Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 16, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CP | |
Entity Registrant Name | CANADIAN PACIFIC RAILWAY LTD/CN | |
Entity Central Index Key | 16,875 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 144,967,167 |
INTERIM CONSOLIDATED STATEMENTS
INTERIM CONSOLIDATED STATEMENTS OF INCOME (unaudited) - CAD shares in Millions, CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Freight | CAD 1,547 | CAD 1,510 | CAD 4,708 | CAD 4,464 |
Non-freight | 48 | 44 | 133 | 131 |
Total revenues | 1,595 | 1,554 | 4,841 | 4,595 |
Operating expenses | ||||
Compensation and benefits | 256 | 294 | 766 | 907 |
Fuel | 150 | 138 | 480 | 394 |
Materials | 45 | 39 | 142 | 133 |
Equipment rents | 35 | 43 | 108 | 132 |
Depreciation and amortization | 162 | 155 | 493 | 478 |
Purchased services and other | 257 | 228 | 812 | 690 |
Total operating expenses | 905 | 897 | 2,801 | 2,734 |
Operating income | 690 | 657 | 2,040 | 1,861 |
Less: | ||||
Other income and charges | (105) | 71 | (194) | (119) |
Net interest expense | 115 | 116 | 357 | 355 |
Income before income tax expense | 680 | 470 | 1,877 | 1,625 |
Income tax expense | (170) | (123) | (456) | (410) |
Net income | CAD 510 | CAD 347 | CAD 1,421 | CAD 1,215 |
Earnings per share | ||||
Basic earnings per share (in CAD per share) | CAD 3.50 | CAD 2.35 | CAD 9.72 | CAD 8.06 |
Diluted earnings per share (in CAD per share) | CAD 3.50 | CAD 2.34 | CAD 9.70 | CAD 8.02 |
Weighted-average number of shares (millions) | ||||
Basic (shares) | 145.5 | 147.3 | 146.2 | 150.7 |
Diluted (shares) | 145.8 | 148.3 | 146.6 | 151.6 |
Dividends declared per share (in CAD per share) | CAD 0.5625 | CAD 0.5000 | CAD 1.6250 | CAD 1.3500 |
INTERIM CONSOLIDATED STATEMENT3
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | CAD 510 | CAD 347 | CAD 1,421 | CAD 1,215 |
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | 19 | (7) | 38 | 33 |
Change in derivatives designated as cash flow hedges | 2 | 1 | 11 | (75) |
Change in pension and post-retirement defined benefit plans | 38 | 47 | 113 | 137 |
Other comprehensive income before income taxes | 59 | 41 | 162 | 95 |
Income tax (expense) recovery on above items | (34) | (3) | (78) | (51) |
Other comprehensive income (loss) | 25 | 38 | 84 | 44 |
Comprehensive income | CAD 535 | CAD 385 | CAD 1,505 | CAD 1,259 |
INTERIM CONSOLIDATED BALANCE SH
INTERIM CONSOLIDATED BALANCE SHEETS AS AT (unaudited) - CAD CAD in Millions | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||||||
Cash and cash equivalents | CAD 142 | CAD 164 | ||||
Accounts receivable, net | 628 | 591 | ||||
Materials and supplies | 157 | 184 | ||||
Other current assets | 65 | 70 | ||||
Total current assets | 992 | 1,009 | ||||
Investments | 185 | 194 | ||||
Properties | 16,700 | 16,689 | ||||
Goodwill and intangible assets | 187 | 202 | ||||
Pension asset | 1,356 | 1,070 | ||||
Other assets | 59 | 57 | ||||
Total assets | 19,479 | 19,221 | ||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 1,139 | 1,322 | ||||
Long-term debt maturing within one year | 749 | 25 | ||||
Total current liabilities | 1,888 | 1,347 | ||||
Pension and other benefit liabilities | 726 | 734 | ||||
Other long-term liabilities | 221 | 284 | ||||
Long-term debt | 7,384 | 8,659 | ||||
Deferred income taxes | 3,695 | 3,571 | ||||
Total liabilities | 13,914 | 14,595 | ||||
Shareholders’ equity | ||||||
Share capital | 2,025 | 2,002 | ||||
Additional paid-in capital | 42 | 52 | ||||
Accumulated other comprehensive loss | (1,715) | CAD (1,740) | (1,799) | CAD (1,433) | CAD (1,471) | CAD (1,477) |
Retained earnings | 5,213 | 4,371 | ||||
Total Shareholders' equity | 5,565 | 4,626 | CAD 4,669 | CAD 4,796 | ||
Total liabilities and shareholders’ equity | CAD 19,479 | CAD 19,221 |
INTERIM CONSOLIDATED STATEMENT5
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities | ||||
Net income | CAD 510 | CAD 347 | CAD 1,421 | CAD 1,215 |
Reconciliation of net income to cash provided by operating activities: | ||||
Depreciation and amortization | 162 | 155 | 493 | 478 |
Deferred income taxes | 77 | 50 | 168 | 233 |
Pension funding in excess of expense | (59) | (26) | (178) | (105) |
Foreign exchange (gain) loss on long-term debt | (105) | 46 | (200) | (153) |
Other operating activities, net | (1) | (17) | (88) | (130) |
Change in non-cash working capital balances related to operations | (57) | 36 | (167) | (217) |
Cash provided by operating activities | 527 | 591 | 1,449 | 1,321 |
Investing activities | ||||
Additions to properties | (319) | (294) | (895) | (902) |
Proceeds from sale of properties and other assets | 13 | 16 | 29 | 87 |
Other | 0 | 0 | 5 | (2) |
Cash used in investing activities | (306) | (278) | (861) | (817) |
Financing activities | ||||
Dividends paid | (83) | (75) | (229) | (182) |
Issuance of CP Common Shares | 2 | 5 | 39 | 14 |
Purchase of CP Common Shares | (226) | (412) | (368) | (1,200) |
Repayment of long-term debt, excluding commercial paper | (3) | (12) | (17) | (30) |
Net issuance (repayment) of commercial paper | 0 | 190 | 0 | 366 |
Settlement of forward starting swaps | 0 | 0 | (22) | 0 |
Other | 0 | 0 | 0 | (3) |
Cash used in financing activities | (310) | (304) | (597) | (1,035) |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | (7) | 2 | (13) | (16) |
Cash position | ||||
Increase (decrease) in cash and cash equivalents | (96) | 11 | (22) | (547) |
Cash and cash equivalents at beginning of period | 238 | 92 | 164 | 650 |
Cash and cash equivalents at end of period | 142 | 103 | 142 | 103 |
Supplemental disclosures of cash flow information: | ||||
Income taxes paid | 78 | 17 | 364 | 274 |
Interest paid | CAD 140 | CAD 148 | CAD 385 | CAD 395 |
INTERIM CONSOLIDATED STATEMENT6
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) shares in Millions, CAD in Millions, $ in Millions | CADshares | Common shares/Share capital [Member]CADshares | Common shares/Share capital [Member]USD ($)shares | Additional paid-in capital [Member]CAD | Accumulated other comprehensive loss [Member]CAD | Retained earnings [Member]CAD |
Beginning balance (shares) at Dec. 31, 2015 | shares | 153 | 153 | ||||
Beginning balance at Dec. 31, 2015 | CAD 4,796 | CAD 2,058 | CAD 43 | CAD (1,477) | CAD 4,172 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 1,215 | 0 | 0 | 0 | 1,215 | |
Other comprehensive income (loss) | 44 | 0 | 0 | 44 | 0 | |
Dividends declared | (202) | 0 | 0 | 0 | (202) | |
Effect of stock-based compensation expense | 11 | CAD 0 | 11 | 0 | 0 | |
CP Common Shares repurchased (shares) | shares | (6.9) | (6.9) | ||||
CP Common Shares repurchased (amount) | (1,210) | CAD (84) | 0 | 0 | (1,126) | |
Shares issued under stock option plan (shares) | shares | 0.2 | 0.2 | ||||
Shares issued under stock option plan | CAD 15 | CAD 26 | (11) | 0 | 0 | |
Ending balance (shares) at Sep. 30, 2016 | shares | 146.3 | 146.3 | 146.3 | |||
Ending balance at Sep. 30, 2016 | CAD 4,669 | CAD 2,000 | 43 | (1,433) | 4,059 | |
Beginning balance (shares) at Dec. 31, 2016 | shares | 146.3 | 146.3 | ||||
Beginning balance at Dec. 31, 2016 | 4,626 | CAD 2,002 | 52 | (1,799) | 4,371 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 1,421 | 0 | $ 0 | 0 | 0 | 1,421 |
Other comprehensive income (loss) | 84 | 0 | 0 | 84 | 0 | |
Dividends declared | (237) | CAD 0 | 0 | 0 | (237) | |
CP Common Shares repurchased (shares) | shares | (1.8) | (1.8) | ||||
CP Common Shares repurchased (amount) | (368) | CAD (26) | 0 | 0 | (342) | |
Shares issued under stock option plan (shares) | shares | 0.5 | 0.5 | ||||
Shares issued under stock option plan | CAD 39 | CAD 49 | (10) | 0 | 0 | |
Ending balance (shares) at Sep. 30, 2017 | shares | 145 | 145 | 145 | |||
Ending balance at Sep. 30, 2017 | CAD 5,565 | CAD 2,025 | CAD 42 | CAD (1,715) | CAD 5,213 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of presentation These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited (“CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2016 annual consolidated financial statements and notes included in CP's 2016 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2016 annual consolidated financial statements, except for the newly adopted accounting policies discussed in Note 2. CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons. |
Accounting Changes
Accounting Changes | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Changes | Accounting changes Implemented in 2017 Compensation - Stock Compensation In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-based Payment Accounting, under FASB Accounting Standards Codification ("ASC") Topic 718. The amendments clarify the guidance relating to treatment of excess tax benefits and deficiencies, acceptable forfeiture rate policies, and treatment of cash paid by an employer when directly withholding shares for tax-withholding purposes and the requirement to treat such cash flows as a financing activity. As a result of this ASU, excess tax benefits are no longer recorded in additional paid-in capital and instead are applied against taxes payable or recognized in the interim consolidated statement of income. This ASU was effective for CP beginning on January 1, 2017. The Company has determined that there were no significant changes to disclosure or financial statement presentation and changes in accounting for excess tax benefits and deficiencies were not material as a result of adoption. Simplifying the Measurement of Inventory In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory under FASB ASC Topic 330. The amendments require that reporting entities measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments apply to inventory that is measured using the first-in, first-out or average cost basis. This ASU was effective for CP beginning on January 1, 2017 and was applied prospectively. The Company determined there were no changes to disclosure, financial statement presentation, or valuation of inventory as a result of adoption. Future changes Leases In February 2016, the FASB issued ASU 2016-02, Leases under FASB ASC Topic 842 which will supersede the lease recognition and measurement requirements in Topic 840 Leases. This new standard requires recognition of right-of-use assets and lease liabilities by lessees for those leases classified as finance and operating leases with a maximum term exceeding 12 months. For CP this new standard will be effective for interim and annual periods commencing January 1, 2019. Entities are required to use a modified retrospective approach to adopt this new standard meaning there will be no impact to the consolidated statements of income; however, the comparative consolidated balance sheet will be adjusted to reflect the provisions of this standard. The Company has a detailed plan to implement the new standard and is assessing contractual arrangements, through a cross functional team, that may qualify as leases under the new standard. CP is also working with a vendor to implement a lease management system which will assist in delivering the required accounting changes. During the third quarter, CP's cross functional team and the vendor finalized system requirements and developed work flows and testing scenarios that will permit system implementation and parallel testing in 2018 for CP's lease system solution. The impact of the new standard will be a material increase to right of use assets and lease liabilities on the consolidated balance sheet, primarily, as a result of operating leases currently not recognized on the balance sheet. The Company does not anticipate a material impact to the consolidated statement of income and is currently evaluating the impact adoption of this new standard will have on disclosure. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers under FASB ASC Topic 606. In March 2016, the FASB issued amendment ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations as an update under FASB ASC Topic 606. The amendments clarify the principal versus agent guidance in determining whether to recognize revenue on a gross or net basis. The guidance in Topic 606, as amended, will be effective for CP for interim and annual periods commencing January 1, 2018, and CP has the option of adopting the new standard by using either a full retrospective or a modified retrospective approach. CP has decided to adopt this new standard using a modified retrospective approach. CP has analyzed contracts for a significant proportion of the Company’s annual rail freight revenue, which represents greater than 95% of CP’s annual revenues, and has concluded that recognizing these revenues over time as rail freight services are performed continues to be appropriate. CP continues to perform detailed reviews of a variety of specific contractual terms. These include assessing potential additional performance obligations, certain arrangements in the context of the new guidance on principal versus agent, contract origination and fulfillment costs, variable compensation and an assessment of required new disclosures. At this time CP does not expect a material change to revenue recognition from adopting this standard. Intangibles - Goodwill and Other In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment under FASB ASC Topic 350. This is intended to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The amendments are effective for CP beginning on January 1, 2020. Entities are required to apply the amendments in this update prospectively from the date of adoption. The Company does not anticipate that the adoption of this ASU will impact CP's financial statements as there is a sufficient excess between the fair value and carrying value of CP's goodwill. Furthermore CP expects to continue to apply the Step 0 qualitative assessment when testing for goodwill impairment. Compensation - Retirement Benefits In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost under FASB ASC Topic 715. The amendments clarify presentation requirements for net periodic pension cost and net periodic post-retirement benefit cost and require that an employer report the current service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the consolidated statement of income separately from the current service cost component and outside a subtotal of income from operations if one is presented. The amendments also restrict capitalization to the current service cost component when applicable. The amendments are effective for CP beginning on January 1, 2018. The amendments related to presentation are required to be applied retrospectively and the restrictions on capitalization of the current service cost component are applicable prospectively on the date of adoption. The impacts of the reclassification are detailed as follows: For the three months ended September 30 For the nine months ended September 30 Year ended December 31 (1) (in millions of Canadian dollars) 2017 2016 2017 2016 2017 2016 Decrease in operating income $ 68 $ 41 $ 203 $ 127 $ 272 $ 167 (1) December 31, 2017 figure is an estimate. There will be no change to net income or earnings per share as a result of adoption of this new standard. The new guidance restricting capitalization of pensions to the current service cost component of net periodic benefit cost will have no impact to operating income or amounts capitalized because the Company currently only capitalizes an appropriate portion of current service cost for self-constructed properties. CP is currently assessing the disclosure requirements of this ASU. Derivatives and Hedging |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component | 9 Months Ended |
Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Changes in Accumulated Other Comprehensive Loss (AOCL) by Component | Changes in accumulated other comprehensive loss ("AOCL") by component For the three months ended Septemb er 30 (in millions of Canadian dollars, net of tax) Foreign currency Derivatives and other Pension and post-retirement defined benefit plans Total Opening balance, July 1, 2017 $ 124 $ (97 ) $ (1,767 ) $ (1,740 ) Other comprehensive loss before reclassifications (5 ) — — (5 ) Amounts reclassified from accumulated other comprehensive loss — 2 28 30 Net current-period other comprehensive (loss) income (5 ) 2 28 25 Closing balance, September 30, 2017 $ 119 $ (95 ) $ (1,739 ) $ (1,715 ) Opening balance, July 1, 2016 $ 124 $ (157 ) $ (1,438 ) $ (1,471 ) Other comprehensive income (loss) before reclassifications 2 (1 ) 1 2 Amounts reclassified from accumulated other comprehensive loss — 2 34 36 Net current-period other comprehensive income 2 1 35 38 Closing balance, September 30, 2016 $ 126 $ (156 ) $ (1,403 ) $ (1,433 ) For the nine months ended Septem ber 30 (in millions of Canadian dollars, net of tax) Foreign currency Derivatives and other Pension and post-retirement defined benefit plans Total Opening balance, January 1, 2017 $ 127 $ (104 ) $ (1,822 ) $ (1,799 ) Other comprehensive loss before reclassifications (8 ) (7 ) — (15 ) Amounts reclassified from accumulated other comprehensive loss — 16 83 99 Net current-period other comprehensive (loss) income (8 ) 9 83 84 Closing balance, September 30, 2017 $ 119 $ (95 ) $ (1,739 ) $ (1,715 ) Opening balance, January 1, 2016 $ 129 $ (102 ) $ (1,504 ) $ (1,477 ) Other comprehensive loss before reclassifications (3 ) (60 ) (1 ) (64 ) Amounts reclassified from accumulated other comprehensive loss — 6 102 108 Net current-period other comprehensive (loss) income (3 ) (54 ) 101 44 Closing balance, September 30, 2016 $ 126 $ (156 ) $ (1,403 ) $ (1,433 ) Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL: For the three months ended September 30 For the nine months ended September 30 (in millions of Canadian dollars) 2017 2016 2017 2016 Amortization of prior service costs (1) $ (1 ) $ (2 ) $ (3 ) $ (5 ) Recognition of net actuarial loss (1) 39 49 116 146 Total before income tax 38 47 113 141 Income tax recovery (10 ) (13 ) (30 ) (39 ) Net of income tax $ 28 $ 34 $ 83 $ 102 (1) |
Gain on Sale of Properties
Gain on Sale of Properties | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Gain on Sale of Properties | Disposition of properties In March 2016, the Company completed the sale of CP’s Arbutus Corridor (the “Arbutus Corridor”) to the City of Vancouver for gross proceeds of $55 million . The agreement allows the Company to share in future proceeds on the eventual development and/or sale of certain parcels of the Arbutus Corridor. The Company recorded a gain on sale of $50 million ( $43 million |
Other Income and Charges
Other Income and Charges | 9 Months Ended |
Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
Other Income and Charges | Other income and charges For the three months ended September 30 For the nine months ended September 30 (in millions of Canadian dollars) 2017 2016 2017 2016 Foreign exchange (gains) losses on long-term d ebt $ (105 ) $ 46 $ (200 ) $ (153 ) Other foreign exchange (gain s) losses (3 ) 2 (5 ) (5 ) Legal settlement — 25 — 25 Insurance recovery of legal settlement — — (10 ) — Charge on hedge roll and de-designation (Note 10) — — 13 — Other 3 (2 ) 8 14 Total other income and charges $ (105 ) $ 71 $ (194 ) $ (119 ) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income taxes For the three months ended September 30 For the nine months ended September 30 (in millions of Canadian dollars) 2017 2016 2017 2016 Current income tax expense $ 93 $ 73 $ 288 $ 177 Deferred income tax expense 77 50 168 233 Income tax expense $ 170 $ 123 $ 456 $ 410 During the three months ended September 30, 2017 , legislation was enacted to increase the Illinois state income tax rate. As a result of this change, the Company recorded a deferred tax expense of $3 million in the third quarter of 2017 related to the revaluation of its deferred income tax balances as at January 1, 2017. During the nine months ended September 30, 2017 , the Company recorded a net deferred tax recovery of $14 million related to the revaluation of its deferred income tax balances as at January 1, 2017. This was due to legislation enacted in the second quarter to decrease the Saskatchewan provincial corporate income tax rate which resulted in a $17 million recovery, partially offset by the $3 million expense described above. The effective tax rates for the three and nine months ended September 30, 2017 , were 24.95% and 24.28% , respectively, compared to 26.23% and 25.26% , respectively, for the same periods in 2016 . The estimated 2017 annual effective tax rate for the three months ended September 30, 2017 , excluding the discrete items of the foreign exchange gain of $105 million on the Company's U.S. dollar-denominated debt and the $3 million tax expense described above, is 26.50% . The estimated 2016 annual effective tax rate for the three months ended September 30, 2016 , excluding the discrete items of the foreign exchange loss of $46 million on the Company's U.S. dollar-denominated debt, and the settlement charge in respect of a corporate legal claim of $25 million , was 25.17% . The estimated 2017 annual effective tax rate for the nine months ended September 30, 2017 , excluding the discrete items of the management transition recovery of $51 million related to the retirement of the Company's Chief Executive Officer, the foreign exchange gain of $200 million on the Company's U.S. dollar-denominated debt, an insurance recovery of $10 million on a legal settlement, the $13 million charge associated with the hedge roll and de-designation and the $14 million net tax recovery due to tax rate changes described above, is 26.50% . The estimated 2016 annual effective tax rate for the nine months ended September 30, 2016 , excluding the discrete items of the foreign exchange gain of $153 million on the Company's U.S. dollar-denominated debt and the settlement charge in respect of a corporate legal claim of $25 million , was 26.50% |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings per share At September 30, 2017 , the number of shares outstanding was 145.0 million ( September 30, 2016 - 146.3 million ). Basic earnings per share have been calculated using net income for the period divided by the weighted-average number of shares outstanding during the period. The number of shares used in earnings per share calculations is reconciled as follows: For the three months ended September 30 For the nine months ended September 30 (in millions) 2017 2016 2017 2016 Weighted-average basic shares outstanding 145.5 147.3 146.2 150.7 Dilutive effect of stock options 0.3 1.0 0.4 0.9 Weighted-average diluted shares outstanding 145.8 148.3 146.6 151.6 For the three and nine months ended September 30, 2017 , there were 255,928 options and 342,595 options, respectively, excluded from the computation of diluted earnings per share because their effects were not dilutive ( three and nine months ended September 30, 2016 - 331,553 and 405,851 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Revolving credit facility Effective June 23, 2017, the Company extended the maturity date by one year on its existing revolving U.S. $2.0 billion credit facility, which includes a U.S. $1.0 billion five-year portion and U.S. $1.0 billion one-year plus one-year term-out portion. The maturity date on the U.S. $1.0 billion one-year plus one-year term-out portion has been extended to June 27, 2019 ; the maturity date on the U.S. $1.0 billion five-year portion was extended to June 28, 2022 . Commercial paper program The Company has a commercial paper program which enables it to issue commercial paper up to a maximum aggregate principal amount of U.S. $1.0 billion in the form of unsecured promissory notes. The commercial paper is backed by the U.S. $1.0 billion one-year plus one-year term-out portion of the revolving credit facility. As at September 30, 2017 and December 31, 2016 , the Company had no commercial paper borrowings. The Company presents issuances and repayments of commercial paper, all of which have a maturity of less than 90 days |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' equity On May 10, 2017, the Company announced a new normal course issuer bid ("bid"), commencing May 15, 2017, to purchase up to 4.38 million Common Shares for cancellation before May 14, 2018 . All purchases are made in accordance with the bid at prevalent market prices plus brokerage fees, or such other prices that may be permitted by the Toronto Stock Exchange, with consideration allocated to share capital up to the average carrying amount of the shares, and any excess allocated to retained earnings. The following table provides activities under the share repurchase program: For the three months ended September 30 For the nine months ended September 30 2017 2016 2017 2016 Number of Common Shares repurchased 1,145,400 1,782,200 1,828,300 6,910,000 Weighted-average price per share (1) $ 196.46 $ 192.10 $ 201.50 $ 175.08 Amount of repurchase (in millions) (1) $ 225 $ 342 $ 368 $ 1,210 (1) |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments | Financial instruments A. Fair values of financial instruments The Company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy established by GAAP that prioritizes those inputs to valuation techniques used to measure fair value based on the degree to which they are observable. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices in active markets for identical assets and liabilities; Level 2 inputs, other than quoted prices included within Level 1, are observable for the asset or liability either directly or indirectly; and Level 3 inputs are not observable in the market. When possible, the estimated fair value is based on quoted market prices and, if not available, estimates from third party brokers. For non-exchange traded derivatives classified in Level 2, the Company uses standard valuation techniques to calculate fair value. Primary inputs to these techniques include observable market prices (interest, foreign exchange ("FX") and commodity) and volatility, depending on the type of derivative and nature of the underlying risk. The Company uses inputs and data used by willing market participants when valuing derivatives and considers its own credit default swap spread as well as those of its counterparties in its determination of fair value. The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt which has a fair value of approximately $9,587 million (December 31, 2016 - $9,981 million ) and a carrying value of $8,133 million (December 31, 2016 - $8,684 million ) as at September 30, 2017 . The estimated fair value of current and long-term borrowings has been determined based on market information where available, or by discounting future payments of interest and principal at estimated interest rates expected to be available to the Company at period end. All derivatives and long-term debt are classified as Level 2. B. Financial risk management Derivative financial instruments Derivative financial instruments may be used to selectively reduce volatility associated with fluctuations in interest rates, FX rates, the price of fuel and stock-based compensation expense. Where derivatives are designated as hedging instruments, the relationship between the hedging instruments and their associated hedged items is documented, as well as the risk management objective and strategy for the use of the hedging instruments. This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the Interim Consolidated Balance Sheets, commitments or forecasted transactions. At the time a derivative contract is entered into, and at least quarterly thereafter, an assessment is made as to whether the derivative item is effective in offsetting the changes in fair value or cash flows of the hedged items. The derivative qualifies for hedge accounting treatment if it is effective in substantially mitigating the risk it was designed to address. It is not the Company’s intent to use financial derivatives or commodity instruments for trading or speculative purposes. FX management The Company conducts business transactions and owns assets in both Canada and the United States. As a result, the Company is exposed to fluctuations in value of financial commitments, assets, liabilities, income or cash flows due to changes in FX rates. The Company may enter into FX risk management transactions primarily to manage fluctuations in the exchange rate between Canadian and U.S. currencies. FX exposure is primarily mitigated through natural offsets created by revenues, expenditures and balance sheet positions incurred in the same currency. Where appropriate, the Company may negotiate with customers and suppliers to reduce the net exposure. Net investment hedge The FX gains and losses on long-term debt are mainly unrealized and can only be realized when U.S. dollar-denominated long-term debt matures or is settled. The Company also has long-term FX exposure on its investment in U.S. affiliates. The majority of the Company’s U.S. dollar-denominated long-term debt has been designated as a hedge of the net investment in foreign subsidiaries. This designation has the effect of mitigating volatility on net income by offsetting long-term FX gains and losses on U.S. dollar-denominated long-term debt and gains and losses on its net investment. The effective portion recognized in “Other comprehensive income” for the three and nine months ended September 30, 2017 was an unrealized FX gain of $180 million and $342 million , respectively ( three and nine months ended September 30, 2016 - an unrealized FX loss of $72 million and an unrealized FX gain of $260 million , respectively). There was no ineffectiveness during the three and nine months ended September 30, 2017 and September 30, 2016 . Interest rate management The Company is exposed to interest rate risk, which is the risk that the fair value or future cash flows of a financial instrument will vary as a result of changes in market interest rates. In order to manage funding needs or capital structure goals, the Company enters into debt or capital lease agreements that are subject to either fixed market interest rates set at the time of issue or floating rates determined by on-going market conditions. Debt subject to variable interest rates exposes the Company to variability in interest expense, while debt subject to fixed interest rates exposes the Company to variability in the fair value of debt. To manage interest rate exposure, the Company accesses diverse sources of financing and manages borrowings in line with a targeted range of capital structure, debt ratings, liquidity needs, maturity schedule, and currency and interest rate profiles. In anticipation of future debt issuances, the Company may enter into forward rate agreements, that are designated as cash flow hedges, to substantially lock in all or a portion of the effective future interest expense. The Company may also enter into swap agreements, designated as fair value hedges, to manage the mix of fixed and floating rate debt. Forward starting swaps As at September 30, 2017 , the Company had forward starting floating-to-fixed interest rate swap agreements (“forward starting swaps”) totaling a notional U.S. $500 million to fix the benchmark rate on cash flows associated with highly probable forecasted issuances of long-term notes. The effective portion of changes in fair value on the forward starting swaps is recorded in “Accumulated other comprehensive loss”, net of tax, as cash flow hedges until the highly probable forecasted notes are issued. Subsequent to the notes issuance, amounts in “Accumulated other comprehensive loss” are reclassified to “Net interest expense”. During the second quarter of 2017 , the Company de-designated the hedging relationship for U.S. $700 million of forward starting swaps. The Company settled a notional U.S. $200 million of forward starting swaps for a cash payment of U.S. $16 million ( $22 million ). The Company rolled the remaining notional U.S. $500 million of forward starting swaps and did not cash settle these swaps. The impact of the U.S. $200 million settlement and U.S. $500 million roll of the forward starting swaps was a charge of $13 million to "Other income and charges" on the Company's Interim Consolidated Statements of Income. Concurrently, the Company re-designated the forward starting swaps totaling U.S. $500 million to fix the benchmark rate on cash flows associated with highly probable forecasted issuances of long-term notes. As at September 30, 2017 , the total fair value loss of $59 million ( December 31, 2016 - fair value loss of $69 million ) derived from the forward starting swaps was included in “Accounts payable and accrued liabilities”. Changes in fair value from the forward starting swaps for the three and nine months ended September 30, 2017 was $ nil and a loss of $12 million , respectively ( three and nine months ended September 30, 2016 - $ nil and a loss of $84 million , respectively). The effective portion for the three and nine months ended September 30, 2017 was $ nil and a loss of $11 million , respectively, ( three and nine months ended September 30, 2016 - $ nil and a loss of $82 million , respectively) and is recorded in “Other comprehensive income”. In addition to the charge on hedge roll and de-designation, for the three and nine months ended September 30, 2017 , an ineffectiveness loss of $ nil and $1 million , respectively ( three and nine months ended September 30, 2016 - $ nil and a loss of $2 million , respectively) is recorded to “Net interest expense”. For the three and nine months ended September 30, 2017 , a loss of $3 million and $8 million , respectively, related to previous forward starting swap hedges have been amortized to “Net interest expense” ( three and nine months ended September 30, 2016 - a loss of $3 million and $8 million , respectively). The Company expects that during the next 12 months $12 million |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-based compensation At September 30, 2017 , the Company had several stock-based compensation plans, including stock option plans, various cash settled liability plans and an employee stock savings plan. These plans resulted in an expense for the three and nine months ended September 30, 2017 of $11 million and $16 million , respectively ( three and nine months ended September 30, 2016 - expense of $31 million and $46 million , respectively). Effective January 31, 2017, Mr. E. Hunter Harrison resigned from all positions held by him at the Company, including as the Company’s Chief Executive Officer and a member of the Board of Directors of the Company. In connection with Mr. Harrison’s resignation, the Company entered into a separation agreement with Mr. Harrison. Under the terms of the separation agreement, the Company has agreed to a limited waiver of Mr. Harrison’s non-competition and non-solicitation obligations. Effective January 31, 2017, pursuant to the separation agreement, Mr. Harrison forfeited certain pension and post-retirement benefits and agreed to the surrender for cancellation of 22,514 performance share units ("PSU"), 68,612 deferred share units ("DSU"), and 752,145 stock options. As a result of this agreement, the Company has recognized a recovery of $51 million in "Compensation and benefits" in the first quarter of 2017. Of this amount, $27 million related to a recovery from cancellation of certain pension benefits. Stock option plan In the nine months ended September 30, 2017 , under CP’s stock option plans, the Company issued 369,980 regular options at the weighted average price of $199.08 per share, based on the closing price on the grant date. Pursuant to the employee plan, these regular options may be exercised upon vesting, which is between 12 months and 60 months after the grant date, and will expire after 7 years . Certain stock options granted in 2017 vest upon the achievement of specific performance criteria. Under the fair value method, the fair value of the stock options at the grant date was approximately $17 million . The weighted average fair value assumptions were approximately: For the nine months ended September 30, 2017 Grant price $199.08 Expected option life (years) (1) 5.48 Risk-free interest rate (2) 1.85% Expected stock price volatility (3) 26.94% Expected annual dividends per share (4) $2.0010 Expected forfeiture rate (5) 6.0% Weighted-average grant date fair value per option granted during the period $45.78 (1) Represents the period of time that awards are expected to be outstanding. Historical data on exercise behaviour, or when available, specific expectations regarding future exercise behaviour, were used to estimate the expected life of the option. (2) Based on the implied yield available on zero-coupon government issues with an equivalent remaining term at the time of the grant. (3) Based on the historical stock price volatility of the Company’s stock over a period commensurate with the expected term of the option. (4) Determined by the current annual dividend at the time of grant. The Company does not employ different dividend yields throughout the contractual term of the option. On May 10, 2017, the Company announced an increase in its quarterly dividend to $0.5625 per share, representing $2.2500 on an annual basis. (5) The Company estimated forfeitures based on past experience. This rate is monitored on a periodic basis. Performance share unit plan In the nine months ended September 30, 2017 , the Company issued 134,991 PSUs with a grant date fair value of approximately $27 million . These units attract dividend equivalents in the form of additional units based on the dividends paid on the Company’s Common Shares. PSUs vest and are settled in cash, or in CP Common Shares, approximately 3 years after the grant date, contingent upon CP’s performance ("performance factor"). Grant recipients who are eligible to retire and have provided six months of service during the performance period are entitled to the full award. The fair value of PSUs is measured periodically until settlement, using a lattice-based valuation model. The performance period for PSUs issued in the nine months ended September 30, 2017 is January 1, 2017 to December 31, 2019. The performance factors for these PSUs are Return on Invested Capital, Total Shareholder Return ("TSR") compared to the S&P/ TSX Capped Industrial Index, and TSR compared to S&P 1500 Road and Rail Index. The performance period for the PSUs issued in 2014 was January 1, 2014 to December 31, 2016. The performance factors for these PSUs were Operating Ratio, Free cash flow, TSR compared to the S&P/TSX 60 index and TSR compared to Class I railways. The resulting payout was 118% of the Company's average share price that was calculated using the last 30 trading days preceding December 31, 2016. In the first quarter of 2017, payouts occurred on the total outstanding awards, including dividends reinvested, totaling $31 million on 133,728 outstanding awards. Deferred share unit plan In the nine months ended September 30, 2017 , the Company granted 20,109 DSUs with a grant date fair value of approximately $4 million . DSUs vest over various periods of up to 48 months |
Pensions and Other Benefits
Pensions and Other Benefits | 9 Months Ended |
Sep. 30, 2017 | |
Retirement Benefits [Abstract] | |
Pensions and Other Benefits | Pension and other benefits In the three and nine months ended September 30, 2017 , the Company made contributions of $11 million and $35 million , respectively ( three and nine months ended September 30, 2016 - $4 million and $38 million , respectively), to its defined benefit pension plans. Net periodic benefit costs for defined benefit pension plans and other benefits recognized in the three and nine months ended September 30, 2017 included the following components: For the three months ended September 30 Pensions Other benefits (in millions of Canadian dollars) 2017 2016 2017 2016 Current service cost (benefits earned by employees in the period) $ 26 $ 26 $ 3 $ 2 Interest cost on benefit obligation 112 117 5 6 Expected return on fund assets (223 ) (211 ) — — Recognized net actuarial loss 38 48 1 1 Amortization of prior service costs (1 ) (2 ) — — Net periodic (recovery) benefit cost $ (48 ) $ (22 ) $ 9 $ 9 For the nine months ended September 30 Pensions Other benefits (in millions of Canadian dollars) 2017 2016 2017 2016 Current service cost (benefits earned by employees in the period) $ 77 $ 79 $ 9 $ 8 Interest cost on benefit obligation 338 350 15 16 Expected return on fund assets (669 ) (634 ) — — Recognized net actuarial loss 114 143 2 3 Amortization of prior service costs (3 ) (5 ) — — Net periodic (recovery) benefit cost $ (143 ) $ (67 ) $ 26 $ 27 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies In the normal course of its operations, the Company becomes involved in various legal actions, including claims relating to injuries and damage to property. The Company maintains provisions it considers to be adequate for such actions. While the final outcome with respect to actions outstanding or pending at September 30, 2017 cannot be predicted with certainty, it is the opinion of management that their resolution will not have a material adverse effect on the Company’s financial position or results of operations. Legal proceedings related to Lac-Mégantic rail accident On July 6, 2013, a train carrying crude oil operated by Montreal Maine and Atlantic Railway (“MMA”) or a subsidiary, Montreal Maine & Atlantic Canada Co. (“MMAC” and collectively the “MMA Group”) derailed and exploded in Lac-Mégantic, Québec. The derailment occurred on a section of railway owned and operated by the MMA Group. The previous day CP had interchanged the train to the MMA Group, and after the interchange, the MMA Group exclusively controlled the train. Following the derailment, Québec's Minister of Sustainable Development, Environment, Wildlife and Parks (the "Minister") ordered the named parties to recover the contaminants and to clean up the derailment site. On August 14, 2013, the Minister added CP as a party (the “Amended Cleanup Order”). CP appealed the Amended Cleanup Order to the Administrative Tribunal of Québec. On July 5, 2016, the Minister served a Notice of Claim for nearly $95 million of compensation spent on cleanup, alleging that CP refused or neglected to undertake the work. On September 6, 2016, CP filed a contestation of the Notice of Claim with the Administrative Tribunal of Québec. In October 2016, CP and the Minister agreed to stay the tribunal proceedings pending the outcome of the Province of Québec's action, set out below. The Court's decision to stay the tribunal proceedings is pending, but de facto, the file has been suspended. Directly related to that matter, on July 6, 2015, the Province of Québec sued CP in Québec Superior Court claiming $409 million in derailment damages, including cleanup costs (the “Province’s Action”). The Province alleges that CP exercised custody or control over the crude oil lading and that CP was otherwise negligent. Therefore, CP is said to be solidarily (joint and severally) liable with third parties responsible for the accident. On September 14, 2017, the Province was granted leave to amend its claim to allege vicarious liability against CP for the acts and omissions of MMAC. While the amendment asserts a new cause of action it does not increase the amount of damages sought and should not, based on CP's understanding of Quebec and Canadian law, increase the risk of a finding of liability against CP. On September 28, 2017, the Province served a further motion for leave to amend its claim to, among other things, add MMAC as a defendant and to reduce its claim for damages to $315 million . This motion will be heard on October 24, 2017 should CP decide to oppose any of the amendments sought. To date, no timetable governing the conduct of this lawsuit has been ordered by the Quebec Superior Court. A class action lawsuit has also been filed in the Québec Superior Court on behalf of persons and entities residing in, owning or leasing property in, operating a business in or physically present in Lac-Mégantic at the time of the derailment (the “Class Action”). That lawsuit seeks derailment damages, including for wrongful death, personal injury, and property harm. On August 16, 2013, CP was added as a defendant. On May 8, 2015, the Québec Superior Court authorized (certified) the Class Action against CP, the shipper - Western Petroleum, and the shipper’s parent - World Fuel Services (collectively, the “World Fuel Entities”). The World Fuel Entities have since settled. On October 24, 2016, the Quebec Superior Court authorized proceedings against two additional defendants in the Class Action, i.e. against MMAC and Mr. Thomas Harding. On December 9, 2016, the Quebec Superior Court granted CP’s motion seeking to confirm the validity of the opt-outs from this Class Action by the estates of the deceased parties following the train derailment who had opted out to allow them to sue in the United States instead (i.e. the wrongful death cases, filed in the United States, which are further discussed hereinafter). Accordingly, at present, all known wrongful death claimants in the class action have opted out and cannot re-join the Class Action. In accordance with the initial case protocol set by the Superior Court on March 27, 2017, CP’s statement of defence was delivered on June 2, 2017. A further case conference was held on July 14, 2017 to review the status of the matter and schedule the next steps in the case protocol. As a result, production of documents, examinations for discovery and the exchange of expert reports by the parties are expected to occur between mid-2017 and the end of 2018. A trial date has yet to be fixed. On September 28, 2017, the Class Action plaintiffs served (i) a motion to consolidate the Class Action with the Province’s Action and the two insurance actions (described below); and (ii) a motion to bifurcate the proceedings into a liability phase (first) and a damages phase (afterwards), if necessary. These motions, together with CP’s motion relating to document production, will be heard on October 24, 2017. On July 4, 2016, eight subrogated insurers served CP with claims of approximately $16 million (the “Promutuel Action”). On July 11, 2016, two additional subrogated insurers served CP with claims of approximately $3 million , (the “Royal Action”). The lawsuits do not identify the parties to which the insurers are subrogated, and therefore the extent of claim overlap and the extent that claims will be satisfied after proof of claim review and distribution from the Plans, referred to below, is difficult to determine at this stage. On September 28, 2017 the Promutuel Action plaintiffs served (i) a motion to consolidate its proceeding with the Class Action, the Province’s Action and the Royal Action; (ii) a motion to bifurcate the proceedings into a liability phase (first) and a damages phase (thereafter), if necessary; and (iii) a motion to amend their claim to add MMAC as a defendant and to reduce the claim for damages to $15 million . On the same date, the Royal Action plaintiffs served a motion to stay their proceeding pending the outcome in the Class Action, the Province’s Action and the Promutuel Action. These motions will be heard on October 24, 2017. In the event the Class Action, the Province’s Action, the Promutuel Action and the Royal Action are consolidated, this procedural step should not increase CP’s exposure to a finding of liability or damages. In the wake of the derailment and ensuing litigation, MMAC filed for bankruptcy in Canada (the “Canadian Proceeding”) and MMA filed for bankruptcy in the United States (the “U.S. Proceeding”). Plans of arrangement have been approved in both the Canadian Proceeding and the U.S. Proceeding (the “Plans”). These Plans provide for the distribution of a fund of approximately $440 million amongst those claiming derailment damages. The Plans also provide settling parties broadly worded third-party releases and injunctions preventing lawsuits against settlement contributors. CP has not settled and therefore will not benefit from those provisions. Both Plans do, however, contain judgment reduction provisions, affording CP a credit for the greater of (i) the settlement monies received by the plaintiff(s), or (ii) the amount, in contribution or indemnity, that CP would have been entitled to charge against third parties other than MMA and MMAC, but for the Plans' releases and injunctions. CP may also have judgment reduction rights, as part of the contribution/indemnification credit, for the fault of the MMA Group. Finally, the Plans provide for a potential re-allocation of the MMA Group’s liability among plaintiffs and CP, the only non-settling party. An Adversary Proceeding filed by the MMA U.S. bankruptcy trustee (now, estate representative) against CP, Irving Oil, and the World Fuel Entities accuses CP of failing to ensure that World Fuel Entities or Irving Oil properly classified the oil lading and of not refusing to ship the misclassified oil as packaged. By that action the estate representative seeks to recover MMA’s going concern value supposedly destroyed by the derailment. The estate representative has since settled with the World Fuel Entities and Irving Oil and now bases CP misfeasance on the railroad’s failure to abide in North Dakota by a Canadian regulation. That regulation supposedly would have caused the railroads to not move the crude oil train because an inaccurate classification was supposedly suspected. In a recently amended complaint, the estate representative named a CP affiliate, Soo Line Railroad Company ("Soo Line"), and asserts that CP and Soo Line breached terms or warranties allegedly contained in the bill of lading. CP’s motion to dismiss this amended complaint was heard on December 20, 2016. On July 7, 2017, the Maine bankruptcy court granted CP’s motion in part (by dismissing the contract claim), and denied CP’s motion in part (by allowing the negligence claim to proceed). CP’s motion for leave to appeal this decision (relating to the negligence claim) was heard on September 28, 2017 and the decision is under reserve. In response to one of CP’s motions to withdraw the Adversary Proceedings bankruptcy reference, the estate representative maintained that Canadian law rather than U.S. law controlled. The Article III court that heard the motion found that if U.S. federal regulations governed, the case was not complex enough to warrant withdrawal. Before the bankruptcy court, CP moved to dismiss for want of personal jurisdiction, but the court denied the motion because CP had participated in the bankruptcy proceedings. Lac-Mégantic residents and wrongful death representatives commenced a class action and a mass action in Texas and wrongful death and personal injury actions in Illinois and Maine. CP removed all of these lawsuits to federal court, and a federal court thereafter consolidated those cases in Maine. These actions generally charge CP with misclassification and mis-packaging (that is, using inappropriate DOT-111 tank cars) negligence. On CP's motion, the Maine court dismissed all wrongful death and personal injury actions on several grounds on September 28, 2016. The plaintiffs’ subsequent motion for reconsideration was denied on January 9, 2017. The plaintiffs filed a notice of appeal on January 19, 2017. CP filed a motion to dismiss the appeal as untimely on April 20, 2017. Plaintiffs filed their response to the motion to dismiss on May 1, 2017. The decision on this motion is pending, and as a result, appellate briefing on the underlying judgment has not yet commenced. If the ruling is upheld on appeal these cases will be litigated, if anywhere, in Canada. As previously mentioned, these plaintiffs had previously opted-out of the Quebec Class Action in order to bring their claims in the United States. CP brought a motion on December 1, 2016 to seek a declaration from the Quebec Superior Court that the plaintiffs who had opted were precluded from opting back into the Quebec Class Action. CP’s motion was successful. Accordingly, if these plaintiffs seek to sue CP, they would have to do so in Quebec in individual actions (they could also join their individual claims in the same individual action). CP received two damage to cargo notices of claims from the shipper of the oil, Western Petroleum. Western Petroleum submitted U.S. and Canadian notices of claims for the same damages and under the Carmack Amendment (49 U.S.C. Section 11706) Western Petroleum seeks to recover for all injuries associated with, and indemnification for, the derailment. Both jurisdictions permit a shipper to recover the value of damaged lading against any carrier in the delivery chain, subject to limitations in the carrier’s tariffs. CP’s tariffs significantly restrict shipper damage claim rights. Western Petroleum is part of the World Fuel Services Entities, and those companies settled with the trustee. In settlements with the estate representative the World Fuel Services Entities and the consignee (Irving Oil) assigned all claims against CP, if any, including Carmack Amendment claims. The estate representative has since designated a trust formed for the benefit of the wrongful death plaintiff to pursue those claims. On April 12, 2016, the Trustee (the “WD Trustee”) for a wrongful death trust (the “WD Trust”), as defined and established under the confirmed Plans, sued CP in North Dakota federal court, asserting Carmack Amendment claims. The WD Trustee maintains that the estate representative assigned Carmack Amendment claims to the WD Trustee. The Plan supposedly gave the estate representative Carmack Amendment assignment rights. The WD Trustee seeks to recover amounts for damaged rail cars (approximately $6 million ) and, the settlement amounts the consignor (i.e, the shipper, the World Fuel Entities) and the consignee (Irving Oil) paid to the bankruptcy estates, alleged to be $110 million and $60 million , respectively. The WD Trustee maintains that Carmack Amendment liability extends beyond lading losses to cover all derailment related damages suffered by the World Fuel Entities or Irving Oil. CP disputes this interpretation of Carmack Amendment exposure and maintains that CP’s tariffs preclude anything except a minimal recovery. CP brought a motion to dismiss the Carmack Amendment claims. On March 24, 2017 the federal court in North Dakota dismissed, with prejudice, these claims. The court determined the claims asserted by the WD Trustee were brought too late. On March 28, 2017, the WD Trustee filed a notice of appeal to the United States Court of Appeals for the Eighth Circuit. On May 19, 2017, the WD Trustee filed his appeal brief. On June 19, 2017, CP filed its responding brief. The appeal is pending and no hearing date has yet been set. At this early stage of the proceedings, any potential responsibility and the quantum of potential losses cannot be determined. Nevertheless, CP denies liability and intends to vigorously defend against all derailment-related proceedings. Environmental liabilities Environmental remediation accruals, recorded on an undiscounted basis unless a reliable, determinable estimate as to an amount and timing of costs can be established, cover site-specific remediation programs. The accruals for environmental remediation represent CP’s best estimate of its probable future obligation and include both asserted and unasserted claims, without reduction for anticipated recoveries from third parties. Although the recorded accruals include CP’s best estimate of all probable costs, CP’s total environmental remediation costs cannot be predicted with certainty. Accruals for environmental remediation may change from time to time as new information about previously untested sites becomes known, and as environmental laws and regulations evolve and advances are made in environmental remediation technology. The accruals may also vary as the courts decide legal proceedings against outside parties responsible for contamination. These potential charges, which cannot be quantified at this time, may materially affect income in the particular period in which a charge is recognized. Costs related to existing, but as yet unknown, or future contamination will be accrued in the period in which they become probable and reasonably estimable. The expense included in “Purchased services and other” for the three and nine months ended September 30, 2017 was $1 million and $3 million , respectively ( three and nine months ended September 30, 2016 - $1 million and $3 million , respectively). Provisions for environmental remediation costs are recorded in “Other long-term liabilities”, except for the current portion which is recorded in “Accounts payable and accrued liabilities”. The total amount provided at September 30, 2017 was $79 million ( December 31, 2016 - $85 million ). Payments are expected to be made over 10 years |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Consolidating Financial Information | Canadian Pacific Railway Company, a 100%-owned subsidiary of Canadian Pacific Railway Limited (“CPRL”), is the issuer of certain debt securities, which are fully and unconditionally guaranteed by CPRL. The following tables present condensed consolidating financial information (“CCFI”) in accordance with Rule 3-10(c) of Regulation S-X. Investments in subsidiaries are accounted for under the equity method when presenting the CCFI. For the three months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 1,092 $ 455 $ — $ 1,547 Non-freight — 38 90 (80 ) 48 Total revenues — 1,130 545 (80 ) 1,595 Operating expenses Compensation and benefits — 149 104 3 256 Fuel — 116 34 — 150 Materials — 33 11 1 45 Equipment rents — 35 — — 35 Depreciation and amortization — 108 54 — 162 Purchased services and other — 195 146 (84 ) 257 Total operating expenses — 636 349 (80 ) 905 Operating income — 494 196 — 690 Less: Other income and charges (10 ) (100 ) 5 — (105 ) Net interest (income) expense (2 ) 126 (9 ) — 115 Income before income tax expense and equity in net earnings of subsidiaries 12 468 200 — 680 Less: Income tax expense 7 99 64 — 170 Add: Equity in net earnings of subsidiaries 505 136 — (641 ) — Net income $ 510 $ 505 $ 136 $ (641 ) $ 510 For the three months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 1,078 $ 432 $ — $ 1,510 Non-freight — 35 95 (86 ) 44 Total revenues — 1,113 527 (86 ) 1,554 Operating expenses Compensation and benefits — 181 111 2 294 Fuel — 111 27 — 138 Materials — 30 6 3 39 Equipment rents — 48 (5 ) — 43 Depreciation and amortization — 102 53 — 155 Purchased services and other — 170 149 (91 ) 228 Total operating expenses — 642 341 (86 ) 897 Operating income — 471 186 — 657 Less: Other income and charges 12 61 (2 ) — 71 Net interest (income) expense (9 ) 131 (6 ) — 116 (Loss) income before income tax expense and equity in net earnings of subsidiaries (3 ) 279 194 — 470 Less: Income tax expense 9 73 41 — 123 Add: Equity in net earnings of subsidiaries 359 153 — (512 ) — Net income $ 347 $ 359 $ 153 $ (512 ) $ 347 For the nine months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 3,310 $ 1,398 $ — $ 4,708 Non-freight — 104 278 (249 ) 133 Total revenues — 3,414 1,676 (249 ) 4,841 Operating expenses Compensation and benefits — 438 323 5 766 Fuel — 370 110 — 480 Materials — 101 28 13 142 Equipment rents — 110 (2 ) — 108 Depreciation and amortization — 325 168 — 493 Purchased services and other — 613 466 (267 ) 812 Total operating expenses — 1,957 1,093 (249 ) 2,801 Operating income — 1,457 583 — 2,040 Less: Other income and charges (35 ) (166 ) 7 — (194 ) Net interest (income) expense (9 ) 390 (24 ) — 357 Income before income tax expense and equity in net earnings of subsidiaries 44 1,233 600 — 1,877 Less: Income tax expense 9 259 188 — 456 Add: Equity in net earnings of subsidiaries 1,386 412 — (1,798 ) — Net income $ 1,421 $ 1,386 $ 412 $ (1,798 ) $ 1,421 For the nine months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 3,182 $ 1,282 $ — $ 4,464 Non-freight — 101 289 (259 ) 131 Total revenues — 3,283 1,571 (259 ) 4,595 Operating expenses Compensation and benefits — 563 339 5 907 Fuel — 317 77 — 394 Materials — 95 24 14 133 Equipment rents — 155 (23 ) — 132 Depreciation and amortization — 316 162 — 478 Purchased services and other — 499 469 (278 ) 690 Total operating expenses — 1,945 1,048 (259 ) 2,734 Operating income — 1,338 523 — 1,861 Less: Other income and charges (61 ) (89 ) 31 — (119 ) Net interest expense (income) — 373 (18 ) — 355 Income before income tax expense and equity in net earnings of subsidiaries 61 1,054 510 — 1,625 Less: Income tax expense 12 254 144 — 410 Add: Equity in net earnings of subsidiaries 1,166 366 — (1,532 ) — Net income $ 1,215 $ 1,166 $ 366 $ (1,532 ) $ 1,215 For the three months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 510 $ 505 $ 136 $ (641 ) $ 510 Net gain (loss) in foreign currency translation adjustments, net of hedging activities — 180 (161 ) — 19 Change in derivatives designated as cash flow — 2 — — 2 Change in pension and post-retirement defined — 36 2 — 38 Other comprehensive income (loss) before income taxes — 218 (159 ) — 59 Income tax expense on above items — (34 ) — — (34 ) Equity accounted investments 25 (159 ) — 134 — Other comprehensive income (loss) 25 25 (159 ) 134 25 Comprehensive income (loss) $ 535 $ 530 $ (23 ) $ (507 ) $ 535 For the three months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 347 $ 359 $ 153 $ (512 ) $ 347 Net (loss) gain in foreign currency translation adjustments, net of hedging activities — (70 ) 63 — (7 ) Change in derivatives designated as cash flow — 1 — — 1 Change in pension and post-retirement defined benefit plans — 45 2 — 47 Other comprehensive (loss) income before income taxes — (24 ) 65 — 41 Income tax expense on above items — (3 ) — — (3 ) Equity accounted investments 38 65 — (103 ) — Other comprehensive income 38 38 65 (103 ) 38 Comprehensive income $ 385 $ 397 $ 218 $ (615 ) $ 385 For the nine months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 1,421 $ 1,386 $ 412 $ (1,798 ) $ 1,421 Net gain (loss) in foreign currency translation adjustments, net of hedging activities — 342 (304 ) — 38 Change in derivatives designated as cash flow — 11 — — 11 Change in pension and post-retirement defined — 108 5 — 113 Other comprehensive income (loss) before income taxes — 461 (299 ) — 162 Income tax expense on above items — (77 ) (1 ) — (78 ) Equity accounted investments 84 (300 ) — 216 — Other comprehensive income (loss) 84 84 (300 ) 216 84 Comprehensive income $ 1,505 $ 1,470 $ 112 $ (1,582 ) $ 1,505 For the nine months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 1,215 $ 1,166 $ 366 $ (1,532 ) $ 1,215 Net gain (loss) in foreign currency translation adjustments, net of hedging activities — 260 (227 ) — 33 Change in derivatives designated as cash flow — (75 ) — — (75 ) Change in pension and post-retirement defined benefit plans — 131 6 — 137 Other comprehensive income (loss) before income taxes — 316 (221 ) — 95 Income tax expense on above items — (49 ) (2 ) — (51 ) Equity accounted investments 44 (223 ) — 179 — Other comprehensive income (loss) 44 44 (223 ) 179 44 Comprehensive income $ 1,259 $ 1,210 $ 143 $ (1,353 ) $ 1,259 As at September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Assets Current assets Cash and cash equivalents $ — $ 78 $ 64 $ — $ 142 Accounts receivable, net — 464 164 — 628 Accounts receivable, inter-company 101 139 185 (425 ) — Short-term advances to affiliates 500 560 4,869 (5,929 ) — Materials and supplies — 124 33 — 157 Other current assets — 40 25 — 65 601 1,405 5,340 (6,354 ) 992 Long-term advances to affiliates 591 — 410 (1,001 ) — Investments — 43 142 — 185 Investments in subsidiaries 9,746 11,201 — (20,947 ) — Properties — 8,979 7,721 — 16,700 Goodwill and intangible assets — — 187 — 187 Pension asset — 1,356 — — 1,356 Other assets — 51 8 — 59 Deferred income taxes 3 — — (3 ) — Total assets $ 10,941 $ 23,035 $ 13,808 $ (28,305 ) $ 19,479 Liabilities and shareholders’ equity Current liabilities Accounts payable and accrued liabilities $ 82 $ 745 $ 312 $ — $ 1,139 Accounts payable, inter-company 15 282 128 (425 ) — Short-term advances from affiliates 5,279 640 10 (5,929 ) — Long-term debt maturing within one year — 749 — — 749 5,376 2,416 450 (6,354 ) 1,888 Pension and other benefit liabilities — 657 69 — 726 Long-term advances from affiliates — 1,001 — (1,001 ) — Other long-term liabilities — 104 117 — 221 Long-term debt — 7,334 50 — 7,384 Deferred income taxes — 1,777 1,921 (3 ) 3,695 Total liabilities 5,376 13,289 2,607 (7,358 ) 13,914 Shareholders’ equity Share capital 2,025 1,036 6,862 (7,898 ) 2,025 Additional paid-in capital 42 1,641 268 (1,909 ) 42 Accumulated other comprehensive (loss) income (1,715 ) (1,716 ) 411 1,305 (1,715 ) Retained earnings 5,213 8,785 3,660 (12,445 ) 5,213 5,565 9,746 11,201 (20,947 ) 5,565 Total liabilities and shareholders’ equity $ 10,941 $ 23,035 $ 13,808 $ (28,305 ) $ 19,479 As at December 31, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Assets Current assets Cash and cash equivalents $ — $ 100 $ 64 $ — $ 164 Accounts receivable, net — 435 156 — 591 Accounts receivable, inter-company 90 113 206 (409 ) — Short-term advances to affiliates 500 692 4,035 (5,227 ) — Materials and supplies — 150 34 — 184 Other current assets — 38 32 — 70 590 1,528 4,527 (5,636 ) 1,009 Long-term advances to affiliates 1 — 91 (92 ) — Investments — 47 147 — 194 Investments in subsidiaries 8,513 10,249 — (18,762 ) — Properties — 8,756 7,933 — 16,689 Goodwill and intangible assets — — 202 — 202 Pension asset — 1,070 — — 1,070 Other assets 1 48 8 — 57 Deferred income taxes 11 — — (11 ) — Total assets $ 9,116 $ 21,698 $ 12,908 $ (24,501 ) $ 19,221 Liabilities and shareholders’ equity Current liabilities Accounts payable and accrued liabilities $ 73 $ 945 $ 304 $ — $ 1,322 Accounts payable, inter-company 14 292 103 (409 ) — Short-term advances from affiliates 4,403 816 8 (5,227 ) — Long-term debt maturing within one year — 25 — — 25 4,490 2,078 415 (5,636 ) 1,347 Pension and other benefit liabilities — 658 76 — 734 Long-term advances from affiliates — 92 — (92 ) — Other long-term liabilities — 152 132 — 284 Long-term debt — 8,605 54 — 8,659 Deferred income taxes — 1,600 1,982 (11 ) 3,571 Total liabilities 4,490 13,185 2,659 (5,739 ) 14,595 Shareholders’ equity Share capital 2,002 1,037 5,823 (6,860 ) 2,002 Additional paid-in capital 52 1,638 298 (1,936 ) 52 Accumulated other comprehensive (loss) income (1,799 ) (1,799 ) 712 1,087 (1,799 ) Retained earnings 4,371 7,637 3,416 (11,053 ) 4,371 4,626 8,513 10,249 (18,762 ) 4,626 Total liabilities and shareholders’ equity $ 9,116 $ 21,698 $ 12,908 $ (24,501 ) $ 19,221 For the three months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 98 $ 322 $ 213 $ (106 ) $ 527 Investing activities Additions to properties — (193 ) (126 ) — (319 ) Proceeds from sale of properties and other assets — 11 2 — 13 Advances to affiliates — — (50 ) 50 — Repayment of advances to affiliates 159 1 — (160 ) — Capital contributions to affiliates — (26 ) — 26 — Repurchase of share capital from affiliates — 32 — (32 ) — Cash provided by (used in) invest ing activities 159 (175 ) (174 ) (116 ) (306 ) Financing activities Dividends paid (83 ) (83 ) (23 ) 106 (83 ) Return of share capital to affiliates — — (32 ) 32 — Issuance of share capital — — 26 (26 ) — Issuance of CP Common Shares 2 — — — 2 Purchase of CP Common Shares (226 ) — — — (226 ) Repayment of long-term debt, excluding commercial paper — (3 ) — — (3 ) Advances from affiliates 50 — — (50 ) — Repayment of advances from affiliates — (159 ) (1 ) 160 — Cash used in financing activities (257 ) (245 ) (30 ) 222 (310 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — (2 ) (5 ) — (7 ) Cash position (Decrease) increase in cash and cash equivalents — (100 ) 4 — (96 ) Cash and cash equivalents at beginning of period — 178 60 — 238 Cash and cash equivalents at end of period $ — $ 78 $ 64 $ — $ 142 For the three months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 84 $ 406 $ 229 $ (128 ) $ 591 Investing activities Additions to properties — (238 ) (56 ) — (294 ) Proceeds from sale of properties and other assets — 6 10 — 16 Advances to affiliates — (275 ) (123 ) 398 — Repayment of advances to affiliates — 14 — (14 ) — Capital contributions to affiliates — (46 ) — 46 — Cash used in investing activities — (539 ) (169 ) 430 (278 ) Financing activities Dividends paid (75 ) (75 ) (53 ) 128 (75 ) Issuance of share capital — — 46 (46 ) — Issuance of CP Common Shares 5 — — — 5 Purchase of CP Common Shares (412 ) — — — (412 ) Repayment of long-term debt, excluding commercial paper — (5 ) (7 ) — (12 ) Net issuance of commercial paper — 190 — — 190 Advances from affiliates 398 — — (398 ) — Repayment of advances from affiliates — — (14 ) 14 — Cash (used in) provided by financing activities (84 ) 110 (28 ) (302 ) (304 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — — 2 — 2 Cash position (Decrease) increase in cash and cash equivalents — (23 ) 34 — 11 Cash and cash equivalents at beginning of period — 47 45 — 92 Cash and cash equivalents at end of period $ — $ 24 $ 79 $ — $ 103 For the nine months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 256 $ 875 $ 716 $ (398 ) $ 1,449 Investing activities Additions to properties — (494 ) (401 ) — (895 ) Proceeds from sale of properties and other assets — 17 12 — 29 Advances to affiliates (1,079 ) (550 ) (1,157 ) 2,786 — Capital contributions to affiliates — (1,039 ) — 1,039 — Repurchase of share capital from affiliates — 32 — (32 ) — Other — 6 (1 ) — 5 Cash used in investing activities (1,079 ) (2,028 ) (1,547 ) 3,793 (861 ) Financing activities Dividends paid (229 ) (229 ) (169 ) 398 (229 ) Return of share capital to affiliates — — (32 ) 32 — Issuance of share capital — — 1,039 (1,039 ) — Issuance of CP Common Shares 39 — — — 39 Purchase of CP Common Shares (368 ) — — — (368 ) Repayment of long-term debt, excluding commercial paper — (17 ) — — (17 ) Advances from affiliates 1,381 1,405 — (2,786 ) — Settlement of forward starting swaps — (22 ) — — (22 ) Cash provided by financing activities 823 1,137 838 (3,395 ) (597 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — (6 ) (7 ) — (13 ) Cash position Decrease in cash and cash equivalents — (22 ) — — (22 ) Cash and cash equivalents at beginning of period — 100 64 — 164 Cash and cash equivalents at end of period $ — $ 78 $ 64 $ — $ 142 For the nine months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 182 $ 831 $ 646 $ (338 ) $ 1,321 Investing activities Additions to properties — (576 ) (326 ) — (902 ) Proceeds from sale of properties and other assets — 74 13 — 87 Advances to affiliates — (792 ) (408 ) 1,200 — Repayment of advances to affiliates — 222 — (222 ) — Capital contributions to affiliates — (403 ) — 403 — Repurchase of share capital from affiliates — 6 — (6 ) — Other — — (2 ) — (2 ) Cash used in investing activities — (1,469 ) (723 ) 1,375 (817 ) Financing activities Dividends paid (182 ) (182 ) (156 ) 338 (182 ) Return of share capital to affiliates — — (6 ) 6 — Issuance of share capital — — 403 (403 ) — Issuance of CP Common Shares 14 — — — 14 Purchase of CP Common Shares (1,200 ) — — — (1,200 ) Repayment of long-term debt, excluding commercial paper — (16 ) (14 ) — (30 ) Net issuance of commercial paper — 366 — — 366 Advances from affiliates 1,186 — 14 (1,200 ) — Repayment of advances from affiliates — — (222 ) 222 — Other — (3 ) — — (3 ) Cash (used in) provided by financing activities (182 ) 165 19 (1,037 ) (1,035 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — (5 ) (11 ) — (16 ) Cash position Decrease in cash and cash equivalents — (478 ) (69 ) — (547 ) Cash and cash equivalents at beginning of period — 502 148 — 650 Cash and cash equivalents at end of period $ — $ 24 $ 79 $ — $ 103 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited (“CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2016 annual consolidated financial statements and notes included in CP's 2016 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2016 annual consolidated financial statements, except for the newly adopted accounting policies discussed in Note 2. CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons. |
Accounting Changes Accounting C
Accounting Changes Accounting Changes (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Accounting Changes | Implemented in 2017 Compensation - Stock Compensation In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-based Payment Accounting, under FASB Accounting Standards Codification ("ASC") Topic 718. The amendments clarify the guidance relating to treatment of excess tax benefits and deficiencies, acceptable forfeiture rate policies, and treatment of cash paid by an employer when directly withholding shares for tax-withholding purposes and the requirement to treat such cash flows as a financing activity. As a result of this ASU, excess tax benefits are no longer recorded in additional paid-in capital and instead are applied against taxes payable or recognized in the interim consolidated statement of income. This ASU was effective for CP beginning on January 1, 2017. The Company has determined that there were no significant changes to disclosure or financial statement presentation and changes in accounting for excess tax benefits and deficiencies were not material as a result of adoption. Simplifying the Measurement of Inventory In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory under FASB ASC Topic 330. The amendments require that reporting entities measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments apply to inventory that is measured using the first-in, first-out or average cost basis. This ASU was effective for CP beginning on January 1, 2017 and was applied prospectively. The Company determined there were no changes to disclosure, financial statement presentation, or valuation of inventory as a result of adoption. Future changes Leases In February 2016, the FASB issued ASU 2016-02, Leases under FASB ASC Topic 842 which will supersede the lease recognition and measurement requirements in Topic 840 Leases. This new standard requires recognition of right-of-use assets and lease liabilities by lessees for those leases classified as finance and operating leases with a maximum term exceeding 12 months. For CP this new standard will be effective for interim and annual periods commencing January 1, 2019. Entities are required to use a modified retrospective approach to adopt this new standard meaning there will be no impact to the consolidated statements of income; however, the comparative consolidated balance sheet will be adjusted to reflect the provisions of this standard. The Company has a detailed plan to implement the new standard and is assessing contractual arrangements, through a cross functional team, that may qualify as leases under the new standard. CP is also working with a vendor to implement a lease management system which will assist in delivering the required accounting changes. During the third quarter, CP's cross functional team and the vendor finalized system requirements and developed work flows and testing scenarios that will permit system implementation and parallel testing in 2018 for CP's lease system solution. The impact of the new standard will be a material increase to right of use assets and lease liabilities on the consolidated balance sheet, primarily, as a result of operating leases currently not recognized on the balance sheet. The Company does not anticipate a material impact to the consolidated statement of income and is currently evaluating the impact adoption of this new standard will have on disclosure. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers under FASB ASC Topic 606. In March 2016, the FASB issued amendment ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations as an update under FASB ASC Topic 606. The amendments clarify the principal versus agent guidance in determining whether to recognize revenue on a gross or net basis. The guidance in Topic 606, as amended, will be effective for CP for interim and annual periods commencing January 1, 2018, and CP has the option of adopting the new standard by using either a full retrospective or a modified retrospective approach. CP has decided to adopt this new standard using a modified retrospective approach. CP has analyzed contracts for a significant proportion of the Company’s annual rail freight revenue, which represents greater than 95% of CP’s annual revenues, and has concluded that recognizing these revenues over time as rail freight services are performed continues to be appropriate. CP continues to perform detailed reviews of a variety of specific contractual terms. These include assessing potential additional performance obligations, certain arrangements in the context of the new guidance on principal versus agent, contract origination and fulfillment costs, variable compensation and an assessment of required new disclosures. At this time CP does not expect a material change to revenue recognition from adopting this standard. Intangibles - Goodwill and Other In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment under FASB ASC Topic 350. This is intended to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The amendments are effective for CP beginning on January 1, 2020. Entities are required to apply the amendments in this update prospectively from the date of adoption. The Company does not anticipate that the adoption of this ASU will impact CP's financial statements as there is a sufficient excess between the fair value and carrying value of CP's goodwill. Furthermore CP expects to continue to apply the Step 0 qualitative assessment when testing for goodwill impairment. Compensation - Retirement Benefits In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost under FASB ASC Topic 715. The amendments clarify presentation requirements for net periodic pension cost and net periodic post-retirement benefit cost and require that an employer report the current service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the consolidated statement of income separately from the current service cost component and outside a subtotal of income from operations if one is presented. The amendments also restrict capitalization to the current service cost component when applicable. The amendments are effective for CP beginning on January 1, 2018. The amendments related to presentation are required to be applied retrospectively and the restrictions on capitalization of the current service cost component are applicable prospectively on the date of adoption. The impacts of the reclassification are detailed as follows: For the three months ended September 30 For the nine months ended September 30 Year ended December 31 (1) (in millions of Canadian dollars) 2017 2016 2017 2016 2017 2016 Decrease in operating income $ 68 $ 41 $ 203 $ 127 $ 272 $ 167 (1) December 31, 2017 figure is an estimate. There will be no change to net income or earnings per share as a result of adoption of this new standard. The new guidance restricting capitalization of pensions to the current service cost component of net periodic benefit cost will have no impact to operating income or amounts capitalized because the Company currently only capitalizes an appropriate portion of current service cost for self-constructed properties. CP is currently assessing the disclosure requirements of this ASU. Derivatives and Hedging |
Accounting Changes Accounting23
Accounting Changes Accounting Changes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Reclassification Impacts of ASU 2017-07 | The impacts of the reclassification are detailed as follows: For the three months ended September 30 For the nine months ended September 30 Year ended December 31 (1) (in millions of Canadian dollars) 2017 2016 2017 2016 2017 2016 Decrease in operating income $ 68 $ 41 $ 203 $ 127 $ 272 $ 167 (1) |
Changes in Accumulated Other 24
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Changes in Accumulated Other Comprehensive Loss (AOCL) by Component | For the three months ended Septemb er 30 (in millions of Canadian dollars, net of tax) Foreign currency Derivatives and other Pension and post-retirement defined benefit plans Total Opening balance, July 1, 2017 $ 124 $ (97 ) $ (1,767 ) $ (1,740 ) Other comprehensive loss before reclassifications (5 ) — — (5 ) Amounts reclassified from accumulated other comprehensive loss — 2 28 30 Net current-period other comprehensive (loss) income (5 ) 2 28 25 Closing balance, September 30, 2017 $ 119 $ (95 ) $ (1,739 ) $ (1,715 ) Opening balance, July 1, 2016 $ 124 $ (157 ) $ (1,438 ) $ (1,471 ) Other comprehensive income (loss) before reclassifications 2 (1 ) 1 2 Amounts reclassified from accumulated other comprehensive loss — 2 34 36 Net current-period other comprehensive income 2 1 35 38 Closing balance, September 30, 2016 $ 126 $ (156 ) $ (1,403 ) $ (1,433 ) For the nine months ended Septem ber 30 (in millions of Canadian dollars, net of tax) Foreign currency Derivatives and other Pension and post-retirement defined benefit plans Total Opening balance, January 1, 2017 $ 127 $ (104 ) $ (1,822 ) $ (1,799 ) Other comprehensive loss before reclassifications (8 ) (7 ) — (15 ) Amounts reclassified from accumulated other comprehensive loss — 16 83 99 Net current-period other comprehensive (loss) income (8 ) 9 83 84 Closing balance, September 30, 2017 $ 119 $ (95 ) $ (1,739 ) $ (1,715 ) Opening balance, January 1, 2016 $ 129 $ (102 ) $ (1,504 ) $ (1,477 ) Other comprehensive loss before reclassifications (3 ) (60 ) (1 ) (64 ) Amounts reclassified from accumulated other comprehensive loss — 6 102 108 Net current-period other comprehensive (loss) income (3 ) (54 ) 101 44 Closing balance, September 30, 2016 $ 126 $ (156 ) $ (1,403 ) $ (1,433 ) |
Amounts in Pension and Post-retirement Defined Benefit Plans Reclassified from AOCL | Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL: For the three months ended September 30 For the nine months ended September 30 (in millions of Canadian dollars) 2017 2016 2017 2016 Amortization of prior service costs (1) $ (1 ) $ (2 ) $ (3 ) $ (5 ) Recognition of net actuarial loss (1) 39 49 116 146 Total before income tax 38 47 113 141 Income tax recovery (10 ) (13 ) (30 ) (39 ) Net of income tax $ 28 $ 34 $ 83 $ 102 (1) |
Other Income and Charges (Table
Other Income and Charges (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
Other Income and Charges | For the three months ended September 30 For the nine months ended September 30 (in millions of Canadian dollars) 2017 2016 2017 2016 Foreign exchange (gains) losses on long-term d ebt $ (105 ) $ 46 $ (200 ) $ (153 ) Other foreign exchange (gain s) losses (3 ) 2 (5 ) (5 ) Legal settlement — 25 — 25 Insurance recovery of legal settlement — — (10 ) — Charge on hedge roll and de-designation (Note 10) — — 13 — Other 3 (2 ) 8 14 Total other income and charges $ (105 ) $ 71 $ (194 ) $ (119 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Expense | For the three months ended September 30 For the nine months ended September 30 (in millions of Canadian dollars) 2017 2016 2017 2016 Current income tax expense $ 93 $ 73 $ 288 $ 177 Deferred income tax expense 77 50 168 233 Income tax expense $ 170 $ 123 $ 456 $ 410 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Number of Shares Used In the Earnings Per Share Calculations | The number of shares used in earnings per share calculations is reconciled as follows: For the three months ended September 30 For the nine months ended September 30 (in millions) 2017 2016 2017 2016 Weighted-average basic shares outstanding 145.5 147.3 146.2 150.7 Dilutive effect of stock options 0.3 1.0 0.4 0.9 Weighted-average diluted shares outstanding 145.8 148.3 146.6 151.6 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Activities Under Share Repurchase Program | The following table provides activities under the share repurchase program: For the three months ended September 30 For the nine months ended September 30 2017 2016 2017 2016 Number of Common Shares repurchased 1,145,400 1,782,200 1,828,300 6,910,000 Weighted-average price per share (1) $ 196.46 $ 192.10 $ 201.50 $ 175.08 Amount of repurchase (in millions) (1) $ 225 $ 342 $ 368 $ 1,210 (1) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Weighted-Average Fair Value Assumptions | The weighted average fair value assumptions were approximately: For the nine months ended September 30, 2017 Grant price $199.08 Expected option life (years) (1) 5.48 Risk-free interest rate (2) 1.85% Expected stock price volatility (3) 26.94% Expected annual dividends per share (4) $2.0010 Expected forfeiture rate (5) 6.0% Weighted-average grant date fair value per option granted during the period $45.78 (1) Represents the period of time that awards are expected to be outstanding. Historical data on exercise behaviour, or when available, specific expectations regarding future exercise behaviour, were used to estimate the expected life of the option. (2) Based on the implied yield available on zero-coupon government issues with an equivalent remaining term at the time of the grant. (3) Based on the historical stock price volatility of the Company’s stock over a period commensurate with the expected term of the option. (4) Determined by the current annual dividend at the time of grant. The Company does not employ different dividend yields throughout the contractual term of the option. On May 10, 2017, the Company announced an increase in its quarterly dividend to $0.5625 per share, representing $2.2500 on an annual basis. (5) |
Pensions and Other Benefits (Ta
Pensions and Other Benefits (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Retirement Benefits [Abstract] | |
Net Periodic Benefit Cost for Defined Benefit Pension Plans and Other Benefits | Net periodic benefit costs for defined benefit pension plans and other benefits recognized in the three and nine months ended September 30, 2017 included the following components: For the three months ended September 30 Pensions Other benefits (in millions of Canadian dollars) 2017 2016 2017 2016 Current service cost (benefits earned by employees in the period) $ 26 $ 26 $ 3 $ 2 Interest cost on benefit obligation 112 117 5 6 Expected return on fund assets (223 ) (211 ) — — Recognized net actuarial loss 38 48 1 1 Amortization of prior service costs (1 ) (2 ) — — Net periodic (recovery) benefit cost $ (48 ) $ (22 ) $ 9 $ 9 For the nine months ended September 30 Pensions Other benefits (in millions of Canadian dollars) 2017 2016 2017 2016 Current service cost (benefits earned by employees in the period) $ 77 $ 79 $ 9 $ 8 Interest cost on benefit obligation 338 350 15 16 Expected return on fund assets (669 ) (634 ) — — Recognized net actuarial loss 114 143 2 3 Amortization of prior service costs (3 ) (5 ) — — Net periodic (recovery) benefit cost $ (143 ) $ (67 ) $ 26 $ 27 |
Condensed Consolidating Finan31
Condensed Consolidating Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Condensed Consolidating Statements of Income | Interim Condensed Consolidating Statements of Income For the three months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 1,092 $ 455 $ — $ 1,547 Non-freight — 38 90 (80 ) 48 Total revenues — 1,130 545 (80 ) 1,595 Operating expenses Compensation and benefits — 149 104 3 256 Fuel — 116 34 — 150 Materials — 33 11 1 45 Equipment rents — 35 — — 35 Depreciation and amortization — 108 54 — 162 Purchased services and other — 195 146 (84 ) 257 Total operating expenses — 636 349 (80 ) 905 Operating income — 494 196 — 690 Less: Other income and charges (10 ) (100 ) 5 — (105 ) Net interest (income) expense (2 ) 126 (9 ) — 115 Income before income tax expense and equity in net earnings of subsidiaries 12 468 200 — 680 Less: Income tax expense 7 99 64 — 170 Add: Equity in net earnings of subsidiaries 505 136 — (641 ) — Net income $ 510 $ 505 $ 136 $ (641 ) $ 510 For the three months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 1,078 $ 432 $ — $ 1,510 Non-freight — 35 95 (86 ) 44 Total revenues — 1,113 527 (86 ) 1,554 Operating expenses Compensation and benefits — 181 111 2 294 Fuel — 111 27 — 138 Materials — 30 6 3 39 Equipment rents — 48 (5 ) — 43 Depreciation and amortization — 102 53 — 155 Purchased services and other — 170 149 (91 ) 228 Total operating expenses — 642 341 (86 ) 897 Operating income — 471 186 — 657 Less: Other income and charges 12 61 (2 ) — 71 Net interest (income) expense (9 ) 131 (6 ) — 116 (Loss) income before income tax expense and equity in net earnings of subsidiaries (3 ) 279 194 — 470 Less: Income tax expense 9 73 41 — 123 Add: Equity in net earnings of subsidiaries 359 153 — (512 ) — Net income $ 347 $ 359 $ 153 $ (512 ) $ 347 For the nine months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 3,310 $ 1,398 $ — $ 4,708 Non-freight — 104 278 (249 ) 133 Total revenues — 3,414 1,676 (249 ) 4,841 Operating expenses Compensation and benefits — 438 323 5 766 Fuel — 370 110 — 480 Materials — 101 28 13 142 Equipment rents — 110 (2 ) — 108 Depreciation and amortization — 325 168 — 493 Purchased services and other — 613 466 (267 ) 812 Total operating expenses — 1,957 1,093 (249 ) 2,801 Operating income — 1,457 583 — 2,040 Less: Other income and charges (35 ) (166 ) 7 — (194 ) Net interest (income) expense (9 ) 390 (24 ) — 357 Income before income tax expense and equity in net earnings of subsidiaries 44 1,233 600 — 1,877 Less: Income tax expense 9 259 188 — 456 Add: Equity in net earnings of subsidiaries 1,386 412 — (1,798 ) — Net income $ 1,421 $ 1,386 $ 412 $ (1,798 ) $ 1,421 For the nine months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 3,182 $ 1,282 $ — $ 4,464 Non-freight — 101 289 (259 ) 131 Total revenues — 3,283 1,571 (259 ) 4,595 Operating expenses Compensation and benefits — 563 339 5 907 Fuel — 317 77 — 394 Materials — 95 24 14 133 Equipment rents — 155 (23 ) — 132 Depreciation and amortization — 316 162 — 478 Purchased services and other — 499 469 (278 ) 690 Total operating expenses — 1,945 1,048 (259 ) 2,734 Operating income — 1,338 523 — 1,861 Less: Other income and charges (61 ) (89 ) 31 — (119 ) Net interest expense (income) — 373 (18 ) — 355 Income before income tax expense and equity in net earnings of subsidiaries 61 1,054 510 — 1,625 Less: Income tax expense 12 254 144 — 410 Add: Equity in net earnings of subsidiaries 1,166 366 — (1,532 ) — Net income $ 1,215 $ 1,166 $ 366 $ (1,532 ) $ 1,215 |
Interim Condensed Consolidating Statements of Comprehensive Income | Interim Condensed Consolidating Statements of Comprehensive Income For the three months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 510 $ 505 $ 136 $ (641 ) $ 510 Net gain (loss) in foreign currency translation adjustments, net of hedging activities — 180 (161 ) — 19 Change in derivatives designated as cash flow — 2 — — 2 Change in pension and post-retirement defined — 36 2 — 38 Other comprehensive income (loss) before income taxes — 218 (159 ) — 59 Income tax expense on above items — (34 ) — — (34 ) Equity accounted investments 25 (159 ) — 134 — Other comprehensive income (loss) 25 25 (159 ) 134 25 Comprehensive income (loss) $ 535 $ 530 $ (23 ) $ (507 ) $ 535 For the three months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 347 $ 359 $ 153 $ (512 ) $ 347 Net (loss) gain in foreign currency translation adjustments, net of hedging activities — (70 ) 63 — (7 ) Change in derivatives designated as cash flow — 1 — — 1 Change in pension and post-retirement defined benefit plans — 45 2 — 47 Other comprehensive (loss) income before income taxes — (24 ) 65 — 41 Income tax expense on above items — (3 ) — — (3 ) Equity accounted investments 38 65 — (103 ) — Other comprehensive income 38 38 65 (103 ) 38 Comprehensive income $ 385 $ 397 $ 218 $ (615 ) $ 385 For the nine months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 1,421 $ 1,386 $ 412 $ (1,798 ) $ 1,421 Net gain (loss) in foreign currency translation adjustments, net of hedging activities — 342 (304 ) — 38 Change in derivatives designated as cash flow — 11 — — 11 Change in pension and post-retirement defined — 108 5 — 113 Other comprehensive income (loss) before income taxes — 461 (299 ) — 162 Income tax expense on above items — (77 ) (1 ) — (78 ) Equity accounted investments 84 (300 ) — 216 — Other comprehensive income (loss) 84 84 (300 ) 216 84 Comprehensive income $ 1,505 $ 1,470 $ 112 $ (1,582 ) $ 1,505 For the nine months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Net income $ 1,215 $ 1,166 $ 366 $ (1,532 ) $ 1,215 Net gain (loss) in foreign currency translation adjustments, net of hedging activities — 260 (227 ) — 33 Change in derivatives designated as cash flow — (75 ) — — (75 ) Change in pension and post-retirement defined benefit plans — 131 6 — 137 Other comprehensive income (loss) before income taxes — 316 (221 ) — 95 Income tax expense on above items — (49 ) (2 ) — (51 ) Equity accounted investments 44 (223 ) — 179 — Other comprehensive income (loss) 44 44 (223 ) 179 44 Comprehensive income $ 1,259 $ 1,210 $ 143 $ (1,353 ) $ 1,259 |
Interim Condensed Consolidating Balance Sheets | Interim Condensed Consolidating Balance Sheets As at September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Assets Current assets Cash and cash equivalents $ — $ 78 $ 64 $ — $ 142 Accounts receivable, net — 464 164 — 628 Accounts receivable, inter-company 101 139 185 (425 ) — Short-term advances to affiliates 500 560 4,869 (5,929 ) — Materials and supplies — 124 33 — 157 Other current assets — 40 25 — 65 601 1,405 5,340 (6,354 ) 992 Long-term advances to affiliates 591 — 410 (1,001 ) — Investments — 43 142 — 185 Investments in subsidiaries 9,746 11,201 — (20,947 ) — Properties — 8,979 7,721 — 16,700 Goodwill and intangible assets — — 187 — 187 Pension asset — 1,356 — — 1,356 Other assets — 51 8 — 59 Deferred income taxes 3 — — (3 ) — Total assets $ 10,941 $ 23,035 $ 13,808 $ (28,305 ) $ 19,479 Liabilities and shareholders’ equity Current liabilities Accounts payable and accrued liabilities $ 82 $ 745 $ 312 $ — $ 1,139 Accounts payable, inter-company 15 282 128 (425 ) — Short-term advances from affiliates 5,279 640 10 (5,929 ) — Long-term debt maturing within one year — 749 — — 749 5,376 2,416 450 (6,354 ) 1,888 Pension and other benefit liabilities — 657 69 — 726 Long-term advances from affiliates — 1,001 — (1,001 ) — Other long-term liabilities — 104 117 — 221 Long-term debt — 7,334 50 — 7,384 Deferred income taxes — 1,777 1,921 (3 ) 3,695 Total liabilities 5,376 13,289 2,607 (7,358 ) 13,914 Shareholders’ equity Share capital 2,025 1,036 6,862 (7,898 ) 2,025 Additional paid-in capital 42 1,641 268 (1,909 ) 42 Accumulated other comprehensive (loss) income (1,715 ) (1,716 ) 411 1,305 (1,715 ) Retained earnings 5,213 8,785 3,660 (12,445 ) 5,213 5,565 9,746 11,201 (20,947 ) 5,565 Total liabilities and shareholders’ equity $ 10,941 $ 23,035 $ 13,808 $ (28,305 ) $ 19,479 As at December 31, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Assets Current assets Cash and cash equivalents $ — $ 100 $ 64 $ — $ 164 Accounts receivable, net — 435 156 — 591 Accounts receivable, inter-company 90 113 206 (409 ) — Short-term advances to affiliates 500 692 4,035 (5,227 ) — Materials and supplies — 150 34 — 184 Other current assets — 38 32 — 70 590 1,528 4,527 (5,636 ) 1,009 Long-term advances to affiliates 1 — 91 (92 ) — Investments — 47 147 — 194 Investments in subsidiaries 8,513 10,249 — (18,762 ) — Properties — 8,756 7,933 — 16,689 Goodwill and intangible assets — — 202 — 202 Pension asset — 1,070 — — 1,070 Other assets 1 48 8 — 57 Deferred income taxes 11 — — (11 ) — Total assets $ 9,116 $ 21,698 $ 12,908 $ (24,501 ) $ 19,221 Liabilities and shareholders’ equity Current liabilities Accounts payable and accrued liabilities $ 73 $ 945 $ 304 $ — $ 1,322 Accounts payable, inter-company 14 292 103 (409 ) — Short-term advances from affiliates 4,403 816 8 (5,227 ) — Long-term debt maturing within one year — 25 — — 25 4,490 2,078 415 (5,636 ) 1,347 Pension and other benefit liabilities — 658 76 — 734 Long-term advances from affiliates — 92 — (92 ) — Other long-term liabilities — 152 132 — 284 Long-term debt — 8,605 54 — 8,659 Deferred income taxes — 1,600 1,982 (11 ) 3,571 Total liabilities 4,490 13,185 2,659 (5,739 ) 14,595 Shareholders’ equity Share capital 2,002 1,037 5,823 (6,860 ) 2,002 Additional paid-in capital 52 1,638 298 (1,936 ) 52 Accumulated other comprehensive (loss) income (1,799 ) (1,799 ) 712 1,087 (1,799 ) Retained earnings 4,371 7,637 3,416 (11,053 ) 4,371 4,626 8,513 10,249 (18,762 ) 4,626 Total liabilities and shareholders’ equity $ 9,116 $ 21,698 $ 12,908 $ (24,501 ) $ 19,221 |
Interim Condensed Consolidating Statements of Cash Flows | Interim Condensed Consolidating Statements of Cash Flows For the three months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 98 $ 322 $ 213 $ (106 ) $ 527 Investing activities Additions to properties — (193 ) (126 ) — (319 ) Proceeds from sale of properties and other assets — 11 2 — 13 Advances to affiliates — — (50 ) 50 — Repayment of advances to affiliates 159 1 — (160 ) — Capital contributions to affiliates — (26 ) — 26 — Repurchase of share capital from affiliates — 32 — (32 ) — Cash provided by (used in) invest ing activities 159 (175 ) (174 ) (116 ) (306 ) Financing activities Dividends paid (83 ) (83 ) (23 ) 106 (83 ) Return of share capital to affiliates — — (32 ) 32 — Issuance of share capital — — 26 (26 ) — Issuance of CP Common Shares 2 — — — 2 Purchase of CP Common Shares (226 ) — — — (226 ) Repayment of long-term debt, excluding commercial paper — (3 ) — — (3 ) Advances from affiliates 50 — — (50 ) — Repayment of advances from affiliates — (159 ) (1 ) 160 — Cash used in financing activities (257 ) (245 ) (30 ) 222 (310 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — (2 ) (5 ) — (7 ) Cash position (Decrease) increase in cash and cash equivalents — (100 ) 4 — (96 ) Cash and cash equivalents at beginning of period — 178 60 — 238 Cash and cash equivalents at end of period $ — $ 78 $ 64 $ — $ 142 For the three months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 84 $ 406 $ 229 $ (128 ) $ 591 Investing activities Additions to properties — (238 ) (56 ) — (294 ) Proceeds from sale of properties and other assets — 6 10 — 16 Advances to affiliates — (275 ) (123 ) 398 — Repayment of advances to affiliates — 14 — (14 ) — Capital contributions to affiliates — (46 ) — 46 — Cash used in investing activities — (539 ) (169 ) 430 (278 ) Financing activities Dividends paid (75 ) (75 ) (53 ) 128 (75 ) Issuance of share capital — — 46 (46 ) — Issuance of CP Common Shares 5 — — — 5 Purchase of CP Common Shares (412 ) — — — (412 ) Repayment of long-term debt, excluding commercial paper — (5 ) (7 ) — (12 ) Net issuance of commercial paper — 190 — — 190 Advances from affiliates 398 — — (398 ) — Repayment of advances from affiliates — — (14 ) 14 — Cash (used in) provided by financing activities (84 ) 110 (28 ) (302 ) (304 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — — 2 — 2 Cash position (Decrease) increase in cash and cash equivalents — (23 ) 34 — 11 Cash and cash equivalents at beginning of period — 47 45 — 92 Cash and cash equivalents at end of period $ — $ 24 $ 79 $ — $ 103 For the nine months ended September 30, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 256 $ 875 $ 716 $ (398 ) $ 1,449 Investing activities Additions to properties — (494 ) (401 ) — (895 ) Proceeds from sale of properties and other assets — 17 12 — 29 Advances to affiliates (1,079 ) (550 ) (1,157 ) 2,786 — Capital contributions to affiliates — (1,039 ) — 1,039 — Repurchase of share capital from affiliates — 32 — (32 ) — Other — 6 (1 ) — 5 Cash used in investing activities (1,079 ) (2,028 ) (1,547 ) 3,793 (861 ) Financing activities Dividends paid (229 ) (229 ) (169 ) 398 (229 ) Return of share capital to affiliates — — (32 ) 32 — Issuance of share capital — — 1,039 (1,039 ) — Issuance of CP Common Shares 39 — — — 39 Purchase of CP Common Shares (368 ) — — — (368 ) Repayment of long-term debt, excluding commercial paper — (17 ) — — (17 ) Advances from affiliates 1,381 1,405 — (2,786 ) — Settlement of forward starting swaps — (22 ) — — (22 ) Cash provided by financing activities 823 1,137 838 (3,395 ) (597 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — (6 ) (7 ) — (13 ) Cash position Decrease in cash and cash equivalents — (22 ) — — (22 ) Cash and cash equivalents at beginning of period — 100 64 — 164 Cash and cash equivalents at end of period $ — $ 78 $ 64 $ — $ 142 For the nine months ended September 30, 2016 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Cash provided by operating activities $ 182 $ 831 $ 646 $ (338 ) $ 1,321 Investing activities Additions to properties — (576 ) (326 ) — (902 ) Proceeds from sale of properties and other assets — 74 13 — 87 Advances to affiliates — (792 ) (408 ) 1,200 — Repayment of advances to affiliates — 222 — (222 ) — Capital contributions to affiliates — (403 ) — 403 — Repurchase of share capital from affiliates — 6 — (6 ) — Other — — (2 ) — (2 ) Cash used in investing activities — (1,469 ) (723 ) 1,375 (817 ) Financing activities Dividends paid (182 ) (182 ) (156 ) 338 (182 ) Return of share capital to affiliates — — (6 ) 6 — Issuance of share capital — — 403 (403 ) — Issuance of CP Common Shares 14 — — — 14 Purchase of CP Common Shares (1,200 ) — — — (1,200 ) Repayment of long-term debt, excluding commercial paper — (16 ) (14 ) — (30 ) Net issuance of commercial paper — 366 — — 366 Advances from affiliates 1,186 — 14 (1,200 ) — Repayment of advances from affiliates — — (222 ) 222 — Other — (3 ) — — (3 ) Cash (used in) provided by financing activities (182 ) 165 19 (1,037 ) (1,035 ) Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents — (5 ) (11 ) — (16 ) Cash position Decrease in cash and cash equivalents — (478 ) (69 ) — (547 ) Cash and cash equivalents at beginning of period — 502 148 — 650 Cash and cash equivalents at end of period $ — $ 24 $ 79 $ — $ 103 |
Accounting Changes Accounting32
Accounting Changes Accounting Changes - Narrative (Details) - Accounting Standards Update 2017-07 [Member] - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Accounting Estimate [Line Items] | ||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | CAD 68 | CAD 41 | CAD 203 | CAD 127 | CAD 167 | |
Scenario, Forecast [Member] | ||||||
Change in Accounting Estimate [Line Items] | ||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | CAD 272 |
Changes in Accumulated Other 33
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component - Changes in AOCL by Component (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOC Income (Loss), Opening balance | CAD (1,740) | CAD (1,471) | CAD (1,799) | CAD (1,477) |
Other comprehensive loss before reclassifications | (5) | 2 | (15) | (64) |
Amounts reclassified from accumulated other comprehensive loss | 30 | 36 | 99 | 108 |
Net current-period other comprehensive (loss) income | 25 | 38 | 84 | 44 |
AOC Income (Loss), Closing balance | (1,715) | (1,433) | (1,715) | (1,433) |
Foreign currency net of hedging activities [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOC Income (Loss), Opening balance | 124 | 124 | 127 | 129 |
Other comprehensive loss before reclassifications | (5) | 2 | (8) | (3) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Net current-period other comprehensive (loss) income | (5) | 2 | (8) | (3) |
AOC Income (Loss), Closing balance | 119 | 126 | 119 | 126 |
Derivatives and other [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOC Income (Loss), Opening balance | (97) | (157) | (104) | (102) |
Other comprehensive loss before reclassifications | 0 | (1) | (7) | (60) |
Amounts reclassified from accumulated other comprehensive loss | 2 | 2 | 16 | 6 |
Net current-period other comprehensive (loss) income | 2 | 1 | 9 | (54) |
AOC Income (Loss), Closing balance | (95) | (156) | (95) | (156) |
Pension and post-retirement defined benefit plans [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOC Income (Loss), Opening balance | (1,767) | (1,438) | (1,822) | (1,504) |
Other comprehensive loss before reclassifications | 0 | 1 | 0 | (1) |
Amounts reclassified from accumulated other comprehensive loss | 28 | 34 | 83 | 102 |
Net current-period other comprehensive (loss) income | 28 | 35 | 83 | 101 |
AOC Income (Loss), Closing balance | CAD (1,739) | CAD (1,403) | CAD (1,739) | CAD (1,403) |
Changes in Accumulated Other 34
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component - Amounts in Pension and Post-Retirement Defined Benefit Plans Reclassified from AOCL (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income before income tax expense | CAD 680 | CAD 470 | CAD 1,877 | CAD 1,625 |
Income tax (recovery) expense | (170) | (123) | (456) | (410) |
Net income | 510 | 347 | 1,421 | 1,215 |
Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of prior service costs | (1) | (2) | (3) | (5) |
Recognition of net actuarial loss | 39 | 49 | 116 | 146 |
Income before income tax expense | 38 | 47 | 113 | 141 |
Income tax (recovery) expense | (10) | (13) | (30) | (39) |
Net income | CAD 28 | CAD 34 | CAD 83 | CAD 102 |
Gain on Sale of Properties - Ga
Gain on Sale of Properties - Gain on Sale of Arbutus Corridor (Details) - Arbutus Corridor [Member] CAD in Millions | 3 Months Ended |
Mar. 31, 2016CAD | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Proceeds from sale | CAD 55 |
Gain on sale before tax | 50 |
Gain on sale after tax | CAD 43 |
Other Income and Charges (Detai
Other Income and Charges (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Other Income and Expenses [Abstract] | ||||
Foreign exchange (gains) losses on long-term debt | CAD (105) | CAD 46 | CAD (200) | CAD (153) |
Other foreign exchange (gains) losses | (3) | 2 | (5) | (5) |
Legal settlement | 0 | 25 | 0 | 25 |
Insurance recovery of legal settlement | 0 | 0 | (10) | 0 |
Charge on hedge roll and de-designation | 0 | 0 | 13 | 0 |
Other | 3 | (2) | 8 | 14 |
Total other income and charges | CAD (105) | CAD 71 | CAD (194) | CAD (119) |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Expense (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Current income tax expense | CAD 93 | CAD 73 | CAD 288 | CAD 177 |
Deferred income tax expense | 77 | 50 | 168 | 233 |
Income tax expense | CAD 170 | CAD 123 | CAD 456 | CAD 410 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Jun. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |||||
Tax Adjustments, Settlements, and Unusual Provisions | CAD 3 | CAD (17) | CAD (14) | ||
Foreign exchange (gain) loss on long-term debt | (105) | CAD 46 | (200) | CAD (153) | |
Legal settlement | 0 | 25 | 0 | 25 | |
Insurance recovery of legal settlement | 0 | 0 | (10) | 0 | |
Charge on hedge roll and de-designation | CAD 0 | CAD 0 | CAD 13 | CAD 0 | |
Effective tax rate | 24.95% | 26.23% | 24.28% | 25.26% | |
Estimated annual effective tax rate | 26.50% | 25.17% | 26.50% | 26.50% | |
Chief Executive Officer [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation and benefits | CAD (51) |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Line Items] | ||||
Number of shares outstanding (shares) | 145,000,000 | 146,300,000 | 145,000,000 | 146,300,000 |
Stock Options [Member] | ||||
Earnings Per Share [Line Items] | ||||
Number of options excluded from the computation of diluted earnings per share (shares) | 255,928 | 331,553 | 342,595 | 405,851 |
Earnings Per Share - Number of
Earnings Per Share - Number of Shares Used in Earnings Per Share Calculations (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Weighted average basic shares outstanding (shares) | 145.5 | 147.3 | 146.2 | 150.7 |
Dilutive effect of weighted average number of stock options (shares) | 0.3 | 1 | 0.4 | 0.9 |
Weighted average diluted shares outstanding (shares) | 145.8 | 148.3 | 146.6 | 151.6 |
Debt - Credit Facility (Narrati
Debt - Credit Facility (Narrative) (Detail) - USD ($) $ in Billions | 3 Months Ended | |
Jun. 30, 2017 | Sep. 30, 2017 | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit Facility, Current Borrowing Capacity | $ 2 | |
Five Year Portion [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit Facility, Current Borrowing Capacity | 1 | |
Credit Facility, Maturity Date | Jun. 28, 2022 | |
One Year Plus One Year Term Out Portion [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit Facility, Current Borrowing Capacity | $ 1 | |
Credit Facility, Maturity Date | Jun. 27, 2019 |
Debt - Commercial Paper Program
Debt - Commercial Paper Program (Narrative) (Detail) $ in Billions | 9 Months Ended | ||
Sep. 30, 2017CAD | Sep. 30, 2017USD ($) | Dec. 31, 2016CAD | |
Commercial Paper [Member] | |||
Cash and Cash Equivalents [Line Items] | |||
Credit Facility, Current Borrowing Capacity | $ 1 | ||
Commercial paper borrowings | CAD | CAD 0 | CAD 0 | |
Debt instrument maturity | less than 90 days | ||
One Year Plus One Year Term Out Portion [Member] | |||
Cash and Cash Equivalents [Line Items] | |||
Credit Facility, Current Borrowing Capacity | $ 1 |
Shareholders Equity - Narrative
Shareholders Equity - Narrative (Details) - CAD CAD / shares in Units, CAD in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | May 10, 2017 | |
CP Common Shares repurchased (amount) | CAD 368 | CAD 1,210 | |||
Current Normal Course Issuer Bid (NCIB) [Member] | |||||
Stock Repurchase Program Expiration Date | May 14, 2018 | ||||
CP Common Shares repurchased (shares) | 1,145,400 | 1,828,300 | |||
Weighted-average price per share | CAD 196.46 | CAD 201.50 | |||
CP Common Shares repurchased (amount) | CAD 225 | CAD 368 | |||
Current Normal Course Issuer Bid (NCIB) [Member] | Maximum [Member] | |||||
Common shares authorized to be repurchase | 4,380,000 | ||||
Normal Course Issuer Bid (NCIB) [Member] | |||||
CP Common Shares repurchased (shares) | 1,782,200 | 6,910,000 | |||
Weighted-average price per share | CAD 192.10 | CAD 175.08 | |||
CP Common Shares repurchased (amount) | CAD 342 | CAD 1,210 |
Shareholders' Equity - Activiti
Shareholders' Equity - Activities Under Shares Repurchase Program (Detail) - CAD CAD / shares in Units, CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CP Common Shares repurchased (amount) | CAD 368 | CAD 1,210 | ||
Current Normal Course Issuer Bid (NCIB) [Member] | ||||
CP Common Shares repurchased (shares) | 1,145,400 | 1,828,300 | ||
Weighted-average price per share | CAD 196.46 | CAD 201.50 | ||
CP Common Shares repurchased (amount) | CAD 225 | CAD 368 | ||
Normal Course Issuer Bid (NCIB) [Member] | ||||
CP Common Shares repurchased (shares) | 1,782,200 | 6,910,000 | ||
Weighted-average price per share | CAD 192.10 | CAD 175.08 | ||
CP Common Shares repurchased (amount) | CAD 342 | CAD 1,210 |
Financial Instruments (Details)
Financial Instruments (Details) CAD in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017CAD | Jun. 30, 2017CAD | Jun. 30, 2017USD ($) | Sep. 30, 2016CAD | Sep. 30, 2017CAD | Sep. 30, 2016CAD | Sep. 30, 2017USD ($) | Dec. 31, 2016CAD | |
Schedule of Investments [Line Items] | ||||||||
Fair value of long-term debt | CAD 9,587 | CAD 9,587 | CAD 9,981 | |||||
Payment for settlement of forward starting swaps | 0 | CAD 0 | 22 | CAD 0 | ||||
Charge on hedge roll and de-designation | 0 | 0 | 13 | 0 | ||||
Net Interest Expense [Member] | ||||||||
Schedule of Investments [Line Items] | ||||||||
Derivative losses amortized to net interest expense | 3 | 3 | 8 | 8 | ||||
Derivative gains (losses) expected to be amortized to net interest expense | (12) | |||||||
Forward Starting Interest Rate Swaps [Member] | ||||||||
Schedule of Investments [Line Items] | ||||||||
Gain (loss) on effective portion of derivative instrument designated as hedge | 0 | 0 | (11) | (82) | ||||
Floating-to-fixed interest rate swaps | $ | $ 500 | |||||||
Forward starting swaps, de-designated | $ | $ 700 | |||||||
Forward starting swaps, settled | $ | 200 | |||||||
Payment for settlement of forward starting swaps | CAD 22 | $ 16 | ||||||
Charge on hedge roll and de-designation | CAD 13 | |||||||
Gain (Loss) on Derivative, Net | 0 | 0 | (12) | (84) | ||||
Forward Starting Interest Rate Swaps [Member] | Net Interest Expense [Member] | ||||||||
Schedule of Investments [Line Items] | ||||||||
Derivative, ineffective portion loss | 0 | 0 | 1 | 2 | ||||
Forward Starting Interest Rate Swaps [Member] | Accounts Payable and Accrued Liabilities [Member] | ||||||||
Schedule of Investments [Line Items] | ||||||||
Fair value loss | 59 | 59 | 69 | |||||
Net Investment Hedging [Member] | ||||||||
Schedule of Investments [Line Items] | ||||||||
Gain (loss) on effective portion of derivative instrument designated as hedge | 180 | (72) | 342 | 260 | ||||
Amount of ineffectiveness on net investment hedges | 0 | CAD 0 | 0 | CAD 0 | ||||
Reported Value Measurement [Member] | ||||||||
Schedule of Investments [Line Items] | ||||||||
Carrying value of long-term debt | CAD 8,133 | CAD 8,133 | CAD 8,684 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - CAD CAD / shares in Units, CAD in Millions | May 10, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Stock-based compensation expense | CAD 11 | CAD 31 | CAD 16 | CAD 46 | ||
Weighted average exercise price on the grant date | CAD 199.08 | |||||
Expected dividends per share | CAD 0.5625 | CAD 2.0010 | ||||
Chief Executive Officer [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Compensation and benefits | CAD (51) | |||||
Pension benefits | CAD (27) | |||||
Stock Options [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Number of options issued (shares) | 369,980 | |||||
Weighted average exercise price on the grant date | CAD 199.08 | |||||
Expiration period | 7 years | |||||
Stock Granted, Value, Share-based Compensation, Gross | CAD 17 | |||||
Stock Options [Member] | Minimum [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Vesting period | 12 months | |||||
Stock Options [Member] | Maximum [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Vesting period | 60 months | |||||
Stock Options [Member] | Chief Executive Officer [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Forfeited vested and unvested options | 752,145 | |||||
Performance Shares [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Vesting period | 3 years | |||||
Equity instruments other than options | 134,991 | |||||
Grant date fair value | CAD 27 | |||||
PSU payout threshold | 118.00% | |||||
Number of trading days | 30 days | |||||
PSU payout | CAD 31 | |||||
Number of PSUs exercised (shares) | 133,728 | |||||
Performance Shares [Member] | Chief Executive Officer [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Forfeited cash settled awards | 22,514 | |||||
Deferred Share Units [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Vesting period | 48 months | |||||
Equity instruments other than options | 20,109 | |||||
Grant date fair value | CAD 4 | |||||
Deferred Share Units [Member] | Chief Executive Officer [Member] | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Forfeited cash settled awards | 68,612 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted-Average Fair Value Assumptions (Details) - CAD / shares | May 10, 2017 | Sep. 30, 2017 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average exercise price on the grant date | CAD 199.08 | ||
Expected option life (years) | 5 years 5 months 23 days | ||
Risk-free interest rate | 1.85% | ||
Expected stock price volatility | 26.94% | ||
Expected annual dividends per share (in CAD per share) | CAD 0.5625 | CAD 2.0010 | |
Estimated forfeiture rate | 6.00% | ||
Weighted average grant date fair value of options granted during the year (in CAD per share) | CAD 45.78 | ||
Scenario, Forecast [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected annual dividends per share (in CAD per share) | CAD 2.2500 | ||
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average exercise price on the grant date | CAD 199.08 |
Pensions and Other Benefits - N
Pensions and Other Benefits - Narrative (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Pension Plans, Defined Benefit [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions made by the company | CAD 11 | CAD 4 | CAD 35 | CAD 38 |
Pensions and Other Benefits -49
Pensions and Other Benefits - Net Periodic Benefit Cost for DB Pension Plans and Other Benefits (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Pension Plans, Defined Benefit [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Current service cost (benefits earned by employees in the period) | CAD 26 | CAD 26 | CAD 77 | CAD 79 |
Interest cost on benefit obligation | 112 | 117 | 338 | 350 |
Expected return on fund assets | (223) | (211) | (669) | (634) |
Recognized net actuarial loss | 38 | 48 | 114 | 143 |
Amortization of prior service costs | (1) | (2) | (3) | (5) |
Net periodic (recovery) benefit cost | (48) | (22) | (143) | (67) |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Current service cost (benefits earned by employees in the period) | 3 | 2 | 9 | 8 |
Interest cost on benefit obligation | 5 | 6 | 15 | 16 |
Expected return on fund assets | 0 | 0 | 0 | 0 |
Recognized net actuarial loss | 1 | 1 | 2 | 3 |
Amortization of prior service costs | 0 | 0 | 0 | 0 |
Net periodic (recovery) benefit cost | CAD 9 | CAD 9 | CAD 26 | CAD 27 |
Contingencies - Legal Proceedin
Contingencies - Legal Proceedings (Details) CAD in Millions | Sep. 28, 2017CAD | Jul. 11, 2016CADclaim | Jul. 05, 2016CAD | Jul. 04, 2016CADclaim | Apr. 12, 2016CAD | Jul. 06, 2015CAD | Sep. 30, 2017CADclaim |
Claimed loss or damages as a result of derailment [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Settlement amounts | CAD 440 | ||||||
Lac-Megantic Rail Accident [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Value of damages sought | CAD 315 | CAD 409 | |||||
Lac-Megantic Rail Accident [Member] | World Fuel Entities [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Settlement amounts | CAD 110 | ||||||
Lac-Megantic Rail Accident [Member] | Irving Oil [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Settlement amounts | 60 | ||||||
Lac-Megantic Rail Accident [Member] | Quebec Minister of Sustainable Development and Environment [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Value of damages sought | CAD 95 | ||||||
Lac-Megantic Rail Accident [Member] | Subrogated Insurance Claim [Member] | Initial Insurer Claimants [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Value of damages sought | CAD 15 | CAD 16 | |||||
Number of notices for claims of damage to cargo | claim | 8 | ||||||
Lac-Megantic Rail Accident [Member] | Subrogated Insurance Claim [Member] | Additional Insurer Claimants [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Value of damages sought | CAD 3 | ||||||
Number of notices for claims of damage to cargo | claim | 2 | ||||||
Lac-Megantic Rail Accident [Member] | Claimed loss or damages as a result of derailment [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Number of notices for claims of damage to cargo | claim | 2 | ||||||
Lac-Megantic Rail Accident [Member] | Lost Lading Loss Recovery [Member] | The “WD Trustee” [Member] | |||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||
Value of damages sought | CAD 6 |
Contingencies - Environmental L
Contingencies - Environmental Liabilities (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Site Contingency [Line Items] | |||||
Total amount provided for provisions for environmental remediation costs | CAD 79 | CAD 79 | CAD 85 | ||
Term for expected payments to be made | 10 years | ||||
Purchased Services and Other [Member] | |||||
Site Contingency [Line Items] | |||||
Environmental remediation expense | CAD 1 | CAD 1 | CAD 3 | CAD 3 |
Condensed Consolidating Finan52
Condensed Consolidating Financial Information - Interim Condensed Consolidating Statements of Income (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Freight | CAD 1,547 | CAD 1,510 | CAD 4,708 | CAD 4,464 |
Non-freight | 48 | 44 | 133 | 131 |
Total revenues | 1,595 | 1,554 | 4,841 | 4,595 |
Operating expenses | ||||
Compensation and benefits | 256 | 294 | 766 | 907 |
Fuel | 150 | 138 | 480 | 394 |
Materials | 45 | 39 | 142 | 133 |
Equipment rents | 35 | 43 | 108 | 132 |
Depreciation and amortization | 162 | 155 | 493 | 478 |
Purchased services and other | 257 | 228 | 812 | 690 |
Total operating expenses | 905 | 897 | 2,801 | 2,734 |
Operating income | 690 | 657 | 2,040 | 1,861 |
Less: | ||||
Other income and charges | (105) | 71 | (194) | (119) |
Net interest (income) expense | 115 | 116 | 357 | 355 |
Income before income tax expense | 680 | 470 | 1,877 | 1,625 |
Income tax (recovery) expense | 170 | 123 | 456 | 410 |
Add: Equity in net earnings of subsidiaries | 0 | 0 | 0 | 0 |
Net income | 510 | 347 | 1,421 | 1,215 |
Consolidating Adjustments and Eliminations [Member] | ||||
Revenues | ||||
Freight | 0 | 0 | 0 | 0 |
Non-freight | (80) | (86) | (249) | (259) |
Total revenues | (80) | (86) | (249) | (259) |
Operating expenses | ||||
Compensation and benefits | 3 | 2 | 5 | 5 |
Fuel | 0 | 0 | 0 | 0 |
Materials | 1 | 3 | 13 | 14 |
Equipment rents | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Purchased services and other | (84) | (91) | (267) | (278) |
Total operating expenses | (80) | (86) | (249) | (259) |
Operating income | 0 | 0 | 0 | 0 |
Less: | ||||
Other income and charges | 0 | 0 | 0 | 0 |
Net interest (income) expense | 0 | 0 | 0 | 0 |
Income before income tax expense | 0 | 0 | 0 | 0 |
Income tax (recovery) expense | 0 | 0 | 0 | 0 |
Add: Equity in net earnings of subsidiaries | (641) | (512) | (1,798) | (1,532) |
Net income | (641) | (512) | (1,798) | (1,532) |
CPRL (Parent Guarantor) [Member] | Reportable Legal Entities [Member] | ||||
Revenues | ||||
Freight | 0 | 0 | 0 | 0 |
Non-freight | 0 | 0 | 0 | 0 |
Total revenues | 0 | 0 | 0 | 0 |
Operating expenses | ||||
Compensation and benefits | 0 | 0 | 0 | 0 |
Fuel | 0 | 0 | 0 | 0 |
Materials | 0 | 0 | 0 | 0 |
Equipment rents | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Purchased services and other | 0 | 0 | 0 | 0 |
Total operating expenses | 0 | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 | 0 |
Less: | ||||
Other income and charges | (10) | 12 | (35) | (61) |
Net interest (income) expense | (2) | (9) | (9) | 0 |
Income before income tax expense | 12 | (3) | 44 | 61 |
Income tax (recovery) expense | 7 | 9 | 9 | 12 |
Add: Equity in net earnings of subsidiaries | 505 | 359 | 1,386 | 1,166 |
Net income | 510 | 347 | 1,421 | 1,215 |
CPRC (Subsidiary Issuer) [Member] | Reportable Legal Entities [Member] | ||||
Revenues | ||||
Freight | 1,092 | 1,078 | 3,310 | 3,182 |
Non-freight | 38 | 35 | 104 | 101 |
Total revenues | 1,130 | 1,113 | 3,414 | 3,283 |
Operating expenses | ||||
Compensation and benefits | 149 | 181 | 438 | 563 |
Fuel | 116 | 111 | 370 | 317 |
Materials | 33 | 30 | 101 | 95 |
Equipment rents | 35 | 48 | 110 | 155 |
Depreciation and amortization | 108 | 102 | 325 | 316 |
Purchased services and other | 195 | 170 | 613 | 499 |
Total operating expenses | 636 | 642 | 1,957 | 1,945 |
Operating income | 494 | 471 | 1,457 | 1,338 |
Less: | ||||
Other income and charges | (100) | 61 | (166) | (89) |
Net interest (income) expense | 126 | 131 | 390 | 373 |
Income before income tax expense | 468 | 279 | 1,233 | 1,054 |
Income tax (recovery) expense | 99 | 73 | 259 | 254 |
Add: Equity in net earnings of subsidiaries | 136 | 153 | 412 | 366 |
Net income | 505 | 359 | 1,386 | 1,166 |
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member] | ||||
Revenues | ||||
Freight | 455 | 432 | 1,398 | 1,282 |
Non-freight | 90 | 95 | 278 | 289 |
Total revenues | 545 | 527 | 1,676 | 1,571 |
Operating expenses | ||||
Compensation and benefits | 104 | 111 | 323 | 339 |
Fuel | 34 | 27 | 110 | 77 |
Materials | 11 | 6 | 28 | 24 |
Equipment rents | 0 | (5) | (2) | (23) |
Depreciation and amortization | 54 | 53 | 168 | 162 |
Purchased services and other | 146 | 149 | 466 | 469 |
Total operating expenses | 349 | 341 | 1,093 | 1,048 |
Operating income | 196 | 186 | 583 | 523 |
Less: | ||||
Other income and charges | 5 | (2) | 7 | 31 |
Net interest (income) expense | (9) | (6) | (24) | (18) |
Income before income tax expense | 200 | 194 | 600 | 510 |
Income tax (recovery) expense | 64 | 41 | 188 | 144 |
Add: Equity in net earnings of subsidiaries | 0 | 0 | 0 | 0 |
Net income | CAD 136 | CAD 153 | CAD 412 | CAD 366 |
Condensed Consolidating Finan53
Condensed Consolidating Financial Information - Interim Condensed Consolidating Statements of Comprehensive Income (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | CAD 510 | CAD 347 | CAD 1,421 | CAD 1,215 |
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | 19 | (7) | 38 | 33 |
Change in derivatives designated as cash flow hedges | 2 | 1 | 11 | (75) |
Change in pension and post-retirement defined benefit plans | 38 | 47 | 113 | 137 |
Other comprehensive income before income taxes | 59 | 41 | 162 | 95 |
Income tax expense on above items | (34) | (3) | (78) | (51) |
Equity accounted investments | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | 25 | 38 | 84 | 44 |
Comprehensive income (loss) | 535 | 385 | 1,505 | 1,259 |
Consolidating Adjustments and Eliminations [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | (641) | (512) | (1,798) | (1,532) |
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | 0 | 0 | 0 | 0 |
Change in derivatives designated as cash flow hedges | 0 | 0 | 0 | 0 |
Change in pension and post-retirement defined benefit plans | 0 | 0 | 0 | 0 |
Other comprehensive income before income taxes | 0 | 0 | 0 | 0 |
Income tax expense on above items | 0 | 0 | 0 | 0 |
Equity accounted investments | 134 | (103) | 216 | 179 |
Other comprehensive income (loss) | 134 | (103) | 216 | 179 |
Comprehensive income (loss) | (507) | (615) | (1,582) | (1,353) |
CPRL (Parent Guarantor) [Member] | Reportable Legal Entities [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 510 | 347 | 1,421 | 1,215 |
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | 0 | 0 | 0 | 0 |
Change in derivatives designated as cash flow hedges | 0 | 0 | 0 | 0 |
Change in pension and post-retirement defined benefit plans | 0 | 0 | 0 | 0 |
Other comprehensive income before income taxes | 0 | 0 | 0 | 0 |
Income tax expense on above items | 0 | 0 | 0 | 0 |
Equity accounted investments | 25 | 38 | 84 | 44 |
Other comprehensive income (loss) | 25 | 38 | 84 | 44 |
Comprehensive income (loss) | 535 | 385 | 1,505 | 1,259 |
CPRC (Subsidiary Issuer) [Member] | Reportable Legal Entities [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 505 | 359 | 1,386 | 1,166 |
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | 180 | (70) | 342 | 260 |
Change in derivatives designated as cash flow hedges | 2 | 1 | 11 | (75) |
Change in pension and post-retirement defined benefit plans | 36 | 45 | 108 | 131 |
Other comprehensive income before income taxes | 218 | (24) | 461 | 316 |
Income tax expense on above items | (34) | (3) | (77) | (49) |
Equity accounted investments | (159) | 65 | (300) | (223) |
Other comprehensive income (loss) | 25 | 38 | 84 | 44 |
Comprehensive income (loss) | 530 | 397 | 1,470 | 1,210 |
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 136 | 153 | 412 | 366 |
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | (161) | 63 | (304) | (227) |
Change in derivatives designated as cash flow hedges | 0 | 0 | 0 | 0 |
Change in pension and post-retirement defined benefit plans | 2 | 2 | 5 | 6 |
Other comprehensive income before income taxes | (159) | 65 | (299) | (221) |
Income tax expense on above items | 0 | 0 | (1) | (2) |
Equity accounted investments | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | (159) | 65 | (300) | (223) |
Comprehensive income (loss) | CAD (23) | CAD 218 | CAD 112 | CAD 143 |
Condensed Consolidating Finan54
Condensed Consolidating Financial Information - Interim Condensed Consolidating Balance Sheets (Details) - CAD CAD in Millions | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||||||
Cash and cash equivalents | CAD 142 | CAD 164 | ||||
Accounts receivable, net | 628 | 591 | ||||
Accounts receivable, inter-company | 0 | 0 | ||||
Short-term advances to affiliates | 0 | 0 | ||||
Materials and supplies | 157 | 184 | ||||
Other current assets | 65 | 70 | ||||
Total current assets | 992 | 1,009 | ||||
Long-term advances to affiliates | 0 | 0 | ||||
Investments | 185 | 194 | ||||
Investments in subsidiaries | 0 | 0 | ||||
Properties | 16,700 | 16,689 | ||||
Goodwill and intangible assets | 187 | 202 | ||||
Pension asset | 1,356 | 1,070 | ||||
Other assets | 59 | 57 | ||||
Deferred income taxes | 0 | 0 | ||||
Total assets | 19,479 | 19,221 | ||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 1,139 | 1,322 | ||||
Due to Related Parties, Current | 0 | 0 | ||||
Short-term advances from affiliates | 0 | 0 | ||||
Long-term debt maturing within one year | 749 | 25 | ||||
Total current liabilities | 1,888 | 1,347 | ||||
Pension and other benefit liabilities | 726 | 734 | ||||
Long-term advances from affiliates | 0 | 0 | ||||
Other long-term liabilities | 221 | 284 | ||||
Long-term debt | 7,384 | 8,659 | ||||
Deferred income taxes | 3,695 | 3,571 | ||||
Total liabilities | 13,914 | 14,595 | ||||
Shareholders’ equity | ||||||
Share capital | 2,025 | 2,002 | ||||
Additional paid-in capital | 42 | 52 | ||||
Accumulated other comprehensive (loss) income | (1,715) | CAD (1,740) | (1,799) | CAD (1,433) | CAD (1,471) | CAD (1,477) |
Retained earnings | 5,213 | 4,371 | ||||
Total Shareholders' equity | 5,565 | 4,626 | CAD 4,669 | CAD 4,796 | ||
Total liabilities and shareholders’ equity | 19,479 | 19,221 | ||||
Consolidating Adjustments and Eliminations [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | 0 | 0 | ||||
Accounts receivable, net | 0 | 0 | ||||
Accounts receivable, inter-company | (425) | (409) | ||||
Short-term advances to affiliates | (5,929) | (5,227) | ||||
Materials and supplies | 0 | 0 | ||||
Other current assets | 0 | 0 | ||||
Total current assets | (6,354) | (5,636) | ||||
Long-term advances to affiliates | (1,001) | (92) | ||||
Investments | 0 | 0 | ||||
Investments in subsidiaries | (20,947) | (18,762) | ||||
Properties | 0 | 0 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Pension asset | 0 | 0 | ||||
Other assets | 0 | 0 | ||||
Deferred income taxes | (3) | (11) | ||||
Total assets | (28,305) | (24,501) | ||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 0 | 0 | ||||
Due to Related Parties, Current | (425) | (409) | ||||
Short-term advances from affiliates | (5,929) | (5,227) | ||||
Long-term debt maturing within one year | 0 | 0 | ||||
Total current liabilities | (6,354) | (5,636) | ||||
Pension and other benefit liabilities | 0 | 0 | ||||
Long-term advances from affiliates | (1,001) | (92) | ||||
Other long-term liabilities | 0 | 0 | ||||
Long-term debt | 0 | 0 | ||||
Deferred income taxes | (3) | (11) | ||||
Total liabilities | (7,358) | (5,739) | ||||
Shareholders’ equity | ||||||
Share capital | (7,898) | (6,860) | ||||
Additional paid-in capital | (1,909) | (1,936) | ||||
Accumulated other comprehensive (loss) income | 1,305 | 1,087 | ||||
Retained earnings | (12,445) | (11,053) | ||||
Total Shareholders' equity | (20,947) | (18,762) | ||||
Total liabilities and shareholders’ equity | (28,305) | (24,501) | ||||
CPRL (Parent Guarantor) [Member] | Reportable Legal Entities [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | 0 | 0 | ||||
Accounts receivable, net | 0 | 0 | ||||
Accounts receivable, inter-company | 101 | 90 | ||||
Short-term advances to affiliates | 500 | 500 | ||||
Materials and supplies | 0 | 0 | ||||
Other current assets | 0 | 0 | ||||
Total current assets | 601 | 590 | ||||
Long-term advances to affiliates | 591 | 1 | ||||
Investments | 0 | 0 | ||||
Investments in subsidiaries | 9,746 | 8,513 | ||||
Properties | 0 | 0 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Pension asset | 0 | 0 | ||||
Other assets | 0 | 1 | ||||
Deferred income taxes | 3 | 11 | ||||
Total assets | 10,941 | 9,116 | ||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 82 | 73 | ||||
Due to Related Parties, Current | 15 | 14 | ||||
Short-term advances from affiliates | 5,279 | 4,403 | ||||
Long-term debt maturing within one year | 0 | 0 | ||||
Total current liabilities | 5,376 | 4,490 | ||||
Pension and other benefit liabilities | 0 | 0 | ||||
Long-term advances from affiliates | 0 | 0 | ||||
Other long-term liabilities | 0 | 0 | ||||
Long-term debt | 0 | 0 | ||||
Deferred income taxes | 0 | 0 | ||||
Total liabilities | 5,376 | 4,490 | ||||
Shareholders’ equity | ||||||
Share capital | 2,025 | 2,002 | ||||
Additional paid-in capital | 42 | 52 | ||||
Accumulated other comprehensive (loss) income | (1,715) | (1,799) | ||||
Retained earnings | 5,213 | 4,371 | ||||
Total Shareholders' equity | 5,565 | 4,626 | ||||
Total liabilities and shareholders’ equity | 10,941 | 9,116 | ||||
CPRC (Subsidiary Issuer) [Member] | Reportable Legal Entities [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | 78 | 100 | ||||
Accounts receivable, net | 464 | 435 | ||||
Accounts receivable, inter-company | 139 | 113 | ||||
Short-term advances to affiliates | 560 | 692 | ||||
Materials and supplies | 124 | 150 | ||||
Other current assets | 40 | 38 | ||||
Total current assets | 1,405 | 1,528 | ||||
Long-term advances to affiliates | 0 | 0 | ||||
Investments | 43 | 47 | ||||
Investments in subsidiaries | 11,201 | 10,249 | ||||
Properties | 8,979 | 8,756 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Pension asset | 1,356 | 1,070 | ||||
Other assets | 51 | 48 | ||||
Deferred income taxes | 0 | 0 | ||||
Total assets | 23,035 | 21,698 | ||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 745 | 945 | ||||
Due to Related Parties, Current | 282 | 292 | ||||
Short-term advances from affiliates | 640 | 816 | ||||
Long-term debt maturing within one year | 749 | 25 | ||||
Total current liabilities | 2,416 | 2,078 | ||||
Pension and other benefit liabilities | 657 | 658 | ||||
Long-term advances from affiliates | 1,001 | 92 | ||||
Other long-term liabilities | 104 | 152 | ||||
Long-term debt | 7,334 | 8,605 | ||||
Deferred income taxes | 1,777 | 1,600 | ||||
Total liabilities | 13,289 | 13,185 | ||||
Shareholders’ equity | ||||||
Share capital | 1,036 | 1,037 | ||||
Additional paid-in capital | 1,641 | 1,638 | ||||
Accumulated other comprehensive (loss) income | (1,716) | (1,799) | ||||
Retained earnings | 8,785 | 7,637 | ||||
Total Shareholders' equity | 9,746 | 8,513 | ||||
Total liabilities and shareholders’ equity | 23,035 | 21,698 | ||||
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member] | ||||||
Current assets | ||||||
Cash and cash equivalents | 64 | 64 | ||||
Accounts receivable, net | 164 | 156 | ||||
Accounts receivable, inter-company | 185 | 206 | ||||
Short-term advances to affiliates | 4,869 | 4,035 | ||||
Materials and supplies | 33 | 34 | ||||
Other current assets | 25 | 32 | ||||
Total current assets | 5,340 | 4,527 | ||||
Long-term advances to affiliates | 410 | 91 | ||||
Investments | 142 | 147 | ||||
Investments in subsidiaries | 0 | 0 | ||||
Properties | 7,721 | 7,933 | ||||
Goodwill and intangible assets | 187 | 202 | ||||
Pension asset | 0 | 0 | ||||
Other assets | 8 | 8 | ||||
Deferred income taxes | 0 | 0 | ||||
Total assets | 13,808 | 12,908 | ||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 312 | 304 | ||||
Due to Related Parties, Current | 128 | 103 | ||||
Short-term advances from affiliates | 10 | 8 | ||||
Long-term debt maturing within one year | 0 | 0 | ||||
Total current liabilities | 450 | 415 | ||||
Pension and other benefit liabilities | 69 | 76 | ||||
Long-term advances from affiliates | 0 | 0 | ||||
Other long-term liabilities | 117 | 132 | ||||
Long-term debt | 50 | 54 | ||||
Deferred income taxes | 1,921 | 1,982 | ||||
Total liabilities | 2,607 | 2,659 | ||||
Shareholders’ equity | ||||||
Share capital | 6,862 | 5,823 | ||||
Additional paid-in capital | 268 | 298 | ||||
Accumulated other comprehensive (loss) income | 411 | 712 | ||||
Retained earnings | 3,660 | 3,416 | ||||
Total Shareholders' equity | 11,201 | 10,249 | ||||
Total liabilities and shareholders’ equity | CAD 13,808 | CAD 12,908 |
Condensed Consolidating Finan55
Condensed Consolidating Financial Information - Interim Condensed Consolidating Statements of Cash Flows (Details) - CAD CAD in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Cash provided by operating activities | CAD 527 | CAD 591 | CAD 1,449 | CAD 1,321 |
Investing activities | ||||
Additions to properties | (319) | (294) | (895) | (902) |
Proceeds from sale of properties and other assets | 13 | 16 | 29 | 87 |
Advances to affiliates | 0 | 0 | 0 | 0 |
Repayment of advances to affiliates | 0 | 0 | 0 | |
Capital contributions to affiliates | 0 | 0 | 0 | 0 |
Repurchase of share capital from affiliates | 0 | 0 | 0 | |
Other | 0 | 0 | 5 | (2) |
Cash used in investing activities | (306) | (278) | (861) | (817) |
Financing activities | ||||
Dividends paid | (83) | (75) | (229) | (182) |
Return of share capital to affiliates | 0 | 0 | 0 | |
Issuance of share capital | 0 | 0 | 0 | 0 |
Issuance of CP Common Shares | 2 | 5 | 39 | 14 |
Purchase of CP Common Shares | (226) | (412) | (368) | (1,200) |
Repayment of long-term debt, excluding commercial paper | (3) | (12) | (17) | (30) |
Net issuance (repayment) of commercial paper | 0 | 190 | 0 | 366 |
Advances from affiliates | 0 | 0 | 0 | 0 |
Settlement of forward starting swaps | 0 | 0 | (22) | 0 |
Repayments of advances from affiliates | 0 | 0 | 0 | |
Other | 0 | 0 | 0 | (3) |
Cash used in financing activities | (310) | (304) | (597) | (1,035) |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | (7) | 2 | (13) | (16) |
Cash position | ||||
Increase (decrease) in cash and cash equivalents | (96) | 11 | (22) | (547) |
Cash and cash equivalents at beginning of period | 238 | 92 | 164 | 650 |
Cash and cash equivalents at end of period | 142 | 103 | 142 | 103 |
Consolidating Adjustments and Eliminations [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash provided by operating activities | (106) | (128) | (398) | (338) |
Investing activities | ||||
Additions to properties | 0 | 0 | 0 | 0 |
Proceeds from sale of properties and other assets | 0 | 0 | 0 | 0 |
Advances to affiliates | 50 | 398 | 2,786 | 1,200 |
Repayment of advances to affiliates | (160) | (14) | (222) | |
Capital contributions to affiliates | 26 | 46 | 1,039 | 403 |
Repurchase of share capital from affiliates | (32) | (32) | (6) | |
Other | 0 | 0 | ||
Cash used in investing activities | (116) | 430 | 3,793 | 1,375 |
Financing activities | ||||
Dividends paid | 106 | 128 | 398 | 338 |
Return of share capital to affiliates | 32 | 32 | 6 | |
Issuance of share capital | (26) | (46) | (1,039) | (403) |
Issuance of CP Common Shares | 0 | 0 | 0 | 0 |
Purchase of CP Common Shares | 0 | 0 | 0 | 0 |
Repayment of long-term debt, excluding commercial paper | 0 | 0 | 0 | 0 |
Net issuance (repayment) of commercial paper | 0 | 0 | ||
Advances from affiliates | (50) | (398) | (2,786) | (1,200) |
Settlement of forward starting swaps | 0 | |||
Repayments of advances from affiliates | 160 | 14 | 222 | |
Other | 0 | |||
Cash used in financing activities | 222 | (302) | (3,395) | (1,037) |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | 0 | 0 | 0 | 0 |
Cash position | ||||
Increase (decrease) in cash and cash equivalents | 0 | 0 | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 | 0 | 0 |
Cash and cash equivalents at end of period | 0 | 0 | 0 | 0 |
CPRL (Parent Guarantor) [Member] | Reportable Legal Entities [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash provided by operating activities | 98 | 84 | 256 | 182 |
Investing activities | ||||
Additions to properties | 0 | 0 | 0 | 0 |
Proceeds from sale of properties and other assets | 0 | 0 | 0 | 0 |
Advances to affiliates | 0 | 0 | (1,079) | 0 |
Repayment of advances to affiliates | 159 | 0 | 0 | |
Capital contributions to affiliates | 0 | 0 | 0 | 0 |
Repurchase of share capital from affiliates | 0 | 0 | 0 | |
Other | 0 | 0 | ||
Cash used in investing activities | 159 | 0 | (1,079) | 0 |
Financing activities | ||||
Dividends paid | (83) | (75) | (229) | (182) |
Return of share capital to affiliates | 0 | 0 | 0 | |
Issuance of share capital | 0 | 0 | 0 | 0 |
Issuance of CP Common Shares | 2 | 5 | 39 | 14 |
Purchase of CP Common Shares | (226) | (412) | (368) | (1,200) |
Repayment of long-term debt, excluding commercial paper | 0 | 0 | 0 | 0 |
Net issuance (repayment) of commercial paper | 0 | 0 | ||
Advances from affiliates | 50 | 398 | 1,381 | 1,186 |
Settlement of forward starting swaps | 0 | |||
Repayments of advances from affiliates | 0 | 0 | 0 | |
Other | 0 | |||
Cash used in financing activities | (257) | (84) | 823 | (182) |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | 0 | 0 | 0 | 0 |
Cash position | ||||
Increase (decrease) in cash and cash equivalents | 0 | 0 | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 | 0 | 0 |
Cash and cash equivalents at end of period | 0 | 0 | 0 | 0 |
CPRC (Subsidiary Issuer) [Member] | Reportable Legal Entities [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash provided by operating activities | 322 | 406 | 875 | 831 |
Investing activities | ||||
Additions to properties | (193) | (238) | (494) | (576) |
Proceeds from sale of properties and other assets | 11 | 6 | 17 | 74 |
Advances to affiliates | 0 | (275) | (550) | (792) |
Repayment of advances to affiliates | 1 | 14 | 222 | |
Capital contributions to affiliates | (26) | (46) | (1,039) | (403) |
Repurchase of share capital from affiliates | 32 | 32 | 6 | |
Other | 6 | 0 | ||
Cash used in investing activities | (175) | (539) | (2,028) | (1,469) |
Financing activities | ||||
Dividends paid | (83) | (75) | (229) | (182) |
Return of share capital to affiliates | 0 | 0 | 0 | |
Issuance of share capital | 0 | 0 | 0 | 0 |
Issuance of CP Common Shares | 0 | 0 | 0 | 0 |
Purchase of CP Common Shares | 0 | 0 | 0 | 0 |
Repayment of long-term debt, excluding commercial paper | (3) | (5) | (17) | (16) |
Net issuance (repayment) of commercial paper | 190 | 366 | ||
Advances from affiliates | 0 | 0 | 1,405 | 0 |
Settlement of forward starting swaps | (22) | |||
Repayments of advances from affiliates | (159) | 0 | 0 | |
Other | (3) | |||
Cash used in financing activities | (245) | 110 | 1,137 | 165 |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | (2) | 0 | (6) | (5) |
Cash position | ||||
Increase (decrease) in cash and cash equivalents | (100) | (23) | (22) | (478) |
Cash and cash equivalents at beginning of period | 178 | 47 | 100 | 502 |
Cash and cash equivalents at end of period | 78 | 24 | 78 | 24 |
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Cash provided by operating activities | 213 | 229 | 716 | 646 |
Investing activities | ||||
Additions to properties | (126) | (56) | (401) | (326) |
Proceeds from sale of properties and other assets | 2 | 10 | 12 | 13 |
Advances to affiliates | (50) | (123) | (1,157) | (408) |
Repayment of advances to affiliates | 0 | 0 | 0 | |
Capital contributions to affiliates | 0 | 0 | 0 | 0 |
Repurchase of share capital from affiliates | 0 | 0 | 0 | |
Other | (1) | (2) | ||
Cash used in investing activities | (174) | (169) | (1,547) | (723) |
Financing activities | ||||
Dividends paid | (23) | (53) | (169) | (156) |
Return of share capital to affiliates | (32) | (32) | (6) | |
Issuance of share capital | 26 | 46 | 1,039 | 403 |
Issuance of CP Common Shares | 0 | 0 | 0 | 0 |
Purchase of CP Common Shares | 0 | 0 | 0 | 0 |
Repayment of long-term debt, excluding commercial paper | 0 | (7) | 0 | (14) |
Net issuance (repayment) of commercial paper | 0 | 0 | ||
Advances from affiliates | 0 | 0 | 0 | 14 |
Settlement of forward starting swaps | 0 | |||
Repayments of advances from affiliates | (1) | (14) | (222) | |
Other | 0 | |||
Cash used in financing activities | (30) | (28) | 838 | 19 |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | (5) | 2 | (7) | (11) |
Cash position | ||||
Increase (decrease) in cash and cash equivalents | 4 | 34 | 0 | (69) |
Cash and cash equivalents at beginning of period | 60 | 45 | 64 | 148 |
Cash and cash equivalents at end of period | CAD 64 | CAD 79 | CAD 64 | CAD 79 |