x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Canada
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98-0355078
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(State or Other Jurisdiction
of Incorporation or Organization)
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(IRS Employer
Identification No.)
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7550 Ogden Dale Road S.E.,
Calgary, Alberta, Canada
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T2C 4X9
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on which Registered
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Common Shares, without par value
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New York Stock Exchange
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
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Emerging growth company o
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PART I
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Page
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Executive Officers of the Registrant
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PART II
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Item 5.
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Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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Item 15.
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Exhibits, Financial Statement Schedule
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Signatures
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•
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Provide Service: Providing efficient and consistent transportation solutions for the Company’s customers. “Doing what we say we are going to do” is what drives CP in providing a reliable product with a lower cost operating model. Centralized planning aligned with local execution is bringing the Company closer to the customer and accelerating decision-making.
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•
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Control Costs: Controlling and removing unnecessary costs from the organization, eliminating bureaucracy and continuing to identify productivity enhancements are the keys to success.
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•
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Optimize Assets: Through longer and heavier trains, and improved asset utilization, the Company is moving increased volumes with fewer locomotives and cars while unlocking capacity for future growth potential.
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•
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Operate Safely: Each year, CP safely moves millions of carloads of freight across North America while ensuring the safety of our people and the communities through which we operate. Safety is never to be compromised. CP strives for continuous implementation of state-of-the-art safety technology, safety management systems, and safety culture with our employees to ensure safe, efficient operations across our network.
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•
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Develop People: CP recognizes that none of the other foundations can be achieved without its people. Every CP employee is a railroader and the Company has established a culture focused on a passion for service with integrity, in everything we do. Coaching and mentoring all employees into becoming leaders will help drive CP forward.
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2018 Freight Revenues
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2017 Freight Revenues
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2016 Freight Revenues
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2018 Freight Revenues
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2017 Freight Revenues
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2016 Freight Revenues
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2018 Bulk Revenues
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2017 Bulk Revenues
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2016 Bulk Revenues
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(41% of Freight Revenues)
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(44% of Freight Revenues)
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(44% of Freight Revenues)
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2018 Grain Revenues
(53% of Bulk Revenues; 22% of Freight Revenues)
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2017 Grain Revenues
(54% of Bulk Revenues; 24% of Freight Revenues)
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2016 Grain Revenues
(55% of Bulk Revenues; 24% of Freight Revenues)
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2018 Coal Revenues
(23% of Bulk Revenues; 9% of Freight Revenues)
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2017 Coal Revenues
(22% of Bulk Revenues; 10% of Freight Revenues)
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2016 Coal Revenues
(22% of Bulk Revenues; 10% of Freight Revenues)
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2018 Potash Revenues
(16% of Bulk Revenues; 7% of Freight Revenues)
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2017 Potash Revenues
(15% of Bulk Revenues; 6% of Freight Revenues)
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2016 Potash Revenues
(12% of Bulk Revenues; 6% of Freight Revenues)
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2018 Fertilizers & Sulphur Revenues
(8% of Bulk Revenues; 3% of Freight Revenues)
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2017 Fertilizers & Sulphur Revenues
(9% of Bulk Revenues; 4% of Freight Revenues)
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2016 Fertilizers & Sulphur Revenues
(11% of Bulk Revenues; 4% of Freight Revenues)
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2018 Merchandise Revenues
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2017 Merchandise Revenues
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2016 Merchandise Revenues
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(37% of Freight Revenues)
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(35% of Freight Revenues)
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(34% of Freight Revenues)
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2018 Forest Products Revenues
(11% of Merchandise Revenues; 4% of Freight Revenues)
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2017 Forest Products Revenues
(12% of Merchandise Revenues; 4% of Freight Revenues)
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2016 Forest Products Revenues
(13% of Merchandise Revenues; 5% of Freight Revenues)
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2018 Energy, Chemicals & Plastics Revenues
(47% of Merchandise Revenues; 17% of Freight Revenues)
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2017 Energy, Chemicals & Plastics Revenues
(41% of Merchandise Revenues; 14% of Freight Revenues)
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2016 Energy, Chemicals & Plastics Revenues
(42% of Merchandise Revenues; 14% of Freight Revenues)
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2018 Metals, Minerals & Consumer Products Revenues
(30% of Merchandise Revenues; 11% of Freight Revenues)
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2017 Metals, Minerals & Consumer Products Revenues
(34% of Merchandise Revenues; 12% of Freight Revenues)
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2016 Metals, Minerals & Consumer Products Revenues
(28% of Merchandise Revenues; 9% of Freight Revenues)
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2018 Automotive Revenues
(12% of Merchandise Revenues; 5% of Freight Revenues)
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2017 Automotive Revenues
(13% of Merchandise Revenues; 5% of Freight Revenues)
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2016 Automotive Revenues
(17% of Merchandise Revenues; 6% of Freight Revenues)
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2018 Intermodal Revenues
(22% of Freight Revenues)
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2017 Intermodal Revenues
(21% of Freight Revenues)
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2016 Intermodal Revenues
(22% of Freight Revenues)
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•
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protecting the environment;
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•
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ensuring compliance with applicable environmental laws and regulations;
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•
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promoting awareness and training;
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•
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managing emergencies through preparedness; and
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•
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encouraging involvement, consultation and dialogue with communities along the Company’s lines.
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•
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CP employs its own police service that works closely with communities and other law enforcement and government agencies to promote railway safety and infrastructure security. As a railway law enforcement agency, CP Police Services is headquartered in Calgary, with police officers assigned to over 25 field offices responsible for railway police operations in six Canadian provinces and 14 U.S. states. CP Police Services operates on the CP rail network as well as in areas where CP has non-railway operations.
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•
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CP’s Police Communication Centre (“PCC”) operates 24 hours a day. PCC receives reports of emergencies, dangerous or potentially dangerous conditions, and other safety and security issues from our employees, the public, and law enforcement and other government officials. PCC ensures that proper emergency responders are notified as well as governing bodies.
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•
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CP’s Security Management Plan is a comprehensive, risk-based plan modelled on and developed in conjunction with the security plan prepared by the Association of American Railroads post-September 11, 2001. Under this plan, CP routinely examines and prioritizes railway assets, physical and cyber vulnerabilities, and threats, as well as tests and revises measures to provide essential railway security. To address cyber security risks, CP implements mitigation programs that evolve with the changing technology threat environment. The Company has also worked diligently to establish backup sites to ensure a seamless transition in the event that the Company's operating systems are the target of a cyber-attack. By doing so, CP is able to maintain network fluidity.
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•
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CP security efforts consist of a wide variety of measures including employee training, engagement with our customers and training of emergency responders.
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Total
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First main track
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12,469
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Second and other main track
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1,114
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Passing sidings and yard track
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4,260
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Industrial and way track
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781
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Total track miles
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18,624
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Locomotives
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Owned
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Leased
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Total
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Average Age
(in years)
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Road freight
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High-adhesion alternating current
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784
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34
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818
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13
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Standard direct current
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249
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—
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249
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31
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Road switcher
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342
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—
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342
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26
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Yard switcher
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14
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—
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14
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36
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Total locomotives
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1,389
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34
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1,423
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20
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Freight cars
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Owned
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Leased
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Total
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Average Age
(in years)
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Box car
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2,687
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126
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2,813
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31
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Covered hopper
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7,305
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10,639
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17,944
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28
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Flat car
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1,439
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779
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2,218
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24
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Gondola
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3,749
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1,430
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5,179
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21
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Intermodal
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1,325
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—
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1,325
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16
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Multi-level autorack
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2,788
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567
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3,355
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30
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Company service car
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2,265
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171
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2,436
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47
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Open top hopper
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312
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—
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312
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32
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Tank car
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214
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9
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223
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14
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Total freight cars
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22,084
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13,721
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35,805
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28
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Name, Age and Position
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Business Experience
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Keith Creel, 50
President and Chief Executive Officer
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Mr. Creel became President and CEO of CP on January 31, 2017. Previously, he was President and Chief Operating Officer ("COO") from February 5, 2013, to January 30, 2017.
Prior to joining CP, Mr. Creel was Executive Vice-President and COO at CN from January 2010 to February 2013. During his time at CN, Mr. Creel held various positions including Executive Vice-President, Operations, Senior Vice-President Eastern Region, Senior Vice-President Western Region, and Vice-President of the Prairie Division.
Mr. Creel began his railroad career at Burlington Northern Railway in 1992 as an intermodal ramp manager in Birmingham, Alabama. He also spent part of his career at Grand Trunk Western Railroad as a superintendent and general manager, and at Illinois Central Railroad as a trainmaster and director of corridor operations, prior to its merger with CN in 1999.
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Robert Johnson, 57
Executive Vice-President, Operations
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Mr. Johnson has been Executive Vice-President, Operations of CP since April 20, 2016. Previous to this appointment, Mr. Johnson was CP's Senior Vice-President Operations, Southern Region from June 2013 to April 2016.
Prior to joining CP, Mr. Johnson's railroad career spanned 32 years with BNSF, where he held roles that progressively added to his responsibilities in operations, transportation and service excellence. His most recent position at BNSF was General Manager, Northwest Division, overseeing day-to-day operations for that region.
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Nadeem Velani, 46
Executive Vice-President and Chief Financial Officer
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Mr. Velani has been Executive Vice-President and CFO of CP since October 17, 2017. Previous to this appointment, he was the Vice-President and CFO of CP from October 19, 2016 to October 16, 2017, Vice-President, Investor Relations from October 28, 2015 and Assistant Vice-President, Investor Relations from March 11, 2013.
Prior to joining CP, Mr. Velani spent 15 years at CN where he worked in a variety of positions in Strategic and Financial Planning, Investor Relations, Sales and Marketing, and the Office of the President and CEO.
Mr. Velani holds a bachelor's degree in Economics from Western University and a Masters of Business Administration degree ("MBA") in Finance/International Business from McGill University.
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John Brooks, 48
Executive Vice-President and Chief Marketing Officer
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Mr. Brooks has been Executive Vice-President and CMO of CP since February 14, 2019. Previous to this appointment, he was the Vice-President and CMO of CP from February 14, 2017 to February 13, 2019. He has worked in senior marketing roles at CP since he joined the Company in 2007, most recently as Vice-President, Marketing - Bulk and Intermodal.
Mr. Brooks began his railroading career with UP and later helped start I&M Rail Link, LLC, which was purchased by DM&E in 2002. Mr. Brooks was Vice-President, Marketing at DM&E prior to it being acquired by CP in 2007.
With more than 20 years in the railroading business, Mr. Brooks brings a breadth of experience to the CMO role that will be pivotal to CP's continued and future success.
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James Clements, 49
Vice-President, Strategic Planning and Transportation Services
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Mr. Clements has been Vice-President, Strategic Planning and Transportation Services of CP since 2015. Mr. Clements has responsibilities that include strategic network issues and Network Service Centre operations. In addition, he has responsibility for all of CP’s facilities and Real Estate across North America.
Mr. Clements has been at CP for 24 years and his previous experience covers a wide range of areas of CP’s business, including car management, finance, joint facilities agreements, logistics, grain marketing and sales in both Canada and the U.S., as well as marketing and sales responsibility for various other lines of business at CP.
He has an MBA in Finance/International Business from McGill University and a Bachelor of Science in Computer Science and Mathematics from McMaster University.
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Jeffrey Ellis, 51
Chief Legal Officer and Corporate Secretary
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Mr. Ellis has been Chief Legal Officer and Corporate Secretary of CP since November 23, 2015. Mr. Ellis is accountable for the overall strategic leadership, oversight and performance of the legal, corporate secretarial, government relations and public affairs functions of CP in Canada and the U.S.
Prior to joining CP in 2015, Mr. Ellis was the U.S. General Counsel at BMO Financial Group. Before joining BMO in 2006, Mr. Ellis was with the law firm of Borden Ladner Gervais LLP in Toronto, Canada.
Mr. Ellis has Bachelor of Arts and Master of Arts from the University of Toronto, Juris Doctor and Master of Laws from Osgoode Hall Law School, and an MBA from the Richard Ivey School of Business, University of Western Ontario. Jeff is a member of the bars of New York, Illinois and Ontario.
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Mike Foran, 45
Vice-President, Market Strategy and
Asset Management
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Mr. Foran has been Vice-President, Market Strategy and Asset Management of CP since February 14, 2017. His prior roles with CP include Vice-President Network Transportation from 2014 to 2017, Assistant Vice-President Network Transportation from 2013 to 2014, and General Manager – Asset Management from 2012 to 2013. In over 20 years at CP, Mr. Foran has worked in operations, business development, marketing and general management.
Mr. Foran holds an Executive MBA from the Ivey School of Business at Western University and a Bachelor of Commerce from the University of Calgary.
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Michael Redeker, 58
Vice-President and Chief Information Officer
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Mr. Redeker has been Vice-President and Chief Information Officer ("CIO") of CP since October 15, 2012.
Prior to joining CP, Mr. Redeker was Vice-President and CIO of Alberta Treasury Branch from May 2007 to September 2012. He also spent 11 years at IBM Canada, where he focused on delivering quality information technology services within the financial services industry.
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Laird Pitz, 74
Senior Vice-President and Chief Risk Officer
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Mr. Pitz has been Senior Vice-President and Chief Risk Officer ("CRO") of CP since October 17, 2017. Previously, he was the Vice-President and CRO of CP from October 29, 2014 to October 16, 2017 and the Vice-President, Security and Risk Management of CP from April 2014 to October 2014.
Prior to joining CP, Mr. Pitz was retired from March 2012 to April 2014, and Vice-President, Risk Mitigation of CN from September 2003 to March 2012.
Mr. Pitz, a Vietnam War veteran and former Federal Bureau of Investigation special agent, is a 40-year career professional who has directed strategic and operational risk mitigation, security and crisis management functions for companies operating in a wide range of fields, including defence, logistics and transportation.
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Chad Rolstad, 42
Vice-President, Human Resources
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Mr. Rolstad has been Vice-President, Human Resources of CP since February 14, 2019. Previous to this appointment, he was Assistant Vice-President, Human Resources of CP from August 1, 2018 to February 13, 2019 and Assistant Vice-President, Strategic Procurement of CP from April 10, 2017 to July 31, 2018.
Prior to joining CP, Mr. Rolstad held various leadership positions at BNSF Railway in marketing and operations.
Mr. Rolstad has a Bachelor of Science from the Colorado School of Mines and an MBA from Duke University.
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2018
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Total number of shares purchased(1)
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Average price paid per share(2)
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Total number of shares purchased as part of publicly announced plans or programs
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Maximum number of shares (or units) that may yet be purchased under the plans or programs
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October 1 to October 31
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399,700
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$
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259.71
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399,700
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5,283,240
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November 1 to November 30
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822,500
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272.23
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822,500
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4,460,740
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December 1 to December 31
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965,000
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249.10
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965,000
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3,495,740
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Ending Balance
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2,187,200
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$
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259.74
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2,187,200
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N/A
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(in millions, except per share data, percentage and ratios)
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2018
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2017
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2016
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2015
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2014
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|||||
Financial Performance
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Total revenues
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$
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7,316
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$
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6,554
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$
|
6,232
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$
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6,712
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$
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6,620
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Operating income(1)
|
2,831
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|
2,519
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|
2,411
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|
2,618
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|
2,202
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Adjusted operating income(1) (2)
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2,831
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|
2,468
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|
2,411
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|
2,550
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|
2,198
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Net income
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1,951
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|
2,405
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|
1,599
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|
1,352
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|
1,476
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Adjusted income(2)
|
2,080
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|
1,666
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|
1,549
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|
1,625
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|
1,482
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Basic earnings per share ("EPS")
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13.65
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16.49
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|
10.69
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|
8.47
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|
8.54
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Diluted EPS
|
13.61
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16.44
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|
10.63
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|
8.40
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|
8.46
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Adjusted diluted EPS(2)
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14.51
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11.39
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|
10.29
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|
10.10
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|
8.50
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Dividends declared per share
|
2.5125
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|
2.1875
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|
1.8500
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1.4000
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1.4000
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Financial Position
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Total assets
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$
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21,254
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$
|
20,135
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$
|
19,221
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$
|
19,637
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$
|
16,550
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Total long-term debt, including current portion
|
8,696
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|
8,159
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|
8,684
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|
8,957
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|
5,759
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Total shareholders' equity
|
6,636
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|
6,437
|
|
4,626
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|
4,796
|
|
5,610
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Cash provided by operating activities
|
2,712
|
|
2,182
|
|
2,089
|
|
2,459
|
|
2,123
|
|
|||||
Free cash(2)
|
1,289
|
|
874
|
|
1,007
|
|
1,381
|
|
969
|
|
|||||
Financial Ratios
|
|
|
|
|
|
||||||||||
Return on invested capital ("ROIC")(2)
|
15.3
|
%
|
20.5
|
%
|
14.4
|
%
|
12.9
|
%
|
14.4
|
%
|
|||||
Adjusted ROIC(2)
|
16.2
|
%
|
14.7
|
%
|
14.0
|
%
|
15.2
|
%
|
14.5
|
%
|
|||||
Operating ratio(1) (3)
|
61.3
|
%
|
61.6
|
%
|
61.3
|
%
|
61.0
|
%
|
66.7
|
%
|
|||||
Adjusted operating ratio(1) (2)
|
61.3
|
%
|
62.4
|
%
|
61.3
|
%
|
62.0
|
%
|
66.7
|
%
|
(1)
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Comparative years' figures have been restated for the retrospective adoption of Accounting Standards Update ("ASU") 2017-07, and the impact on the 2017 and 2016 comparatives are discussed further in Item 8. Financial Statements and Supplementary Data, Note 2 Accounting changes. The restatements of 2015 and 2014 comparatives resulted in a decrease in Operating income of $70 million and $137 million for the years ended December 31, 2015 and 2014, respectively.
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(2)
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These measures have no standardized meanings prescribed by accounting principles generally accepted in the United States of America ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. These measures are defined and reconciled in Non-GAAP Measures in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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(3)
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Operating ratio is defined as operating expenses divided by revenues.
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Page
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Executive Summary
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2019 Outlook
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Performance Indicators
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Results of Operations
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Impact of Foreign Exchange on Earnings
|
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Impact of Fuel Price on Earnings
|
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Impact of Share Price on Earnings
|
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Operating Revenues
|
|
Operating Expenses
|
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Other Income Statement Items
|
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Liquidity and Capital Resources
|
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Non-GAAP Measures
|
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Off-Balance Sheet Arrangements
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Critical Accounting Estimates
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Forward-Looking Statements
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•
|
Financial performance – In 2018, CP reported Diluted EPS of $13.61, a 17% decrease from $16.44 in 2017. The Adjusted diluted EPS increased to $14.51, a 27% improvement compared to Adjusted diluted EPS of $11.39 in 2017. CP’s commitment to service and operational efficiency produced an Operating ratio and Adjusted operating ratio of 61.3%. Adjusted diluted EPS and Adjusted operating ratio are defined and reconciled in Non-GAAP Measures and discussed further in Results of Operations of this Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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•
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Total revenues – CP’s total revenues increased by 12% to $7,316 million in 2018 from $6,554 million in 2017, driven primarily by an 8% volume growth as measured in revenue ton-miles ("RTM").
|
•
|
Operating performance – CP's average train weight increased by 3% to 9,100 tons and fuel efficiency improved by 3%, primarily as a result of improvements in operating plan efficiency. Average train speed decreased by 5% to 21.5 miles per hour and average dwell time increased by 3% to 6.8 hours in 2018 primarily from network disruptions from labour negotiations in the second quarter and harsher weather conditions in the first quarter. These metrics are discussed further in Performance Indicators of this Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
|
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|
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% Change
|
||||||
For the year ended December 31
|
2018
|
|
2017(1)
|
|
2016(1)
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||
Operations Performance
|
|
|
|
|
|
|||||
Gross ton-miles (“GTMs”) (millions)
|
275,362
|
|
252,195
|
|
242,694
|
|
9
|
|
4
|
|
Train miles (thousands)
|
32,312
|
|
30,632
|
|
30,373
|
|
5
|
|
1
|
|
Average train weight – excluding local traffic (tons)
|
9,100
|
|
8,806
|
|
8,614
|
|
3
|
|
2
|
|
Average train length – excluding local traffic (feet)
|
7,313
|
|
7,214
|
|
7,217
|
|
1
|
|
—
|
|
Average terminal dwell (hours)
|
6.8
|
|
6.6
|
|
6.7
|
|
3
|
|
(1
|
)
|
Average train speed (miles per hour, or "mph")
|
21.5
|
|
22.6
|
|
23.5
|
|
(5
|
)
|
(4
|
)
|
Fuel efficiency (U.S. gallons of locomotive fuel consumed/1,000 GTMs)
|
0.953
|
|
0.980
|
|
0.980
|
|
(3
|
)
|
—
|
|
Total employees (average)
|
12,695
|
|
12,034
|
|
12,082
|
|
5
|
|
—
|
|
Total employees (end of period)
|
12,770
|
|
12,163
|
|
11,653
|
|
5
|
|
4
|
|
Workforce (end of period)
|
12,793
|
|
12,242
|
|
11,698
|
|
5
|
|
5
|
|
Safety Indicators
|
|
|
|
|
|
|||||
FRA personal injuries per 200,000 employee-hours
|
1.47
|
|
1.65
|
|
1.67
|
|
(11
|
)
|
(1
|
)
|
FRA train accidents per million train-miles
|
1.10
|
|
0.99
|
|
1.12
|
|
11
|
|
(12
|
)
|
•
|
network disruptions from labour negotiations in the second quarter of 2018;
|
•
|
harsher weather conditions and increased network disruptions in the first quarter of 2018; and
|
•
|
higher volumes in the second half of the year and increased delays from accelerated track and roadway capital programs in the third quarter of 2018.
|
•
|
network disruptions from labour negotiations in the second quarter of 2018;
|
•
|
harsher weather conditions and increased network disruptions in the first quarter of 2018; and
|
•
|
higher volumes and increased delays from accelerated track and roadway capital programs in the third quarter of 2018.
|
•
|
increased volumes of heavier and slower frac sand and Potash trains;
|
•
|
decreased volumes of lighter and faster Intermodal trains; and
|
•
|
harsher weather conditions in the first quarter of 2017.
|
•
|
cost inflation;
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP in 2017; and
|
•
|
higher depreciation and amortization driven primarily from a higher asset base as a result of higher capital program spending in 2018.
|
•
|
higher volumes;
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP; and
|
•
|
the efficiencies generated from improved operating performance and asset utilization.
|
•
|
lower gains on land sales of $91 million, following the sales of CP's Arbutus Corridor and Obico rail yard in 2016;
|
•
|
the unfavourable impact of the change in FX of $32 million;
|
•
|
the impact of wage and benefit inflation; and
|
•
|
higher depreciation and amortization.
|
•
|
income tax recoveries of $541 million from tax rate changes;
|
•
|
higher Operating income; and
|
•
|
the favourable impact of FX translation on U.S. dollar-denominated debt.
|
•
|
the impact of higher fuel prices;
|
•
|
cost inflation; and
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP in 2017.
|
•
|
higher volumes;
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP; and
|
•
|
efficiencies generated from improved operating performance and asset utilization.
|
•
|
a higher average invested capital base due to higher Retained earnings from Net income;
|
•
|
higher Income tax expense due to lower income tax recoveries from tax rate changes in 2018 compared to 2017; and
|
•
|
the unfavourable impact of the change in FX translation on U.S. dollar-denominated debt.
|
Average exchange rates (Canadian/U.S. dollar)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
For the year ended – December 31
|
$
|
1.30
|
|
$
|
1.30
|
|
$
|
1.33
|
|
$
|
1.28
|
|
$
|
1.10
|
|
For the three months ended – December 31
|
$
|
1.32
|
|
$
|
1.27
|
|
$
|
1.33
|
|
$
|
1.34
|
|
$
|
1.13
|
|
Ending exchange rates (Canadian/U.S. dollar)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
Beginning of year – January 1
|
$
|
1.25
|
|
$
|
1.34
|
|
$
|
1.38
|
|
$
|
1.16
|
|
$
|
1.06
|
|
Beginning of quarter – April 1
|
$
|
1.29
|
|
$
|
1.33
|
|
$
|
1.30
|
|
$
|
1.27
|
|
$
|
1.11
|
|
Beginning of quarter – July 1
|
$
|
1.32
|
|
$
|
1.30
|
|
$
|
1.29
|
|
$
|
1.25
|
|
$
|
1.07
|
|
Beginning of quarter – October 1
|
$
|
1.29
|
|
$
|
1.25
|
|
$
|
1.31
|
|
$
|
1.33
|
|
$
|
1.12
|
|
End of year – December 31
|
$
|
1.36
|
|
$
|
1.25
|
|
$
|
1.34
|
|
$
|
1.38
|
|
$
|
1.16
|
|
High/Low exchange rates (Canadian/U.S. dollar)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
High
|
$
|
1.37
|
|
$
|
1.37
|
|
$
|
1.46
|
|
$
|
1.40
|
|
$
|
1.16
|
|
Low
|
$
|
1.23
|
|
$
|
1.21
|
|
$
|
1.25
|
|
$
|
1.17
|
|
$
|
1.06
|
|
Average Fuel Price (U.S. dollars per U.S. gallon)
|
2018
|
|
2017
|
|
2016
|
|
|||
For the year ended – December 31
|
$
|
2.72
|
|
$
|
2.16
|
|
$
|
1.80
|
|
For the three months ended – December 31
|
$
|
2.71
|
|
$
|
2.43
|
|
$
|
2.01
|
|
Toronto Stock Exchange (in Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Opening Common Share price, as at January 1
|
$
|
229.66
|
|
$
|
191.56
|
|
$
|
176.73
|
|
Ending Common Share price, as at March 31
|
$
|
227.20
|
|
$
|
195.35
|
|
$
|
172.55
|
|
Ending Common Share price, as at June 30
|
$
|
240.92
|
|
$
|
208.65
|
|
$
|
166.33
|
|
Ending Common Share price, as at September 30
|
$
|
273.23
|
|
$
|
209.58
|
|
$
|
200.19
|
|
Ending Common Share price, as at December 31
|
$
|
242.24
|
|
$
|
229.66
|
|
$
|
191.56
|
|
Change in Common Share price for the year ended December 31
|
$
|
12.58
|
|
$
|
38.10
|
|
$
|
14.83
|
|
New York Stock Exchange (in U.S. dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Opening Common Share price, as at January 1
|
$
|
182.76
|
|
$
|
142.77
|
|
$
|
127.60
|
|
Ending Common Share price, as at March 31
|
$
|
176.50
|
|
$
|
146.92
|
|
$
|
132.69
|
|
Ending Common Share price, as at June 30
|
$
|
183.02
|
|
$
|
160.81
|
|
$
|
128.79
|
|
Ending Common Share price, as at September 30
|
$
|
211.94
|
|
$
|
168.03
|
|
$
|
152.70
|
|
Ending Common Share price, as at December 31
|
$
|
177.62
|
|
$
|
182.76
|
|
$
|
142.77
|
|
Change in Common Share price for the year ended December 31
|
$
|
(5.14
|
)
|
$
|
39.99
|
|
$
|
15.17
|
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||||
For the year ended
December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(2)
|
Total Change
|
% Change
|
FX Adjusted % Change(2)
|
||||||||||||
Freight revenues (in millions)(1)
|
$
|
7,152
|
|
$
|
6,375
|
|
$
|
6,060
|
|
$
|
777
|
|
12
|
|
12
|
|
$
|
315
|
|
5
|
6
|
Non-freight revenues (in millions)
|
164
|
|
179
|
|
172
|
|
(15
|
)
|
(8
|
)
|
(8
|
)
|
7
|
|
4
|
5
|
|||||
Total revenues (in millions)
|
$
|
7,316
|
|
$
|
6,554
|
|
$
|
6,232
|
|
$
|
762
|
|
12
|
|
12
|
|
$
|
322
|
|
5
|
6
|
Carloads (in thousands)
|
2,739.8
|
|
2,634.2
|
|
2,524.9
|
|
105.6
|
|
4
|
|
N/A
|
|
109.3
|
|
4
|
N/A
|
|||||
Revenue ton-miles (in millions)
|
154,207
|
|
142,540
|
|
135,952
|
|
11,667
|
|
8
|
|
N/A
|
|
6,588
|
|
5
|
N/A
|
|||||
Freight revenue per carload (in dollars)
|
$
|
2,611
|
|
$
|
2,420
|
|
$
|
2,400
|
|
$
|
191
|
|
8
|
|
8
|
|
$
|
20
|
|
1
|
2
|
Freight revenue per revenue ton-miles (in cents)
|
4.64
|
|
4.47
|
|
4.46
|
|
0.17
|
|
4
|
|
4
|
|
0.01
|
|
—
|
1
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
|||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
|||||||||||
Freight revenues (in millions)
|
$
|
1,566
|
|
$
|
1,532
|
|
$
|
1,480
|
|
$
|
34
|
|
2
|
|
2
|
$
|
52
|
|
4
|
5
|
Carloads (in thousands)
|
429.4
|
|
440.7
|
|
431.9
|
|
(11.3
|
)
|
(3
|
)
|
N/A
|
8.8
|
|
2
|
N/A
|
|||||
Revenue ton-miles (in millions)
|
36,856
|
|
37,377
|
|
36,892
|
|
(521
|
)
|
(1
|
)
|
N/A
|
485
|
|
1
|
N/A
|
|||||
Freight revenue per carload (in dollars)
|
$
|
3,645
|
|
$
|
3,477
|
|
$
|
3,426
|
|
$
|
168
|
|
5
|
|
5
|
$
|
51
|
|
1
|
3
|
Freight revenue per revenue ton-mile (in cents)
|
4.25
|
|
4.10
|
|
4.01
|
|
0.15
|
|
4
|
|
4
|
0.09
|
|
2
|
4
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
|||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
|||||||||||
Freight revenues (in millions)
|
$
|
673
|
|
$
|
631
|
|
$
|
606
|
|
$
|
42
|
|
7
|
|
7
|
$
|
25
|
|
4
|
4
|
Carloads (in thousands)
|
304.3
|
|
306.0
|
|
305.3
|
|
(1.7
|
)
|
(1
|
)
|
N/A
|
0.7
|
|
—
|
N/A
|
|||||
Revenue ton-miles (in millions)
|
22,443
|
|
22,660
|
|
22,171
|
|
(217
|
)
|
(1
|
)
|
N/A
|
489
|
|
2
|
N/A
|
|||||
Freight revenue per carload (in dollars)
|
$
|
2,211
|
|
$
|
2,061
|
|
$
|
1,984
|
|
$
|
150
|
|
7
|
|
7
|
$
|
77
|
|
4
|
4
|
Freight revenue per revenue ton-mile (in cents)
|
3.00
|
|
2.78
|
|
2.73
|
|
0.22
|
|
8
|
|
8
|
0.05
|
|
2
|
2
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
||||||||||
Freight revenues (in millions)
|
$
|
486
|
|
$
|
411
|
|
$
|
338
|
|
$
|
75
|
|
18
|
19
|
$
|
73
|
|
22
|
23
|
Carloads (in thousands)
|
158.4
|
|
137.4
|
|
116.4
|
|
21.0
|
|
15
|
N/A
|
21.0
|
|
18
|
N/A
|
|||||
Revenue ton-miles (in millions)
|
18,371
|
|
15,751
|
|
14,175
|
|
2,620
|
|
17
|
N/A
|
1,576
|
|
11
|
N/A
|
|||||
Freight revenue per carload (in dollars)
|
$
|
3,071
|
|
$
|
2,988
|
|
$
|
2,904
|
|
$
|
83
|
|
3
|
3
|
$
|
84
|
|
3
|
4
|
Freight revenue per revenue ton-mile (in cents)
|
2.65
|
|
2.61
|
|
2.38
|
|
0.04
|
|
2
|
2
|
0.23
|
|
10
|
11
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
||||||||||||||
Freight revenues (in millions)
|
$
|
243
|
|
$
|
241
|
|
$
|
284
|
|
$
|
2
|
|
1
|
|
1
|
|
$
|
(43
|
)
|
(15
|
)
|
(14
|
)
|
Carloads (in thousands)
|
58.1
|
|
57.7
|
|
59.6
|
|
0.4
|
|
1
|
|
N/A
|
|
(1.9
|
)
|
(3
|
)
|
N/A
|
|
|||||
Revenue ton-miles (in millions)
|
4,051
|
|
3,849
|
|
4,140
|
|
202
|
|
5
|
|
N/A
|
|
(291
|
)
|
(7
|
)
|
N/A
|
|
|||||
Freight revenue per carload (in dollars)
|
$
|
4,186
|
|
$
|
4,178
|
|
$
|
4,769
|
|
$
|
8
|
|
—
|
|
1
|
|
$
|
(591
|
)
|
(12
|
)
|
(11
|
)
|
Freight revenue per revenue ton-mile (in cents)
|
6.00
|
|
6.27
|
|
6.87
|
|
(0.27
|
)
|
(4
|
)
|
(4
|
)
|
(0.60
|
)
|
(9
|
)
|
(8
|
)
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
||||||||||||
Freight revenues (in millions)
|
$
|
284
|
|
$
|
265
|
|
$
|
275
|
|
$
|
19
|
|
7
|
8
|
$
|
(10
|
)
|
(4
|
)
|
(2
|
)
|
Carloads (in thousands)
|
68.6
|
|
65.8
|
|
66.1
|
|
2.8
|
|
4
|
N/A
|
(0.3
|
)
|
—
|
|
N/A
|
|
|||||
Revenue ton-miles (in millions)
|
4,763
|
|
4,484
|
|
4,691
|
|
279
|
|
6
|
N/A
|
(207
|
)
|
(4
|
)
|
N/A
|
|
|||||
Freight revenue per carload (in dollars)
|
$
|
4,139
|
|
$
|
4,036
|
|
$
|
4,157
|
|
$
|
103
|
|
3
|
3
|
$
|
(121
|
)
|
(3
|
)
|
(1
|
)
|
Freight revenue per revenue ton-mile (in cents)
|
5.96
|
|
5.92
|
|
5.86
|
|
0.04
|
|
1
|
1
|
0.06
|
|
1
|
|
3
|
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
||||||||||||
Freight revenues (in millions)
|
$
|
1,243
|
|
$
|
898
|
|
$
|
852
|
|
$
|
345
|
|
38
|
39
|
$
|
46
|
|
5
|
|
7
|
|
Carloads (in thousands)
|
334.6
|
|
269.5
|
|
250.0
|
|
65.1
|
|
24
|
N/A
|
19.5
|
|
8
|
|
N/A
|
|
|||||
Revenue ton-miles (in millions)
|
27,830
|
|
21,327
|
|
19,021
|
|
6,503
|
|
30
|
N/A
|
2,306
|
|
12
|
|
N/A
|
|
|||||
Freight revenue per carload (in dollars)
|
$
|
3,715
|
|
$
|
3,333
|
|
$
|
3,410
|
|
$
|
382
|
|
11
|
12
|
$
|
(77
|
)
|
(2
|
)
|
—
|
|
Freight revenue per revenue ton-mile (in cents)
|
4.47
|
|
4.21
|
|
4.48
|
|
0.26
|
|
6
|
6
|
(0.27
|
)
|
(6
|
)
|
(4
|
)
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
|||||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
|||||||||||||
Freight revenues (in millions)
|
$
|
797
|
|
$
|
739
|
|
$
|
564
|
|
$
|
58
|
|
8
|
|
8
|
$
|
175
|
|
31
|
|
33
|
|
Carloads (in thousands)
|
252.2
|
|
255.3
|
|
195.3
|
|
(3.1
|
)
|
(1
|
)
|
N/A
|
60.0
|
|
31
|
|
N/A
|
|
|||||
Revenue ton-miles (in millions)
|
11,858
|
|
11,468
|
|
8,338
|
|
390
|
|
3
|
|
N/A
|
3,130
|
|
38
|
|
N/A
|
|
|||||
Freight revenue per carload (in dollars)
|
$
|
3,161
|
|
$
|
2,894
|
|
$
|
2,888
|
|
$
|
267
|
|
9
|
|
9
|
$
|
6
|
|
—
|
|
2
|
|
Freight revenue per revenue ton-mile (in cents)
|
6.72
|
|
6.44
|
|
6.77
|
|
0.28
|
|
4
|
|
4
|
(0.33
|
)
|
(5
|
)
|
(3
|
)
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
||||||||||||
Freight revenues (in millions)
|
$
|
322
|
|
$
|
293
|
|
$
|
350
|
|
$
|
29
|
|
10
|
11
|
$
|
(57
|
)
|
(16
|
)
|
(15
|
)
|
Carloads (in thousands)
|
108.3
|
|
105.1
|
|
124.1
|
|
3.2
|
|
3
|
N/A
|
(19.0
|
)
|
(15
|
)
|
N/A
|
|
|||||
Revenue ton-miles (in millions)
|
1,347
|
|
1,321
|
|
1,667
|
|
26
|
|
2
|
N/A
|
(346
|
)
|
(21
|
)
|
N/A
|
|
|||||
Freight revenue per carload (in dollars)
|
$
|
2,975
|
|
$
|
2,785
|
|
$
|
2,825
|
|
$
|
190
|
|
7
|
7
|
$
|
(40
|
)
|
(1
|
)
|
—
|
|
Freight revenue per revenue ton-mile (in cents)
|
23.92
|
|
22.15
|
|
21.02
|
|
1.77
|
|
8
|
8
|
1.13
|
|
5
|
|
7
|
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
|||||||||||||||
For the year ended December 31
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
Total Change
|
% Change
|
FX Adjusted % Change(1)
|
|||||||||||
Freight revenues (in millions)
|
$
|
1,538
|
|
$
|
1,365
|
|
$
|
1,311
|
|
$
|
173
|
|
13
|
13
|
$
|
54
|
|
4
|
|
5
|
Carloads (in thousands)
|
1,025.9
|
|
996.7
|
|
976.2
|
|
29.2
|
|
3
|
N/A
|
20.5
|
|
2
|
|
N/A
|
|||||
Revenue ton-miles (in millions)
|
26,688
|
|
24,303
|
|
24,857
|
|
2,385
|
|
10
|
N/A
|
(554
|
)
|
(2
|
)
|
N/A
|
|||||
Freight revenue per carload (in dollars)
|
$
|
1,499
|
|
$
|
1,370
|
|
$
|
1,342
|
|
$
|
129
|
|
9
|
9
|
$
|
28
|
|
2
|
|
3
|
Freight revenue per revenue ton-mile (in cents)
|
5.76
|
|
5.62
|
|
5.27
|
|
0.14
|
|
2
|
2
|
0.35
|
|
7
|
|
7
|
2018 Operating Expenses
|
2017 Operating Expenses
|
2016 Operating Expenses
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||||||
For the year ended December 31 (in millions)
|
2018
|
|
2017
|
|
2016
|
|
Total Change
|
% Change
|
FX Adjusted % Change(2)
|
Total Change
|
% Change
|
FX Adjusted % Change(2)
|
|||||||||||
Compensation and benefits(1)
|
$
|
1,468
|
|
$
|
1,309
|
|
$
|
1,356
|
|
$
|
159
|
|
12
|
|
12
|
|
$
|
(47
|
)
|
(3
|
)
|
(3
|
)
|
Fuel
|
918
|
|
677
|
|
567
|
|
241
|
|
36
|
|
36
|
|
110
|
|
19
|
|
22
|
|
|||||
Materials
|
201
|
|
190
|
|
180
|
|
11
|
|
6
|
|
6
|
|
10
|
|
6
|
|
7
|
|
|||||
Equipment rents
|
130
|
|
142
|
|
173
|
|
(12
|
)
|
(8
|
)
|
(8
|
)
|
(31
|
)
|
(18
|
)
|
(17
|
)
|
|||||
Depreciation and amortization
|
696
|
|
661
|
|
640
|
|
35
|
|
5
|
|
5
|
|
21
|
|
3
|
|
4
|
|
|||||
Purchased services and other
|
1,072
|
|
1,056
|
|
905
|
|
16
|
|
2
|
|
2
|
|
151
|
|
17
|
|
18
|
|
|||||
Total operating expenses(1)
|
$
|
4,485
|
|
$
|
4,035
|
|
$
|
3,821
|
|
$
|
450
|
|
11
|
|
11
|
|
$
|
214
|
|
6
|
|
7
|
|
•
|
the unfavourable impact of $197 million from higher fuel prices;
|
•
|
higher volume variable expenses;
|
•
|
cost inflation;
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP in 2017;
|
•
|
higher depreciation and amortization due to a higher asset base;
|
•
|
a $20 million charge associated with a loss contingency;
|
•
|
harsher winter operating conditions in the first quarter of 2018;
|
•
|
higher stock-based compensation primarily driven by stronger performance against targets, partially offset by the changes in share price; and
|
•
|
higher incentive compensation.
|
•
|
the unfavourable impact of $104 million from higher fuel prices;
|
•
|
lower gains on land sales of $91 million, following the sales of CP's Arbutus Corridor and Obico rail yard in 2016;
|
•
|
higher volume variable expenses;
|
•
|
cost inflation; and
|
•
|
higher depreciation and amortization due to a higher asset base.
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP;
|
•
|
efficiencies generated from improved operating performance and asset utilization; and
|
•
|
the favourable impact of the change in FX of $36 million.
|
•
|
higher volume variable expenses as a result of an increase in workload as measured by GTMs;
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP;
|
•
|
the impact of wage and benefit inflation;
|
•
|
higher stock-based compensation primarily driven by stronger performance against targets, partially offset by the changes in share price;
|
•
|
higher incentive compensation;
|
•
|
an increase in training programs; and
|
•
|
harsher winter operating conditions.
|
•
|
management transition recoveries of $51 million associated with Mr. E. Hunter Harrison's retirement as CEO of CP;
|
•
|
lower labour expenses due to operational efficiencies; and
|
•
|
the favourable impact of the change in FX of $9 million.
|
•
|
the impact of wage and benefit inflation;
|
•
|
higher volume variable expenses as a result of an increase in workload as measured by GTMs;
|
•
|
the unfavourable impact of stock-based compensation driven primarily by the change in stock price; and
|
•
|
higher incentive compensation.
|
•
|
the unfavourable impact of $197 million from higher fuel prices;
|
•
|
an increase in workload, as measured by GTMs; and
|
•
|
a fuel tax recovery received in 2017 that related to prior periods of $8 million.
|
|
|
|
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||||||||
For the year ended December 31 (in millions)
|
2018
|
2017
|
2016
|
Total Change
|
% Change
|
Total Change
|
% Change
|
||||||||||||
Support and facilities
|
$
|
264
|
|
$
|
266
|
|
$
|
271
|
|
$
|
(2
|
)
|
(1
|
)
|
$
|
(5
|
)
|
(2
|
)
|
Track and operations
|
268
|
|
251
|
|
238
|
|
17
|
|
7
|
|
13
|
|
5
|
|
|||||
Intermodal
|
221
|
|
197
|
|
180
|
|
24
|
|
12
|
|
17
|
|
9
|
|
|||||
Equipment
|
143
|
|
157
|
|
165
|
|
(14
|
)
|
(9
|
)
|
(8
|
)
|
(5
|
)
|
|||||
Casualty
|
73
|
|
72
|
|
68
|
|
1
|
|
1
|
|
4
|
|
6
|
|
|||||
Property taxes
|
124
|
|
121
|
|
116
|
|
3
|
|
2
|
|
5
|
|
4
|
|
|||||
Other
|
20
|
|
7
|
|
(27
|
)
|
13
|
|
186
|
|
34
|
|
(126
|
)
|
|||||
Land sales
|
(41
|
)
|
(15
|
)
|
(106
|
)
|
(26
|
)
|
173
|
|
91
|
|
(86
|
)
|
|||||
Total Purchased services and other
|
$
|
1,072
|
|
$
|
1,056
|
|
$
|
905
|
|
$
|
16
|
|
2
|
|
$
|
151
|
|
17
|
|
•
|
a $20 million charge associated with a loss contingency, reported in Other;
|
•
|
higher intermodal expenses related to pickup and delivery, reported in Intermodal; and
|
•
|
higher costs due to winter weather related impacts and costs related to labour disruptions, reported primarily in Track and operations.
|
•
|
lower gains on land sales of $91 million, following the sales of CP's Arbutus Corridor and Obico rail yard in 2016;
|
•
|
a $17 million gain on sale of surplus freight cars, and a reduction in accrued discontinuance costs for certain branch lines, both in 2016, reported in Other;
|
•
|
higher right-of-way and track dismantling costs, reported in Track and operations;
|
•
|
higher intermodal expenses related to pickup and delivery services, reported in Intermodal; and
|
•
|
higher property taxes due to tax rate increases.
|
•
|
in the fourth quarter of 2018, the Company completed the sale of Bass Lake railway line, for gross proceeds of $37 million and a gain on sale of $35 million;
|
•
|
in the fourth quarter of 2016, the Company completed the sale of CP's Obico rail yard for gross proceeds of $38 million and a gain on sale of $37 million;
|
•
|
in the second quarter of 2016, the Company disposed of 1,000 surplus freight cars that had reached, or were nearing the end of, their useful life in a non-monetary exchange for new freight cars. The Company recognized a gain on sale of $17 million from the transaction and the sale did not impact cash from investing activities; and
|
•
|
in the first quarter of 2016, the Company completed the sale of CP’s Arbutus Corridor to the City of Vancouver for gross proceeds of $55 million and a gain on sale of $50 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.
|
For the year ended December 31
(in millions, except for track miles and crossties)
|
2018
|
|
2017
|
|
2016
|
|
|||
Additions to capital
|
|
|
|
||||||
Track and roadway
|
$
|
965
|
|
$
|
958
|
|
$
|
904
|
|
Rolling stock
|
401
|
|
198
|
|
105
|
|
|||
Information systems(1)
|
86
|
|
78
|
|
88
|
|
|||
Buildings and other
|
122
|
|
132
|
|
108
|
|
|||
Total – accrued additions to capital
|
1,574
|
|
1,366
|
|
1,205
|
|
|||
Less:
|
|
|
|
||||||
Non-cash transactions
|
23
|
|
26
|
|
23
|
|
|||
Cash invested in additions to properties (per Consolidated Statements of Cash Flows)
|
$
|
1,551
|
|
$
|
1,340
|
|
$
|
1,182
|
|
Track installation capital programs
|
|
|
|
||||||
Track miles of rail laid (miles)
|
281
|
|
313
|
|
252
|
|
|||
Track miles of rail capacity expansion (miles)
|
4
|
|
4
|
|
2
|
|
|||
Crossties installed (thousands)
|
1,015
|
|
1,138
|
|
1,008
|
|
Long-term debt
|
|
Outlook
|
|
Standard & Poor's
|
|
|
|
|
Long-term corporate credit
|
BBB+
|
stable
|
|
Senior secured debt
|
A
|
stable
|
|
Senior unsecured debt
|
BBB+
|
stable
|
Moody's
|
|
|
|
|
Senior unsecured debt
|
Baa1
|
stable
|
|
|
|
|
Commercial paper program
|
|
|
|
Standard & Poor's
|
A-2
|
N/A
|
|
Moody's
|
|
P-2
|
N/A
|
•
|
in the second quarter, a deferred tax recovery of $21 million due to reductions in the Missouri and Iowa state tax rates that favourably impacted Diluted EPS by 15 cents; and
|
•
|
during the course of the year, a net non-cash loss of $168 million ($150 million after deferred tax) due to FX translation of the Company's U.S. dollar-denominated debt as follows:
|
–
|
in the fourth quarter, a $113 million loss ($103 million after deferred tax) that unfavourably impacted Diluted EPS by 72 cents;
|
–
|
in the third quarter, a $38 million gain ($33 million after deferred tax) that favourably impacted Diluted EPS by 23 cents;
|
–
|
in the second quarter, a $44 million loss ($38 million after deferred tax) that unfavourably impacted Diluted EPS by 27 cents; and
|
–
|
in the first quarter, a $49 million loss ($42 million after deferred tax) that unfavourably impacted Diluted EPS by 29 cents.
|
•
|
in the second quarter, a charge on hedge roll and de-designation of $13 million ($10 million after deferred tax) that unfavourably impacted Diluted EPS by 7 cents;
|
•
|
in the second quarter, an insurance recovery of a legal settlement of $10 million ($7 million after current tax) that favourably impacted Diluted EPS by 5 cents;
|
•
|
in the first quarter, a management transition recovery of $51 million related to the retirement of Mr. E. Hunter Harrison as CEO of CP ($39 million after deferred tax) that favourably impacted Diluted EPS by 27 cents;
|
•
|
during the course of the year, a net deferred tax recovery of $541 million as a result of changes in income tax rates as follows:
|
–
|
in the fourth quarter, a deferred tax recovery of $527 million, primarily due to the U.S. tax reform, that favourably impacted Diluted EPS by $3.63;
|
–
|
in the third quarter, a deferred tax expense of $3 million as a result of the change in the Illinois state corporate income tax rate change that unfavourably impacted Diluted EPS by 2 cents;
|
–
|
in the second quarter, a deferred tax recovery of $17 million as a result of the change in the Saskatchewan provincial corporate income tax rate that favourably impacted Diluted EPS by 12 cents; and
|
•
|
during the course of the year, a net non-cash gain of $186 million ($162 million after deferred tax) due to FX translation of the Company’s U.S. dollar-denominated debt as follows:
|
–
|
in the fourth quarter, a $14 million loss ($12 million after deferred tax) that unfavourably impacted Diluted EPS by 8 cents;
|
–
|
in the third quarter, a $105 million gain ($91 million after deferred tax) that favourably impacted Diluted EPS by 62 cents;
|
–
|
in the second quarter, a $67 million gain ($59 million after deferred tax) that favourably impacted Diluted EPS by 40 cents; and
|
–
|
in the first quarter, a $28 million gain ($24 million after deferred tax) that favourably impacted Diluted EPS by 16 cents.
|
•
|
in the third quarter, a $25 million expense ($18 million after current tax) related to a legal settlement that unfavourably impacted Diluted EPS by 12 cents; and
|
•
|
during the course of the year, a net non-cash gain of $79 million ($68 million after deferred tax) due to FX translation of the Company’s U.S. dollar-denominated debt as follows:
|
–
|
in the fourth quarter, a $74 million loss ($64 million after deferred tax) that unfavourably impacted Diluted EPS by 43 cents;
|
–
|
in the third quarter, a $46 million loss ($40 million after deferred tax) that unfavourably impacted Diluted EPS by 27 cents;
|
–
|
in the second quarter, an $18 million gain ($16 million after deferred tax) that favourably impacted Diluted EPS by 10 cents; and
|
–
|
in the first quarter, a $181 million gain ($156 million after deferred tax) that favourably impacted Diluted EPS by $1.01.
|
•
|
in the third quarter, a $68 million gain ($42 million after current tax) related to the sale of D&H South that favourably impacted Diluted EPS by 26 cents;
|
•
|
in the third quarter, a $47 million charge ($35 million after deferred tax) related to the early redemption premium on notes that unfavourably impacted Diluted EPS by 22 cents;
|
•
|
in the second quarter, a deferred income tax expense of $23 million as a result of the change in the Alberta provincial corporate income tax rate that unfavourably impacted Diluted EPS by 14 cents; and
|
•
|
during the course of the year, a net non-cash loss of $297 million ($257 million after deferred tax) due to FX translation of the Company’s U.S. dollar-denominated debt as follows:
|
–
|
in the fourth quarter, a $115 million loss ($100 million after deferred tax) that unfavourably impacted Diluted EPS by 64 cents;
|
–
|
in the third quarter, a $128 million loss ($111 million after deferred tax) that unfavourably impacted Diluted EPS by 69 cents;
|
–
|
in the second quarter, a $10 million gain ($9 million after deferred tax) that favourably impacted Diluted EPS by 5 cents; and
|
–
|
in the first quarter, a $64 million loss ($55 million after deferred tax) that unfavourably impacted Diluted EPS by 34 cents.
|
•
|
in the fourth quarter, a net non-cash loss of $12 million ($9 million after deferred tax) due to FX translation on the Company’s U.S. dollar-denominated debt that unfavourably impacted Diluted EPS by 5 cents; and
|
•
|
in the first quarter, a recovery of $4 million ($3 million after current tax) was recorded for the Company's 2012 labour restructuring initiative due to favourable experience gains, recorded in Compensation and benefits that favourably impacted Diluted EPS by 1 cent.
|
|
For the year ended December 31
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Net income as reported
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
1,599
|
|
$
|
1,352
|
|
$
|
1,476
|
|
Less significant items (pre-tax):
|
|
|
|
|
|
||||||||||
Legal settlement charge
|
—
|
|
—
|
|
(25
|
)
|
—
|
|
—
|
|
|||||
Insurance recovery of legal settlement
|
—
|
|
10
|
|
—
|
|
—
|
|
—
|
|
|||||
Charge on hedge roll and de-designation
|
—
|
|
(13
|
)
|
—
|
|
—
|
|
—
|
|
|||||
Gain on sale of D&H South
|
—
|
|
—
|
|
—
|
|
68
|
|
—
|
|
|||||
Labour restructuring
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||
Management transition recovery
|
—
|
|
51
|
|
—
|
|
—
|
|
—
|
|
|||||
Impact of FX translation on U.S. dollar-denominated debt
|
(168
|
)
|
186
|
|
79
|
|
(297
|
)
|
(12
|
)
|
|||||
Early redemption premium on notes
|
—
|
|
—
|
|
—
|
|
(47
|
)
|
—
|
|
|||||
Add:
|
|
|
|
|
|
||||||||||
Tax effect of adjustments(1)
|
(18
|
)
|
36
|
|
4
|
|
(26
|
)
|
(2
|
)
|
|||||
Income tax rate changes
|
(21
|
)
|
(541
|
)
|
—
|
|
23
|
|
—
|
|
|||||
Adjusted income
|
$
|
2,080
|
|
$
|
1,666
|
|
$
|
1,549
|
|
$
|
1,625
|
|
$
|
1,482
|
|
|
For the year ended December 31
|
||||||||||||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Diluted earnings per share as reported
|
$
|
13.61
|
|
$
|
16.44
|
|
$
|
10.63
|
|
$
|
8.40
|
|
$
|
8.46
|
|
Less significant items (pre-tax):
|
|
|
|
|
|
||||||||||
Legal settlement charge
|
—
|
|
—
|
|
(0.17
|
)
|
—
|
|
—
|
|
|||||
Insurance recovery of legal settlement
|
—
|
|
0.07
|
|
—
|
|
—
|
|
—
|
|
|||||
Charge on hedge roll and de-designation
|
—
|
|
(0.09
|
)
|
—
|
|
—
|
|
—
|
|
|||||
Gain on sale of D&H South
|
—
|
|
—
|
|
—
|
|
0.42
|
|
—
|
|
|||||
Labour restructuring
|
—
|
|
—
|
|
—
|
|
—
|
|
0.02
|
|
|||||
Management transition recovery
|
—
|
|
0.35
|
|
—
|
|
—
|
|
—
|
|
|||||
Impact of FX translation on U.S. dollar-denominated debt
|
(1.17
|
)
|
1.27
|
|
0.53
|
|
(1.84
|
)
|
(0.07
|
)
|
|||||
Early redemption premium on notes
|
—
|
|
—
|
|
—
|
|
(0.30
|
)
|
—
|
|
|||||
Add:
|
|
|
|
|
|
||||||||||
Tax effect of adjustments(1)
|
(0.12
|
)
|
0.25
|
|
0.02
|
|
(0.16
|
)
|
(0.01
|
)
|
|||||
Income tax rate changes
|
(0.15
|
)
|
(3.70
|
)
|
—
|
|
0.14
|
|
—
|
|
|||||
Adjusted diluted earnings per share
|
$
|
14.51
|
|
$
|
11.39
|
|
$
|
10.29
|
|
$
|
10.10
|
|
$
|
8.50
|
|
|
For the year ended December 31
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Operating income as reported(1)
|
$
|
2,831
|
|
$
|
2,519
|
|
$
|
2,411
|
|
$
|
2,618
|
|
$
|
2,202
|
|
Less significant items:
|
|
|
|
|
|
||||||||||
Gain on sale of D&H South
|
—
|
|
—
|
|
—
|
|
68
|
|
—
|
|
|||||
Labour restructuring
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||
Management transition recovery
|
—
|
|
51
|
|
—
|
|
—
|
|
—
|
|
|||||
Adjusted operating income(1)
|
$
|
2,831
|
|
$
|
2,468
|
|
$
|
2,411
|
|
$
|
2,550
|
|
$
|
2,198
|
|
|
For the year ended December 31
|
||||||||||||||
(in millions, except for percentages)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Operating income(1)
|
$
|
2,831
|
|
$
|
2,519
|
|
$
|
2,411
|
|
$
|
2,618
|
|
$
|
2,202
|
|
Less:
|
|
|
|
|
|
||||||||||
Other expense (income)
|
174
|
|
(178
|
)
|
(45
|
)
|
335
|
|
19
|
|
|||||
Other components of net periodic benefit recovery(1)
|
(384
|
)
|
(274
|
)
|
(167
|
)
|
(70
|
)
|
(137
|
)
|
|||||
Tax(2)
|
749
|
|
111
|
|
675
|
|
728
|
|
640
|
|
|||||
|
$
|
2,292
|
|
$
|
2,860
|
|
$
|
1,948
|
|
$
|
1,625
|
|
$
|
1,680
|
|
Average of total shareholders' equity, long-term debt, long-term debt maturing within one year and short-term borrowing
|
$
|
14,964
|
|
$
|
13,961
|
|
$
|
13,532
|
|
$
|
12,561
|
|
$
|
11,653
|
|
ROIC
|
15.3
|
%
|
20.5
|
%
|
14.4
|
%
|
12.9
|
%
|
14.4
|
%
|
|
For the year ended December 31
|
||||||||||||||
(in millions, except for percentages)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Adjusted operating income(1)
|
$
|
2,831
|
|
$
|
2,468
|
|
$
|
2,411
|
|
$
|
2,550
|
|
$
|
2,198
|
|
Less:
|
|
|
|
|
|
||||||||||
Other expense (income)
|
174
|
|
(178
|
)
|
(45
|
)
|
335
|
|
19
|
|
|||||
Other components of net periodic benefit recovery(1)
|
(384
|
)
|
(274
|
)
|
(167
|
)
|
(70
|
)
|
(137
|
)
|
|||||
Add significant items (pre-tax):
|
|
|
|
|
|
|
|
|
|
|
|||||
Legal settlement charge
|
—
|
|
—
|
|
25
|
|
—
|
|
—
|
|
|||||
Insurance recovery of legal settlement
|
—
|
|
(10
|
)
|
—
|
|
—
|
|
—
|
|
|||||
Charge on hedge roll and de-designation
|
—
|
|
13
|
|
—
|
|
—
|
|
—
|
|
|||||
Impact of FX translation on U.S. dollar-denominated debt
|
168
|
|
(186
|
)
|
(79
|
)
|
297
|
|
12
|
|
|||||
Early redemption premium on notes
|
—
|
|
—
|
|
—
|
|
47
|
|
—
|
|
|||||
Less:
|
|
|
|
|
|
||||||||||
Tax(2)
|
788
|
|
724
|
|
673
|
|
716
|
|
642
|
|
|||||
|
$
|
2,421
|
|
$
|
2,013
|
|
$
|
1,896
|
|
$
|
1,913
|
|
$
|
1,686
|
|
Average of total shareholders' equity, long-term debt, long-term debt maturing within one year and short-term borrowing
|
$
|
14,964
|
|
$
|
13,961
|
|
$
|
13,532
|
|
$
|
12,561
|
|
$
|
11,653
|
|
Add:
|
|
|
|
|
|
||||||||||
Impact of periodic significant items net of tax on the above average
|
(11
|
)
|
(289
|
)
|
9
|
|
8
|
|
(2
|
)
|
|||||
Adjusted average for the twelve months of total shareholders' equity, long-term debt, long-term debt maturing within one year and short-term borrowing
|
$
|
14,953
|
|
$
|
13,672
|
|
$
|
13,541
|
|
$
|
12,569
|
|
$
|
11,651
|
|
Adjusted ROIC
|
16.2
|
%
|
14.7
|
%
|
14.0
|
%
|
15.2
|
%
|
14.5
|
%
|
|
For the year ended December 31
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Cash provided by operating activities
|
$
|
2,712
|
|
$
|
2,182
|
|
$
|
2,089
|
|
$
|
2,459
|
|
$
|
2,123
|
|
Cash used in investing activities
|
(1,458
|
)
|
(1,295
|
)
|
(1,069
|
)
|
(1,123
|
)
|
(1,161
|
)
|
|||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents
|
11
|
|
(13
|
)
|
(13
|
)
|
45
|
|
7
|
|
|||||
Settlement of forward starting swaps on debt issuance
|
24
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Free cash
|
$
|
1,289
|
|
$
|
874
|
|
$
|
1,007
|
|
$
|
1,381
|
|
$
|
969
|
|
|
|
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||||||
(in millions)
|
Reported 2018
|
Reported 2017
|
Reported 2016
|
Variance
due to
FX
|
FX Adjusted 2017
|
FX Adj. % Change
|
|
Variance
due to
FX
|
FX Adjusted 2016
|
FX Adj. % Change
|
||||||||||||||||
Freight revenues by line of business
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Grain
|
$
|
1,566
|
|
$
|
1,532
|
|
$
|
1,480
|
|
$
|
—
|
|
$
|
1,532
|
|
2
|
|
|
$
|
(19
|
)
|
$
|
1,461
|
|
5
|
|
Coal
|
673
|
|
631
|
|
606
|
|
—
|
|
631
|
|
7
|
|
|
(2
|
)
|
604
|
|
4
|
|
|||||||
Potash
|
486
|
|
411
|
|
338
|
|
(1
|
)
|
410
|
|
19
|
|
|
(4
|
)
|
334
|
|
23
|
|
|||||||
Fertilizers and sulphur
|
243
|
|
241
|
|
284
|
|
(1
|
)
|
240
|
|
1
|
|
|
(3
|
)
|
281
|
|
(14
|
)
|
|||||||
Forest products
|
284
|
|
265
|
|
275
|
|
(1
|
)
|
264
|
|
8
|
|
|
(4
|
)
|
271
|
|
(2
|
)
|
|||||||
Energy, chemicals and plastics
|
1,243
|
|
898
|
|
852
|
|
(1
|
)
|
897
|
|
39
|
|
|
(15
|
)
|
837
|
|
7
|
|
|||||||
Metals, minerals, and consumer products
|
797
|
|
739
|
|
564
|
|
(1
|
)
|
738
|
|
8
|
|
|
(9
|
)
|
555
|
|
33
|
|
|||||||
Automotive
|
322
|
|
293
|
|
350
|
|
(2
|
)
|
291
|
|
11
|
|
|
(5
|
)
|
345
|
|
(15
|
)
|
|||||||
Intermodal
|
1,538
|
|
1,365
|
|
1,311
|
|
(1
|
)
|
1,364
|
|
13
|
|
|
(6
|
)
|
1,305
|
|
5
|
|
|||||||
Freight revenues
|
7,152
|
|
6,375
|
|
6,060
|
|
(8
|
)
|
6,367
|
|
12
|
|
|
(67
|
)
|
5,993
|
|
6
|
|
|||||||
Non-freight revenues
|
164
|
|
179
|
|
172
|
|
—
|
|
179
|
|
(8
|
)
|
|
(1
|
)
|
171
|
|
5
|
|
|||||||
Total revenues
|
$
|
7,316
|
|
$
|
6,554
|
|
$
|
6,232
|
|
$
|
(8
|
)
|
$
|
6,546
|
|
12
|
|
|
$
|
(68
|
)
|
$
|
6,164
|
|
6
|
|
|
|
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||||||
(in millions)
|
Reported 2018
|
Reported 2017
|
Reported 2016
|
Variance
due to FX |
FX Adjusted 2017
|
FX Adj. % Change
|
|
Variance
due to FX |
FX Adjusted 2016
|
FX Adj. % Change
|
||||||||||||||||
Compensation and benefits(1)
|
$
|
1,468
|
|
$
|
1,309
|
|
$
|
1,356
|
|
$
|
(1
|
)
|
$
|
1,308
|
|
12
|
|
|
$
|
(9
|
)
|
$
|
1,347
|
|
(3
|
)
|
Fuel
|
918
|
|
677
|
|
567
|
|
—
|
|
677
|
|
36
|
|
|
(10
|
)
|
557
|
|
22
|
|
|||||||
Materials
|
201
|
|
190
|
|
180
|
|
—
|
|
190
|
|
6
|
|
|
(2
|
)
|
178
|
|
7
|
|
|||||||
Equipment rents
|
130
|
|
142
|
|
173
|
|
—
|
|
142
|
|
(8
|
)
|
|
(2
|
)
|
171
|
|
(17
|
)
|
|||||||
Depreciation and amortization
|
696
|
|
661
|
|
640
|
|
—
|
|
661
|
|
5
|
|
|
(3
|
)
|
637
|
|
4
|
|
|||||||
Purchased services and other
|
1,072
|
|
1,056
|
|
905
|
|
(3
|
)
|
1,053
|
|
2
|
|
|
(10
|
)
|
895
|
|
18
|
|
|||||||
Total operating expenses(1)
|
$
|
4,485
|
|
$
|
4,035
|
|
$
|
3,821
|
|
$
|
(4
|
)
|
$
|
4,031
|
|
11
|
|
|
$
|
(36
|
)
|
$
|
3,785
|
|
7
|
|
|
For the year ended December 31
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Net income as reported
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
1,599
|
|
$
|
1,352
|
|
$
|
1,476
|
|
Add:
|
|
|
|
|
|
||||||||||
Net interest expense
|
453
|
|
473
|
|
471
|
|
394
|
|
282
|
|
|||||
Income tax expense
|
637
|
|
93
|
|
553
|
|
607
|
|
562
|
|
|||||
EBIT
|
3,041
|
|
2,971
|
|
2,623
|
|
2,353
|
|
2,320
|
|
|||||
Less significant items (pre-tax):
|
|
|
|
|
|
||||||||||
Legal settlement charge
|
—
|
|
—
|
|
(25
|
)
|
—
|
|
—
|
|
|||||
Insurance recovery of legal settlement
|
—
|
|
10
|
|
—
|
|
—
|
|
—
|
|
|||||
Charge on hedge roll and de-designation
|
—
|
|
(13
|
)
|
—
|
|
—
|
|
—
|
|
|||||
Gain on sale of D&H South
|
—
|
|
—
|
|
—
|
|
68
|
|
—
|
|
|||||
Labour restructuring
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||
Management transition recovery
|
—
|
|
51
|
|
—
|
|
—
|
|
—
|
|
|||||
Impact of FX translation on U.S. dollar-denominated debt
|
(168
|
)
|
186
|
|
79
|
|
(297
|
)
|
(12
|
)
|
|||||
Early redemption premium on notes
|
—
|
|
—
|
|
—
|
|
(47
|
)
|
—
|
|
|||||
Adjusted EBIT
|
3,209
|
|
2,737
|
|
2,569
|
|
2,629
|
|
2,328
|
|
|||||
Less:
|
|
|
|
|
|
||||||||||
Other components of net periodic benefit recovery
|
384
|
|
274
|
|
167
|
|
70
|
|
137
|
|
|||||
Operating lease expense
|
(97
|
)
|
(104
|
)
|
(111
|
)
|
(127
|
)
|
(121
|
)
|
|||||
Depreciation and amortization
|
(696
|
)
|
(661
|
)
|
(640
|
)
|
(595
|
)
|
(552
|
)
|
|||||
Adjusted EBITDA
|
$
|
3,618
|
|
$
|
3,228
|
|
$
|
3,153
|
|
$
|
3,281
|
|
$
|
2,864
|
|
(in millions)
|
2018
|
2017
|
2016
|
||||||
Long-term debt including long-term debt maturing within one year as at December 31
|
$
|
8,696
|
|
$
|
8,159
|
|
$
|
8,684
|
|
Less:
|
|
|
|
||||||
Pension plans deficit(1)
|
(266
|
)
|
(278
|
)
|
(273
|
)
|
|||
Net present value of operating leases
|
(387
|
)
|
(281
|
)
|
(361
|
)
|
|||
Cash and cash equivalents
|
61
|
|
338
|
|
164
|
|
|||
Adjusted net debt as at December 31
|
$
|
9,288
|
|
$
|
8,380
|
|
$
|
9,154
|
|
(in millions, except for ratios)
|
2018
|
2017
|
2016
|
||||||
Adjusted net debt as at December 31
|
$
|
9,288
|
|
$
|
8,380
|
|
$
|
9,154
|
|
Adjusted EBITDA for the year ended December 31
|
3,618
|
|
3,228
|
|
3,153
|
|
|||
Adjusted net debt to Adjusted EBITDA ratio
|
2.6
|
|
2.6
|
|
2.9
|
|
Payments due by period (in millions)
|
Total
|
|
2019
|
|
2020 & 2021
|
|
2022 & 2023
|
|
2024 & beyond
|
|
|||||
Contractual commitments
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest on long-term debt and capital lease
|
$
|
12,004
|
|
$
|
457
|
|
$
|
870
|
|
$
|
737
|
|
$
|
9,940
|
|
Long-term debt
|
8,625
|
|
501
|
|
449
|
|
1,002
|
|
6,673
|
|
|||||
Capital leases
|
159
|
|
5
|
|
11
|
|
117
|
|
26
|
|
|||||
Operating lease(1)
|
485
|
|
90
|
|
126
|
|
99
|
|
170
|
|
|||||
Supplier purchase
|
1,247
|
|
658
|
|
160
|
|
133
|
|
296
|
|
|||||
Other long-term liabilities(2)
|
498
|
|
53
|
|
103
|
|
100
|
|
242
|
|
|||||
Total contractual commitments
|
$
|
23,018
|
|
$
|
1,764
|
|
$
|
1,719
|
|
$
|
2,188
|
|
$
|
17,347
|
|
Payments due by period (in millions)
|
Total
|
|
2019
|
|
2020 & 2021
|
|
2022 & 2023
|
|
2024 & beyond
|
|
|||||
Certain other financial commitments
|
|
|
|
|
|
||||||||||
Letters of credit
|
$
|
60
|
|
$
|
60
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Capital commitments
|
586
|
|
310
|
|
92
|
|
67
|
|
117
|
|
|||||
Total certain other financial commitments
|
$
|
646
|
|
$
|
370
|
|
$
|
92
|
|
$
|
67
|
|
$
|
117
|
|
|
2018
|
2017
|
||||||||||||||||
(in millions of Canadian dollars)
|
Current service cost
|
|
Other components
|
|
Total
|
|
Current service cost
|
|
Other components
|
|
Total
|
|
||||||
Defined benefit pensions
|
$
|
120
|
|
$
|
(405
|
)
|
$
|
(285
|
)
|
$
|
103
|
|
$
|
(294
|
)
|
$
|
(191
|
)
|
Defined contribution pensions
|
10
|
|
—
|
|
10
|
|
9
|
|
—
|
|
9
|
|
||||||
Post-retirement benefits
|
5
|
|
18
|
|
23
|
|
4
|
|
18
|
|
22
|
|
||||||
Self-insured workers' compensation and long-term disability benefits
|
7
|
|
3
|
|
10
|
|
8
|
|
2
|
|
10
|
|
||||||
All plans
|
$
|
142
|
|
$
|
(384
|
)
|
$
|
(242
|
)
|
$
|
124
|
|
$
|
(274
|
)
|
$
|
(150
|
)
|
Key Assumptions
|
Assessments
|
•
Whole and remaining asset lives
|
•
Statistical analysis of historical retirement patterns;
•
Evaluation of management strategy and its impact on operations and the future use of specific property assets;
•
Assessment of technological advances;
•
Engineering estimates of changes in current operations and analysis of historic, current and projected future usage;
•
Additional factors considered for track assets: density of traffic and whether rail is new or has been re-laid in a subsequent position;
•
Assessment of policies and practices for the management of assets including maintenance; and
•
Comparison with industry data.
|
•
Salvage values
|
•
Analysis of historical, current and estimated future salvage values.
|
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Statements of Income
|
|
For the Year Ended December 31, 2018, 2017, and 2016
|
|
|
|
Consolidated Statements of Comprehensive Income
|
|
For the Year Ended December 31, 2018, 2017, and 2016
|
|
|
|
Consolidated Balance Sheets
|
|
As at December 31, 2018 and 2017
|
|
|
|
Consolidated Statements of Cash Flows
|
|
For the Year Ended December 31, 2018, 2017, and 2016
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity
|
|
For the Year Ended December 31, 2018, 2017, and 2016
|
|
|
|
Notes to Consolidated Financial Statements
|
Year ended December 31 (in millions of Canadian dollars, except per share data)
|
2018
|
|
2017
|
|
2016
|
|
|||
Revenues (Note 3)
|
|
|
|
||||||
Freight
|
$
|
7,152
|
|
$
|
6,375
|
|
$
|
6,060
|
|
Non-freight
|
164
|
|
179
|
|
172
|
|
|||
Total revenues
|
7,316
|
|
6,554
|
|
6,232
|
|
|||
Operating expenses
|
|
|
|
||||||
Compensation and benefits (Note 2, 21, 22)
|
1,468
|
|
1,309
|
|
1,356
|
|
|||
Fuel
|
918
|
|
677
|
|
567
|
|
|||
Materials
|
201
|
|
190
|
|
180
|
|
|||
Equipment rents
|
130
|
|
142
|
|
173
|
|
|||
Depreciation and amortization
|
696
|
|
661
|
|
640
|
|
|||
Purchased services and other (Note 11)
|
1,072
|
|
1,056
|
|
905
|
|
|||
Total operating expenses
|
4,485
|
|
4,035
|
|
3,821
|
|
|||
Operating income
|
2,831
|
|
2,519
|
|
2,411
|
|
|||
Less:
|
|
|
|
||||||
Other expense (income) (Note 4)
|
174
|
|
(178
|
)
|
(45
|
)
|
|||
Other components of net periodic benefit recovery (Note 2, 21)
|
(384
|
)
|
(274
|
)
|
(167
|
)
|
|||
Net interest expense (Note 5)
|
453
|
|
473
|
|
471
|
|
|||
Income before income tax expense
|
2,588
|
|
2,498
|
|
2,152
|
|
|||
Income tax expense (Note 6)
|
637
|
|
93
|
|
553
|
|
|||
Net income
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
1,599
|
|
Earnings per share (Note 7)
|
|
|
|
||||||
Basic earnings per share
|
$
|
13.65
|
|
$
|
16.49
|
|
$
|
10.69
|
|
Diluted earnings per share
|
$
|
13.61
|
|
$
|
16.44
|
|
$
|
10.63
|
|
Weighted average number of shares (millions) (Note 7)
|
|
|
|
||||||
Basic
|
142.9
|
|
145.9
|
|
149.6
|
|
|||
Diluted
|
143.3
|
|
146.3
|
|
150.5
|
|
Year ended December 31 (in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Net income
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
1,599
|
|
Net (loss) gain in foreign currency translation adjustments, net of hedging activities
|
(60
|
)
|
24
|
|
18
|
|
|||
Change in derivatives designated as cash flow hedges
|
38
|
|
19
|
|
(2
|
)
|
|||
Change in pension and post-retirement defined benefit plans
|
(449
|
)
|
80
|
|
(434
|
)
|
|||
Other comprehensive (loss) income before income taxes
|
(471
|
)
|
123
|
|
(418
|
)
|
|||
Income tax recovery (expense) on above items
|
169
|
|
(65
|
)
|
96
|
|
|||
Other comprehensive (loss) income (Note 8)
|
(302
|
)
|
58
|
|
(322
|
)
|
|||
Comprehensive income
|
$
|
1,649
|
|
$
|
2,463
|
|
$
|
1,277
|
|
As at December 31 (in millions of Canadian dollars, except Common Shares)
|
2018
|
|
2017
|
|
||
Assets
|
|
|
||||
Current assets
|
|
|
||||
Cash and cash equivalents
|
$
|
61
|
|
$
|
338
|
|
Accounts receivable, net (Note 10)
|
815
|
|
687
|
|
||
Materials and supplies
|
173
|
|
152
|
|
||
Other current assets
|
68
|
|
97
|
|
||
|
1,117
|
|
1,274
|
|
||
Investments (Note 12)
|
203
|
|
182
|
|
||
Properties (Note 13)
|
18,418
|
|
17,016
|
|
||
Goodwill and intangible assets (Note 14)
|
202
|
|
187
|
|
||
Pension asset (Note 21)
|
1,243
|
|
1,407
|
|
||
Other assets (Note 15)
|
71
|
|
69
|
|
||
Total assets
|
$
|
21,254
|
|
$
|
20,135
|
|
Liabilities and shareholders’ equity
|
|
|
||||
Current liabilities
|
|
|
||||
Accounts payable and accrued liabilities (Note 16)
|
$
|
1,449
|
|
$
|
1,238
|
|
Long-term debt maturing within one year (Note 17, 18)
|
506
|
|
746
|
|
||
|
1,955
|
|
1,984
|
|
||
Pension and other benefit liabilities (Note 21)
|
718
|
|
749
|
|
||
Other long-term liabilities (Note 19)
|
237
|
|
231
|
|
||
Long-term debt (Note 17, 18)
|
8,190
|
|
7,413
|
|
||
Deferred income taxes (Note 6)
|
3,518
|
|
3,321
|
|
||
Total liabilities
|
14,618
|
|
13,698
|
|
||
Shareholders’ equity
|
|
|
||||
Share capital (Note 20)
Authorized unlimited Common Shares without par value. Issued and outstanding are 140.5 million and 144.9 million at December 31, 2018 and 2017, respectively. |
2,002
|
|
2,032
|
|
||
Authorized unlimited number of first and second preferred shares; none outstanding.
|
|
|
||||
Additional paid-in capital
|
42
|
|
43
|
|
||
Accumulated other comprehensive loss (Note 8)
|
(2,043
|
)
|
(1,741
|
)
|
||
Retained earnings
|
6,635
|
|
6,103
|
|
||
|
6,636
|
|
6,437
|
|
||
Total liabilities and shareholders’ equity
|
$
|
21,254
|
|
$
|
20,135
|
|
Approved on behalf of the Board:
|
|
|
|
|
|
|
|
|
|
|
/s/ ANDREW F. REARDON
|
|
|
/s/ JANE L. PEVERETT
|
|||
|
|
Andrew F. Reardon, Director,
|
|
|
Jane L. Peverett, Director,
|
|||
|
|
Chair of the Board
|
|
|
Chair of the Audit Committee
|
Year ended December 31 (in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Operating activities
|
|
|
|
||||||
Net income
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
1,599
|
|
Reconciliation of net income to cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
696
|
|
661
|
|
640
|
|
|||
Deferred income taxes (Note 6)
|
256
|
|
(210
|
)
|
320
|
|
|||
Pension recovery and funding (Note 21)
|
(321
|
)
|
(237
|
)
|
(138
|
)
|
|||
Foreign exchange loss (gain) on long-term debt (Note 4)
|
168
|
|
(186
|
)
|
(79
|
)
|
|||
Settlement of forward starting swaps on debt issuance (Note 17, 18)
|
(24
|
)
|
—
|
|
—
|
|
|||
Other operating activities, net
|
(79
|
)
|
(113
|
)
|
(198
|
)
|
|||
Change in non-cash working capital balances related to operations (Note 9)
|
65
|
|
(138
|
)
|
(55
|
)
|
|||
Cash provided by operating activities
|
2,712
|
|
2,182
|
|
2,089
|
|
|||
Investing activities
|
|
|
|
||||||
Additions to properties
|
(1,551
|
)
|
(1,340
|
)
|
(1,182
|
)
|
|||
Proceeds from sale of properties and other assets (Note 11)
|
78
|
|
42
|
|
116
|
|
|||
Other
|
15
|
|
3
|
|
(3
|
)
|
|||
Cash used in investing activities
|
(1,458
|
)
|
(1,295
|
)
|
(1,069
|
)
|
|||
Financing activities
|
|
|
|
||||||
Dividends paid
|
(348
|
)
|
(310
|
)
|
(255
|
)
|
|||
Issuance of CP Common Shares (Note 20)
|
24
|
|
45
|
|
21
|
|
|||
Purchase of CP Common shares (Note 20)
|
(1,103
|
)
|
(381
|
)
|
(1,210
|
)
|
|||
Issuance of long-term debt, excluding commercial paper (Note 17)
|
638
|
|
—
|
|
—
|
|
|||
Repayment of long-term debt, excluding commercial paper (Note 17)
|
(753
|
)
|
(32
|
)
|
(38
|
)
|
|||
Net repayment of commercial paper (Note 17)
|
—
|
|
—
|
|
(8
|
)
|
|||
Settlement of forward starting swaps on de-designation (Note 18)
|
—
|
|
(22
|
)
|
—
|
|
|||
Other
|
—
|
|
—
|
|
(3
|
)
|
|||
Cash used in financing activities
|
(1,542
|
)
|
(700
|
)
|
(1,493
|
)
|
|||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents
|
11
|
|
(13
|
)
|
(13
|
)
|
|||
Cash position
|
|
|
|
||||||
(Decrease) increase in cash and cash equivalents
|
(277
|
)
|
174
|
|
(486
|
)
|
|||
Cash and cash equivalents at beginning of year
|
338
|
|
164
|
|
650
|
|
|||
Cash and cash equivalents at end of year
|
$
|
61
|
|
$
|
338
|
|
$
|
164
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||||
Income taxes paid
|
$
|
318
|
|
$
|
425
|
|
$
|
322
|
|
Interest paid
|
$
|
463
|
|
$
|
475
|
|
$
|
488
|
|
(in millions of Canadian dollars, except per share data)
|
Share
capital |
|
Additional
paid-in capital |
|
Accumulated
other comprehensive loss |
|
Retained
earnings |
|
Total
shareholders’ equity |
|
|||||
Balance at December 31, 2015
|
$
|
2,058
|
|
$
|
43
|
|
$
|
(1,477
|
)
|
$
|
4,172
|
|
$
|
4,796
|
|
Net income
|
—
|
|
—
|
|
—
|
|
1,599
|
|
1,599
|
|
|||||
Other comprehensive loss (Note 8)
|
—
|
|
—
|
|
(322
|
)
|
—
|
|
(322
|
)
|
|||||
Dividends declared ($1.8500 per share)
|
—
|
|
—
|
|
—
|
|
(274
|
)
|
(274
|
)
|
|||||
Effect of stock-based compensation expense
|
—
|
|
14
|
|
—
|
|
—
|
|
14
|
|
|||||
CP Common Shares repurchased (Note 20)
|
(84
|
)
|
—
|
|
—
|
|
(1,126
|
)
|
(1,210
|
)
|
|||||
Shares issued under stock option plan (Note 20)
|
28
|
|
(5
|
)
|
—
|
|
—
|
|
23
|
|
|||||
Balance at December 31, 2016
|
2,002
|
|
52
|
|
(1,799
|
)
|
4,371
|
|
4,626
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
2,405
|
|
2,405
|
|
|||||
Other comprehensive income (Note 8)
|
—
|
|
—
|
|
58
|
|
—
|
|
58
|
|
|||||
Dividends declared ($2.1875 per share)
|
—
|
|
—
|
|
—
|
|
(319
|
)
|
(319
|
)
|
|||||
Effect of stock-based compensation expense
|
—
|
|
3
|
|
—
|
|
—
|
|
3
|
|
|||||
CP Common Shares repurchased (Note 20)
|
(27
|
)
|
—
|
|
—
|
|
(354
|
)
|
(381
|
)
|
|||||
Shares issued under stock option plan (Note 20)
|
57
|
|
(12
|
)
|
—
|
|
—
|
|
45
|
|
|||||
Balance at December 31, 2017
|
2,032
|
|
43
|
|
(1,741
|
)
|
6,103
|
|
6,437
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
1,951
|
|
1,951
|
|
|||||
Other comprehensive income (Note 8)
|
—
|
|
—
|
|
(302
|
)
|
—
|
|
(302
|
)
|
|||||
Dividends declared ($2.5125 per share)
|
—
|
|
—
|
|
—
|
|
(358
|
)
|
(358
|
)
|
|||||
Effect of stock-based compensation expense
|
—
|
|
11
|
|
—
|
|
—
|
|
11
|
|
|||||
CP Common Shares repurchased (Note 20)
|
(66
|
)
|
—
|
|
—
|
|
(1,061
|
)
|
(1,127
|
)
|
|||||
Shares issued under stock option plan (Note 20)
|
36
|
|
(12
|
)
|
—
|
|
—
|
|
24
|
|
|||||
Balance at December 31, 2018
|
$
|
2,002
|
|
$
|
42
|
|
$
|
(2,043
|
)
|
$
|
6,635
|
|
$
|
6,636
|
|
Principal subsidiary
|
Incorporated under the laws of
|
Canadian Pacific Railway Company
|
Canada
|
Soo Line Railroad Company (“Soo Line”)
|
Minnesota
|
Delaware and Hudson Railway Company, Inc. (“D&H”)
|
Delaware
|
Dakota, Minnesota & Eastern Railroad Corporation (“DM&E”)
|
Delaware
|
Mount Stephen Properties Inc. (“MSP”)
|
Canada
|
•
|
Acceptance of the package of practical expedients, permitting the Company not to reassess lease existence, classification and capitalization of initial direct costs previously determined under Topic 840;
|
•
|
Acceptance of the previous accounting treatment for land easements where Topic 840 was not applied;
|
•
|
Combination of lease and non-lease components as a single lease component for all lease classes, except for leases identified within engineering service agreements; and
|
•
|
Off-balance sheet treatment for leases with a term of 12 months or less.
|
(in millions of Canadian dollars)
|
2018
|
2017(1)
|
2016(1)
|
||||||
Freight
|
|
|
|
||||||
Grain
|
$
|
1,566
|
|
$
|
1,532
|
|
$
|
1,480
|
|
Coal
|
673
|
|
631
|
|
606
|
|
|||
Potash
|
486
|
|
411
|
|
338
|
|
|||
Fertilizers and sulphur
|
243
|
|
241
|
|
284
|
|
|||
Forest products
|
284
|
|
265
|
|
275
|
|
|||
Energy, chemicals and plastics
|
1,243
|
|
898
|
|
852
|
|
|||
Metals, minerals, and consumer products
|
797
|
|
739
|
|
564
|
|
|||
Automotive
|
322
|
|
293
|
|
350
|
|
|||
Intermodal
|
1,538
|
|
1,365
|
|
1,311
|
|
|||
Total freight revenues
|
7,152
|
|
6,375
|
|
6,060
|
|
|||
Non-freight excluding leasing revenues
|
102
|
|
117
|
|
113
|
|
|||
Revenues from contracts with customers
|
7,254
|
|
6,492
|
|
6,173
|
|
|||
Leasing revenues
|
62
|
|
62
|
|
59
|
|
|||
Total revenues
|
$
|
7,316
|
|
$
|
6,554
|
|
$
|
6,232
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Foreign exchange loss (gain) on long-term debt
|
$
|
168
|
|
$
|
(186
|
)
|
$
|
(79
|
)
|
Other foreign exchange losses (gains)
|
3
|
|
(7
|
)
|
(5
|
)
|
|||
Insurance recovery of legal settlement
|
—
|
|
(10
|
)
|
—
|
|
|||
Legal settlement
|
—
|
|
—
|
|
25
|
|
|||
Charge on hedge roll and de-designation
|
—
|
|
13
|
|
—
|
|
|||
Other
|
3
|
|
12
|
|
14
|
|
|||
Other expense (income)
|
$
|
174
|
|
$
|
(178
|
)
|
$
|
(45
|
)
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Interest cost
|
$
|
475
|
|
$
|
491
|
|
$
|
497
|
|
Interest capitalized to Properties
|
(20
|
)
|
(16
|
)
|
(25
|
)
|
|||
Interest expense
|
455
|
|
475
|
|
472
|
|
|||
Interest income
|
(2
|
)
|
(2
|
)
|
(1
|
)
|
|||
Net interest expense
|
$
|
453
|
|
$
|
473
|
|
$
|
471
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Current income tax expense
|
$
|
381
|
|
$
|
303
|
|
$
|
233
|
|
Deferred income tax expense
|
|
|
|
||||||
Origination and reversal of temporary differences
|
214
|
|
371
|
|
336
|
|
|||
Effect of tax rate decrease
|
(21
|
)
|
(541
|
)
|
—
|
|
|||
Effect of hedge of net investment in foreign subsidiaries
|
64
|
|
(42
|
)
|
(20
|
)
|
|||
Other
|
(1
|
)
|
2
|
|
4
|
|
|||
Total deferred income tax expense (recovery)
|
256
|
|
(210
|
)
|
320
|
|
|||
Total income taxes
|
$
|
637
|
|
$
|
93
|
|
$
|
553
|
|
Income before income tax expense
|
|
|
|
||||||
Canada
|
$
|
1,788
|
|
$
|
1,829
|
|
$
|
1,513
|
|
Foreign
|
800
|
|
669
|
|
639
|
|
|||
Total income before income tax expense
|
$
|
2,588
|
|
$
|
2,498
|
|
$
|
2,152
|
|
Income tax expense
|
|
|
|
||||||
Current
|
|
|
|
||||||
Canada
|
$
|
336
|
|
$
|
257
|
|
$
|
165
|
|
Foreign
|
45
|
|
46
|
|
68
|
|
|||
Total current income tax expense
|
381
|
|
303
|
|
233
|
|
|||
Deferred
|
|
|
|
||||||
Canada
|
174
|
|
256
|
|
207
|
|
|||
Foreign
|
82
|
|
(466
|
)
|
113
|
|
|||
Total deferred income tax expense (recovery)
|
256
|
|
(210
|
)
|
320
|
|
|||
Total income taxes
|
$
|
637
|
|
$
|
93
|
|
$
|
553
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Deferred income tax assets
|
|
|
||||
Amount related to tax losses carried forward
|
$
|
11
|
|
$
|
12
|
|
Liabilities carrying value in excess of tax basis
|
97
|
|
77
|
|
||
Unrealized foreign exchange losses
|
85
|
|
11
|
|
||
Environmental remediation costs
|
23
|
|
16
|
|
||
Other
|
2
|
|
11
|
|
||
Total deferred income tax assets
|
218
|
|
127
|
|
||
Less: Valuation allowance
|
(5
|
)
|
—
|
|
||
Total net deferred income tax assets
|
213
|
|
127
|
|
||
Deferred income tax liabilities
|
|
|
||||
Properties carrying value in excess of tax basis
|
3,496
|
|
3,181
|
|
||
Pensions carrying value in excess of tax basis
|
164
|
|
226
|
|
||
Other
|
71
|
|
41
|
|
||
Total deferred income tax liabilities
|
3,731
|
|
3,448
|
|
||
Total net deferred income tax liabilities
|
$
|
3,518
|
|
$
|
3,321
|
|
(in millions of Canadian dollars, except percentage)
|
2018
|
|
2017
|
|
2016
|
|
|||
Statutory federal and provincial income tax rate (Canada)
|
26.86
|
%
|
26.56
|
%
|
26.65
|
%
|
|||
Expected income tax expense at Canadian enacted statutory tax rates
|
$
|
695
|
|
$
|
663
|
|
$
|
573
|
|
Increase (decrease) in taxes resulting from:
|
|
|
|
||||||
Losses (gains) not subject to tax
|
8
|
|
(27
|
)
|
(23
|
)
|
|||
Canadian tax rate differentials
|
—
|
|
1
|
|
—
|
|
|||
Foreign tax rate differentials
|
(55
|
)
|
(9
|
)
|
—
|
|
|||
Effect of tax rate decrease
|
(21
|
)
|
(541
|
)
|
—
|
|
|||
Valuation allowance
|
5
|
|
—
|
|
—
|
|
|||
Other
|
5
|
|
6
|
|
3
|
|
|||
Income tax expense
|
$
|
637
|
|
$
|
93
|
|
$
|
553
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Unrecognized tax benefits at January 1
|
$
|
13
|
|
$
|
13
|
|
$
|
15
|
|
Increase in unrecognized:
|
|
|
|
||||||
Tax benefits related to the current year
|
1
|
|
—
|
|
—
|
|
|||
Dispositions:
|
|
|
|
||||||
Gross uncertain tax benefits related to prior years
|
(1
|
)
|
—
|
|
(2
|
)
|
|||
Unrecognized tax benefits at December 31
|
$
|
13
|
|
$
|
13
|
|
$
|
13
|
|
(in millions of Canadian dollars, except per share data)
|
2018
|
|
2017
|
|
2016
|
|
|||
Net income
|
$
|
1,951
|
|
$
|
2,405
|
|
$
|
1,599
|
|
Weighted average basic shares outstanding (millions)
|
142.9
|
|
145.9
|
|
149.6
|
|
|||
Dilutive effect of weighted average number of stock options (millions)
|
0.4
|
|
0.4
|
|
0.9
|
|
|||
Weighted average diluted shares outstanding (millions)
|
143.3
|
|
146.3
|
|
150.5
|
|
|||
Earnings per share – basic
|
$
|
13.65
|
|
$
|
16.49
|
|
$
|
10.69
|
|
Earnings per share – diluted
|
$
|
13.61
|
|
$
|
16.44
|
|
$
|
10.63
|
|
(in millions of Canadian dollars)
|
Before
tax amount |
|
Income tax (expense) recovery
|
|
Net of tax
amount |
|
|||
For the year ended December 31, 2018
|
|
|
|
||||||
Unrealized foreign exchange gain (loss) on:
|
|
|
|
||||||
Translation of the net investment in U.S. subsidiaries
|
$
|
419
|
|
$
|
—
|
|
$
|
419
|
|
Translation of the U.S. dollar-denominated long-term debt designated as a hedge of the net investment in U.S. subsidiaries (Note 18)
|
(479
|
)
|
64
|
|
(415
|
)
|
|||
Change in derivatives designated as cash flow hedges:
|
|
|
|
||||||
Realized loss on cash flow hedges recognized in income
|
10
|
|
(3
|
)
|
7
|
|
|||
Unrealized gain on cash flow hedges and other
|
28
|
|
(8
|
)
|
20
|
|
|||
Change in pension and other benefits actuarial gains and losses
|
(447
|
)
|
115
|
|
(332
|
)
|
|||
Change in prior service pension and other benefit costs
|
(2
|
)
|
1
|
|
(1
|
)
|
|||
Other comprehensive loss
|
$
|
(471
|
)
|
$
|
169
|
|
$
|
(302
|
)
|
For the year ended December 31, 2017
|
|
|
|
||||||
Unrealized foreign exchange (loss) gain on:
|
|
|
|
||||||
Translation of the net investment in U.S. subsidiaries
|
$
|
(295
|
)
|
$
|
—
|
|
$
|
(295
|
)
|
Translation of the U.S. dollar-denominated long-term debt designated as a hedge of the net investment in U.S. subsidiaries (Note 18)
|
319
|
|
(42
|
)
|
277
|
|
|||
Change in derivatives designated as cash flow hedges:
|
|
|
|
||||||
Realized loss on cash flow hedges recognized in income
|
25
|
|
(6
|
)
|
19
|
|
|||
Unrealized loss on cash flow hedges and other
|
(6
|
)
|
2
|
|
(4
|
)
|
|||
Change in pension and other benefits actuarial gains and losses
|
84
|
|
(20
|
)
|
64
|
|
|||
Change in prior service pension and other benefit costs
|
(4
|
)
|
1
|
|
(3
|
)
|
|||
Other comprehensive income
|
$
|
123
|
|
$
|
(65
|
)
|
$
|
58
|
|
For the year ended December 31, 2016
|
|
|
|
||||||
Unrealized foreign exchange (loss) gain on:
|
|
|
|
||||||
Translation of the net investment in U.S. subsidiaries
|
$
|
(132
|
)
|
$
|
—
|
|
$
|
(132
|
)
|
Translation of the U.S. dollar-denominated long-term debt designated as a hedge of the net investment in U.S. subsidiaries (Note 18)
|
150
|
|
(20
|
)
|
130
|
|
|||
Change in derivatives designated as cash flow hedges:
|
|
|
|
||||||
Realized loss on cash flow hedges recognized in income
|
10
|
|
(2
|
)
|
8
|
|
|||
Unrealized loss on cash flow hedges and other
|
(12
|
)
|
2
|
|
(10
|
)
|
|||
Change in pension and other benefits actuarial gains and losses
|
(422
|
)
|
113
|
|
(309
|
)
|
|||
Change in prior service pension and other benefit costs
|
(12
|
)
|
3
|
|
(9
|
)
|
|||
Other comprehensive loss
|
$
|
(418
|
)
|
$
|
96
|
|
$
|
(322
|
)
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Unrealized foreign exchange gain on translation of the net investment in U.S. subsidiaries
|
$
|
862
|
|
$
|
443
|
|
Unrealized foreign exchange loss on translation of the U.S. dollar-denominated long-term debt designated as a hedge of the net investment in U.S. subsidiaries
|
(749
|
)
|
(334
|
)
|
||
Net deferred and unrealized losses on derivatives and other
|
(62
|
)
|
(89
|
)
|
||
Amounts for defined benefit pension and other post-retirement plans not recognized in income (Note 21)
|
(2,094
|
)
|
(1,761
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(2,043
|
)
|
$
|
(1,741
|
)
|
(in millions of Canadian dollars)
|
Foreign currency
net of hedging activities(1) |
|
Derivatives and
other(1) |
|
Pension and post-
retirement defined benefit plans(1) |
|
Total(1)
|
|
||||
Opening balance, January 1, 2018
|
$
|
109
|
|
$
|
(89
|
)
|
$
|
(1,761
|
)
|
$
|
(1,741
|
)
|
Other comprehensive income (loss) before reclassifications
|
4
|
|
19
|
|
(417
|
)
|
(394
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
8
|
|
84
|
|
92
|
|
||||
Net current-period other comprehensive income (loss)
|
4
|
|
27
|
|
(333
|
)
|
(302
|
)
|
||||
Closing balance, December 31, 2018
|
$
|
113
|
|
$
|
(62
|
)
|
$
|
(2,094
|
)
|
$
|
(2,043
|
)
|
Opening balance, January 1, 2017
|
$
|
127
|
|
$
|
(104
|
)
|
$
|
(1,822
|
)
|
$
|
(1,799
|
)
|
Net current-period other comprehensive loss before reclassifications
|
(17
|
)
|
(4
|
)
|
(50
|
)
|
(71
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
(1
|
)
|
19
|
|
111
|
|
129
|
|
||||
Net current-period other comprehensive (loss) income
|
(18
|
)
|
15
|
|
61
|
|
58
|
|
||||
Closing balance, December 31, 2017
|
$
|
109
|
|
$
|
(89
|
)
|
$
|
(1,761
|
)
|
$
|
(1,741
|
)
|
|
2018
|
|
2017
|
|
||
Amortization of prior service costs(1)
|
$
|
(2
|
)
|
$
|
(4
|
)
|
Recognition of net actuarial loss(1)
|
117
|
|
154
|
|
||
Total before income tax
|
$
|
115
|
|
$
|
150
|
|
Income tax recovery
|
(31
|
)
|
(39
|
)
|
||
Total net of income tax
|
$
|
84
|
|
$
|
111
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Source (use) of cash:
|
|
|
|
||||||
Accounts receivable, net
|
$
|
(107
|
)
|
$
|
(91
|
)
|
$
|
44
|
|
Materials and supplies
|
(11
|
)
|
9
|
|
14
|
|
|||
Other current assets
|
30
|
|
(26
|
)
|
(18
|
)
|
|||
Accounts payable and accrued liabilities
|
153
|
|
(30
|
)
|
(95
|
)
|
|||
Change in non-cash working capital
|
$
|
65
|
|
$
|
(138
|
)
|
$
|
(55
|
)
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Freight
|
$
|
677
|
|
$
|
536
|
|
Non-freight
|
168
|
|
176
|
|
||
|
845
|
|
712
|
|
||
Allowance for doubtful accounts
|
(30
|
)
|
(25
|
)
|
||
Total accounts receivable, net
|
$
|
815
|
|
$
|
687
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Rail investments accounted for on an equity basis
|
$
|
160
|
|
$
|
144
|
|
Other investments
|
43
|
|
38
|
|
||
Total investments
|
$
|
203
|
|
$
|
182
|
|
(in millions of Canadian dollars except percentages)
|
2018
|
2018
|
|
2017
|
|||||||||||||||||||||
|
Weighted average annual depreciation rate
|
|
Cost
|
|
|
Accumulated
depreciation |
|
|
Net book
value |
|
|
Cost
|
|
|
Accumulated
depreciation |
|
|
Net book
value |
|
||||||
Track and roadway
|
2.8
|
%
|
$
|
18,599
|
|
|
$
|
5,236
|
|
|
$
|
13,363
|
|
|
$
|
17,285
|
|
|
$
|
4,814
|
|
|
$
|
12,471
|
|
Buildings
|
3.0
|
%
|
781
|
|
|
218
|
|
|
563
|
|
|
719
|
|
|
196
|
|
|
523
|
|
||||||
Rolling stock
|
2.8
|
%
|
4,467
|
|
|
1,613
|
|
|
2,854
|
|
|
4,114
|
|
|
1,557
|
|
|
2,557
|
|
||||||
Information systems(1)
|
10.4
|
%
|
551
|
|
|
252
|
|
|
299
|
|
|
551
|
|
|
264
|
|
|
287
|
|
||||||
Other
|
5.1
|
%
|
1,984
|
|
|
645
|
|
|
1,339
|
|
|
1,760
|
|
|
582
|
|
|
1,178
|
|
||||||
Total
|
$
|
26,382
|
|
|
$
|
7,964
|
|
|
$
|
18,418
|
|
|
$
|
24,429
|
|
|
$
|
7,413
|
|
|
$
|
17,016
|
|
(in millions of Canadian dollars)
|
2018
|
2017
|
||||||||||||||||
|
Cost
|
|
Accumulated
depreciation |
|
Net book
value |
|
Cost
|
|
Accumulated
depreciation |
|
Net book
value |
|
||||||
Buildings
|
$
|
1
|
|
$
|
1
|
|
$
|
—
|
|
$
|
1
|
|
$
|
1
|
|
$
|
—
|
|
Rolling stock
|
311
|
|
124
|
|
187
|
|
311
|
|
115
|
|
196
|
|
||||||
Total assets held under capital lease
|
$
|
312
|
|
$
|
125
|
|
$
|
187
|
|
$
|
312
|
|
$
|
116
|
|
$
|
196
|
|
|
Goodwill
|
|
|
Intangible assets
|
|
|||||||||||
(in millions of Canadian dollars)
|
Net
carrying amount |
|
|
Cost
|
|
Accumulated
amortization |
|
Net
carrying amount |
|
Total goodwill and intangible assets
|
|
|||||
Balance at December 31, 2016
|
$
|
191
|
|
|
$
|
22
|
|
$
|
(11
|
)
|
$
|
11
|
|
$
|
202
|
|
Amortization
|
—
|
|
|
—
|
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
|||||
Foreign exchange impact
|
(13
|
)
|
|
—
|
|
(1
|
)
|
(1
|
)
|
(14
|
)
|
|||||
Balance at December 31, 2017
|
$
|
178
|
|
|
$
|
22
|
|
$
|
(13
|
)
|
$
|
9
|
|
$
|
187
|
|
Amortization
|
—
|
|
|
—
|
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
|||||
Foreign exchange impact
|
16
|
|
|
—
|
|
—
|
|
—
|
|
16
|
|
|||||
Balance at December 31, 2018
|
$
|
194
|
|
|
$
|
22
|
|
$
|
(14
|
)
|
$
|
8
|
|
$
|
202
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Long-term materials
|
$
|
26
|
|
$
|
24
|
|
Contracted customer incentives
|
11
|
|
11
|
|
||
Prepaid leases
|
10
|
|
5
|
|
||
Other
|
24
|
|
29
|
|
||
Total other assets
|
$
|
71
|
|
$
|
69
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Trade payables
|
$
|
474
|
|
$
|
402
|
|
Accrued charges
|
360
|
|
256
|
|
||
Income and other taxes payable
|
104
|
|
72
|
|
||
Accrued interest
|
135
|
|
128
|
|
||
Dividends payable
|
91
|
|
82
|
|
||
Payroll-related accruals
|
78
|
|
72
|
|
||
Accrued vacation
|
61
|
|
59
|
|
||
Stock-based compensation liabilities
|
53
|
|
32
|
|
||
Personal injury, damage and other claims provision
|
68
|
|
28
|
|
||
Provision for environmental remediation (Note 19)
|
8
|
|
8
|
|
||
Financial derivative liability (Note 18)
|
—
|
|
55
|
|
||
Other
|
17
|
|
44
|
|
||
Total accounts payable and accrued liabilities
|
$
|
1,449
|
|
$
|
1,238
|
|
(in millions of Canadian dollars except percentages)
|
|
Maturity
|
Currency
in which payable |
2018
|
|
2017
|
|
|||
6.500%
|
10-year Notes
|
(A)
|
May 2018
|
U.S.$
|
$
|
—
|
|
$
|
345
|
|
6.250%
|
10-year Medium Term Notes
|
(A)
|
Jun 2018
|
CDN$
|
—
|
|
375
|
|
||
7.250%
|
10-year Notes
|
(A)
|
May 2019
|
U.S.$
|
477
|
|
439
|
|
||
9.450%
|
30-year Debentures
|
(A)
|
Aug 2021
|
U.S.$
|
341
|
|
314
|
|
||
5.100%
|
10-year Medium Term Notes
|
(A)
|
Jan 2022
|
CDN$
|
125
|
|
125
|
|
||
4.500%
|
10-year Notes
|
(A)
|
Jan 2022
|
U.S.$
|
339
|
|
311
|
|
||
4.450%
|
12.5-year Notes
|
(A)
|
Mar 2023
|
U.S.$
|
477
|
|
438
|
|
||
2.900%
|
10-year Notes
|
(A)
|
Feb 2025
|
U.S.$
|
955
|
|
878
|
|
||
3.700%
|
10.5-year Notes
|
(A)
|
Feb 2026
|
U.S.$
|
340
|
|
313
|
|
||
4.000%
|
10-year Notes
|
(A)
|
Jun 2028
|
U.S.$
|
682
|
|
—
|
|
||
7.125%
|
30-year Debentures
|
(A)
|
Oct 2031
|
U.S.$
|
477
|
|
439
|
|
||
5.750%
|
30-year Debentures
|
(A)
|
Mar 2033
|
U.S.$
|
334
|
|
307
|
|
||
4.800%
|
20-year Notes
|
(A)
|
Sep 2035
|
U.S.$
|
408
|
|
375
|
|
||
5.950%
|
30-year Notes
|
(A)
|
May 2037
|
U.S.$
|
607
|
|
558
|
|
||
6.450%
|
30-year Notes
|
(A)
|
Nov 2039
|
CDN$
|
400
|
|
400
|
|
||
5.750%
|
30-year Notes
|
(A)
|
Jan 2042
|
U.S.$
|
336
|
|
308
|
|
||
4.800%
|
30-year Notes
|
(A)
|
Aug 2045
|
U.S.$
|
748
|
|
687
|
|
||
6.125%
|
100-year Notes
|
(A)
|
Sep 2115
|
U.S.$
|
1,228
|
|
1,129
|
|
||
5.41%
|
Senior Secured Notes
|
(B)
|
Mar 2024
|
U.S.$
|
113
|
|
111
|
|
||
6.91%
|
Secured Equipment Notes
|
(C)
|
Oct 2024
|
CDN$
|
106
|
|
120
|
|
||
7.49%
|
Equipment Trust Certificates
|
(D)
|
Jan 2021
|
U.S.$
|
57
|
|
52
|
|
||
Obligations under capital leases
|
|
|
|
|
||||||
6.99%
|
|
(E)
|
Mar 2022
|
U.S.$
|
104
|
|
96
|
|
||
6.57%
|
|
(E)
|
Dec 2026
|
U.S.$
|
52
|
|
52
|
|
||
12.77%
|
|
(E)
|
Jan 2031
|
CDN$
|
4
|
|
3
|
|
||
|
|
|
8,710
|
|
8,175
|
|
||||
Perpetual 4% Consolidated Debenture Stock
|
(F)
|
|
U.S.$
|
41
|
|
38
|
|
|||
Perpetual 4% Consolidated Debenture Stock
|
(F)
|
|
G.B.£
|
6
|
|
6
|
|
|||
|
|
|
8,757
|
|
8,219
|
|
||||
Less: Unamortized fees on long-term debt
|
|
|
61
|
|
60
|
|
||||
|
|
|
8,696
|
|
8,159
|
|
||||
Less: Long-term debt maturing within one year
|
|
|
506
|
|
746
|
|
||||
|
|
|
|
|
$
|
8,190
|
|
$
|
7,413
|
|
(in millions of Canadian dollars)
|
Year
|
Capital leases
|
|
|
Minimum lease payments in:
|
|
|
||
|
2019
|
$
|
16
|
|
|
2020
|
16
|
|
|
|
2021
|
16
|
|
|
|
2022
|
114
|
|
|
|
2023
|
9
|
|
|
|
Thereafter
|
31
|
|
|
Total minimum lease payments
|
|
202
|
|
|
Less: Imputed interest
|
|
(43
|
)
|
|
Present value of minimum lease payments
|
|
159
|
|
|
Less: Current portion
|
|
(5
|
)
|
|
Long-term portion of capital lease obligations
|
|
$
|
154
|
|
(in millions of Canadian dollars)
|
December 31, 2018
|
|
December 31, 2017
|
|
||
Long-term debt (including current maturities):
|
|
|
||||
Fair value
|
$
|
9,639
|
|
$
|
9,680
|
|
Carrying value
|
8,696
|
|
8,159
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
||
Stock-based compensation liabilities, net of current portion
|
$
|
81
|
|
$
|
67
|
|
Provision for environmental remediation, net of current portion(1)
|
74
|
|
70
|
|
||
Deferred revenue on rights-of-way license agreements, net of current portion(2)
|
24
|
|
26
|
|
||
Deferred gains on sale leaseback transactions(2)
|
13
|
|
16
|
|
||
Other, net of current portion
|
45
|
|
52
|
|
||
Total other long-term liabilities
|
$
|
237
|
|
$
|
231
|
|
(number of shares in millions)
|
2018
|
|
2017
|
|
2016
|
|
Share capital, January 1
|
144.9
|
|
146.3
|
|
153.0
|
|
CP Common Shares repurchased
|
(4.6
|
)
|
(1.9
|
)
|
(6.9
|
)
|
Shares issued under stock option plan
|
0.2
|
|
0.5
|
|
0.2
|
|
Share capital, December 31
|
140.5
|
|
144.9
|
|
146.3
|
|
|
2018
|
|
2017
|
|
2016
|
|
|||
Number of Common Shares repurchased(1)
|
4,683,162
|
|
1,888,100
|
|
6,910,000
|
|
|||
Weighted-average price per share(2)
|
$
|
240.68
|
|
$
|
201.53
|
|
$
|
175.08
|
|
Amount of repurchase (in millions)(2)
|
$
|
1,127
|
|
$
|
381
|
|
$
|
1,210
|
|
|
Pensions
|
|
Other benefits
|
||||||||||||||||
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Current service cost (benefits earned by employees)
|
$
|
120
|
|
$
|
103
|
|
$
|
106
|
|
|
$
|
12
|
|
$
|
12
|
|
$
|
11
|
|
Other components of net periodic benefit cost (recovery):
|
|
|
|
|
|
|
|
||||||||||||
Interest cost on benefit obligation
|
438
|
|
451
|
|
467
|
|
|
19
|
|
20
|
|
21
|
|
||||||
Expected return on fund assets
|
(955
|
)
|
(893
|
)
|
(846
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Recognized net actuarial loss
|
114
|
|
153
|
|
190
|
|
|
2
|
|
(1
|
)
|
7
|
|
||||||
Amortization of prior service costs
|
(2
|
)
|
(5
|
)
|
(7
|
)
|
|
—
|
|
1
|
|
1
|
|
||||||
Total other components of net periodic benefit (recovery) cost
|
(405
|
)
|
(294
|
)
|
(196
|
)
|
|
21
|
|
20
|
|
29
|
|
||||||
Net periodic benefit (recovery) cost
|
$
|
(285
|
)
|
$
|
(191
|
)
|
$
|
(90
|
)
|
|
$
|
33
|
|
$
|
32
|
|
$
|
40
|
|
|
Pensions
|
|
Other benefits
|
||||||||||
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
Change in projected benefit obligation:
|
|
|
|
|
|
||||||||
Benefit obligation at January 1
|
$
|
11,679
|
|
$
|
11,399
|
|
|
$
|
518
|
|
$
|
510
|
|
Current service cost
|
120
|
|
103
|
|
|
12
|
|
12
|
|
||||
Interest cost
|
438
|
|
451
|
|
|
19
|
|
20
|
|
||||
Employee contributions
|
47
|
|
44
|
|
|
1
|
|
1
|
|
||||
Benefits paid
|
(640
|
)
|
(648
|
)
|
|
(33
|
)
|
(35
|
)
|
||||
Foreign currency changes
|
20
|
|
(15
|
)
|
|
2
|
|
(3
|
)
|
||||
Plan amendments and other
|
—
|
|
1
|
|
|
—
|
|
—
|
|
||||
Actuarial (gain) loss
|
(292
|
)
|
344
|
|
|
(18
|
)
|
13
|
|
||||
Projected benefit obligation at December 31
|
$
|
11,372
|
|
$
|
11,679
|
|
|
$
|
501
|
|
$
|
518
|
|
|
Pensions
|
|
Other benefits
|
||||||||||
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
Change in fund assets:
|
|
|
|
|
|
||||||||
Fair value of fund assets at January 1
|
$
|
12,808
|
|
$
|
12,196
|
|
|
$
|
4
|
|
$
|
5
|
|
Actual return on fund assets
|
82
|
|
1,183
|
|
|
—
|
|
(1
|
)
|
||||
Employer contributions
|
36
|
|
46
|
|
|
32
|
|
34
|
|
||||
Employee contributions
|
47
|
|
44
|
|
|
1
|
|
1
|
|
||||
Benefits paid
|
(640
|
)
|
(648
|
)
|
|
(33
|
)
|
(35
|
)
|
||||
Foreign currency changes
|
16
|
|
(13
|
)
|
|
—
|
|
—
|
|
||||
Fair value of fund assets at December 31
|
$
|
12,349
|
|
$
|
12,808
|
|
|
$
|
4
|
|
$
|
4
|
|
Funded status - plan surplus (deficit)
|
$
|
977
|
|
$
|
1,129
|
|
|
$
|
(497
|
)
|
$
|
(514
|
)
|
|
2018
|
|
2017
|
||||||||||
(in millions of Canadian dollars)
|
Pension
plans in surplus |
|
Pension
plans in deficit |
|
|
Pension
plans in surplus |
|
Pension
plans in deficit |
|
||||
Projected benefit obligation at December 31
|
$
|
(10,884
|
)
|
$
|
(488
|
)
|
|
$
|
(11,174
|
)
|
$
|
(505
|
)
|
Fair value of fund assets at December 31
|
12,127
|
|
222
|
|
|
12,581
|
|
227
|
|
||||
Funded Status
|
$
|
1,243
|
|
$
|
(266
|
)
|
|
$
|
1,407
|
|
$
|
(278
|
)
|
|
Pensions
|
|
Other benefits
|
||||||||||
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
Pension asset
|
$
|
1,243
|
|
$
|
1,407
|
|
|
$
|
—
|
|
$
|
—
|
|
Accounts payable and accrued liabilities
|
(11
|
)
|
(10
|
)
|
|
(34
|
)
|
(33
|
)
|
||||
Pension and other benefit liabilities
|
(255
|
)
|
(268
|
)
|
|
(463
|
)
|
(481
|
)
|
||||
Total amount recognized
|
$
|
977
|
|
$
|
1,129
|
|
|
$
|
(497
|
)
|
$
|
(514
|
)
|
|
Pensions
|
|
Other benefits
|
||||||||||
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
Net actuarial loss:
|
|
|
|
|
|
||||||||
Other than deferred investment gains
|
$
|
2,233
|
|
$
|
2,555
|
|
|
$
|
61
|
|
$
|
81
|
|
Deferred investment gains
|
611
|
|
(178
|
)
|
|
—
|
|
—
|
|
||||
Prior service cost
|
—
|
|
(2
|
)
|
|
2
|
|
2
|
|
||||
Deferred income tax
|
(797
|
)
|
(676
|
)
|
|
(16
|
)
|
(21
|
)
|
||||
Total (Note 8)
|
$
|
2,047
|
|
$
|
1,699
|
|
|
$
|
47
|
|
$
|
62
|
|
(percentages)
|
2018
|
|
2017
|
|
2016
|
|
Benefit obligation at December 31:
|
|
|
|
|
|
|
Discount rate
|
4.01
|
|
3.80
|
|
4.02
|
|
Projected future salary increases
|
2.75
|
|
2.75
|
|
2.75
|
|
Health care cost trend rate
|
6.00
|
(1)
|
7.00
|
(2)
|
7.00
|
(2)
|
Benefit cost for year ended December 31:
|
|
|
|
|
|
|
Discount rate
|
3.80
|
|
4.02
|
|
4.22
|
|
Expected rate of return on fund assets (4)
|
7.75
|
|
7.75
|
|
7.75
|
|
Projected future salary increases
|
2.75
|
|
2.75
|
|
3.00
|
|
Health care cost trend rate
|
7.00
|
(2)
|
7.00
|
(2)
|
7.00
|
(3)
|
|
Asset allocation
target |
Policy
range |
Percentage of plan assets
at December 31 |
|||
Asset allocation (percentage)
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
Cash and cash equivalents
|
1.2
|
0.5
|
0 – 10
|
0 – 5
|
1.1
|
1.4
|
Fixed income
|
24.1
|
29.5
|
20 – 40
|
20 – 40
|
25.6
|
26.1
|
Public equity
|
45.1
|
46.0
|
35 – 55
|
35 – 55
|
50.2
|
53.3
|
Real estate and infrastructure
|
9.8
|
12.0
|
4 – 13
|
4 – 20
|
7.7
|
6.2
|
Private debt
|
9.8
|
—
|
4 – 13
|
—
|
1.3
|
—
|
Absolute return
|
10.0
|
12.0
|
4 – 13
|
0 – 18
|
14.1
|
13.0
|
Total
|
100.0
|
100.0
|
|
|
100.0
|
100.0
|
|
Assets Measured at Fair Value
|
Investments
measured at NAV(1)
|
|
Total Plan
Assets
|
|
|||||||
(in millions of Canadian dollars)
|
Quoted prices in
active markets for identical assets (Level 1) |
|
Significant other
observable inputs (Level 2) |
|
||||||||
December 31, 2018
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
127
|
|
$
|
12
|
|
$
|
—
|
|
$
|
139
|
|
Fixed income
|
|
|
|
|
||||||||
• Government bonds(2)
|
101
|
|
1,281
|
|
—
|
|
1,382
|
|
||||
• Corporate bonds(2)
|
128
|
|
1,606
|
|
—
|
|
1,734
|
|
||||
• Mortgages(3)
|
41
|
|
—
|
|
—
|
|
41
|
|
||||
Public equities
|
|
|
|
|
||||||||
• Canada
|
1,287
|
|
—
|
|
—
|
|
1,287
|
|
||||
• U.S. and international
|
4,892
|
|
24
|
|
—
|
|
4,916
|
|
||||
Real estate(4)
|
—
|
|
—
|
|
697
|
|
697
|
|
||||
Infrastructure(5)
|
—
|
|
—
|
|
259
|
|
259
|
|
||||
Private Debt(6)
|
—
|
|
—
|
|
162
|
|
162
|
|
||||
Derivative instruments(7)
|
—
|
|
(7
|
)
|
—
|
|
(7
|
)
|
||||
Absolute return(8)
|
|
|
|
|
||||||||
• Funds of hedge funds
|
—
|
|
—
|
|
1,189
|
|
1,189
|
|
||||
• Multi-strategy funds
|
—
|
|
—
|
|
286
|
|
286
|
|
||||
• Credit funds
|
—
|
|
—
|
|
32
|
|
32
|
|
||||
• Equity funds
|
—
|
|
—
|
|
232
|
|
232
|
|
||||
|
$
|
6,576
|
|
$
|
2,916
|
|
$
|
2,857
|
|
$
|
12,349
|
|
December 31, 2017
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
165
|
|
$
|
11
|
|
$
|
—
|
|
$
|
176
|
|
Fixed income
|
|
|
|
|
||||||||
• Government bonds(2)
|
—
|
|
2,087
|
|
—
|
|
2,087
|
|
||||
• Corporate bonds(2)
|
—
|
|
1,215
|
|
—
|
|
1,215
|
|
||||
• Mortgages(3)
|
—
|
|
45
|
|
—
|
|
45
|
|
||||
Public equities
|
|
|
|
|
||||||||
• Canada
|
1,467
|
|
62
|
|
—
|
|
1,529
|
|
||||
• U.S. and international
|
5,254
|
|
42
|
|
—
|
|
5,296
|
|
||||
Real estate(4)
|
—
|
|
—
|
|
622
|
|
622
|
|
||||
Infrastructure(5)
|
—
|
|
—
|
|
176
|
|
176
|
|
||||
Absolute return(8)
|
|
|
|
|
||||||||
• Funds of hedge funds
|
—
|
|
—
|
|
681
|
|
681
|
|
||||
• Multi-strategy funds
|
—
|
|
—
|
|
515
|
|
515
|
|
||||
• Credit funds
|
—
|
|
—
|
|
252
|
|
252
|
|
||||
• Equity funds
|
—
|
|
—
|
|
214
|
|
214
|
|
||||
|
$
|
6,886
|
|
$
|
3,462
|
|
$
|
2,460
|
|
$
|
12,808
|
|
(in millions of Canadian dollars)
|
Real Estate
|
|
|
As at January 1, 2017
|
$
|
437
|
|
Disbursements
|
(43
|
)
|
|
Net realized gains
|
7
|
|
|
Decrease in net unrealized gains
|
(7
|
)
|
|
Net transfers (out of) Level 3
|
(394
|
)
|
|
As at December 31, 2017
|
$
|
—
|
|
(in millions of Canadian dollars)
|
Pensions
|
|
Other benefits
|
|
||
2019
|
$
|
624
|
|
$
|
34
|
|
2020
|
628
|
|
32
|
|
||
2021
|
632
|
|
31
|
|
||
2022
|
636
|
|
30
|
|
||
2023
|
640
|
|
30
|
|
||
2024 – 2028
|
3,246
|
|
144
|
|
|
Options outstanding
|
Non-vested options
|
||||||||
|
Number of
options |
|
Weighted
average exercise price |
|
Number of
options |
|
Weighted
average grant date fair value |
|
||
Outstanding, January 1, 2018
|
1,479,275
|
|
$
|
150.64
|
|
682,927
|
|
$
|
45.46
|
|
Granted
|
282,125
|
|
$
|
248.54
|
|
282,125
|
|
$
|
55.63
|
|
Exercised
|
(200,552
|
)
|
$
|
118.86
|
|
N/A
|
|
N/A
|
|
|
Vested
|
N/A
|
|
N/A
|
|
(226,623
|
)
|
$
|
46.94
|
|
|
Forfeited
|
(26,650
|
)
|
$
|
211.80
|
|
(24,327
|
)
|
$
|
47.65
|
|
Expired
|
(600
|
)
|
$
|
71.69
|
|
N/A
|
|
N/A
|
|
|
Outstanding, December 31, 2018
|
1,533,598
|
|
$
|
176.02
|
|
714,102
|
|
$
|
48.94
|
|
Vested or expected to vest at December 31, 2018(1)
|
1,500,135
|
|
$
|
174.77
|
|
N/A
|
|
N/A
|
|
|
Exercisable, December 31, 2018
|
819,496
|
|
$
|
140.54
|
|
N/A
|
|
N/A
|
|
|
Options outstanding
|
Options exercisable
|
|||||||||||||||
Range of exercise prices
|
Number of
options |
|
Weighted
average years to expiration |
Weighted
average exercise price |
|
Aggregate
intrinsic value (millions) |
|
Number of
options |
|
Weighted
average exercise price |
|
Aggregate
intrinsic value (millions) |
|
||||
$36.29 – $122.76
|
410,049
|
|
3.3
|
$
|
93.51
|
|
$
|
61
|
|
410,049
|
|
$
|
93.51
|
|
$
|
61
|
|
$122.77 – $200.75
|
339,686
|
|
6.1
|
$
|
164.47
|
|
$
|
26
|
|
232,206
|
|
$
|
164.49
|
|
$
|
18
|
|
$200.76 – $217.68
|
388,527
|
|
5.1
|
$
|
205.80
|
|
$
|
14
|
|
88,013
|
|
$
|
207.63
|
|
$
|
3
|
|
$217.69 – $272.92
|
395,336
|
|
6.2
|
$
|
242.25
|
|
$
|
3
|
|
89,228
|
|
$
|
228.12
|
|
$
|
1
|
|
Total(1)
|
1,533,598
|
|
5.2
|
$
|
176.02
|
|
$
|
104
|
|
819,496
|
|
$
|
140.54
|
|
$
|
83
|
|
|
2018
|
|
2017
|
|
2016
|
|
|||
Expected option life (years)(1)
|
5.00
|
|
5.48
|
|
5.25
|
|
|||
Risk-free interest rate(2)
|
2.22
|
%
|
1.85
|
%
|
1.21
|
%
|
|||
Expected stock price volatility(3)
|
25
|
%
|
27
|
%
|
27
|
%
|
|||
Expected annual dividends per share(4)
|
$
|
2.3854
|
|
$
|
2.0010
|
|
$
|
1.4000
|
|
Estimated forfeiture rate(5)
|
4.7
|
%
|
2.8
|
%
|
2.0
|
%
|
|||
Weighted average grant date fair value of options granted during the year
|
$
|
55.63
|
|
$
|
45.78
|
|
$
|
39.01
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Total intrinsic value
|
$
|
17
|
|
$
|
36
|
|
$
|
30
|
|
Cash received by the Company upon exercise of options
|
$
|
24
|
|
$
|
45
|
|
$
|
21
|
|
|
2018
|
|
2017
|
|
Outstanding, January 1
|
334,028
|
|
373,593
|
|
Granted
|
162,255
|
|
134,991
|
|
Units, in lieu of dividends
|
3,643
|
|
3,571
|
|
Settled
|
(66,243
|
)
|
(133,728
|
)
|
Forfeited
|
(38,635
|
)
|
(44,399
|
)
|
Outstanding, December 31
|
395,048
|
|
334,028
|
|
|
2018
|
|
2017
|
|
Outstanding, January 1
|
156,547
|
|
234,036
|
|
Granted
|
16,481
|
|
23,932
|
|
Units, in lieu of dividends
|
1,551
|
|
1,969
|
|
Settled
|
(20,072
|
)
|
(33,682
|
)
|
Forfeited
|
(1,747
|
)
|
(69,708
|
)
|
Outstanding, December 31
|
152,760
|
|
156,547
|
|
(in millions of Canadian dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
Plan
|
|
|
|
||||||
PSUs
|
$
|
30
|
|
$
|
31
|
|
$
|
31
|
|
DSUs
|
6
|
|
6
|
|
17
|
|
|||
Other
|
1
|
|
2
|
|
—
|
|
|||
Total
|
$
|
37
|
|
$
|
39
|
|
$
|
48
|
|
(in millions of Canadian dollars)
|
Operating leases
|
|
|
2019
|
$
|
90
|
|
2020
|
71
|
|
|
2021
|
55
|
|
|
2022
|
50
|
|
|
2023
|
49
|
|
|
Thereafter
|
170
|
|
|
Total minimum lease payments
|
$
|
485
|
|
(1)
|
Québec's Minister of Sustainable Development, Environment, Wildlife and Parks (the "Minister") ordered various parties, including CP, to clean up the derailment site (the “Cleanup Order”). CP appealed the Cleanup Order to the Administrative Tribunal of Québec (the “TAQ”). The Minister subsequently served a Notice of Claim seeking $95 million for compensation spent on cleanup. CP filed a contestation of the Notice of Claim with the TAQ (the “TAQ Proceeding”). CP and the Minister agreed to stay the TAQ Proceedings pending the outcome of the Province of Québec's action, described in the following paragraph.
|
(2)
|
Québec’s Attorney General sued CP in the Québec Superior Court initially claiming $409 million in damages, which claim was amended and reduced to $315 million (the “Province’s Action”). The Province’s Action alleges that CP exercised custody or control over the petroleum crude oil until its delivery to
|
(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 (the “Class Action”) was certified against CP, MMAC and the train conductor, Mr. Thomas Harding. The Class Action seeks unquantified damages, including for wrongful death, personal injury, and property damage arising from the derailment. All known wrongful death claimants in the Class Action have opted out and, by court order, cannot re-join the Class Action.
|
(4)
|
Eight subrogated insurers sued CP in the Québec Superior Court initially claiming approximately $16 million in damages, which claim was amended and reduced to $14 million (the “Promutuel Action”). Two additional subrogated insurers sued CP in the Québec Superior Court claiming approximately $3 million in damages (the “Royal Action”). Both Actions contain essentially the same allegations as the Province’s Action. The lawsuits do not identify the parties to which the insurers are subrogated, and therefore the extent to which these claims overlap with the proof of claims process under the Plans is difficult to determine at this stage. The Royal Action has been stayed pending the determination of the consolidated proceedings described below.
|
(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. These plaintiffs assert essentially the same allegations as those contained in the Class Action and the Province’s Action against CP. The plaintiffs assert they have opted-out of the Class Action. All but two of the plaintiffs were plaintiffs in litigation against CP, described below, that originated in the U.S. who either withdrew their claims or had their case dismissed in the U.S.
|
(6)
|
An adversary proceeding commenced against CP in November 2014 in the Maine Bankruptcy Court by the MMAR U.S. estate representative (“Estate Representative”) accuses CP of failing to abide by certain regulations (the “Adversary Proceeding”). The Estate Representative alleges that CP knew or ought to have known that the shipper had misclassified the petroleum crude oil and therefore should have refused to transport it. The Estate Representative seeks damages for MMAR’s business value (as yet unquantified) allegedly destroyed by the derailment.
|
(7)
|
A class action and mass tort action on behalf of Lac-Mégantic residents and wrongful death representatives commenced in Texas in June 2015 and wrongful death and personal injury actions commenced in Illinois and Maine in June 2015 against CP were all removed and subsequently transferred and consolidated in Federal District Court in Maine (the “Maine Actions”). The Maine Actions allege that CP negligently misclassified and mis-packaged the petroleum crude oil being shipped. On CP’s motion, the Maine Actions were dismissed by the Court on several grounds. The plaintiffs are appealing the dismissal decision.
|
(8)
|
The Trustee (“WD Trustee”) for the wrongful death trust (“WD Trust”), as defined and established by the Estate Representative under the Plans, asserts Carmack Amendment claims against CP in North Dakota federal court (the “Carmack Claims”). The WD Trustee seeks to recover approximately $6 million for damaged rail cars and lost crude and recover the settlement amounts the consignor and the consignee paid to the bankruptcy estates, alleged to be $110 million and $60 million, respectively. On CP’s motion, the District Court in North Dakota dismissed the Carmack Claims on timeliness grounds, but the Eighth Circuit Court of Appeals ("8CCA") reversed that decision. CP sought reconsideration by the 8CCA. That appeal was dismissed. CP will be seeking judicial review of this decision with the Supreme Court in February 2019. Failing this judicial review, CP will seek dismissal of the Carmack Claims on various other grounds.
|
•
|
residual value guarantees on operating lease commitments of $2 million at December 31, 2018;
|
•
|
guarantees to pay other parties in the event of the occurrence of specified events, including damage to equipment, in relation to assets used in the operation of the railway through operating leases, rental agreements, easements, trackage, and interline agreements; and
|
•
|
indemnifications of certain tax-related payments incurred by lessors and lenders.
|
(in millions of Canadian dollars)
|
Canada
|
|
United States
|
|
Total
|
|
|||
2018
|
|
|
|
||||||
Revenues
|
$
|
5,232
|
|
$
|
2,084
|
|
$
|
7,316
|
|
Long-term assets excluding financial instruments and pension assets
|
$
|
12,133
|
|
$
|
6,759
|
|
$
|
18,892
|
|
2017
|
|
|
|
||||||
Revenues(1)
|
$
|
4,667
|
|
$
|
1,887
|
|
$
|
6,554
|
|
Long-term assets excluding financial instruments and pension assets
|
$
|
11,505
|
|
$
|
5,947
|
|
$
|
17,452
|
|
2016
|
|
|
|
||||||
Revenues(1)
|
$
|
4,473
|
|
$
|
1,759
|
|
$
|
6,232
|
|
Long-term assets excluding financial instruments and pension assets
|
$
|
11,000
|
|
$
|
6,121
|
|
$
|
17,121
|
|
For the quarter ended
|
2018
|
2017
|
||||||||||||||||||||||
(in millions of Canadian dollars, except per share data)
|
Dec. 31
|
|
Sep. 30
|
|
Jun. 30
|
|
Mar. 31
|
|
Dec. 31
|
|
Sep. 30
|
|
Jun. 30
|
|
Mar. 31
|
|
||||||||
Total revenues
|
$
|
2,006
|
|
$
|
1,898
|
|
$
|
1,750
|
|
$
|
1,662
|
|
$
|
1,713
|
|
$
|
1,595
|
|
$
|
1,643
|
|
$
|
1,603
|
|
Operating income(1)
|
874
|
|
790
|
|
627
|
|
540
|
|
682
|
|
622
|
|
611
|
|
604
|
|
||||||||
Net income
|
545
|
|
622
|
|
436
|
|
348
|
|
984
|
|
510
|
|
480
|
|
431
|
|
||||||||
Basic earnings per share(2)
|
$
|
3.84
|
|
$
|
4.36
|
|
$
|
3.05
|
|
$
|
2.41
|
|
$
|
6.79
|
|
$
|
3.50
|
|
$
|
3.28
|
|
$
|
2.94
|
|
Diluted earnings per share(2)
|
3.83
|
|
4.35
|
|
3.04
|
|
2.41
|
|
6.77
|
|
3.50
|
|
3.27
|
|
2.93
|
|
(in millions of Canadian dollars)
|
CPRL (Parent Guarantor)
|
|
CPRC (Subsidiary Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments and Eliminations
|
|
CPRL Consolidated
|
|
|||||
Revenues
|
|
|
|
|
|
||||||||||
Freight
|
$
|
—
|
|
$
|
5,098
|
|
$
|
2,054
|
|
$
|
—
|
|
$
|
7,152
|
|
Non-freight
|
—
|
|
120
|
|
361
|
|
(317
|
)
|
164
|
|
|||||
Total revenues
|
—
|
|
5,218
|
|
2,415
|
|
(317
|
)
|
7,316
|
|
|||||
Operating expenses
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
—
|
|
996
|
|
466
|
|
6
|
|
1,468
|
|
|||||
Fuel
|
—
|
|
716
|
|
202
|
|
—
|
|
918
|
|
|||||
Materials
|
—
|
|
139
|
|
49
|
|
13
|
|
201
|
|
|||||
Equipment rents
|
—
|
|
137
|
|
(7
|
)
|
—
|
|
130
|
|
|||||
Depreciation and amortization
|
—
|
|
424
|
|
272
|
|
—
|
|
696
|
|
|||||
Purchased services and other
|
—
|
|
886
|
|
522
|
|
(336
|
)
|
1,072
|
|
|||||
Total operating expenses
|
—
|
|
3,298
|
|
1,504
|
|
(317
|
)
|
4,485
|
|
|||||
Operating income
|
—
|
|
1,920
|
|
911
|
|
—
|
|
2,831
|
|
|||||
Less:
|
|
|
|
|
|
||||||||||
Other expense (income)
|
19
|
|
193
|
|
(38
|
)
|
—
|
|
174
|
|
|||||
Other components of net periodic benefit (recovery) cost
|
—
|
|
(386
|
)
|
2
|
|
—
|
|
(384
|
)
|
|||||
Net interest expense (income)
|
3
|
|
478
|
|
(28
|
)
|
—
|
|
453
|
|
|||||
(Loss) income before income tax (recovery) expense and equity in net earnings of subsidiaries
|
(22
|
)
|
1,635
|
|
975
|
|
—
|
|
2,588
|
|
|||||
Less: Income tax (recovery) expense
|
(4
|
)
|
469
|
|
172
|
|
—
|
|
637
|
|
|||||
Add: Equity in net earnings of subsidiaries
|
1,969
|
|
803
|
|
—
|
|
(2,772
|
)
|
—
|
|
|||||
Net income
|
$
|
1,951
|
|
$
|
1,969
|
|
$
|
803
|
|
$
|
(2,772
|
)
|
$
|
1,951
|
|
(in millions of Canadian dollars)
|
CPRL (Parent Guarantor)
|
|
CPRC (Subsidiary Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments and Eliminations
|
|
CPRL Consolidated
|
|
|||||
Revenues
|
|
|
|
|
|
||||||||||
Freight
|
$
|
—
|
|
$
|
4,516
|
|
$
|
1,859
|
|
$
|
—
|
|
$
|
6,375
|
|
Non-freight
|
—
|
|
140
|
|
372
|
|
(333
|
)
|
179
|
|
|||||
Total revenues
|
—
|
|
4,656
|
|
2,231
|
|
(333
|
)
|
6,554
|
|
|||||
Operating expenses
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
—
|
|
879
|
|
423
|
|
7
|
|
1,309
|
|
|||||
Fuel
|
—
|
|
522
|
|
155
|
|
—
|
|
677
|
|
|||||
Materials
|
—
|
|
134
|
|
41
|
|
15
|
|
190
|
|
|||||
Equipment rents
|
—
|
|
143
|
|
(1
|
)
|
—
|
|
142
|
|
|||||
Depreciation and amortization
|
—
|
|
400
|
|
261
|
|
—
|
|
661
|
|
|||||
Purchased services and other
|
—
|
|
826
|
|
585
|
|
(355
|
)
|
1,056
|
|
|||||
Total operating expenses
|
—
|
|
2,904
|
|
1,464
|
|
(333
|
)
|
4,035
|
|
|||||
Operating income
|
—
|
|
1,752
|
|
767
|
|
—
|
|
2,519
|
|
|||||
Less:
|
|
|
|
|
|
||||||||||
Other (income) expense
|
(33
|
)
|
(149
|
)
|
4
|
|
—
|
|
(178
|
)
|
|||||
Other components of net periodic benefit (recovery) cost
|
—
|
|
(278
|
)
|
4
|
|
—
|
|
(274
|
)
|
|||||
Net interest (income) expense
|
(12
|
)
|
517
|
|
(32
|
)
|
—
|
|
473
|
|
|||||
Income before income tax expense (recovery) and equity in net earnings of subsidiaries
|
45
|
|
1,662
|
|
791
|
|
—
|
|
2,498
|
|
|||||
Less: Income tax expense (recovery)
|
7
|
|
475
|
|
(389
|
)
|
—
|
|
93
|
|
|||||
Add: Equity in net earnings of subsidiaries
|
2,367
|
|
1,180
|
|
—
|
|
(3,547
|
)
|
—
|
|
|||||
Net income
|
$
|
2,405
|
|
$
|
2,367
|
|
$
|
1,180
|
|
$
|
(3,547
|
)
|
$
|
2,405
|
|
(in millions of Canadian dollars)
|
CPRL (Parent Guarantor)
|
|
CPRC (Subsidiary Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments and Eliminations
|
|
CPRL Consolidated
|
|
|||||
Revenues
|
|
|
|
|
|
||||||||||
Freight
|
$
|
—
|
|
$
|
4,332
|
|
$
|
1,728
|
|
$
|
—
|
|
$
|
6,060
|
|
Non-freight
|
—
|
|
134
|
|
386
|
|
(348
|
)
|
172
|
|
|||||
Total revenues
|
—
|
|
4,466
|
|
2,114
|
|
(348
|
)
|
6,232
|
|
|||||
Operating expenses
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
—
|
|
923
|
|
427
|
|
6
|
|
1,356
|
|
|||||
Fuel
|
—
|
|
458
|
|
109
|
|
—
|
|
567
|
|
|||||
Materials
|
—
|
|
130
|
|
32
|
|
18
|
|
180
|
|
|||||
Equipment rents
|
—
|
|
204
|
|
(31
|
)
|
—
|
|
173
|
|
|||||
Depreciation and amortization
|
—
|
|
422
|
|
218
|
|
—
|
|
640
|
|
|||||
Purchased services and other
|
—
|
|
673
|
|
604
|
|
(372
|
)
|
905
|
|
|||||
Total operating expenses
|
—
|
|
2,810
|
|
1,359
|
|
(348
|
)
|
3,821
|
|
|||||
Operating income
|
—
|
|
1,656
|
|
755
|
|
—
|
|
2,411
|
|
|||||
Less:
|
|
|
|
|
|
||||||||||
Other (income) expense
|
(40
|
)
|
(34
|
)
|
29
|
|
—
|
|
(45
|
)
|
|||||
Other components of net periodic benefit (recovery) cost
|
—
|
|
(174
|
)
|
7
|
|
—
|
|
(167
|
)
|
|||||
Net interest expense (income)
|
1
|
|
493
|
|
(23
|
)
|
—
|
|
471
|
|
|||||
Income before income tax expense and equity in net earnings of subsidiaries
|
39
|
|
1,371
|
|
742
|
|
—
|
|
2,152
|
|
|||||
Less: Income tax expense
|
6
|
|
337
|
|
210
|
|
—
|
|
553
|
|
|||||
Add: Equity in net earnings of subsidiaries
|
1,566
|
|
532
|
|
—
|
|
(2,098
|
)
|
—
|
|
|||||
Net income
|
$
|
1,599
|
|
$
|
1,566
|
|
$
|
532
|
|
$
|
(2,098
|
)
|
$
|
1,599
|
|
(in millions of Canadian dollars)
|
CPRL (Parent Guarantor)
|
|
CPRC (Subsidiary Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments and Eliminations
|
|
CPRL Consolidated
|
|
|||||
Net income
|
$
|
1,951
|
|
$
|
1,969
|
|
$
|
803
|
|
$
|
(2,772
|
)
|
$
|
1,951
|
|
Net (loss) gain in foreign currency translation adjustments, net of hedging activities
|
—
|
|
(479
|
)
|
419
|
|
—
|
|
(60
|
)
|
|||||
Change in derivatives designated as cash flow hedges
|
—
|
|
38
|
|
—
|
|
—
|
|
38
|
|
|||||
Change in pension and post-retirement defined
benefit plans |
—
|
|
(455
|
)
|
6
|
|
—
|
|
(449
|
)
|
|||||
Other comprehensive income (loss) before income taxes
|
—
|
|
(896
|
)
|
425
|
|
—
|
|
(471
|
)
|
|||||
Income tax recovery (expense) on above items
|
—
|
|
171
|
|
(2
|
)
|
—
|
|
169
|
|
|||||
Equity accounted investments
|
(302
|
)
|
423
|
|
—
|
|
(121
|
)
|
—
|
|
|||||
Other comprehensive (loss) income
|
(302
|
)
|
(302
|
)
|
423
|
|
(121
|
)
|
(302
|
)
|
|||||
Comprehensive income
|
$
|
1,649
|
|
$
|
1,667
|
|
$
|
1,226
|
|
$
|
(2,893
|
)
|
$
|
1,649
|
|
(in millions of Canadian dollars)
|
CPRL (Parent Guarantor)
|
|
CPRC (Subsidiary Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments and Eliminations
|
|
CPRL Consolidated
|
|
|||||
Net income
|
$
|
2,405
|
|
$
|
2,367
|
|
$
|
1,180
|
|
$
|
(3,547
|
)
|
$
|
2,405
|
|
Net gain (loss) in foreign currency translation adjustments, net of hedging activities
|
—
|
|
318
|
|
(294
|
)
|
—
|
|
24
|
|
|||||
Change in derivatives designated as cash flow hedges
|
—
|
|
19
|
|
—
|
|
—
|
|
19
|
|
|||||
Change in pension and post-retirement defined
benefit plans |
—
|
|
82
|
|
(2
|
)
|
—
|
|
80
|
|
|||||
Other comprehensive income (loss) before income taxes
|
—
|
|
419
|
|
(296
|
)
|
—
|
|
123
|
|
|||||
Income tax (expense) recovery on above items
|
—
|
|
(66
|
)
|
1
|
|
—
|
|
(65
|
)
|
|||||
Equity accounted investments
|
58
|
|
(295
|
)
|
—
|
|
237
|
|
—
|
|
|||||
Other comprehensive income (loss)
|
58
|
|
58
|
|
(295
|
)
|
237
|
|
58
|
|
|||||
Comprehensive income
|
$
|
2,463
|
|
$
|
2,425
|
|
$
|
885
|
|
$
|
(3,310
|
)
|
$
|
2,463
|
|
(in millions of Canadian dollars)
|
CPRL (Parent Guarantor)
|
|
CPRC (Subsidiary Issuer)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments and Eliminations
|
|
CPRL Consolidated
|
|
|||||
Net income
|
$
|
1,599
|
|
$
|
1,566
|
|
$
|
532
|
|
$
|
(2,098
|
)
|
$
|
1,599
|
|
Net gain (loss) in foreign currency translation adjustments, net of hedging activities
|
—
|
|
149
|
|
(131
|
)
|
—
|
|
18
|
|
|||||
Change in derivatives designated as cash flow hedges
|
—
|
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
|||||
Change in pension and post-retirement defined
benefit plans |
—
|
|
(443
|
)
|
9
|
|
—
|
|
(434
|
)
|
|||||
Other comprehensive income (loss) before income taxes
|
—
|
|
(296
|
)
|
(122
|
)
|
—
|
|
(418
|
)
|
|||||
Income tax recovery (expense) on above items
|
—
|
|
99
|
|
(3
|
)
|
—
|
|
96
|
|
|||||
Equity accounted investments
|
(322
|
)
|
(125
|
)
|
—
|
|
447
|
|
—
|
|
|||||
Other comprehensive loss
|
(322
|
)
|
(322
|
)
|
(125
|
)
|
447
|
|
(322
|
)
|
|||||
Comprehensive income
|
$
|
1,277
|
|
$
|
1,244
|
|
$
|
407
|
|
$
|
(1,651
|
)
|
$
|
1,277
|
|
(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
|
$
|
—
|
|
$
|
42
|
|
$
|
19
|
|
$
|
—
|
|
$
|
61
|
|
Accounts receivable, net
|
—
|
|
629
|
|
186
|
|
—
|
|
815
|
|
|||||
Accounts receivable, intercompany
|
125
|
|
167
|
|
224
|
|
(516
|
)
|
—
|
|
|||||
Short-term advances to affiliates
|
—
|
|
1,602
|
|
4,651
|
|
(6,253
|
)
|
—
|
|
|||||
Materials and supplies
|
—
|
|
136
|
|
37
|
|
—
|
|
173
|
|
|||||
Other current assets
|
—
|
|
39
|
|
29
|
|
—
|
|
68
|
|
|||||
|
125
|
|
2,615
|
|
5,146
|
|
(6,769
|
)
|
1,117
|
|
|||||
Long-term advances to affiliates
|
1,090
|
|
5
|
|
93
|
|
(1,188
|
)
|
—
|
|
|||||
Investments
|
—
|
|
24
|
|
179
|
|
—
|
|
203
|
|
|||||
Investments in subsidiaries
|
11,443
|
|
12,003
|
|
—
|
|
(23,446
|
)
|
—
|
|
|||||
Properties
|
—
|
|
9,579
|
|
8,839
|
|
—
|
|
18,418
|
|
|||||
Goodwill and intangible assets
|
—
|
|
—
|
|
202
|
|
—
|
|
202
|
|
|||||
Pension asset
|
—
|
|
1,243
|
|
—
|
|
—
|
|
1,243
|
|
|||||
Other assets
|
—
|
|
57
|
|
14
|
|
—
|
|
71
|
|
|||||
Deferred income taxes
|
6
|
|
—
|
|
—
|
|
(6
|
)
|
—
|
|
|||||
Total assets
|
$
|
12,664
|
|
$
|
25,526
|
|
$
|
14,473
|
|
$
|
(31,409
|
)
|
$
|
21,254
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
||||||||||
Accounts payable and accrued liabilities
|
$
|
115
|
|
$
|
1,017
|
|
$
|
317
|
|
$
|
—
|
|
$
|
1,449
|
|
Accounts payable, intercompany
|
4
|
|
344
|
|
168
|
|
(516
|
)
|
—
|
|
|||||
Short-term advances from affiliates
|
5,909
|
|
341
|
|
3
|
|
(6,253
|
)
|
—
|
|
|||||
Long-term debt maturing within one year
|
—
|
|
506
|
|
—
|
|
—
|
|
506
|
|
|||||
|
6,028
|
|
2,208
|
|
488
|
|
(6,769
|
)
|
1,955
|
|
|||||
Pension and other benefit liabilities
|
—
|
|
639
|
|
79
|
|
—
|
|
718
|
|
|||||
Long-term advances from affiliates
|
—
|
|
1,182
|
|
6
|
|
(1,188
|
)
|
—
|
|
|||||
Other long-term liabilities
|
—
|
|
120
|
|
117
|
|
—
|
|
237
|
|
|||||
Long-term debt
|
—
|
|
8,135
|
|
55
|
|
—
|
|
8,190
|
|
|||||
Deferred income taxes
|
—
|
|
1,799
|
|
1,725
|
|
(6
|
)
|
3,518
|
|
|||||
Total liabilities
|
6,028
|
|
14,083
|
|
2,470
|
|
(7,963
|
)
|
14,618
|
|
|||||
Shareholders’ equity
|
|
|
|
|
|
||||||||||
Share capital
|
2,002
|
|
538
|
|
5,946
|
|
(6,484
|
)
|
2,002
|
|
|||||
Additional paid-in capital
|
42
|
|
1,656
|
|
92
|
|
(1,748
|
)
|
42
|
|
|||||
Accumulated other comprehensive (loss) income
|
(2,043
|
)
|
(2,043
|
)
|
839
|
|
1,204
|
|
(2,043
|
)
|
|||||
Retained earnings
|
6,635
|
|
11,292
|
|
5,126
|
|
(16,418
|
)
|
6,635
|
|
|||||
|
6,636
|
|
11,443
|
|
12,003
|
|
(23,446
|
)
|
6,636
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
12,664
|
|
$
|
25,526
|
|
$
|
14,473
|
|
$
|
(31,409
|
)
|
$
|
21,254
|
|
(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
|
$
|
—
|
|
$
|
241
|
|
$
|
97
|
|
$
|
—
|
|
$
|
338
|
|
Accounts receivable, net
|
—
|
|
508
|
|
179
|
|
—
|
|
687
|
|
|||||
Accounts receivable, intercompany
|
97
|
|
153
|
|
215
|
|
(465
|
)
|
—
|
|
|||||
Short-term advances to affiliates
|
500
|
|
1,004
|
|
4,996
|
|
(6,500
|
)
|
—
|
|
|||||
Materials and supplies
|
—
|
|
120
|
|
32
|
|
—
|
|
152
|
|
|||||
Other current assets
|
—
|
|
31
|
|
66
|
|
—
|
|
97
|
|
|||||
|
597
|
|
2,057
|
|
5,585
|
|
(6,965
|
)
|
1,274
|
|
|||||
Long-term advances to affiliates
|
590
|
|
—
|
|
410
|
|
(1,000
|
)
|
—
|
|
|||||
Investments
|
—
|
|
27
|
|
155
|
|
—
|
|
182
|
|
|||||
Investments in subsidiaries
|
10,623
|
|
12,122
|
|
—
|
|
(22,745
|
)
|
—
|
|
|||||
Properties
|
—
|
|
8,982
|
|
8,034
|
|
—
|
|
17,016
|
|
|||||
Goodwill and intangible assets
|
—
|
|
—
|
|
187
|
|
—
|
|
187
|
|
|||||
Pension asset
|
—
|
|
1,407
|
|
—
|
|
—
|
|
1,407
|
|
|||||
Other assets
|
—
|
|
56
|
|
13
|
|
—
|
|
69
|
|
|||||
Deferred income taxes
|
3
|
|
—
|
|
—
|
|
(3
|
)
|
—
|
|
|||||
Total assets
|
$
|
11,813
|
|
$
|
24,651
|
|
$
|
14,384
|
|
$
|
(30,713
|
)
|
$
|
20,135
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
||||||||||
Accounts payable and accrued liabilities
|
$
|
82
|
|
$
|
844
|
|
$
|
312
|
|
$
|
—
|
|
$
|
1,238
|
|
Accounts payable, intercompany
|
3
|
|
309
|
|
153
|
|
(465
|
)
|
—
|
|
|||||
Short-term advances from affiliates
|
5,291
|
|
1,185
|
|
24
|
|
(6,500
|
)
|
—
|
|
|||||
Long-term debt maturing within one year
|
—
|
|
746
|
|
—
|
|
—
|
|
746
|
|
|||||
|
5,376
|
|
3,084
|
|
489
|
|
(6,965
|
)
|
1,984
|
|
|||||
Pension and other benefit liabilities
|
—
|
|
672
|
|
77
|
|
—
|
|
749
|
|
|||||
Long-term advances from affiliates
|
—
|
|
1,000
|
|
—
|
|
(1,000
|
)
|
—
|
|
|||||
Other long-term liabilities
|
—
|
|
108
|
|
123
|
|
—
|
|
231
|
|
|||||
Long-term debt
|
—
|
|
7,362
|
|
51
|
|
—
|
|
7,413
|
|
|||||
Deferred income taxes
|
—
|
|
1,802
|
|
1,522
|
|
(3
|
)
|
3,321
|
|
|||||
Total liabilities
|
5,376
|
|
14,028
|
|
2,262
|
|
(7,968
|
)
|
13,698
|
|
|||||
Shareholders’ equity
|
|
|
|
|
|
||||||||||
Share capital
|
2,032
|
|
1,037
|
|
6,730
|
|
(7,767
|
)
|
2,032
|
|
|||||
Additional paid-in capital
|
43
|
|
1,643
|
|
259
|
|
(1,902
|
)
|
43
|
|
|||||
Accumulated other comprehensive (loss) income
|
(1,741
|
)
|
(1,742
|
)
|
417
|
|
1,325
|
|
(1,741
|
)
|
|||||
Retained earnings
|
6,103
|
|
9,685
|
|
4,716
|
|
(14,401
|
)
|
6,103
|
|
|||||
|
6,437
|
|
10,623
|
|
12,122
|
|
(22,745
|
)
|
6,437
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
11,813
|
|
$
|
24,651
|
|
$
|
14,384
|
|
$
|
(30,713
|
)
|
$
|
20,135
|
|
(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
|
$
|
316
|
|
$
|
1,968
|
|
$
|
1,128
|
|
$
|
(700
|
)
|
$
|
2,712
|
|
Investing activities
|
|
|
|
|
|
||||||||||
Additions to properties
|
—
|
|
(971
|
)
|
(580
|
)
|
—
|
|
(1,551
|
)
|
|||||
Proceeds from sale of properties and other assets
|
—
|
|
35
|
|
43
|
|
—
|
|
78
|
|
|||||
Advances to affiliates
|
—
|
|
(611
|
)
|
(209
|
)
|
820
|
|
—
|
|
|||||
Repayment of advances to affiliates
|
—
|
|
—
|
|
866
|
|
(866
|
)
|
—
|
|
|||||
Repurchase of share capital from affiliates
|
500
|
|
964
|
|
—
|
|
(1,464
|
)
|
—
|
|
|||||
Other
|
—
|
|
18
|
|
(3
|
)
|
—
|
|
15
|
|
|||||
Cash provided by (used in) investing activities
|
500
|
|
(565
|
)
|
117
|
|
(1,510
|
)
|
(1,458
|
)
|
|||||
Financing activities
|
|
|
|
|
|
||||||||||
Dividends paid
|
(348
|
)
|
(348
|
)
|
(352
|
)
|
700
|
|
(348
|
)
|
|||||
Return of share capital to affiliates
|
—
|
|
(500
|
)
|
(964
|
)
|
1,464
|
|
—
|
|
|||||
Issuance of CP Common Shares
|
24
|
|
—
|
|
—
|
|
—
|
|
24
|
|
|||||
Purchase of CP Common Shares
|
(1,103
|
)
|
—
|
|
—
|
|
—
|
|
(1,103
|
)
|
|||||
Issuance of long-term debt, excluding commercial paper
|
—
|
|
638
|
|
—
|
|
—
|
|
638
|
|
|||||
Repayment of long-term debt, excluding commercial paper
|
—
|
|
(753
|
)
|
—
|
|
—
|
|
(753
|
)
|
|||||
Advances from affiliates
|
820
|
|
—
|
|
—
|
|
(820
|
)
|
—
|
|
|||||
Repayment of advances from affiliates
|
(209
|
)
|
(657
|
)
|
—
|
|
866
|
|
—
|
|
|||||
Cash used in financing activities
|
(816
|
)
|
(1,620
|
)
|
(1,316
|
)
|
2,210
|
|
(1,542
|
)
|
|||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents
|
—
|
|
18
|
|
(7
|
)
|
—
|
|
11
|
|
|||||
Cash position
|
|
|
|
|
|
||||||||||
Decrease in cash and cash equivalents
|
—
|
|
(199
|
)
|
(78
|
)
|
—
|
|
(277
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
—
|
|
241
|
|
97
|
|
—
|
|
338
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
—
|
|
$
|
42
|
|
$
|
19
|
|
$
|
—
|
|
$
|
61
|
|
(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
|
$
|
338
|
|
$
|
1,334
|
|
$
|
989
|
|
$
|
(479
|
)
|
$
|
2,182
|
|
Investing activities
|
|
|
|
|
|
||||||||||
Additions to properties
|
—
|
|
(950
|
)
|
(390
|
)
|
—
|
|
(1,340
|
)
|
|||||
Proceeds from sale of properties and other assets
|
—
|
|
29
|
|
13
|
|
—
|
|
42
|
|
|||||
Advances to affiliates
|
(590
|
)
|
(550
|
)
|
(1,528
|
)
|
2,668
|
|
—
|
|
|||||
Repayment of advances to affiliates
|
—
|
|
242
|
|
243
|
|
(485
|
)
|
—
|
|
|||||
Capital contributions to affiliates
|
—
|
|
(1,039
|
)
|
—
|
|
1,039
|
|
—
|
|
|||||
Repurchase of share capital from affiliates
|
—
|
|
156
|
|
—
|
|
(156
|
)
|
—
|
|
|||||
Other
|
—
|
|
5
|
|
(2
|
)
|
—
|
|
3
|
|
|||||
Cash used in investing activities
|
(590
|
)
|
(2,107
|
)
|
(1,664
|
)
|
3,066
|
|
(1,295
|
)
|
|||||
Financing activities
|
|
|
|
|
|
||||||||||
Dividends paid
|
(310
|
)
|
(310
|
)
|
(169
|
)
|
479
|
|
(310
|
)
|
|||||
Issuance of share capital
|
—
|
|
—
|
|
1,039
|
|
(1,039
|
)
|
—
|
|
|||||
Return of share capital to affiliates
|
—
|
|
—
|
|
(156
|
)
|
156
|
|
—
|
|
|||||
Issuance of CP Common Shares
|
45
|
|
—
|
|
—
|
|
—
|
|
45
|
|
|||||
Purchase of CP Common Shares
|
(381
|
)
|
—
|
|
—
|
|
—
|
|
(381
|
)
|
|||||
Repayment of long-term debt, excluding commercial paper
|
—
|
|
(32
|
)
|
—
|
|
—
|
|
(32
|
)
|
|||||
Advances from affiliates
|
1,383
|
|
1,285
|
|
—
|
|
(2,668
|
)
|
—
|
|
|||||
Repayment of advances from affiliates
|
(485
|
)
|
—
|
|
—
|
|
485
|
|
—
|
|
|||||
Settlement of forward starting swaps
|
—
|
|
(22
|
)
|
—
|
|
—
|
|
(22
|
)
|
|||||
Cash provided by (used in) financing activities
|
252
|
|
921
|
|
714
|
|
(2,587
|
)
|
(700
|
)
|
|||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents
|
—
|
|
(7
|
)
|
(6
|
)
|
—
|
|
(13
|
)
|
|||||
Cash position
|
|
|
|
|
|
||||||||||
Increase in cash and cash equivalents
|
—
|
|
141
|
|
33
|
|
—
|
|
174
|
|
|||||
Cash and cash equivalents at beginning of year
|
—
|
|
100
|
|
64
|
|
—
|
|
164
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
—
|
|
$
|
241
|
|
$
|
97
|
|
$
|
—
|
|
$
|
338
|
|
(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
|
$
|
255
|
|
$
|
1,424
|
|
$
|
879
|
|
$
|
(469
|
)
|
$
|
2,089
|
|
Investing activities
|
|
|
|
|
|
||||||||||
Additions to properties
|
—
|
|
(728
|
)
|
(454
|
)
|
—
|
|
(1,182
|
)
|
|||||
Proceeds from sale of properties and other assets
|
—
|
|
102
|
|
14
|
|
—
|
|
116
|
|
|||||
Advances to affiliates
|
—
|
|
(664
|
)
|
(539
|
)
|
1,203
|
|
—
|
|
|||||
Repayment of advances to affiliates
|
—
|
|
222
|
|
—
|
|
(222
|
)
|
—
|
|
|||||
Capital contributions to affiliates
|
—
|
|
(472
|
)
|
—
|
|
472
|
|
—
|
|
|||||
Repurchase of share capital from affiliates
|
—
|
|
8
|
|
—
|
|
(8
|
)
|
—
|
|
|||||
Other
|
—
|
|
—
|
|
(3
|
)
|
—
|
|
(3
|
)
|
|||||
Cash used in investing activities
|
—
|
|
(1,532
|
)
|
(982
|
)
|
1,445
|
|
(1,069
|
)
|
|||||
Financing activities
|
|
|
|
|
|
||||||||||
Dividends paid
|
(255
|
)
|
(255
|
)
|
(214
|
)
|
469
|
|
(255
|
)
|
|||||
Issuance of share capital
|
—
|
|
—
|
|
472
|
|
(472
|
)
|
—
|
|
|||||
Return of share capital to affiliates
|
—
|
|
—
|
|
(8
|
)
|
8
|
|
—
|
|
|||||
Issuance of CP Common Shares
|
21
|
|
—
|
|
—
|
|
—
|
|
21
|
|
|||||
Purchase of CP Common Shares
|
(1,210
|
)
|
—
|
|
—
|
|
—
|
|
(1,210
|
)
|
|||||
Repayment of long-term debt, excluding commercial paper
|
—
|
|
(24
|
)
|
(14
|
)
|
—
|
|
(38
|
)
|
|||||
Net repayment of commercial paper
|
—
|
|
(8
|
)
|
—
|
|
—
|
|
(8
|
)
|
|||||
Advances from affiliates
|
1,189
|
|
—
|
|
14
|
|
(1,203
|
)
|
—
|
|
|||||
Repayment of advances from affiliates
|
—
|
|
—
|
|
(222
|
)
|
222
|
|
—
|
|
|||||
Other
|
—
|
|
(3
|
)
|
—
|
|
—
|
|
(3
|
)
|
|||||
Cash (used in) provided by financing activities
|
(255
|
)
|
(290
|
)
|
28
|
|
(976
|
)
|
(1,493
|
)
|
|||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents
|
—
|
|
(4
|
)
|
(9
|
)
|
—
|
|
(13
|
)
|
|||||
Cash position
|
|
|
|
|
|
||||||||||
Decrease in cash and cash equivalents
|
—
|
|
(402
|
)
|
(84
|
)
|
—
|
|
(486
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
—
|
|
502
|
|
148
|
|
—
|
|
650
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
—
|
|
$
|
100
|
|
$
|
64
|
|
$
|
—
|
|
$
|
164
|
|
(a)
|
Financial Statements
|
(b)
|
Financial Statement Schedule
|
(in millions of Canadian dollars)
|
Beginning balance at January 1
|
|
Additions charged to expenses
|
|
Payments and other reductions
|
|
Impact of FX
|
|
Ending
balance at December 31 |
|
|||||
Accruals for personal injury, damage and other claims provision(1)
|
|||||||||||||||
2016
|
$
|
133
|
|
$
|
67
|
|
$
|
(71
|
)
|
$
|
1
|
|
$
|
130
|
|
2017
|
$
|
130
|
|
$
|
66
|
|
$
|
(77
|
)
|
$
|
(1
|
)
|
$
|
118
|
|
2018
|
$
|
118
|
|
$
|
93
|
|
$
|
(60
|
)
|
$
|
1
|
|
$
|
152
|
|
Environmental liabilities
|
|||||||||||||||
2016
|
$
|
93
|
|
$
|
6
|
|
$
|
(12
|
)
|
$
|
(2
|
)
|
$
|
85
|
|
2017
|
$
|
85
|
|
$
|
5
|
|
$
|
(8
|
)
|
$
|
(4
|
)
|
$
|
78
|
|
2018
|
$
|
78
|
|
$
|
6
|
|
$
|
(7
|
)
|
$
|
5
|
|
$
|
82
|
|
(c)
|
Exhibits
|
Exhibit
|
Description
|
3
|
Articles of Incorporation and Bylaws:
|
4
|
Instruments Defining the Rights of Security Holders, Including Indentures:
|
|
|
10
|
Material Contracts:
|
|
|
|
|
10.6*
|
|
|
|
101.INS**
|
Inline XBRL Instance Document
|
101.SCH**
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB**
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.DEF**
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.PRE**
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
The following financial information from Canadian Pacific Railway Limited’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in Extensible Business Reporting Language (XBRL) includes: (i) the Consolidated Statements of Income of each of the three years ended December 31, 2018, 2017, and 2016; (ii) the Consolidated Statements of Comprehensive Income for each of the three years ended December 31, 2018, 2017, and 2016; (iii) the Consolidated Balance Sheets at December 31, 2018 and 2017; (iv) the Consolidated Statements of Cash Flows for each of the three years ended December 31, 2018, 2017, and 2016; (v) the Consolidated Statements of Changes in Shareholders’ Equity for each of the three years ended December 31, 2018, 2017, and 2016; and (vi) the Notes to Consolidated Financial Statements.
|
CANADIAN PACIFIC RAILWAY LIMITED
|
|
(Registrant)
|
|
By:
|
/s/ KEITH CREEL
|
|
Keith Creel
|
|
Chief Executive Officer
|
Signature
|
Title
|
/s/ KEITH CREEL
|
Chief Executive Officer and Director
|
Keith Creel
|
(Principal Executive Officer)
|
|
|
/s/ NADEEM VELANI
|
Executive Vice-President and Chief Financial Officer
|
Nadeem Velani
|
(Principal Financial Officer)
|
|
|
/s/ ANDREW F. REARDON
|
Chairman of the Board of Directors
|
Andrew F. Reardon
|
|
|
|
/s/ JOHN R. BAIRD
|
Director
|
John R. Baird
|
|
|
|
/s/ ISABELLE COURVILLE
|
Director
|
Isabelle Courville
|
|
|
|
/s/ GILLIAN H. DENHAM
|
Director
|
Gillian H. Denham
|
|
|
|
/s/ REBECCA MACDONALD
|
Director
|
Rebecca MacDonald
|
|
|
|
/s/ EDWARD L. MONSER
|
Director
|
Edward L. Monser
|
|
|
|
/s/ MATTHEW H. PAULL
|
Director
|
Matthew H. Paull
|
|
|
|
/s/ JANE L. PEVERETT
|
Director
|
Jane L. Peverett
|
|
|
|
/s/ GORDON T. TRAFTON
|
Director
|
Gordon T. Trafton
|
|
1.
|
Capitalized Terms. Except as defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Employment Agreement.
|
2.
|
Salary. Section 2(a) of the Employment Agreement is hereby amended to delete: “$1,125,000.” and replace it with “$1,158,750.
|
3.
|
Short Term Incentive Plan. Section 2(c) of the Employment Agreement is hereby amended to delete the reference to “…a target level of not less than 120% of Annual Salary...” and replace it with “…a target level of not less than 125% of Annual Salary...”.
|
4.
|
Long Term Incentive Plan. Section 2(d) of the Employment Agreement is hereby deleted and replaced with the following:
|
5.
|
Continuing Effect of Employment Agreement. Except as expressly modified hereby, the provisions of the Employment Agreement are and shall remain in full force and effect.
|
6.
|
Governing Law. This amendment shall in all respects be subject to, and governed by, the laws of the Province of Alberta without giving effect to its conflict of laws principles.
|
7.
|
Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
|
/s/ N. Hasham
|
/s/ Keith Creel
|
Witness
|
Keith Creel
|
|
|
|
|
N. Hasham
|
|
Witness Name
|
|
|
|
|
|
|
|
|
|
Significant subsidiary
|
Incorporated under the laws of
|
Canadian Pacific Railway Company
|
Canada
|
6061338 Canada Inc.
|
Canada
|
Mount Stephen Properties Inc.
|
Canada
|
3939804 Canada Inc.
|
Canada
|
CPR Finance II Ltd.
|
Canada
|
CPR Finance III Ltd.
|
Canada
|
6211241 Canada Inc.
|
Canada
|
CPFL S.à.r.l.
|
Luxembourg
|
CP (US) Holding Corporation
|
Delaware
|
Soo Line Corporation
|
Minnesota
|
Soo Line Railroad Company
|
Minnesota
|
1.
|
I have reviewed this Annual Report on Form 10-K of Canadian Pacific Railway Limited;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date: February 15, 2019
|
|
/s/ Keith Creel
|
|
|
Keith Creel
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Canadian Pacific Railway Limited;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
Date: February 15, 2019
|
|
/s/ Nadeem Velani
|
|
|
Nadeem Velani
|
|
|
Executive Vice-President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
Date: February 15, 2019
|
|
|
|
/s/ Keith Creel
|
|
|
|
|
Keith Creel
|
|
|
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
Date: February 15, 2019
|
|
|
|
/s/ Nadeem Velani
|
|
|
|
|
Nadeem Velani
|
|
|
|
|
Executive Vice-President and Chief Financial Officer
|