41)		(23)
Commercial paper with maturities of 90 days or greater
Issuance of commercial paper		469		-		571		-
Repayment of commercial paper		(104)		-		(104)		-
Change in commercial paper with maturities of 90 days or greater, net		365		-		467		-
Change in commercial paper, net	$	451	$	(112)	$	426	$	(23)

Accounts receivable securitization program

The Company has an agreement, to sell an undivided co-ownership interest in a revolving pool of accounts receivable to unrelated trusts for maximum cash proceeds of $450 million. On April 30, 2018, the Company extended the term of its agreement by two years to February 1, 2021.

As at June 30, 2018, the Company had accounts receivable securitization borrowings of $nil. As at December 31, 2017, the Company had accounts receivable securitization borrowings of $421 million, consisting of $320 million at a weighted-average interest rate of 1.43% and US$80 million ($101 million) at a weighted-average interest rate of 2.10%, secured by and limited to $476 million of accounts receivable, presented in Current portion of long-term debt on the Consolidated Balance Sheets.

Bilateral letter of credit facilities

The Company has a series of committed and uncommitted bilateral letter of credit facility agreements. On March 15, 2018, the Company extended the maturity date of the committed bilateral letter of credit facility agreements to April 28, 2021. The agreements are held with various banks to support the Company's requirements to post letters of credit in the ordinary course of business. Under these agreements, the Company has the option from time to time to pledge collateral in the form of cash or cash equivalents, for a minimum term of one month, equal to at least the face value of the letters of credit issued.

As at June 30, 2018, the Company had outstanding letters of credit of $398 million ($394 million as at December 31, 2017) under the committed facilities from a total available amount of $442 million ($437 million as at December 31, 2017) and $137 million ($136 million as at December 31, 2017) under the uncommitted facilities.

As at June 30, 2018, included in Restricted cash and cash equivalents was $401 million ($400 million as at December 31, 2017) and $80 million ($80 million as at December 31, 2017) which were pledged as collateral under the committed and uncommitted bilateral letter of credit facilities, respectively.

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 31.0 million common shares between October 30, 2017 and October 29, 2018. As at June 30, 2018, the Company had repurchased 13.2 million common shares for $1,309 million under its current NCIB.

18CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

The following table provides the information related to the share repurchases for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30				Six months ended June 30
In millions, except per share data	2018		2017		2018		2017
Number of common shares repurchased (1)		3.8		5.2		10.3		10.6
Weighted-average price per share	$	100.78	$	99.38	$	98.70	$	94.98
Amount of repurchase (2)	$	385	$	521	$	1,016	$	1,012
(1) Includes repurchases of common shares in the first and second quarters of 2017 pursuant to private agreements between the Company and arm's length third-party sellers.
(2) Includes settlements in subsequent periods.

Share Trusts

The Company's Employee Benefit Plan Trusts ("Share Trusts") purchase CN's common shares on the open market, which are used to deliver common shares under the Share Units Plan (see Note 9 – Stock-based compensation). Additional information relating to Share Trusts is provided in Note 13 – Share capital to the Company's 2017 Annual Consolidated Financial Statements.

The following table provides the information related to the activity of the Share Trusts for the six months ended June 30, 2018 and 2017:

		Six months ended June 30
In millions, except per share data		2018		2017
Share settlements by Share Trusts
Number of common shares		0.4		0.3
Weighted-average price per share	$	84.53	$	77.99
Amount of settlement	$	31	$	24

8 – 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 12 – Pensions and other postretirement benefits to the Company's 2017 Annual Consolidated Financial Statements.

The following table provides the components of net periodic benefit cost (income) for defined benefit pension and other postretirement benefit plans for the three and six months ended June 30, 2018 and 2017:

	Three months ended June 30								Six months ended June 30
		Pensions				Other postretirement benefits				Pensions				Other postretirement benefits
In millions		2018		2017		2018		2017		2018		2017		2018		2017
Current service cost	$	38	$	33	$	-	$	-	$	79	$	67	$	1	$	1
Other components of net periodic benefit cost (income) (1)
Interest cost		142		134		2		3		284		269		4		5
Expected return on plan assets		(271)		(262)		-		-		(542)		(524)		-		-
Amortization of prior service cost		1		1		-		-		2		2		-		-
Amortization of net actuarial loss (gain)		50		45		-		(1)		100		91		(1)		(2)
Total other components of net periodic benefit cost (income)		(78)		(82)		2		2		(156)		(162)		3		3
Net periodic benefit cost (income) (2)	$	(40)	$	(49)	$	2	$	2	$	(77)	$	(95)	$	4	$	4
(1) The Company adopted ASU 2017-07 in the first quarter of 2018 on a retrospective basis. Comparative figures on the Company's Consolidated Statements of Income have been adjusted to conform to the current presentation. See Note 2 – Recent accounting pronouncements for additional information.
(2) In the second quarter of 2018 and 2017, the Company revised its estimate of full year net periodic benefit cost (income) for pensions to reflect updated plan demographic information.

19   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

Pension contributions

Pension contributions for the six months ended June 30, 2018 and 2017 of $54 million and $76 million, respectively, primarily represent contributions to the Company's main pension plan, the CN Pension Plan, for the current service cost as determined under the Company's applicable actuarial valuations for funding purposes. In 2018, the Company now expects to make total cash contributions of approximately $95 million for all of its pension plans, which reflects the Company reducing its current service cost contributions for the CN Pension Plan as permitted based on its most recently filed actuarial valuation.

9 – Stock-based compensation

The Company has various stock-based compensation plans for eligible employees. A description of the major plans is provided in Note 14 – Stock-based compensation to the Company's 2017 Annual Consolidated Financial Statements.

	Three months ended June 30				Six months ended June 30
In millions		2018		2017		2018		2017
Share Units Plan (1)
Equity settled awards	$	12	$	11	$	17	$	20
Cash settled awards		-		-		-		1
Total Share Units Plan expense	$	12	$	11	$	17	$	21
Voluntary Incentive Deferral Plan (VIDP) (2)
Cash settled awards	$	3	$	3	$	1	$	6
Total VIDP expense	$	3	$	3	$	1	$	6
Stock option awards	$	3	$	4	$	6	$	7
Total stock-based compensation expense	$	18	$	18	$	24	$	34
Tax benefit recognized in income	$	4	$	4	$	5	$	8
Excess tax benefit recognized in income	$	3	$	2	$	11	$	11
(1) Performance share unit (PSU) awards are granted under the Share Units Plan.
(2) Deferred share unit (DSU) awards are granted under the Voluntary Incentive Deferral Plan.

Share Units Plan

	Equity settled
	PSUs-ROIC (1)			PSUs-TSR (2)
		Weighted-average  grant date fair value			Weighted-average  grant date fair value
	Units			Units
	In millions			In millions
Outstanding at December 31, 2017	1.2	$	46.35	0.4	$	104.32
Granted	0.4	$	49.39	0.1	$	102.74
Settled (3)	(0.4)	$	50.87	(0.1)	$	114.86
Forfeited	(0.1)	$	50.02	-	$	102.58
Outstanding at June 30, 2018	1.1	$	45.62	0.4	$	100.26
(1) The grant date fair value of equity settled PSUs-ROIC granted in 2018 of $20 million is calculated using a lattice-based valuation model. As at June 30, 2018, total unrecognized compensation cost related to outstanding awards was $28 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 PSUs-TSR granted in 2018 of $13 million is calculated using a Monte Carlo simulation model. As at June 30, 2018, total unrecognized compensation cost related to outstanding awards was $14 million and is expected to be recognized over a weighted-average period of 1.9 years.
(3) Equity settled PSUs-ROIC granted in 2015 met the minimum share price condition for settlement and attained a performance vesting factor of 135%. Equity settled PSUs-TSR granted in 2015 attained a performance vesting factor of 142%. In the first quarter of 2018, these awards were settled, net of the remittance of the participants' withholding tax obligation of $34 million, by way of disbursement from the Share Trusts of 0.4 million common shares.

20   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

Voluntary Incentive Deferral Plan

	Equity settled			Cash settled
	DSUs (1)			DSUs (2)
	Units	Weighted-average  grant date fair value		Units
	In millions			In millions
Outstanding at December 31, 2017	1.1	$	77.81	0.2
Granted	0.1	$	95.64	-
Settled (3)	(0.3)	$	78.57	-
Outstanding at June 30, 2018	0.9	$	78.97	0.2
(1) The grant date fair value of equity settled DSUs granted in 2018 of $4 million is calculated using the Company's stock price on the grant date. As at June 30, 2018, the aggregate intrinsic value of equity settled DSUs outstanding amounted to $91 million.
(2) The fair value of cash settled DSUs as at June 30, 2018 is based on the intrinsic value. As at June 30, 2018, the liability for cash settled DSUs was $27 million ($30 million as at December 31, 2017). The closing stock price used to determine the liability was $107.53.
(3) For the six months ended June 30, 2018 the Company purchased 0.1 million common shares for the settlement of equity settled DSUs, net of the remittance of the participants' withholding tax obligation of $12 million.

Stock option awards

	Options outstanding
	Number of options	Weighted-average exercise price
	In millions
Outstanding at December 31, 2017 (1)	5.1	$	66.78
Granted (2)	1.0	$	96.85
Exercised	(1.1)	$	56.51
Forfeited	(0.2)	$	100.68
Outstanding at June 30, 2018 (1) (2) (3)	4.8	$	76.61
Exercisable at June 30, 2018 (1) (3)	2.5	$	64.23
(1) Stock options with a US dollar exercise price have been translated into Canadian dollars using the foreign exchange rate in effect at the balance sheet date.
(2) The grant date fair value of options granted in 2018 of $16 million ($15.06 per option) is calculated using the Black-Scholes option-pricing model. As at June 30, 2018, total unrecognized compensation cost related to outstanding awards was $15 million and is expected to be recognized over a weighted-average period of 2.3 years.
(3) The weighted-average term to expiration of options outstanding was 7 years and the weighted-average term to expiration of exercisable stock options was 5.5 years. As at June 30, 2018, the aggregate intrinsic value of in-the-money stock options outstanding amounted to $149 million and the aggregate intrinsic value of stock options exercisable amounted to $108 million.

21   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

10 – Accumulated other comprehensive loss

In millions				Foreign currency translation adjustments		Pension and other postretirement benefit plans		Total before tax			Income tax recovery (expense)			Total  net of tax
Balance at March 31, 2018			$	(337)	$	(3,072)	$	(3,409)		$	794		$	(2,615)
Other comprehensive income (loss)
	before reclassifications:
	Foreign exchange gain on translation of net
		investment in foreign operations		245				245			-			245
	Foreign exchange loss on translation of
		US dollar-denominated debt designated
		as a hedge of the net investment in
		foreign operations (1)		(155)				(155)			20			(135)
Amounts reclassified from Accumulated
	other comprehensive loss:
	Amortization of net actuarial loss					50		50	(2)		(13)	(3)		37
	Amortization of prior service cost					1		1	(2)		-			1
Other comprehensive income				90		51		141			7			148
Balance at June 30, 2018			$	(247)	$	(3,021)	$	(3,268)		$	801		$	(2,467)
In millions				Foreign currency translation adjustments		Pension and other postretirement benefit plans		Total  before tax			Income tax recovery (expense)			Total net of tax
Balance at December 31, 2017			$	(444)	$	(3,122)	$	(3,566)		$	782		$	(2,784)
Other comprehensive income (loss)
	before reclassifications:
	Foreign exchange gain on translation of net
		investment in foreign operations		542				542			-			542
	Foreign exchange loss on translation of
		US dollar-denominated debt designated
		as a hedge of the net investment in
		foreign operations (1)		(345)				(345)			46			(299)
Amounts reclassified from Accumulated
	other comprehensive loss:
	Amortization of net actuarial loss					99		99	(2)		(27)	(3)		72
	Amortization of prior service cost					2		2	(2)		-			2
Other comprehensive income				197		101		298			19			317
Balance at June 30, 2018			$	(247)	$	(3,021)	$	(3,268)		$	801		$	(2,467)
(1) The Company designates US dollar-denominated debt of the parent company as a foreign currency hedge of its net investment in foreign operations. As a result, 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 volatility of  earnings resulting from the       conversion of US dollar-denominated debt into Canadian dollars.
(2) Reclassified to Other components of net periodic benefit income in the Consolidated Statements of Income and included in net periodic benefit cost. See Note 8 - Pensions and other postretirement benefits.
(3) Included in Income tax expense in the Consolidated Statements of Income.

22   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

In millions				Foreign currency translation adjustments		Pension and other postretirement benefit plans		Total  before tax			Income tax recovery (expense)			Total  net of tax
Balance at March 31, 2017			$	(270)	$	(2,852)	$	(3,122)		$	765		$	(2,357)
Other comprehensive income (loss)
	before reclassifications:
	Foreign exchange loss on translation of net
		investment in foreign operations		(262)				(262)			-			(262)
	Foreign exchange gain on translation of
		US dollar-denominated debt designated
		as a hedge of the net investment in
		foreign operations (1)		196				196			(27)			169
Amounts reclassified from Accumulated
	other comprehensive loss:
	Amortization of net actuarial loss					44		44	(2)		(11)	(3)		33
	Amortization of prior service cost					1		1	(2)		-			1
Other comprehensive income (loss)				(66)		45		(21)			(38)			(59)
Balance at June 30, 2017			$	(336)	$	(2,807)	$	(3,143)		$	727		$	(2,416)
In millions				Foreign currency translation adjustments		Pension and other postretirement benefit plans		Total before tax			Income tax recovery (expense)			Total net of tax
Balance at December 31, 2016			$	(247)	$	(2,898)	$	(3,145)		$	787		$	(2,358)
Other comprehensive income (loss)
	before reclassifications:
	Foreign exchange loss on translation of net
		investment in foreign operations		(361)				(361)			-			(361)
	Foreign exchange gain on translation of
		US dollar-denominated debt designated
		as a hedge of the net investment in
		foreign operations (1)		272				272			(37)			235
Amounts reclassified from Accumulated
	other comprehensive loss:
	Amortization of net actuarial loss					89		89	(2)		(23)	(3)		66
	Amortization of prior service cost					2		2	(2)		-			2
Other comprehensive income (loss)				(89)		91		2			(60)			(58)
Balance at June 30, 2017			$	(336)	$	(2,807)	$	(3,143)		$	727		$	(2,416)
(1) The Company designates US dollar-denominated debt of the parent company as a foreign currency hedge of its net investment in foreign operations. As a result, 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 volatility of earnings resulting from the       conversion of US dollar-denominated debt into Canadian dollars.
(2) Reclassified to Other components of net periodic benefit income in the Consolidated Statements of Income and included in net periodic benefit cost. See Note 8 - Pensions and other postretirement benefits.
(3) Included in Income tax expense in the Consolidated Statements of Income.

23   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements 

11 – Major commitments and contingencies

Purchase commitments

As at June 30, 2018, the Company had fixed and variable commitments to purchase locomotives, wheels, rail, engineering service contracts, information technology service contracts and licenses, railroad ties, rail cars, as well as other equipment and services with a total estimated cost of $2,394 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, 2018, the Company had aggregate reserves for personal injury and other claims of $323 million, of which $88 million was recorded as a current liability ($299 million as at December 31, 2017, of which $65 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, 2018, 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 operations are subject to numerous federal, provincial, state, municipal and local environmental laws and regulations in Canada and the U.S. concerning, among other things, emissions into the air; discharges into waters; the generation, handling, storage, transportation, treatment and disposal of waste, hazardous substances, and other materials; decommissioning of underground and aboveground storage tanks; and soil and groundwater contamination. A risk of environmental liability is inherent in railroad and related transportation operations; real estate ownership, operation or control; and other commercial activities of the Company with respect to both current and past operations.

The Company has identified approximately 145 sites at which it is or may be liable for remediation costs, in some cases along with other potentially responsible parties, associated with alleged contamination and is subject to environmental clean-up and enforcement actions, including those imposed by the U.S. federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), also known as the Superfund law, or analogous state laws. CERCLA and similar state laws, in addition to other similar Canadian and U.S. laws, generally impose joint and several liability for clean-up and enforcement costs on current and former owners and operators of a site, as well as those whose waste is disposed of at the site, without regard to fault or the legality of the original conduct. The Company has been notified that it is a potentially responsible party for study and clean-up costs at 6 sites governed by the Superfund law (and analogous state laws) for which investigation and remediation payments are or will be made or are yet to be determined and, in many instances, is one of several potentially responsible parties.

The ultimate cost of addressing these known contaminated sites cannot be definitively established given that the estimated environmental liability for any given site may vary depending on the nature and extent of the contamination; the nature of anticipated response actions, taking into account the available clean-up techniques; evolving regulatory standards governing environmental liability; and the number of potentially responsible parties and their financial viability. As a result, liabilities are recorded based on the results of a four-phase assessment conducted on a site-by-site basis. A liability is initially recorded when environmental assessments occur, remedial efforts are probable, and when the costs, based on a specific plan of action in terms of the technology to be used and the extent of the corrective action required, can be reasonably estimated. The Company estimates the costs related to a particular site using cost scenarios established by external consultants based on the extent of contamination and expected costs for remedial efforts. In the case of multiple parties, the Company accrues its allocable share of liability taking into account the Company's alleged responsibility, the number of potentially responsible parties and their ability to pay their respective share of the liability. Adjustments to initial estimates are recorded as additional information becomes available.

24   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

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.

As at June 30, 2018, the Company had aggregate accruals for environmental costs of $78 million, of which $37 million was recorded as a current liability ($78 million as at December 31, 2017, of which $57 million was recorded as a current liability). The Company anticipates that the majority of the liability at June 30, 2018 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 16 – Major commitments and contingencies to the Company's 2017 Annual Consolidated Financial Statements.

Guarantee of residual values of operating leases

The Company has guaranteed a portion of the residual values of certain of its assets under operating leases with expiry dates between 2018 and 2023, for the benefit of the lessor. If the fair value of the assets at the end of their respective lease term is less than the fair value, as estimated at the inception of the lease, then the Company must, under certain conditions, compensate the lessor for the shortfall. As at June 30, 2018, the maximum exposure in respect of these guarantees was $133 million ($141 million as at December 31, 2017). There are no recourse provisions to recover any amounts from third parties.

Other guarantees

As at June 30, 2018, the Company had outstanding letters of credit of $398 million ($394 million as at December 31, 2017) under the committed bilateral letter of credit facilities and $137 million ($136 million as at December 31, 2017) under the uncommitted bilateral letter of credit facilities, and surety and other bonds of $166 million ($167 million as at December 31, 2017), 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, 2018, the maximum potential liability under these guarantee instruments was $701 million ($697 million as at December 31, 2017), of which $650 million ($648 million as at December 31, 2017) related to other employee benefit liabilities and workers' compensation and $51 million ($49 million as at December 31, 2017) related to other liabilities. The guarantee instruments expire at various dates between 2018 and2020.

As at June 30, 2018, 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.

25   CN | 2018 Quarterly Review – Second Quarter

Notes to Unaudited Consolidated Financial Statements

12 –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. As at June 30, 2018, the Company had outstanding foreign exchange forward contracts with a notional value of US$1,696 million (US$887 million as at December 31, 2017). Changes in the fair value of foreign exchange forward contracts, resulting from changes in foreign exchange rates, are recognized in Other income in the Consolidated Statement of Income as they occur.

For the three and six months ended June 30, 2018, the Company recorded a gain of $41 million and $85 million, respectively, related to foreign exchange forward contracts compared to a loss of $26 million and $41 million, respectively, for the same periods in 2017. These gains and losses were largely offset by the re-measurement of US dollar-denominated monetary assets and liabilities recorded in Other income.

As at June 30, 2018, the fair value of outstanding foreign exchange forward contracts included in Other current assets and Accounts payable and other was $51 million and $2 million, respectively ($nil and $19 million, respectively, as at December 31, 2017).

Fair value of financial instruments

The following table provides the valuation methods and assumptions used by the Company to estimate the fair value of financial instruments and their associated level within the fair value hierarchy:

Level 1 Quoted prices for identical instruments in active markets	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.
Level 2 Significant inputs (other than quoted prices included in Level 1) are observable	The carrying amounts of Accounts receivable, Other current assets, and Accounts payable and other approximate fair value. The fair value of these financial instruments is not determined using quoted prices, but rather from market observable information. The fair value of derivative financial instruments used to manage the Company's exposure to foreign currency risk and included in Other current assets and Accounts payable and other 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, credit rating, and remaining maturity. As at June 30, 2018, the Company's debt had a carrying amount of $11,874 million ($10,828 million as at December 31, 2017) and a fair value of $12,645 million ($12,164 million as at December 31, 2017).
Level 3 Significant inputs are unobservable	The carrying amounts of investments included in Intangible and other assets approximate fair value, with the exception of investments in equity securities measured at cost minus impairment, plus or minus observable price changes, for which fair value is not readily determinable.

26   CN | 2018 Quarterly Review – Second Quarter