Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 26, 2022 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2022 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-01342 | |
Entity Incorporation, State or Country Code | Z4 | |
Entity Tax Identification Number | 98-0355078 | |
Entity Address, Address Line One | 7550 Ogden Dale Road S.E. | |
Entity Address, City or Town | Calgary | |
Entity Address, State or Province | AB | |
Entity Address, Postal Zip Code | T2C 4X9 | |
City Area Code | (403) | |
Local Phone Number | 319-7000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 929,873,437 | |
Entity Registrant Name | CANADIAN PACIFIC RAILWAY LTD/CN | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000016875 | |
Current Fiscal Year End Date | --12-31 | |
Common Shares, without par value, of Canadian Pacific Railway Limited | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Shares, without par value, of Canadian Pacific Railway Limited | |
Trading Symbol | CP | |
Security Exchange Name | NYSE | |
Perpetual 4% Consolidated Debenture Stock of Canadian Pacific Railway Company | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Perpetual 4% Consolidated Debenture Stock of Canadian Pacific Railway Company | |
Trading Symbol | CP/40 | |
Security Exchange Name | NYSE |
INTERIM CONSOLIDATED STATEMENTS
INTERIM CONSOLIDATED STATEMENTS OF INCOME (unaudited) - CAD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues | ||
Revenues | $ 1,838 | $ 1,959 |
Operating expenses | ||
Compensation and benefits | 413 | 405 |
Fuel | 273 | 206 |
Materials | 62 | 59 |
Equipment rents | 35 | 33 |
Depreciation and amortization | 210 | 202 |
Purchased services and other | 310 | 274 |
Total operating expenses | 1,303 | 1,179 |
Operating income | 535 | 780 |
Less: | ||
Equity earnings of Kansas City Southern | (198) | 0 |
Other income | (1) | (28) |
Other components of net periodic benefit recovery | (101) | (95) |
Net interest expense | 160 | 110 |
Income before income tax expense | 675 | 793 |
Income tax expense | 85 | 191 |
Net income | $ 590 | $ 602 |
Earnings per share | ||
Basic earnings per share | $ 0.63 | $ 0.90 |
Diluted earnings per share | $ 0.63 | $ 0.90 |
Weighted-average number of shares (millions) | ||
Basic | 929.7 | 666.5 |
Diluted | 932.7 | 669.6 |
Dividends declared per share | $ 0.190 | $ 0.190 |
Freight | ||
Revenues | ||
Revenues | $ 1,796 | $ 1,918 |
Non-freight | ||
Revenues | ||
Revenues | $ 42 | $ 41 |
INTERIM CONSOLIDATED STATEMEN_2
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 590 | $ 602 |
Net (loss) gain in foreign currency translation adjustments, net of hedging activities | (336) | 10 |
Change in derivatives designated as cash flow hedges | 1 | 25 |
Change in pension and post-retirement defined benefit plans | 39 | 53 |
Equity Accounted Investments | 62 | 0 |
Other comprehensive (loss) income before income taxes | (234) | 88 |
Income tax expense on above items | (36) | (30) |
Other comprehensive (loss) income | (270) | 58 |
Comprehensive income | $ 320 | $ 660 |
INTERIM CONSOLIDATED BALANCE SH
INTERIM CONSOLIDATED BALANCE SHEETS AS AT (unaudited) - CAD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 85 | $ 69 |
Restricted Cash and Cash Equivalents | 13 | 13 |
Accounts receivable, net | 818 | 819 |
Materials and supplies | 251 | 235 |
Other current assets | 240 | 216 |
Total current assets | 1,407 | 1,352 |
Investment in Kansas City Southern | 41,626 | 42,309 |
Investments | 201 | 209 |
Properties | 21,120 | 21,200 |
Goodwill and intangible assets | 366 | 371 |
Pension asset | 2,428 | 2,317 |
Other assets | 444 | 419 |
Total assets | 67,592 | 68,177 |
Current liabilities | ||
Accounts payable and accrued liabilities | 1,445 | 1,609 |
Long-term debt maturing within one year | 1,746 | 1,550 |
Total current liabilities | 3,191 | 3,159 |
Pension and other benefit liabilities | 715 | 718 |
Other long-term liabilities | 521 | 542 |
Long-term debt | 17,917 | 18,577 |
Deferred income taxes | 11,263 | 11,352 |
Total liabilities | 33,607 | 34,348 |
Shareholders’ equity | ||
Share capital | 25,486 | 25,475 |
Additional paid-in capital | 68 | 66 |
Accumulated other comprehensive loss | (2,373) | (2,103) |
Retained earnings | 10,804 | 10,391 |
Total shareholders' equity | 33,985 | 33,829 |
Total liabilities and shareholders’ equity | $ 67,592 | $ 68,177 |
INTERIM CONSOLIDATED STATEMEN_3
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities | ||
Net income | $ 590 | $ 602 |
Reconciliation of net income to cash provided by operating activities: | ||
Depreciation and amortization | 210 | 202 |
Deferred income tax (recovery) expense | (1) | 51 |
Pension recovery and funding | (72) | (61) |
Equity earnings of Kansas City Southern | (198) | 0 |
Foreign exchange gain on debt and lease liabilities | 0 | (33) |
Dividend from Kansas City Southern | 334 | 0 |
Other operating activities, net | (83) | (88) |
Change in non-cash working capital balances related to operations | (167) | (91) |
Cash provided by operating activities | 613 | 582 |
Investing activities | ||
Additions to properties | (226) | (323) |
Proceeds from sale of properties and other assets | 15 | 37 |
Other | 5 | 0 |
Cash used in investing activities | (206) | (286) |
Financing activities | ||
Dividends paid | (177) | (127) |
Issuance of CP Common Shares | 8 | 8 |
Repayment of long-term debt, excluding commercial paper | (542) | (21) |
Net issuance of commercial paper | 320 | 93 |
Acquisition-related financing fees | 0 | (33) |
Cash used in financing activities | (391) | (80) |
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | 0 | (3) |
Cash position | ||
Increase in cash, cash equivalents, and restricted cash | 16 | 213 |
Cash, cash equivalents, and restricted cash at beginning of period | 82 | 147 |
Cash, cash equivalents, and restricted cash at end of period | 98 | 360 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid | 159 | 133 |
Interest paid | $ 150 | $ 155 |
INTERIM CONSOLIDATED STATEMEN_4
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - CAD ($) shares in Millions, $ in Millions | Total | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings |
Beginning balance (shares) at Dec. 31, 2020 | 666.3 | ||||
Beginning balance at Dec. 31, 2020 | $ 7,319 | $ 1,983 | $ 55 | $ (2,814) | $ 8,095 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 602 | 0 | 0 | 0 | 602 |
Other comprehensive income | 58 | 0 | 0 | 58 | 0 |
Dividends declared | (126) | 0 | 0 | 0 | (126) |
Effect of stock-based compensation expense | $ 5 | 0 | 5 | 0 | 0 |
Shares issued under stock option plan (shares) | 0.3 | ||||
Shares issued under stock option plan | $ 8 | 10 | (2) | 0 | 0 |
Ending balance (shares) at Mar. 31, 2021 | 666.6 | ||||
Ending balance at Mar. 31, 2021 | $ 7,866 | 1,993 | 58 | (2,756) | 8,571 |
Beginning balance (shares) at Dec. 31, 2021 | 929.7 | ||||
Beginning balance at Dec. 31, 2021 | $ 33,829 | 25,475 | 66 | (2,103) | 10,391 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 590 | 0 | 0 | 0 | 590 |
Other comprehensive income | (270) | 0 | 0 | (270) | 0 |
Dividends declared | (177) | 0 | 0 | 0 | (177) |
Effect of stock-based compensation expense | 7 | 0 | 7 | 0 | 0 |
Stock Issued During Period, Value, Acquisitions | $ (2) | 0 | (2) | 0 | 0 |
Shares issued under stock option plan (shares) | 0.2 | ||||
Shares issued under stock option plan | $ 8 | 11 | (3) | 0 | 0 |
Ending balance (shares) at Mar. 31, 2022 | 929.9 | ||||
Ending balance at Mar. 31, 2022 | $ 33,985 | $ 25,486 | $ 68 | $ (2,373) | $ 10,804 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of presentation These unaudited Interim Consolidated Financial Statements ("Interim Consolidated Financial Statements") of Canadian Pacific Railway Limited ("CPRL") and its subsidiaries (collectively, “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 2021 annual Consolidated Financial Statements and notes included in CP's 2021 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2021 annual Consolidated Financial Statements. On April 21, 2021, the Company's shareholders approved a five-for-one share split of the Company's issued and outstanding Common Shares. On May 13, 2021, the Company's shareholders of record, as of May 5, 2021 received four additional shares for every Common Share held. Ex-distribution trading in the Company’s Common Shares on a split-adjusted basis commenced on May 14, 2021. Proportional adjustments were also made to outstanding awards under the Company's stock-based compensation plans in order to reflect the share split. All outstanding Common Shares, stock-based compensation awards, and per share amounts herein have been retrospectively adjusted to reflect the share split. 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. In management’s opinion, the Interim Consolidated Financial Statements include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year. |
Accounting Changes
Accounting Changes | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Accounting Changes | Accounting changes Implemented in 2022 Government Assistance On January 1, 2022, the Company adopted the new Accounting Standards Update ("ASU") 2021-10, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 832, Government Assistance. The amendment is made to increase transparency by introducing specific disclosure requirements for entities who apply a grant or contribution model by analogy to account for transactions with a government. This update will be applied to government assistance transactions within the scope of this amendment that are in the financial statements at the date of initial application and prospectively to new transactions entered into after initial application. See Note 9 for further discussion on government assistance. All other accounting pronouncements that became effective during the period covered by the Interim Consolidated Financial Statements did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Future changes Contract Assets and Contract Liabilities Acquired in a Business Combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This amendment introduces the requirement for an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers, rather than at fair value. This amendment will be effective prospectively from January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of this amendment. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues The following table disaggregates the Company’s revenues from contracts with customers by major source: For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Freight Grain $ 360 $ 448 Coal 139 163 Potash 104 101 Fertilizers and sulphur 78 77 Forest products 86 80 Energy, chemicals and plastics 310 388 Metals, minerals and consumer products 181 159 Automotive 91 108 Intermodal 447 394 Total freight revenues 1,796 1,918 Non-freight excluding leasing revenues 22 24 Revenues from contracts with customers 1,818 1,942 Leasing revenues 20 17 Total revenues $ 1,838 $ 1,959 Contract liabilities Contract liabilities represent payments received for performance obligations not yet satisfied and relate to deferred revenue and are presented as components of "Accounts payable and accrued liabilities" and "Other long-term liabilities" on the Company's Interim Consolidated Balance Sheets. The following table summarizes the changes in contract liabilities: For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Opening balance $ 67 $ 61 Revenue recognized that was included in the contract liability balance at the beginning of the period (7) (11) Increase due to consideration received, net of revenue recognized during the period 7 64 Closing balance $ 67 $ 114 |
Other (Income) Expense
Other (Income) Expense | 3 Months Ended |
Mar. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Other Income and Expenses | Other income For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Foreign exchange gain on debt and lease liabilities $ — $ (33) Other foreign exchange (gains) losses (2) 1 Acquisition-related costs (Note 10) — 3 Other 1 1 Other income $ (1) $ (28) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income taxes For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Current income tax expense $ 86 $ 140 Deferred income tax (recovery) expense (1) 51 Income tax expense $ 85 $ 191 The effective tax rates including discrete items for the three months ended March 31, 2022 was 12.67%, compared to 24.05% for the same period of 2021. For the three months ended March 31, 2022, the effective tax rate was 24.25%, excluding equity earnings of Kansas City Southern ("KCS"), acquisition-related costs incurred by CP of $20 million, and an outside basis deferred tax recovery of $32 million arising from the difference between the carrying amount of CP's investment in KCS for financial reporting, and the underlying tax basis of this investment. For the three months ended March 31, 2021, the effective tax rate was 24.60%, excluding acquisition-related costs incurred by CP of $36 million and the FX gain of $33 million on debt and lease liabilities. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings per share Basic earnings per share has 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 the earnings per share calculations are reconciled as follows: For the three months ended March 31 (in millions) 2022 2021 Weighted-average basic shares outstanding 929.7 666.5 Dilutive effect of stock options 3.0 3.1 Weighted-average diluted shares outstanding 932.7 669.6 For the three months ended March 31, 2022, there were nil options excluded from the computation of diluted earnings per share because their effects were not dilutive (three months ended March 31, 2021 - nil). |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31 (in millions of Canadian dollars) Foreign currency net of hedging activities (1) Derivatives (1)(2) Pension and post- (1) Equity accounted investments (1)(2) Total (1) Opening balance, January 1, 2022 $ (182) $ (4) $ (1,915) $ (2) $ (2,103) Other comprehensive (loss) income before reclassifications (349) — — 46 (303) Amounts reclassified from accumulated other comprehensive loss — 1 31 1 33 Net other comprehensive (loss) income (349) 1 31 47 (270) Closing balance, March 31, 2022 $ (531) $ (3) $ (1,884) $ 45 $ (2,373) Opening balance, January 1, 2021 $ 112 $ (40) $ (2,878) $ (8) $ (2,814) Other comprehensive income before reclassifications — 17 — — 17 Amounts reclassified from accumulated other comprehensive loss — 2 39 — 41 Net other comprehensive income — 19 39 — 58 Closing balance, March 31, 2021 $ 112 $ (21) $ (2,839) $ (8) $ (2,756) (1) Amounts are presented net of tax. (2) Comparative figures have been reclassified to conform with current period presentation. Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL are as follows: For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Recognition of net actuarial loss (1) $ 39 $ 53 Income tax recovery (8) (14) Total net of income tax $ 31 $ 39 (1) Impacts "Other components of net periodic benefit recovery" on the Interim Consolidated Statements of Income. |
Accounts Receivable, Net
Accounts Receivable, Net | 3 Months Ended |
Mar. 31, 2022 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Accounts Receivable, Net | Accounts receivable, net As at March 31, 2022 As at December 31, 2021 (in millions of Canadian dollars) Freight Non-freight Total Freight Non-freight Total Total accounts receivable $ 599 $ 255 $ 854 $ 614 $ 239 $ 853 Allowance for credit losses (22) (14) (36) (20) (14) (34) Total accounts receivable, net $ 577 $ 241 $ 818 $ 594 $ 225 $ 819 For the three months ended March 31, 2022 For the three months ended March 31, 2021 (in millions of Canadian dollars) Freight Non-freight Total Freight Non-freight Total Allowance for credit losses, opening balance $ (20) $ (14) $ (34) $ (25) $ (15) $ (40) Current period credit loss provision, net (2) — (2) 1 — 1 Allowance for credit losses, closing balance $ (22) $ (14) $ (36) $ (24) $ (15) $ (39) |
Government Assistance
Government Assistance | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Government Assistance Disclosure | Government Assistance By analogy to the grant model of accounting within International Accounting Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance, CP records government assistance from various levels of Canadian and U.S. governments and government agencies when the conditions of their receipt are complied with and there is reasonable assurance that the assistance will be received. Government assistance related to properties have as a primary condition that CP should purchase, construct, or otherwise acquire property, plant and equipment. Under certain government assistance arrangements, there is a secondary condition which requires CP to repay a portion of the assistance if certain conditions related to the assets are not adhered to during a specified period. In these cases, it is CP's intention to comply with all conditions imposed by the terms of the government assistance. Government assistance received or receivable related to CP's property assets are deducted from the cost of the assets in the Consolidated Balance Sheets and amortized over the same period as the related assets in "Depreciation and amortization" in the Consolidated Statements of Income. During the three months ended March 31, 2022, the Company received $13 million of government assistance towards the purchase and construction of properties. Government assistance received is netted against "Properties" in the Company's Interim Consolidated Balance Sheets. As of March 31, 2022, the total Properties balance of $21,120 million is net of $269 million of unamortized government assistance (December 31, 2021 - $259 million), primarily related to the enhancement of CP's track and roadway infrastructure. Amortization expense related to government assistance for the three months ended March 31, 2022 was $3 million (three months ended March 31, 2021 - $3 million). |
Business Acquisition
Business Acquisition | 3 Months Ended |
Mar. 31, 2022 | |
Business Combinations [Abstract] | |
Business Acquisition | Business acquisition Kansas City Southern The Company accounts for its investment in KCS using the equity method of accounting while the United States Surface Transportation Board's ("STB") considers the Company's application to control KCS. The STB review of CP's proposed control of KCS while KCS is in the voting trust is expected to be completed in the first quarter of 2023. The investment in KCS of $41,626 million at March 31, 2022 includes $198 million of equity earnings of KCS for the first quarter of 2022, offset by a dividend received of $334 million on January 27, 2022. Included within the $198 million of equity earnings of KCS in the first quarter of 2022 is $40 million amortization (net of tax) of the approximately $30 billion basis difference, representing the difference in value between the consideration paid to acquire KCS and the underlying carrying value of the net assets of KCS as at December 14, 2021, immediately prior to the acquisition by CP. The basis difference is related to depreciable property, plant and equipment, intangible assets with definite lives, and long-term debt, and is amortized over the related assets' remaining useful lives, and the remaining terms to maturity of the debt instruments. During the three months ended March 31, 2022, the Company incurred $20 million in acquisition-related costs, recorded within "Purchased services and other" in the Company's Interim Consolidated Statements of Income. Acquisition-related costs of $13 million incurred by KCS during the three months ended March 31, 2022 are included within "Equity earnings of Kansas City Southern" in the Company's Interim Consolidated Statements of Income. |
Investment in KCS
Investment in KCS | 3 Months Ended |
Mar. 31, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in KCS | Investment in KCS The KCS investment carrying cost of $41,626 million reported on the Company's Interim Consolidated Balance Sheets as at March 31, 2022 reflects the consideration paid to acquire KCS, the asset recorded upon recognition of a deferred tax liability computed on an outside basis (see Note 5), the subsequent recognition of equity earnings, the dividend received from KCS, and foreign currency translation based on the quarter-end exchange rate. The following table presents summarized financial information for KCS, on its historical cost basis: Statement of Income (in millions of Canadian dollars) (1) For the three months ended March 31, 2022 Total revenues $ 986 Total operating expenses 617 Operating Income 369 Less: Other (2) 39 Income before income taxes 330 Net Income $ 238 (1) Amounts translated at the average FX rate for the three months ended March 31, 2022 of $1.00 USD = $1.27 CAD. (2) Includes Equity in net earnings of KCS's affiliates, Interest expense, FX loss, and Other income, net. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt During the three months ended March 31, 2022, the Company repaid at maturity $125 million 5.100% 10-year Medium Term Notes, U.S. $250 million ($313 million) 4.500% 10-year Notes, and a U.S. $76 million ($97 million) 6.99% finance lease. Credit Facility Effective March 14, 2022, the Company extended the maturity date of the U.S. $500 million unsecured non-revolving term credit facility (the "term facility") to September 15, 2022. As at March 31, 2022, the Company had borrowings of U.S. $500 million ($625 million) under this term facility (December 31, 2021 - U.S. $500 million) at a weighted-average interest rate of 1.55% (December 31, 2021 - 1.38%). 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. This commercial paper program is backed by the U.S. $1.3 billion revolving credit facility. As at March 31, 2022, the Company had total commercial paper borrowings of U.S. $520 million ($650 million), included in "Long-term debt maturing within one year" on the Company's Interim Consolidated Balance sheets (December 31, 2021 - U.S. $265 million). The weighted-average interest rate on these borrowings was 0.82% (December 31, 2021 - 0.32%). The Company presents issuances and repayments of commercial paper, all of which have a maturity of less than 90 days, in the Company's Interim Consolidated Statements of Cash Flows on a net basis. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2022 | |
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. The Company’s short-term financial instruments include cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term borrowings including commercial paper and term loans. The carrying values of short-term financial instruments approximate their fair values. The carrying value of the Company’s long-term debt and finance lease liabilities does not approximate their fair value. Their estimated fair value has been determined based on market information, where available, or by discounting future payments of principal and interest at estimated interest rates expected to be available to the Company at period end. All measurements are classified as Level 2. The Company’s long-term debt and finance lease liabilities, including current maturities, with a carrying value of $18,389 million at March 31, 2022 (December 31, 2021 - $19,151 million), had a fair value of $18,699 million (December 31, 2021 - $21,265 million). B. Financial risk management FX management Net investment hedge The effect of the Company's net investment hedge for the three months ended March 31, 2022 was an unrealized FX gain of $98 million (three months ended March 31, 2021 - unrealized FX gain of $76 million) recognized in “Other comprehensive (loss) income”. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders' equity On January 27, 2021, the Company announced a normal course issuer bid ("NCIB"), commencing January 29, 2021, to purchase up to 16.7 million Common Shares in the open market for cancellation on or before January 28, 2022. Upon expiry of this NCIB, the Company had not purchased any Common Shares under this NCIB. |
Pension and Other Benefits
Pension and Other Benefits | 3 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Pensions and Other Benefits | Pension and other benefits In the three months ended March 31, 2022, the Company made contributions to its defined benefit pension plans of $3 million (three months ended March 31, 2021 - $4 million). Net periodic benefit costs for defined benefit pension plans and other benefits included the following components: For the three months ended March 31 Pensions Other benefits (in millions of Canadian dollars) 2022 2021 2022 2021 Current service cost (benefits earned by employees) $ 37 $ 43 $ 2 $ 3 Other components of net periodic benefit (recovery) cost: Interest cost on benefit obligation 96 88 4 4 Expected return on fund assets (240) (240) — — Recognized net actuarial loss 38 52 1 1 Total other components of net periodic benefit (recovery) cost (106) (100) 5 5 Net periodic benefit (recovery) cost $ (69) $ (57) $ 7 $ 8 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-based compensation At March 31, 2022, the Company had several stock-based compensation plans including stock option plans, various cash-settled liability plans, and an employee share purchase plan. These plans resulted in an expense for the three months ended March 31, 2022 of $44 million (three months ended March 31, 2021 - expense of $24 million). Stock option plan In the three months ended March 31, 2022, under CP’s stock option plans, the Company issued 819,760 options at the weighted-average price of $90.86 per share, based on the closing price on the grant date. Pursuant to the employee plan, these options may be exercised upon vesting, which is between 12 months and 48 months after the grant date, and will expire after seven years. Under the fair value method, the fair value of the stock options at grant date was approximately $15 million. The weighted-average fair value assumptions were approximately: For the three months ended March 31, 2022 Expected option life (years) (1) 4.75 Risk-free interest rate (2) 1.59% Expected share price volatility (3) 26.84% Expected annual dividends per share (4) $0.760 Expected forfeiture rate (5) 2.98% Weighted-average grant date fair value per option granted during the period $18.69 (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 term commensurate with the expected term of the option. (3) Based on the historical volatility of the Company’s share price 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. (5) The Company estimates forfeitures based on past experience. This rate is monitored on a periodic basis. Performance share unit plans During the three months ended March 31, 2022, the Company issued 411,999 Performance Share Units ("PSUs") with a grant date fair value of approximately $36 million and 13,506 Performance Deferred Share Units ("PDSUs") with a grant date fair value, including the value of expected future matching units, of approximately $2 million. PSUs and PDSUs attract dividend equivalents in the form of additional units based on dividends paid on the Company’s Common Shares, and vest approximately three years after the grant date, contingent upon CP’s performance ("performance factor"). The fair value of these PSUs and PDSUs is measured periodically until settlement. Vested PSUs are settled in cash. Vested PDSUs are settled in cash pursuant to the Deferred Share Unit ("DSU") Plan and are eligible for a 25% match if the holder has not exceeded their share ownership requirements, and are paid out only when the holder ceases their employment with CP. The performance period for PSUs and PDSUs issued in the three months ended March 31, 2022 is January 1, 2022 to December 31, 2024 and the performance factors are Free Cash Flow ("FCF"), Adjusted Net Debt to Adjusted earnings before interest, tax, depreciation, and amortization ("EBITDA") Modifier, Total Shareholder Return ("TSR") compared to the S&P/TSX 60 Index, and TSR compared to S&P 500 Industrials Index. The performance period for PSUs issued in 2019 was January 1, 2019 to December 31, 2021. The performance factors for 668,405 PSUs were Return on Invested Capital ("ROIC"), TSR compared to the S&P/TSX 60 Index, and TSR compared to Class I Railways. The resulting payout was 200% of the outstanding units multiplied by the Company's average share price calculated using the last 30 trading days preceding December 31, 2021. In the first quarter of 2022, payouts occurred on 631,457 total outstanding awards, including dividends reinvested, totalling $116 million. Deferred share unit plan During the three months ended March 31, 2022, the Company granted 39,409 DSUs with a grant date fair value of approximately $4 million. DSUs vest over various periods of up to 36 months and are only redeemable for a specified period after employment is terminated. The expense for DSUs is recognized over the vesting period for both the initial subscription price and the change in value between reporting periods. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 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 business, financial position or results of operations. However, an unexpected adverse resolution of one or more of these legal actions could have a material adverse effect on the Company's business, financial position, results of operations, or liquidity in a particular quarter or fiscal year. Legal proceedings related to Lac-Mégantic rail accident On July 6, 2013, a train carrying petroleum crude oil operated by Montréal Maine and Atlantic Railway (“MMAR”) or a subsidiary, Montréal Maine & Atlantic Canada Co. (“MMAC” and collectively the “MMA Group”), derailed in Lac-Mégantic, Québec. The derailment occurred on a section of railway owned and operated by the MMA Group and while the MMA Group exclusively controlled the train. Following the derailment, MMAC sought court protection in Canada under the Companies’ Creditors Arrangement Act and MMAR filed for bankruptcy in the U.S. Plans of arrangement were approved in both Canada and the U.S. (the “Plans”), providing for the distribution of approximately $440 million amongst those claiming derailment damages. A number of legal proceedings, set out below, were commenced in Canada and the U.S. against CP and others: (1) Québec's Minister of Sustainable Development, Environment, Wildlife and Parks ordered various parties, including CP, to remediate the derailment site (the "Cleanup Order") and served CP with a Notice of Claim for $95 million for those costs. CP appealed the Cleanup Order and contested the Notice of Claim with the Administrative Tribunal of Québec. These proceedings are stayed pending determination of the Attorney General of Québec (“AGQ”) action (paragraph 2 below). (2) The AGQ sued CP in the Québec Superior Court claiming $409 million in damages, which was amended and reduced to $315 million (the “AGQ Action”). The AGQ Action alleges that: (i) CP was responsible for the petroleum crude oil from its point of origin until its delivery to Irving Oil Ltd.; and (ii) CP is vicariously liable for the acts and omissions of the MMA Group. (3) A class action 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 was certified against CP on May 8, 2015 (the "Class Action"). Other defendants including MMAC and Mr. Thomas Harding ("Harding") were added to the Class Action on January 25, 2017. On November 28, 2019, the plaintiffs' motion to discontinue their action against Harding was granted. The Class Action seeks unquantified damages, including for wrongful death, personal injury, property damage, and economic loss. (4) Eight subrogated insurers sued CP in the Québec Superior Court claiming approximately $16 million in damages, which was amended and reduced to approximately $15 million (the “Promutuel Action”), and two additional subrogated insurers sued CP claiming approximately $3 million in damages (the “Royal Action”). Both actions contain similar allegations as the AGQ Action. The actions do not identify the subrogated parties. As such, the extent of any overlap between the damages claimed in these actions and under the Plans is unclear. The Royal Action is stayed pending determination of the consolidated proceedings described below. On December 11, 2017, the AGQ Action, the Class Action and the Promutuel Action were consolidated. The joint liability trial of these consolidated claims commenced on September 21, 2021 and will be followed by a damages trial, if necessary. (5) Forty-eight plaintiffs (all individual claims joined in one action) sued CP, MMAC, and Harding in the Québec Superior Court claiming approximately $5 million in damages for economic loss and pain and suffering, and asserting similar allegations as in the Class Action and the AGQ Action. The majority of the plaintiffs opted-out of the Class Action and all but two are also plaintiffs in litigation against CP, described in paragraph 7 below. This action is stayed pending determination of the consolidated claims described above. (6) The MMAR U.S. bankruptcy estate representative commenced an action against CP in November 2014 in the Maine Bankruptcy Court claiming that CP failed to abide by certain regulations and seeking approximately U.S. $30 million in damages for MMAR’s loss in business value according to a recent expert report filed by the bankruptcy estate. This action asserts that CP knew or ought to have known that the shipper misclassified the petroleum crude oil and therefore should have refused to transport it. (7) The class and mass tort action commenced against CP in June 2015 in Texas (on behalf of Lac-Mégantic residents and wrongful death representatives) and the wrongful death and personal injury actions commenced against CP in June 2015 in Illinois and Maine, were all transferred and consolidated in Federal District Court in Maine (the “Maine Actions”). The Maine Actions allege that CP negligently misclassified and improperly packaged the petroleum crude oil. On CP’s motion, the Maine Actions were dismissed. The plaintiffs appealed the dismissal decision to the United States First Circuit Court of Appeals, which dismissed the plaintiffs' appeal on June 2, 2021. The plaintiffs further petitioned the United States First Circuit Court of Appeals for a rehearing, which was denied on September 8, 2021. On January 24, 2022, the plaintiffs further appealed to the U.S. Supreme Court on two bankruptcy procedural grounds. CP filed its opposition to the appeal on April 20, 2022. (8) The trustee for the wrongful death trust commenced Carmack Amendment claims against CP in North Dakota Federal Court, seeking to recover approximately U.S. $6 million for damaged rail cars and lost crude and reimbursement for the settlement paid by the consignor and the consignee under the Plans (alleged to be U.S. $110 million and U.S. $60 million, respectively). The Court issued an Order on August 6, 2020 granting and denying in parts the parties' summary judgment motions which has been reviewed and confirmed following motions by the parties for clarification and reconsideration. This action is scheduled for trial on July 11 to 14, 2022. At this stage of the proceedings, any potential responsibility and the quantum of potential losses cannot be determined. Nevertheless, CP denies liability and is vigorously defending these 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” in the Company's Interim Consolidated Statements of Income for the three months ended March 31, 2022 was $2 million (three months ended March 31, 2021 - $2 million). Provisions for environmental remediation costs are recorded in the Company's Interim Consolidated Balance Sheets in “Other long-term liabilities”, except for the current portion which is recorded in “Accounts payable and accrued liabilities”. The total amount provided at March 31, 2022 was $79 million (December 31, 2021 - $79 million). Payments are expected to be made over 10 years through 2031. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | These unaudited Interim Consolidated Financial Statements ("Interim Consolidated Financial Statements") of Canadian Pacific Railway Limited ("CPRL") and its subsidiaries (collectively, “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 2021 annual Consolidated Financial Statements and notes included in CP's 2021 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2021 annual Consolidated Financial Statements. On April 21, 2021, the Company's shareholders approved a five-for-one share split of the Company's issued and outstanding Common Shares. On May 13, 2021, the Company's shareholders of record, as of May 5, 2021 received four additional shares for every Common Share held. Ex-distribution trading in the Company’s Common Shares on a split-adjusted basis commenced on May 14, 2021. Proportional adjustments were also made to outstanding awards under the Company's stock-based compensation plans in order to reflect the share split. All outstanding Common Shares, stock-based compensation awards, and per share amounts herein have been retrospectively adjusted to reflect the share split. 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. In management’s opinion, the Interim Consolidated Financial Statements include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year. |
Accounting Changes (Policies)
Accounting Changes (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Accounting Changes | Implemented in 2022 Government Assistance On January 1, 2022, the Company adopted the new Accounting Standards Update ("ASU") 2021-10, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 832, Government Assistance. The amendment is made to increase transparency by introducing specific disclosure requirements for entities who apply a grant or contribution model by analogy to account for transactions with a government. This update will be applied to government assistance transactions within the scope of this amendment that are in the financial statements at the date of initial application and prospectively to new transactions entered into after initial application. See Note 9 for further discussion on government assistance. All other accounting pronouncements that became effective during the period covered by the Interim Consolidated Financial Statements did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Future changes Contract Assets and Contract Liabilities Acquired in a Business Combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This amendment introduces the requirement for an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers, rather than at fair value. This amendment will be effective prospectively from January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of this amendment. |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates the Company’s revenues from contracts with customers by major source: For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Freight Grain $ 360 $ 448 Coal 139 163 Potash 104 101 Fertilizers and sulphur 78 77 Forest products 86 80 Energy, chemicals and plastics 310 388 Metals, minerals and consumer products 181 159 Automotive 91 108 Intermodal 447 394 Total freight revenues 1,796 1,918 Non-freight excluding leasing revenues 22 24 Revenues from contracts with customers 1,818 1,942 Leasing revenues 20 17 Total revenues $ 1,838 $ 1,959 |
Changes in Contract Liabilities | The following table summarizes the changes in contract liabilities: For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Opening balance $ 67 $ 61 Revenue recognized that was included in the contract liability balance at the beginning of the period (7) (11) Increase due to consideration received, net of revenue recognized during the period 7 64 Closing balance $ 67 $ 114 |
Other (Income) Expense (Tables)
Other (Income) Expense (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Other Income and Expenses | For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Foreign exchange gain on debt and lease liabilities $ — $ (33) Other foreign exchange (gains) losses (2) 1 Acquisition-related costs (Note 10) — 3 Other 1 1 Other income $ (1) $ (28) |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Expense | For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Current income tax expense $ 86 $ 140 Deferred income tax (recovery) expense (1) 51 Income tax expense $ 85 $ 191 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Shares Used in the Earnings Per Share Calculations | The number of shares used in the earnings per share calculations are reconciled as follows: For the three months ended March 31 (in millions) 2022 2021 Weighted-average basic shares outstanding 929.7 666.5 Dilutive effect of stock options 3.0 3.1 Weighted-average diluted shares outstanding 932.7 669.6 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Changes in Accumulated Other Comprehensive Income Loss by Component | For the three months ended March 31 (in millions of Canadian dollars) Foreign currency net of hedging activities (1) Derivatives (1)(2) Pension and post- (1) Equity accounted investments (1)(2) Total (1) Opening balance, January 1, 2022 $ (182) $ (4) $ (1,915) $ (2) $ (2,103) Other comprehensive (loss) income before reclassifications (349) — — 46 (303) Amounts reclassified from accumulated other comprehensive loss — 1 31 1 33 Net other comprehensive (loss) income (349) 1 31 47 (270) Closing balance, March 31, 2022 $ (531) $ (3) $ (1,884) $ 45 $ (2,373) Opening balance, January 1, 2021 $ 112 $ (40) $ (2,878) $ (8) $ (2,814) Other comprehensive income before reclassifications — 17 — — 17 Amounts reclassified from accumulated other comprehensive loss — 2 39 — 41 Net other comprehensive income — 19 39 — 58 Closing balance, March 31, 2021 $ 112 $ (21) $ (2,839) $ (8) $ (2,756) (1) Amounts are presented net of tax. (2) Comparative figures have been reclassified to conform with current period presentation. |
Amounts in Pension and Post-retirement Defined Benefit Plans Reclassified from AOCL | Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL are as follows: For the three months ended March 31 (in millions of Canadian dollars) 2022 2021 Recognition of net actuarial loss (1) $ 39 $ 53 Income tax recovery (8) (14) Total net of income tax $ 31 $ 39 (1) Impacts "Other components of net periodic benefit recovery" on the Interim Consolidated Statements of Income. |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of Accounts Receivable, Net | As at March 31, 2022 As at December 31, 2021 (in millions of Canadian dollars) Freight Non-freight Total Freight Non-freight Total Total accounts receivable $ 599 $ 255 $ 854 $ 614 $ 239 $ 853 Allowance for credit losses (22) (14) (36) (20) (14) (34) Total accounts receivable, net $ 577 $ 241 $ 818 $ 594 $ 225 $ 819 |
Allowance for Credit Losses | For the three months ended March 31, 2022 For the three months ended March 31, 2021 (in millions of Canadian dollars) Freight Non-freight Total Freight Non-freight Total Allowance for credit losses, opening balance $ (20) $ (14) $ (34) $ (25) $ (15) $ (40) Current period credit loss provision, net (2) — (2) 1 — 1 Allowance for credit losses, closing balance $ (22) $ (14) $ (36) $ (24) $ (15) $ (39) |
Investment in KCS (Tables)
Investment in KCS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Financial Information | The following table presents summarized financial information for KCS, on its historical cost basis: Statement of Income (in millions of Canadian dollars) (1) For the three months ended March 31, 2022 Total revenues $ 986 Total operating expenses 617 Operating Income 369 Less: Other (2) 39 Income before income taxes 330 Net Income $ 238 (1) Amounts translated at the average FX rate for the three months ended March 31, 2022 of $1.00 USD = $1.27 CAD. (2) Includes Equity in net earnings of KCS's affiliates, Interest expense, FX loss, and Other income, net. |
Pension and Other Benefits (Tab
Pension and Other Benefits (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 included the following components: For the three months ended March 31 Pensions Other benefits (in millions of Canadian dollars) 2022 2021 2022 2021 Current service cost (benefits earned by employees) $ 37 $ 43 $ 2 $ 3 Other components of net periodic benefit (recovery) cost: Interest cost on benefit obligation 96 88 4 4 Expected return on fund assets (240) (240) — — Recognized net actuarial loss 38 52 1 1 Total other components of net periodic benefit (recovery) cost (106) (100) 5 5 Net periodic benefit (recovery) cost $ (69) $ (57) $ 7 $ 8 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Weighted-Average Fair Value Assumptions | The weighted-average fair value assumptions were approximately: For the three months ended March 31, 2022 Expected option life (years) (1) 4.75 Risk-free interest rate (2) 1.59% Expected share price volatility (3) 26.84% Expected annual dividends per share (4) $0.760 Expected forfeiture rate (5) 2.98% Weighted-average grant date fair value per option granted during the period $18.69 (1) Represents the period of time that awards are expected to be outstanding. Historical data on exercise behaviour or, when available, specific expectations regarding future exercise behaviour were used to estimate the expected life of the option. (2) Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the option. (3) Based on the historical volatility of the Company’s share price over a period commensurate with the expected term of the option. (4) Determined by the current annual dividend at the time of grant. The Company does not employ different dividend yields throughout the contractual term of the option. (5) The Company estimates forfeitures based on past experience. This rate is monitored on a periodic basis. |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | $ 1,818 | $ 1,942 |
Leasing revenues | 20 | 17 |
Total revenues | 1,838 | 1,959 |
Freight | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 1,796 | 1,918 |
Total revenues | 1,796 | 1,918 |
Grain | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 360 | 448 |
Coal | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 139 | 163 |
Potash | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 104 | 101 |
Fertilizers and sulphur | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 78 | 77 |
Forest products | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 86 | 80 |
Energy, chemicals and plastics | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 310 | 388 |
Metals, minerals and consumer products | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 181 | 159 |
Automotive | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 91 | 108 |
Intermodal | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | 447 | 394 |
Non-freight excluding leasing revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues from contracts with customers | $ 22 | $ 24 |
Revenues - Contract Liabilities
Revenues - Contract Liabilities (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Contract with Customer, Liability [Abstract] | ||
Opening balance | $ 67 | $ 61 |
Revenue recognized that was included in the contract liability balance at the beginning of the period | (7) | (11) |
Increase due to consideration received, net of revenue recognized during the period | 7 | 64 |
Closing balance | $ 67 | $ 114 |
Other (Income) Expense - Other
Other (Income) Expense - Other Income and Expense (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Other Income and Expenses [Abstract] | ||
Foreign exchange gain on debt and lease liabilities | $ 0 | $ (33) |
Other foreign exchange (gains) losses | (2) | 1 |
Acquisition-related costs | 0 | 3 |
Other | 1 | 1 |
Other income | $ (1) | $ (28) |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Expense (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Current income tax expense | $ 86 | $ 140 |
Deferred income tax (recovery) expense | (1) | 51 |
Income tax expense | $ 85 | $ 191 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Business Acquisition [Line Items] | ||
Effective tax rate | 12.67% | 24.05% |
Effective tax rate, excluding discrete items | 24.25% | 24.60% |
Acquisition-related costs | $ 0 | $ 3 |
Effective Income Tax Rate Reconciliation, Basis Difference On Equity Method Investment | 32 | |
Foreign exchange gain on debt and lease liabilities | 0 | (33) |
KCS | ||
Business Acquisition [Line Items] | ||
Acquisition-related costs | 20 | 36 |
KCS | Purchased services and other | ||
Business Acquisition [Line Items] | ||
Acquisition-related costs | $ 20 | $ 33 |
Earnings Per Share - Number of
Earnings Per Share - Number of Shares Used in the Earnings Per Share Calculations (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Weighted-average basic shares outstanding | 929.7 | 666.5 |
Dilutive effect of stock options | 3 | 3.1 |
Weighted-average diluted shares outstanding | 932.7 | 669.6 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of options excluded from the computation of diluted earnings per share | 0 | 0 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component - Changes in Accumulated Other Comprehensive Loss (AOCL) by Component (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
AOC Income (Loss), Opening balance | $ (2,103) | $ (2,814) |
Other comprehensive income (loss) before reclassifications | (303) | 17 |
Amounts reclassified from accumulated other comprehensive loss | 33 | 41 |
Net other comprehensive (loss) income | (270) | 58 |
AOC Income (Loss), Closing balance | (2,373) | (2,756) |
Foreign currency net of hedging activities | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
AOC Income (Loss), Opening balance | (182) | 112 |
Other comprehensive income (loss) before reclassifications | (349) | 0 |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 |
Net other comprehensive (loss) income | (349) | 0 |
AOC Income (Loss), Closing balance | (531) | 112 |
Derivatives | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
AOC Income (Loss), Opening balance | (4) | (40) |
Other comprehensive income (loss) before reclassifications | 0 | 17 |
Amounts reclassified from accumulated other comprehensive loss | 1 | 2 |
Net other comprehensive (loss) income | 1 | 19 |
AOC Income (Loss), Closing balance | (3) | (21) |
Pension and post-retirement defined benefit plans | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
AOC Income (Loss), Opening balance | (1,915) | (2,878) |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Amounts reclassified from accumulated other comprehensive loss | 31 | 39 |
Net other comprehensive (loss) income | 31 | 39 |
AOC Income (Loss), Closing balance | (1,884) | (2,839) |
Equity Accounted Investments | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
AOC Income (Loss), Opening balance | (2) | (8) |
Other comprehensive income (loss) before reclassifications | 46 | 0 |
Amounts reclassified from accumulated other comprehensive loss | 1 | 0 |
Net other comprehensive (loss) income | 47 | 0 |
AOC Income (Loss), Closing balance | $ 45 | $ (8) |
Changes in Accumulated Other _4
Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component - Amounts in Pension and Post-retirement Defined Benefit Plans Reclassified from AOCL (Details) - Reclassification out of Accumulated Other Comprehensive Income - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Recognition of net actuarial loss | $ 39 | $ 53 |
Income tax recovery | (8) | (14) |
Total net of income tax | $ 31 | $ 39 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of Accounts Receivable (Details) - CAD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total accounts receivable | $ 854 | $ 853 | ||
Allowance for credit losses | (36) | (34) | $ (39) | $ (40) |
Total accounts receivable, net | 818 | 819 | ||
Freight | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total accounts receivable | 599 | 614 | ||
Allowance for credit losses | (22) | (20) | (24) | (25) |
Total accounts receivable, net | 577 | 594 | ||
Non-freight | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total accounts receivable | 255 | 239 | ||
Allowance for credit losses | (14) | (14) | $ (15) | $ (15) |
Total accounts receivable, net | $ 241 | $ 225 |
Accounts Receivable, Net - Allo
Accounts Receivable, Net - Allowance for Credit Loss (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses, opening balance | $ (34) | $ (40) |
Current period credit loss provision, net | (2) | 1 |
Allowance for credit losses, closing balance | (36) | (39) |
Freight | ||
Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses, opening balance | (20) | (25) |
Current period credit loss provision, net | (2) | 1 |
Allowance for credit losses, closing balance | (22) | (24) |
Non-freight | ||
Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses, opening balance | (14) | (15) |
Current period credit loss provision, net | 0 | 0 |
Allowance for credit losses, closing balance | $ (14) | $ (15) |
Government Assistance (Details)
Government Assistance (Details) - CAD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |||
Government Assistance Received Amount | $ 13 | ||
Properties | 21,120 | $ 21,200 | |
Unamortized Government Assistance | 269 | $ 259 | |
Amortization Expense Related to Government Assistance | $ 3 | $ 3 |
Business Acquisition (Details)
Business Acquisition (Details) - CAD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||
Investment in Kansas City Southern | $ 41,626 | $ 42,309 | |
Equity earnings of Kansas City Southern | 198 | $ 0 | |
Dividend from Kansas City Southern | 334 | 0 | |
Acquisition-related costs | 0 | 3 | |
KCS | |||
Business Acquisition [Line Items] | |||
Investment in Kansas City Southern | 41,626 | ||
Equity earnings of Kansas City Southern | 198 | ||
Dividend from Kansas City Southern | 334 | ||
Equity Method Investment, Amortization Of Difference Between Carrying Amount and Underlying Equity | 40 | ||
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ 30,000 | ||
KCS | |||
Business Acquisition [Line Items] | |||
Business Acquisition, Name of Acquired Entity | Kansas City Southern | ||
Acquisition-related costs | $ 20 | 36 | |
Acquisition-related costs | 3 | ||
Payments of Financing Costs | 33 | ||
Purchased services and other | KCS | |||
Business Acquisition [Line Items] | |||
Acquisition-related costs | 20 | $ 33 | |
Income (Loss) from Equity Method Investments | KCS | |||
Business Acquisition [Line Items] | |||
Acquisition-related costs | $ 13 |
Investment in KCS - Narrative (
Investment in KCS - Narrative (Details) - CAD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Schedule of Equity Method Investments [Line Items] | ||
Investment in Kansas City Southern | $ 41,626 | $ 42,309 |
KCS | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in Kansas City Southern | $ 41,626 |
Investment in KCS - Summarized
Investment in KCS - Summarized Financial Information, Statement of Income (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of Equity Method Investments [Line Items] | ||
Revenues | $ 1,838 | $ 1,959 |
Total operating expenses | 1,303 | 1,179 |
Operating income | 535 | 780 |
Income before income tax expense | 675 | 793 |
Net income | 590 | $ 602 |
KCS | ||
Schedule of Equity Method Investments [Line Items] | ||
Revenues | 986 | |
Total operating expenses | 617 | |
Operating income | 369 | |
Other | 39 | |
Income before income tax expense | 330 | |
Net income | $ 238 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2022CAD ($) | Mar. 31, 2022USD ($) | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | |
Commercial Paper | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 1,000,000,000 | |||
Commercial paper borrowings | $ 650 | $ 520,000,000 | $ 265,000,000 | |
Weighted-average interest rate | 0.82% | 0.82% | 0.32% | |
Term Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, Face amount | $ 625 | $ 500,000,000 | $ 500,000,000 | |
Debt, Weighted Average Interest Rate | 1.55% | 1.55% | 1.38% | |
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 1,300,000,000 | |||
5.100% 10-year Notes | ||||
Debt Instrument [Line Items] | ||||
Extinguishment of Debt, Amount | $ 125 | |||
4.500% 10-year Notes | ||||
Debt Instrument [Line Items] | ||||
Extinguishment of Debt, Amount | 313 | $ 250,000,000 | ||
6.99% Finance Lease | ||||
Debt Instrument [Line Items] | ||||
Extinguishment of Debt, Amount | $ 97 | $ 76,000,000 | ||
5.100% 10-year Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, Interest rate | 5.10% | 5.10% | ||
Debt instrument, Term | 10 years | 10 years | ||
4.500% 10-year Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, Interest rate | 4.50% | 4.50% | ||
Debt instrument, Term | 10 years | 10 years | ||
6.99% Finance Lease | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, Interest rate | 6.99% | 6.99% |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - CAD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Schedule of Investments [Line Items] | |||
Debt and finance lease liabilities, Carrying value | $ 18,389 | $ 19,151 | |
Debt and finance lease liabilities, Fair value | 18,699 | $ 21,265 | |
Net Investment Hedge | |||
Schedule of Investments [Line Items] | |||
Derivative, Gain (Loss) on Derivative, Net | $ 98 | $ 76 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) shares in Millions | Jan. 29, 2021shares |
2021 Normal Course Issuer Bid (NCIB) | |
Common Shares authorized to be repurchased | 16.7 |
Pension and Other Benefits - Na
Pension and Other Benefits - Narrative (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Defined Benefit Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions made by the Company | $ 3 | $ 4 |
Pension and Other Benefits - Ne
Pension and Other Benefits - Net Periodic Benefit Cost for DB Pension Plans and Other Benefits (Details) - CAD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Defined Benefit Plan and Other Postretirement Benefit Plans | ||
Total other components of net periodic benefit (recovery) cost | $ (101) | $ (95) |
Defined Benefit Pension Plan | ||
Defined Benefit Plan and Other Postretirement Benefit Plans | ||
Current service cost (benefits earned by employees) | 37 | 43 |
Interest cost on benefit obligation | 96 | 88 |
Expected return on fund assets | (240) | (240) |
Recognized net actuarial loss | 38 | 52 |
Total other components of net periodic benefit (recovery) cost | (106) | (100) |
Net periodic benefit (recovery) cost | (69) | (57) |
Other Post-retirement Benefit Plans | ||
Defined Benefit Plan and Other Postretirement Benefit Plans | ||
Current service cost (benefits earned by employees) | 2 | 3 |
Interest cost on benefit obligation | 4 | 4 |
Expected return on fund assets | 0 | 0 |
Recognized net actuarial loss | 1 | 1 |
Total other components of net periodic benefit (recovery) cost | 5 | 5 |
Net periodic benefit (recovery) cost | $ 7 | $ 8 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - CAD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 44 | $ 24 | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options issued | 819,760 | |||
Weighted-average grant price | $ 90.86 | |||
Expiration period | 7 years | |||
Stock options grant date fair value | $ 15 | |||
Stock Options | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 12 months | |||
Stock Options | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 48 months | |||
Performance Share Units (PSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units issued | 411,999 | 668,405 | ||
Grant date fair value | $ 36 | |||
PSU payout percentage | 200.00% | |||
Number of trading days | 30 days | |||
Units paid in period | 631,457 | |||
Cash payout | $ 116 | |||
Performance Deferred Share Units (PDSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units issued | 13,506 | |||
Grant date fair value | $ 2 | |||
Number of additional PDSUs that can be granted as a % of original units granted | 25.00% | |||
PSUs and PDSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Deferred Share Units (DSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 36 months | |||
Units issued | 39,409 | |||
Grant date fair value | $ 4 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted-Average Fair Value Assumptions (Details) - Stock Options | 3 Months Ended |
Mar. 31, 2022CAD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected option life (years) | 4 years 9 months |
Risk-free interest rate | 1.59% |
Expected stock price volatility | 26.84% |
Expected annual dividends per share | $ | $ 0.760 |
Expected forfeiture rate | 2.98% |
Weighted-average grant date fair value per option granted during the period | $ / shares | $ 18.69 |
Contingencies - Legal Proceedin
Contingencies - Legal Proceedings (Details) - 3 months ended Mar. 31, 2022 - Lac-Megantic Rail Accident $ in Millions, $ in Millions | CAD ($)claim | USD ($)claim |
Claimed derailment damages | ||
Other Commitments [Line Items] | ||
Amount of fund to be distributed | $ 440 | |
Quebec Minister of Sustainable Development, Environment, Wildlife and Parks | ||
Other Commitments [Line Items] | ||
Value of damages sought | 95 | |
Attorney General of Quebec | ||
Other Commitments [Line Items] | ||
Value of damages sought | 315 | |
Initial value of damages sought | 409 | |
Initial Subrogated Insurers | Subrogated insurance claim | ||
Other Commitments [Line Items] | ||
Value of damages sought | 15 | |
Initial value of damages sought | $ 16 | |
Number of subrogated insurer claims | claim | 8 | 8 |
Additional Subrogated Insurers | Subrogated insurance claim | ||
Other Commitments [Line Items] | ||
Value of damages sought | $ 3 | |
Number of subrogated insurer claims | claim | 2 | 2 |
Class Action Plaintiffs | ||
Other Commitments [Line Items] | ||
Value of damages sought | $ 5 | |
Number of plaintiffs | claim | 48 | 48 |
MMAR Estate Representative | Damages for loss in business value | ||
Other Commitments [Line Items] | ||
Value of damages sought | $ 30 | |
WD Trustee | Damaged rail cars and lost crude recovery | ||
Other Commitments [Line Items] | ||
Value of damages sought | 6 | |
WD Trustee | Reimbursement for settlement paid by consignor | ||
Other Commitments [Line Items] | ||
Value of damages sought | 110 | |
WD Trustee | Reimbursement for settlement paid by consignee | ||
Other Commitments [Line Items] | ||
Value of damages sought | $ 60 |
Contingencies - Environmental L
Contingencies - Environmental Liabilities (Details) - CAD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Site Contingency [Line Items] | |||
Total amount provided for provisions for environmental remediation costs | $ 79 | $ 79 | |
Term for expected payments to be made | 10 years | ||
Purchased services and other | |||
Site Contingency [Line Items] | |||
Environmental remediation expense | $ 2 | $ 2 |