CALGARY, Jan. 18, 2017 /PRNewswire/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) today announced its
lowest-ever fourth-quarter operating ratio ("OR") of 56.2 percent
and a record-low full-year OR of 58.6 percent as focussed cost
control helped offset softer than expected volumes.
Fourth-quarter revenues decreased 3 percent to C$1.64 billion from $1.69
billion, while diluted earnings per share ("EPS") increased
25 percent to $2.61 from $2.08 and adjusted diluted EPS rose 12 percent to
$3.04 from $2.72.
"While the fourth quarter was weighed down by challenging
operating conditions, including unexpected and extreme weather on
the West Coast that compounded the impact of an already delayed
grain harvest, it once again highlighted our resiliency and ability
to operate efficiently under tough conditions," said E. Hunter Harrison, CP's Chief Executive
Officer. "I am particularly proud of our people who worked
tirelessly over the last three months of 2016 to deliver for our
customers in a safe and efficient manner."
FULL-YEAR 2016 RESULTS
- Revenues decreased 7 percent to $6.23
billion from $6.71
billion
- OR fell to a record 58.6 percent, improving on the 2015
reported OR by 140 basis-points and the adjusted OR by 240
basis-points
- Reported diluted EPS increased 27 percent to $10.63 from $8.40;
adjusted diluted EPS rose 2 percent to $10.29 from $10.10
- Free cash flow of $1 billion
"2016 featured stiff economic headwinds and a challenging volume
environment, headlined by a precipitous decline in crude oil
shipments and weakness in grain movements, particularly in the
first half," Harrison said. "These are not excuses, but
opportunities to showcase our operating ability and leadership. As
we have shown over the last four years, the precision railroading
model works in all economic conditions."
In 2017, CP will continue to find opportunities to enhance the
productivity, fluidity and safety of its operations.
"With continued margin improvement and an anticipated increase
in volumes, led by a stronger bulk outlook, we expect adjusted
diluted EPS growth to be in the high single-digits," said
Keith Creel, CP's President and
Chief Operating Officer. "With our strong leadership team, plus the
commitment and discipline shown by the thousands of men and women
every day at CP, the franchise is well positioned for 2017 and
beyond."
CP's expectations for adjusted diluted EPS growth in 2017 are
based on adjusted diluted EPS of $10.29 in 2016. CP assumes that in 2017 the
Canadian-to-U.S. dollar exchange rate will be in the range of
$1.30 to $1.35, the average price of
West Texas Intermediate (WTI) will be approximately US$45 to $55 per barrel. To further enhance
safety and fluidity of the network, CP also plans to invest
approximately $1.25 billion in
capital programs in 2017, an increase of 6 percent over the
$1.18 billion spent in 2016.
Non-GAAP Measures
For further information regarding non-GAAP measures, including
reconciliations to the nearest GAAP measures, see the attached
supplementary schedule Non-GAAP Measures.
Conference Call Access
Toronto participants dial in
number: 1-647-427-7450
Operator assisted toll free dial in number: 1-888-231-8191
Callers should dial in 10 minutes prior to the call.
Webcast
We encourage you to access the webcast and presentation material
in the Investors section of CP's website at
http://www.cpr.ca/en/investors/earnings-releases
A replay of the fourth-quarter conference call will be available
by phone through to February 15, 2017
at 416-849-0833 or toll free 1-855-859-2056, password 38021965.
Access to the webcast and audio file of the presentation will be
made available at:
http://www.cpr.ca/en/investors/earnings-releases
Note on forward-looking information
This news release contains certain forward-looking information
within the meaning of applicable securities laws relating, but not
limited, to our operations, priorities and plans, anticipated
financial performance, including our 2017 full-year guidance,
business prospects, planned capital expenditures, programs and
strategies. This forward-looking information also includes, but is
not limited to, statements concerning expectations, beliefs, plans,
goals, objectives, assumptions and statements about possible future
events, conditions, and results of operations or performance.
Forward-looking information may contain statements with words or
headings such as "financial expectations", "key assumptions",
"anticipate", "believe", "expect", "plan", "will", "outlook",
"should" or similar words suggesting future outcomes. To the extent
that CP has provided guidance using non-GAAP financial measures,
the Company may not be able to provide a reconciliation to a GAAP
measure, due to unknown variables and uncertainty related to future
results.
Undue reliance should not be placed on forward-looking
information as actual results may differ materially from the
forward-looking information. Forward-looking information is not a
guarantee of future performance. By its nature, CP's
forward-looking information involves numerous assumptions, inherent
risks and uncertainties that could cause actual results to differ
materially from the forward looking information, including but not
limited to the following factors: changes in business strategies;
general North American and global economic, credit and business
conditions; risks in agricultural production such as weather
conditions and insect populations; the availability and price of
energy commodities; the effects of competition and pricing
pressures; industry capacity; shifts in market demand; changes in
commodity prices; uncertainty surrounding timing and volumes of
commodities being shipped via CP; inflation; changes in laws and
regulations, including regulation of rates; changes in taxes and
tax rates; potential increases in maintenance and operating costs;
uncertainties of investigations, proceedings or other types of
claims and litigation; labour disputes; risks and liabilities
arising from derailments; transportation of dangerous goods; timing
of completion of capital and maintenance projects; currency and
interest rate fluctuations; effects of changes in market conditions
and discount rates on the financial position of pension plans and
investments; and various events that could disrupt operations,
including severe weather, droughts, floods, avalanches and
earthquakes as well as security threats and governmental response
to them, and technological changes. The foregoing list of factors
is not exhaustive. These and other factors are detailed from time
to time in reports filed by CP with securities regulators in
Canada and the United States. Reference should be made to
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Forward-Looking
Information" in CP's annual and interim reports on Form 10-K and
10-Q. Readers are cautioned not to place undue reliance on
forward-looking information. Forward looking information is based
on current expectations, estimates and projections and it is
possible that predictions, forecasts, projections, and other forms
of forward-looking information will not be achieved by CP. Except
as required by law, CP undertakes no obligation to update publicly
or otherwise revise any forward-looking information, whether as a
result of new information, future events or otherwise.
About Canadian Pacific
Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) is a
transcontinental railway in Canada
and the United States with direct
links to eight major ports, including Vancouver and Montreal, providing North American customers a
competitive rail service with access to key markets in every corner
of the globe. CP is growing with its customers, offering a suite of
freight transportation services, logistics solutions and supply
chain expertise. Visit www.cpr.ca to see the rail advantages of
CP.
CANADIAN PACIFIC
RAILWAY LIMITED
|
|
INTERIM
CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited)
|
|
|
|
|
For the three
months
ended December 31
|
For the year
ended
December 31
|
(in millions of
Canadian dollars, except share and per share data)
|
2016
|
2015
|
2016
|
2015
|
Revenues
|
|
|
|
|
|
Freight
|
$
|
1,596
|
$
|
1,645
|
$
|
6,060
|
$
|
6,552
|
|
Non-freight
|
41
|
42
|
172
|
160
|
Total
revenues
|
1,637
|
1,687
|
6,232
|
6,712
|
Operating
expenses
|
|
|
|
|
|
Compensation and
benefits
|
282
|
333
|
1,189
|
1,371
|
|
Fuel
|
173
|
166
|
567
|
708
|
|
Materials
|
47
|
40
|
180
|
184
|
|
Equipment
rents
|
41
|
44
|
173
|
174
|
|
Depreciation and
amortization
|
162
|
155
|
640
|
595
|
|
Purchased services
and other (Note 3)
|
215
|
272
|
905
|
1,060
|
|
Gain on sale of
Delaware & Hudson South
|
—
|
—
|
—
|
(68)
|
Total operating
expenses
|
920
|
1,010
|
3,654
|
4,024
|
|
|
|
|
|
Operating
income
|
717
|
677
|
2,578
|
2,688
|
Less:
|
|
|
|
|
|
Other income and
charges (Note 4)
|
74
|
99
|
(45)
|
335
|
|
Net interest
expense
|
116
|
122
|
471
|
394
|
Income before
income tax expense
|
527
|
456
|
2,152
|
1,959
|
|
Income tax
expense
|
143
|
137
|
553
|
607
|
Net
income
|
$
|
384
|
$
|
319
|
$
|
1,599
|
$
|
1,352
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
Basic earnings per
share
|
$
|
2.63
|
$
|
2.09
|
$
|
10.69
|
$
|
8.47
|
|
Diluted earnings per
share
|
$
|
2.61
|
$
|
2.08
|
$
|
10.63
|
$
|
8.40
|
|
|
|
|
|
Weighted-average
number of shares (millions)
|
|
|
|
|
|
Basic
|
146.3
|
153.0
|
149.6
|
159.7
|
|
Diluted
|
147.3
|
154.0
|
150.5
|
161.0
|
|
|
|
|
|
Dividends declared
per share
|
$
|
0.5000
|
$
|
0.3500
|
$
|
1.8500
|
$
|
1.4000
|
|
|
|
|
|
|
|
|
|
See notes to interim
consolidated financial information.
|
INTERIM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(unaudited)
|
|
|
|
|
|
For the three
months
ended December 31
|
For the year
ended
December 31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
2016
|
2015
|
Net income
|
$
|
384
|
$
|
319
|
$
|
1,599
|
$
|
1,352
|
|
Net (loss) gain in
foreign currency translation adjustments, net of
hedging activities
|
(15)
|
(23)
|
18
|
(86)
|
|
Change in derivatives
designated as cash flow hedges
|
73
|
9
|
(2)
|
(69)
|
|
Change in pension and
post-retirement defined benefit plans
|
(571)
|
856
|
(434)
|
1,059
|
Other comprehensive
(loss) income before income taxes
|
(513)
|
842
|
(418)
|
904
|
Income tax recovery
(expense) on above items
|
147
|
(206)
|
96
|
(162)
|
Other comprehensive
(loss) income
|
(366)
|
636
|
(322)
|
742
|
Comprehensive
income
|
$
|
18
|
$
|
955
|
$
|
1,277
|
$
|
2,094
|
|
|
|
|
|
|
|
|
|
See notes to interim
consolidated financial information.
|
INTERIM
CONSOLIDATED BALANCE SHEETS AS AT
|
(unaudited)
|
|
|
|
(in millions of
Canadian dollars)
|
December
31
2016
|
December
31
2015
|
Assets
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
164
|
$
|
650
|
|
Accounts receivable,
net
|
591
|
645
|
|
Materials and
supplies
|
184
|
188
|
|
Other current
assets
|
70
|
54
|
|
1,009
|
1,537
|
Investments
|
194
|
152
|
Properties
|
16,689
|
16,273
|
Goodwill and
intangible assets
|
202
|
211
|
Pension
asset
|
1,070
|
1,401
|
Other
assets
|
57
|
63
|
Total
assets
|
$
|
19,221
|
$
|
19,637
|
Liabilities and
shareholders' equity
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
1,322
|
$
|
1,417
|
|
Long-term debt
maturing within one year
|
25
|
30
|
|
1,347
|
1,447
|
Pension and other
benefit liabilities
|
734
|
758
|
Other long-term
liabilities
|
284
|
318
|
Long-term
debt
|
8,659
|
8,927
|
Deferred income
taxes
|
3,571
|
3,391
|
Total
liabilities
|
14,595
|
14,841
|
Shareholders'
equity
|
|
|
|
Share
capital
|
2,002
|
2,058
|
|
Additional paid-in
capital
|
52
|
43
|
|
Accumulated other
comprehensive loss
|
(1,799)
|
(1,477)
|
|
Retained
earnings
|
4,371
|
4,172
|
|
4,626
|
4,796
|
Total liabilities
and shareholders' equity
|
$
|
19,221
|
$
|
19,637
|
|
|
|
|
|
See notes to interim
consolidated financial information.
|
INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
|
|
|
|
For the three
months
ended December 31
|
For the year
ended
December 31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
2016
|
2015
|
Operating
activities
|
|
|
|
|
Net income
|
$
|
384
|
$
|
319
|
$
|
1,599
|
$
|
1,352
|
Reconciliation of net
income to cash provided by operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
162
|
155
|
640
|
595
|
|
Deferred income
taxes
|
87
|
128
|
320
|
234
|
|
Pension funding in
excess of expense
|
(33)
|
(9)
|
(138)
|
(49)
|
Foreign exchange loss
(gain) on long-term debt (Note 4)
|
74
|
115
|
(79)
|
297
|
Other operating
activities, net
|
(68)
|
(123)
|
(198)
|
(245)
|
Change in non-cash
working capital balances related to operations
|
162
|
38
|
(55)
|
275
|
Cash provided by
operating activities
|
768
|
623
|
2,089
|
2,459
|
Investing
activities
|
|
|
|
|
Additions to
properties
|
(280)
|
(455)
|
(1,182)
|
(1,522)
|
Proceeds from the
sale of Delaware & Hudson South
|
—
|
—
|
—
|
281
|
Proceeds from sale of
properties and other assets
|
29
|
41
|
116
|
114
|
Other
|
(1)
|
(1)
|
(3)
|
4
|
Cash used in
investing activities
|
(252)
|
(415)
|
(1,069)
|
(1,123)
|
Financing
activities
|
|
|
|
|
Dividends
paid
|
(73)
|
(54)
|
(255)
|
(226)
|
Issuance of CP common
shares
|
7
|
11
|
21
|
43
|
Purchase of CP common
shares
|
(10)
|
(192)
|
(1,210)
|
(2,787)
|
Issuance of long-term
debt, excluding commercial paper
|
—
|
—
|
—
|
3,411
|
Repayment of
long-term debt, excluding commercial paper
|
(8)
|
(6)
|
(38)
|
(505)
|
Net repayment of
commercial paper
|
(374)
|
—
|
(8)
|
(893)
|
Other
|
—
|
—
|
(3)
|
—
|
Cash used in
financing activities
|
(458)
|
(241)
|
(1,493)
|
(957)
|
Effect of foreign
currency fluctuations on U.S. dollar-denominated
cash and cash equivalents
|
3
|
22
|
(13)
|
45
|
Cash
position
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
61
|
(11)
|
(486)
|
424
|
Cash and cash
equivalents at beginning of period
|
103
|
661
|
650
|
226
|
Cash and cash
equivalents at end of period
|
$
|
164
|
$
|
650
|
$
|
164
|
$
|
650
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Income taxes
paid
|
$
|
48
|
$
|
69
|
$
|
322
|
$
|
176
|
|
Interest
paid
|
$
|
93
|
$
|
94
|
$
|
488
|
$
|
336
|
|
|
|
|
|
|
|
|
|
See notes to interim
consolidated financial information.
|
INTERIM
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
|
(unaudited)
|
|
(in millions of
Canadian dollars, except
common share amounts)
|
Common
shares (in
millions)
|
Share
capital
|
Additional
paid-in
capital
|
Accumulated
other
comprehensive
loss
|
Retained
earnings
|
Total
shareholders'
equity
|
Balance at January
1, 2016
|
153.0
|
$
|
2,058
|
$
|
43
|
$
|
(1,477)
|
$
|
4,172
|
$
|
4,796
|
|
Net income
|
—
|
—
|
—
|
—
|
1,599
|
1,599
|
|
Other comprehensive
loss
|
—
|
—
|
—
|
(322)
|
—
|
(322)
|
|
Dividends declared
($1.8500 per share)
|
—
|
—
|
—
|
—
|
(274)
|
(274)
|
|
Effect of stock-based
compensation
expense
|
—
|
—
|
14
|
—
|
—
|
14
|
|
CP common shares
repurchased
|
(6.9)
|
(84)
|
—
|
—
|
(1,126)
|
(1,210)
|
|
Shares issued under
stock option plan
|
0.2
|
28
|
(5)
|
—
|
—
|
23
|
Balance at
December 31, 2016
|
146.3
|
$
|
2,002
|
$
|
52
|
$
|
(1,799)
|
$
|
4,371
|
$
|
4,626
|
Balance at January
1, 2015
|
166.1
|
$
|
2,185
|
$
|
36
|
$
|
(2,219)
|
$
|
5,608
|
$
|
5,610
|
|
Net income
|
—
|
—
|
—
|
—
|
1,352
|
1,352
|
|
Other comprehensive
income
|
—
|
—
|
—
|
742
|
—
|
742
|
|
Dividends declared
($1.4000 per share)
|
—
|
—
|
—
|
—
|
(221)
|
(221)
|
|
Effect of stock-based
compensation
expense
|
—
|
—
|
17
|
—
|
—
|
17
|
|
CP common shares
repurchased
|
(13.7)
|
(181)
|
—
|
—
|
(2,567)
|
(2,748)
|
|
Shares issued under
stock option plan
|
0.6
|
54
|
(10)
|
—
|
—
|
44
|
Balance at
December 31, 2015
|
153.0
|
$
|
2,058
|
$
|
43
|
$
|
(1,477)
|
$
|
4,172
|
$
|
4,796
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to interim
consolidated financial information.
|
NOTES TO INTERIM CONSOLIDATED FINANCIAL INFORMATION
December 31, 2016
(unaudited)
1 Basis of presentation
This unaudited interim consolidated financial information of
Canadian Pacific Railway Limited ("CP" or "the Company"), expressed
in Canadian dollars, reflects management's estimates and
assumptions that are necessary for presentation in conformity with
accounting principles generally accepted in the United States of America ("GAAP"). They do
not include all disclosures required under GAAP for financial
statements and should be read in conjunction with the 2015 annual
consolidated financial statements and 2016 consolidated interim
financial statements. The accounting policies used are consistent
with the accounting policies used in preparing the 2015 annual
consolidated financial statements, except for the accounting
changes discussed in Note 2.
CP's operations can be affected by seasonal fluctuations such as
changes in customer demand and weather-related issues. This
seasonality could impact quarter-over-quarter comparisons.
In management's opinion, the unaudited interim consolidated
financial information includes all adjustments (consisting of
normal and recurring adjustments) necessary to present such
information.
2 Accounting changes
Implemented in 2016
Early Adoption of Restricted Cash
In November 2016, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards
Update ("ASU") 2016-18, Restricted Cash a consensus of the FASB
Emerging Issues Task Force under FASB Accounting Standards
Codification ("ASC") Topic 230 Statement of Cash Flows. The
amendments required the statement of cash flows explain the change
during the period in the total of cash, cash equivalents, and
amounts generally described as restricted cash and restricted cash
equivalents. Restricted cash will therefore be included in
beginning-of-period and end-of-period total amounts shown on the
statement of cash flows. The updated standard does not provide a
definition of restricted cash and restricted cash equivalents. This
ASU is effective retrospectively for public entities for fiscal
years and interim periods within those years, beginning on or after
December 15, 2017. Early adoption of
this ASU is permitted. The Company adopted the provisions of this
ASU during the fourth quarter of 2016. As a result of the adoption
of ASU 2016-18, no changes to disclosure or financial statement
presentation were required for the 2015 comparative period.
Amendments to the Consolidation Analysis
In February 2015, the FASB issued
ASU 2015-02, Amendments to the Consolidation Analysis under FASB
ASC Topic 810 Consolidation. The amendments required reporting
entities to evaluate whether they should consolidate certain legal
entities under the revised consolidation model. Specifically, the
amendments modify the evaluation of whether limited partnerships
and similar legal entities are variable interest entities ("VIEs")
or voting interest entities, eliminated the presumption that a
general partner should consolidate a limited partnership and
affected the consolidation analysis of reporting entities involved
with VIEs, particularly those that have fee arrangements and
related party relationships. This ASU was effective for public
entities for fiscal years, and interim periods within those years,
beginning on or after December 15,
2015. Entities had the option of using either a full
retrospective or a modified retrospective approach to adopt this
ASU. The Company evaluated all arrangements that might give rise to
a VIE and all existing VIEs; no changes to disclosure or financial
statement presentation were required as a result of this
evaluation.
3 Gain on sale of
properties
During the fourth quarter of 2016, the Company completed the
sale of its Obico rail yard, for gross proceeds of $38 million. The Company recorded a gain on sale
of $37 million before tax
($33 million after tax) within
"Purchased services and other" in the interim consolidated
statement of income.
4 Other income and charges
|
For the three
months
ended December 31
|
For the year
ended
December 31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
2016
|
2015
|
Foreign exchange loss
(gain) on long-term debt
|
$
|
74
|
$
|
115
|
$
|
(79)
|
$
|
297
|
Other foreign
exchange gains
|
—
|
(20)
|
(5)
|
(24)
|
Early redemption
premium on notes
|
—
|
—
|
—
|
47
|
Legal
settlement
|
—
|
—
|
25
|
—
|
Other
|
—
|
4
|
14
|
15
|
Total other income
and charges
|
$
|
74
|
$
|
99
|
$
|
(45)
|
$
|
335
|
Summary of Rail
Data
|
|
|
|
|
|
Fourth
Quarter
|
|
Year
|
Financial
(millions, except per share data)
|
2016
|
2015
|
Change
|
%
|
|
2016
|
2015
|
Change
|
%
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Freight
|
$
|
1,596
|
$
|
1,645
|
$
|
(49)
|
(3)
|
|
$
|
6,060
|
$
|
6,552
|
$
|
(492)
|
(8)
|
|
Non-freight
|
41
|
42
|
(1)
|
(2)
|
|
172
|
160
|
12
|
8
|
Total
revenues
|
1,637
|
1,687
|
(50)
|
(3)
|
|
6,232
|
6,712
|
(480)
|
(7)
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
282
|
333
|
(51)
|
(15)
|
|
1,189
|
1,371
|
(182)
|
(13)
|
|
Fuel
|
173
|
166
|
7
|
4
|
|
567
|
708
|
(141)
|
(20)
|
|
Materials
|
47
|
40
|
7
|
18
|
|
180
|
184
|
(4)
|
(2)
|
|
Equipment
rents
|
41
|
44
|
(3)
|
(7)
|
|
173
|
174
|
(1)
|
(1)
|
|
Depreciation and
amortization
|
162
|
155
|
7
|
5
|
|
640
|
595
|
45
|
8
|
|
Purchased services
and other
|
215
|
272
|
(57)
|
(21)
|
|
905
|
1,060
|
(155)
|
(15)
|
|
Gain on sale of
Delaware & Hudson South
|
—
|
—
|
—
|
—
|
|
—
|
(68)
|
68
|
(100)
|
Total operating
expenses
|
920
|
1,010
|
(90)
|
(9)
|
|
3,654
|
4,024
|
(370)
|
(9)
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
717
|
677
|
40
|
6
|
|
2,578
|
2,688
|
(110)
|
(4)
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and
charges
|
74
|
99
|
(25)
|
(25)
|
|
(45)
|
335
|
(380)
|
(113)
|
|
Net interest
expense
|
116
|
122
|
(6)
|
(5)
|
|
471
|
394
|
77
|
20
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
527
|
456
|
71
|
16
|
|
2,152
|
1,959
|
193
|
10
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
143
|
137
|
6
|
4
|
|
553
|
607
|
(54)
|
(9)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
384
|
$
|
319
|
$
|
65
|
20
|
|
$
|
1,599
|
$
|
1,352
|
$
|
247
|
18
|
Operating ratio
(%)
|
56.2
|
59.8
|
(3.6)
|
(360)
bps
|
|
58.6
|
60.0
|
(1.4)
|
(140)
bps
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
2.63
|
$
|
2.09
|
$
|
0.54
|
26
|
|
$
|
10.69
|
$
|
8.47
|
$
|
2.22
|
26
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
2.61
|
$
|
2.08
|
$
|
0.53
|
25
|
|
$
|
10.63
|
$
|
8.40
|
$
|
2.23
|
27
|
|
|
|
|
|
|
|
|
|
|
Shares
Outstanding
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
(millions)
|
146.3
|
153.0
|
(6.7)
|
(4)
|
|
149.6
|
159.7
|
(10.1)
|
(6)
|
|
Weighted average
number of diluted shares
outstanding (millions)
|
147.3
|
154.0
|
(6.7)
|
(4)
|
|
150.5
|
161.0
|
(10.5)
|
(7)
|
|
|
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
|
|
|
|
Average foreign
exchange rate (US$/Canadian$)
|
0.75
|
0.75
|
—
|
—
|
|
0.75
|
0.78
|
(0.03)
|
(4)
|
|
Average foreign
exchange rate (Canadian$/US$)
|
1.33
|
1.34
|
(0.01)
|
(1)
|
|
1.33
|
1.28
|
0.05
|
4
|
Summary of Rail
Data (Page 2)
|
|
|
|
|
|
Fourth
Quarter
|
|
Year
|
|
2016
|
2015
|
Change
|
%
|
FX
Adjusted
%(1)
|
|
2016
|
2015
|
Change
|
%
|
FX
Adjusted
%(1)
|
Commodity
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenues
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
- Canadian
Grain
|
$
|
285
|
$
|
296
|
$
|
(11)
|
(4)
|
(4)
|
|
$
|
962
|
$
|
1,068
|
$
|
(106)
|
(10)
|
(11)
|
|
- U.S.
Grain
|
154
|
131
|
23
|
18
|
18
|
|
518
|
522
|
(4)
|
(1)
|
(5)
|
|
- Coal
|
152
|
149
|
3
|
2
|
2
|
|
606
|
639
|
(33)
|
(5)
|
(6)
|
|
- Potash
|
96
|
78
|
18
|
23
|
23
|
|
338
|
359
|
(21)
|
(6)
|
(8)
|
|
- Fertilizers and
sulphur
|
66
|
72
|
(6)
|
(8)
|
(8)
|
|
284
|
272
|
12
|
4
|
2
|
|
- Forest
products
|
63
|
65
|
(2)
|
(3)
|
(3)
|
|
275
|
249
|
26
|
10
|
7
|
|
- Chemicals and
plastics
|
184
|
187
|
(3)
|
(2)
|
(2)
|
|
714
|
709
|
5
|
1
|
(3)
|
|
- Crude
|
30
|
105
|
(75)
|
(71)
|
(71)
|
|
138
|
393
|
(255)
|
(65)
|
(66)
|
|
- Metals, minerals,
and consumer products
|
149
|
151
|
(2)
|
(1)
|
(1)
|
|
564
|
643
|
(79)
|
(12)
|
(15)
|
|
-
Automotive
|
80
|
89
|
(9)
|
(10)
|
(10)
|
|
350
|
349
|
1
|
—
|
(3)
|
|
- Domestic
intermodal
|
187
|
182
|
5
|
3
|
3
|
|
721
|
757
|
(36)
|
(5)
|
(5)
|
|
- International
intermodal
|
150
|
140
|
10
|
7
|
7
|
|
590
|
592
|
(2)
|
—
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Freight
Revenues
|
$
|
1,596
|
$
|
1,645
|
$
|
(49)
|
(3)
|
(3)
|
|
$
|
6,060
|
$
|
6,552
|
$
|
(492)
|
(8)
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenue
per Revenue Ton-Miles
(RTM) (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
- Canadian
Grain
|
3.89
|
3.80
|
0.09
|
2
|
|
|
3.70
|
3.89
|
(0.19)
|
(5)
|
|
|
- U.S.
Grain
|
4.83
|
4.71
|
0.12
|
3
|
|
|
4.75
|
4.91
|
(0.16)
|
(3)
|
|
|
- Coal
|
2.70
|
2.85
|
(0.15)
|
(5)
|
|
|
2.73
|
2.88
|
(0.15)
|
(5)
|
|
|
- Potash
|
2.49
|
2.32
|
0.17
|
7
|
|
|
2.38
|
2.37
|
0.01
|
—
|
|
|
- Fertilizers and
sulphur
|
6.68
|
7.00
|
(0.32)
|
(5)
|
|
|
6.87
|
6.71
|
0.16
|
2
|
|
|
- Forest
products
|
5.86
|
6.24
|
(0.38)
|
(6)
|
|
|
5.86
|
5.92
|
(0.06)
|
(1)
|
|
|
- Chemicals and
plastics
|
4.92
|
5.49
|
(0.57)
|
(10)
|
|
|
4.99
|
5.21
|
(0.22)
|
(4)
|
|
|
- Crude
|
3.07
|
2.80
|
0.27
|
10
|
|
|
2.93
|
2.96
|
(0.03)
|
(1)
|
|
|
- Metals, minerals
and consumer products
|
6.59
|
7.15
|
(0.56)
|
(8)
|
|
|
6.77
|
7.13
|
(0.36)
|
(5)
|
|
|
-
Automotive
|
22.31
|
21.71
|
0.60
|
3
|
|
|
21.02
|
19.97
|
1.05
|
5
|
|
|
- Domestic
intermodal
|
6.10
|
6.17
|
(0.07)
|
(1)
|
|
|
6.01
|
6.27
|
(0.26)
|
(4)
|
|
|
- International
intermodal
|
4.74
|
4.78
|
(0.04)
|
(1)
|
|
|
4.59
|
4.96
|
(0.37)
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Freight Revenue
per RTM
|
4.48
|
4.47
|
0.01
|
—
|
|
|
4.46
|
4.51
|
(0.05)
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenue
per Carload
|
|
|
|
|
|
|
|
|
|
|
|
|
- Canadian
Grain
|
$
|
3,758
|
$
|
3,707
|
$
|
51
|
1
|
|
|
$
|
3,559
|
$
|
3,750
|
$
|
(191)
|
(5)
|
|
|
- U.S.
Grain
|
3,488
|
3,266
|
222
|
7
|
|
|
3,202
|
3,326
|
(124)
|
(4)
|
|
|
- Coal
|
1,932
|
1,920
|
12
|
1
|
|
|
1,984
|
1,978
|
6
|
—
|
|
|
- Potash
|
2,973
|
2,849
|
124
|
4
|
|
|
2,904
|
2,887
|
17
|
1
|
|
|
- Fertilizers and
sulphur
|
4,593
|
4,604
|
(11)
|
—
|
|
|
4,769
|
4,410
|
359
|
8
|
|
|
- Forest
products
|
4,158
|
4,227
|
(69)
|
(2)
|
|
|
4,157
|
4,026
|
131
|
3
|
|
|
- Chemicals and
plastics
|
3,292
|
3,596
|
(304)
|
(8)
|
|
|
3,368
|
3,483
|
(115)
|
(3)
|
|
|
- Crude
|
3,361
|
4,184
|
(823)
|
(20)
|
|
|
3,646
|
4,309
|
(663)
|
(15)
|
|
|
- Metals, minerals
and consumer products
|
2,964
|
3,005
|
(41)
|
(1)
|
|
|
2,888
|
2,963
|
(75)
|
(3)
|
|
|
-
Automotive
|
3,006
|
2,698
|
308
|
11
|
|
|
2,825
|
2,659
|
166
|
6
|
|
|
- Domestic
intermodal
|
1,696
|
1,822
|
(126)
|
(7)
|
|
|
1,688
|
1,831
|
(143)
|
(8)
|
|
|
- International
intermodal
|
1,103
|
1,058
|
45
|
4
|
|
|
1,074
|
1,061
|
13
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Freight Revenue
per Carload
|
$
|
2,462
|
$
|
2,534
|
$
|
(72)
|
(3)
|
|
|
$
|
2,400
|
$
|
2,493
|
$
|
(93)
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This
earnings measure has no standardized meaning prescribed by GAAP
and, therefore, is unlikely to be comparable to similar measures
presented by other companies. This measure is defined and
reconciled in Non-GAAP Measures of this Earnings
Release.
|
Summary of Rail
Data (Page 3)
|
|
|
|
|
|
Fourth
Quarter
|
|
Year
|
|
2016
|
2015
|
Change
|
%
|
|
2016
|
2015
|
Change
|
%
|
|
|
|
|
|
|
|
|
|
|
Millions of
RTM
|
|
|
|
|
|
|
|
|
|
|
- Canadian
Grain
|
7,309
|
7,776
|
(467)
|
(6)
|
|
25,994
|
27,442
|
(1,448)
|
(5)
|
|
- U.S.
Grain
|
3,179
|
2,770
|
409
|
15
|
|
10,898
|
10,625
|
273
|
3
|
|
- Coal
|
5,631
|
5,250
|
381
|
7
|
|
22,171
|
22,164
|
7
|
—
|
|
- Potash
|
3,842
|
3,359
|
483
|
14
|
|
14,175
|
15,117
|
(942)
|
(6)
|
|
- Fertilizers and
sulphur
|
996
|
1,021
|
(25)
|
(2)
|
|
4,140
|
4,044
|
96
|
2
|
|
- Forest
products
|
1,072
|
1,038
|
34
|
3
|
|
4,691
|
4,201
|
490
|
12
|
|
- Chemicals and
plastics
|
3,737
|
3,391
|
346
|
10
|
|
14,294
|
13,611
|
683
|
5
|
|
- Crude
|
989
|
3,749
|
(2,760)
|
(74)
|
|
4,727
|
13,280
|
(8,553)
|
(64)
|
|
- Metals, minerals
and consumer products
|
2,271
|
2,114
|
157
|
7
|
|
8,338
|
9,020
|
(682)
|
(8)
|
|
-
Automotive
|
362
|
411
|
(49)
|
(12)
|
|
1,667
|
1,750
|
(83)
|
(5)
|
|
- Domestic
intermodal
|
3,060
|
2,958
|
102
|
3
|
|
11,992
|
12,072
|
(80)
|
(1)
|
|
- International
intermodal
|
3,163
|
2,938
|
225
|
8
|
|
12,865
|
11,931
|
934
|
8
|
|
|
|
|
|
|
|
|
|
|
Total RTMs
|
35,611
|
36,775
|
(1,164)
|
(3)
|
|
135,952
|
145,257
|
(9,305)
|
(6)
|
|
|
|
|
|
|
|
|
|
|
Carloads
(thousands)
|
|
|
|
|
|
|
|
|
|
|
- Canadian
Grain
|
75
|
80
|
(5)
|
(6)
|
|
270
|
285
|
(15)
|
(5)
|
|
- U.S.
Grain
|
44
|
40
|
4
|
10
|
|
162
|
157
|
5
|
3
|
|
- Coal
|
78
|
78
|
—
|
—
|
|
305
|
323
|
(18)
|
(6)
|
|
- Potash
|
32
|
27
|
5
|
19
|
|
116
|
124
|
(8)
|
(6)
|
|
- Fertilizers and
sulphur
|
15
|
16
|
(1)
|
(6)
|
|
60
|
62
|
(2)
|
(3)
|
|
- Forest
products
|
15
|
16
|
(1)
|
(6)
|
|
66
|
62
|
4
|
6
|
|
- Chemicals and
plastics
|
56
|
51
|
5
|
10
|
|
212
|
203
|
9
|
4
|
|
- Crude
|
9
|
25
|
(16)
|
(64)
|
|
38
|
91
|
(53)
|
(58)
|
|
- Metals, minerals
and consumer products
|
51
|
50
|
1
|
2
|
|
196
|
217
|
(21)
|
(10)
|
|
-
Automotive
|
27
|
33
|
(6)
|
(18)
|
|
124
|
131
|
(7)
|
(5)
|
|
- Domestic
intermodal
|
110
|
100
|
10
|
10
|
|
427
|
414
|
13
|
3
|
|
- International
intermodal
|
136
|
133
|
3
|
2
|
|
549
|
559
|
(10)
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Total
Carloads
|
648
|
649
|
(1)
|
—
|
|
2,525
|
2,628
|
(103)
|
(4)
|
|
Fourth
Quarter
|
|
Year
|
|
2016
|
2015
|
Change
|
%
|
FX
Adjusted
%(1)
|
|
2016
|
2015
|
Change
|
%
|
FX
Adjusted
%(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
$
|
282
|
$
|
333
|
$
|
(51)
|
(15)
|
(15)
|
|
$
|
1,189
|
$
|
1,371
|
$
|
(182)
|
(13)
|
(14)
|
|
Fuel
|
173
|
166
|
7
|
4
|
4
|
|
567
|
708
|
(141)
|
(20)
|
(23)
|
|
Materials
|
47
|
40
|
7
|
18
|
18
|
|
180
|
184
|
(4)
|
(2)
|
(3)
|
|
Equipment
rents
|
41
|
44
|
(3)
|
(7)
|
(7)
|
|
173
|
174
|
(1)
|
(1)
|
(3)
|
|
Depreciation and
amortization
|
162
|
155
|
7
|
5
|
5
|
|
640
|
595
|
45
|
8
|
7
|
|
Purchased services
and other
|
215
|
272
|
(57)
|
(21)
|
(21)
|
|
905
|
1,060
|
(155)
|
(15)
|
(16)
|
|
Gain on sale of
Delaware & Hudson South
|
—
|
—
|
—
|
—
|
—
|
|
—
|
(68)
|
68
|
(100)
|
(100)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating
Expenses
|
$
|
920
|
$
|
1,010
|
$
|
(90)
|
(9)
|
(9)
|
|
$
|
3,654
|
$
|
4,024
|
$
|
(370)
|
(9)
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This
earnings measure has no standardized meaning prescribed by GAAP
and, therefore, is unlikely to be comparable to similar measures
presented by other companies. This measure is defined and
reconciled in Non-GAAP Measures of this Earnings
Release.
|
Summary of Rail
Data (Page 4)
|
|
|
|
|
|
Fourth
Quarter
|
|
Year
|
|
2016
|
2015 (1)
|
Change
|
%
|
|
2016(1)
|
2015 (1)
|
Change
|
%
|
|
|
|
|
|
|
|
|
|
|
Operations
Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross ton-miles
("GTMs") (millions)
|
62,233
|
66,117
|
(3,884)
|
(6)
|
|
242,694
|
263,344
|
(20,650)
|
(8)
|
Train miles
(thousands)
|
7,748
|
8,390
|
(642)
|
(8)
|
|
30,373
|
34,064
|
(3,691)
|
(11)
|
Average train
weight - excluding local traffic (tons)
|
8,588
|
8,505
|
83
|
1
|
|
8,614
|
8,314
|
300
|
4
|
Average train
length - excluding local traffic (feet)
|
7,100
|
7,036
|
64
|
1
|
|
7,217
|
6,935
|
282
|
4
|
Average terminal
dwell (hours)
|
6.4
|
6.6
|
(0.2)
|
(3)
|
|
6.7
|
7.2
|
(0.5)
|
(7)
|
Average train speed
(mph)(2)
|
22.9
|
22.8
|
0.1
|
—
|
|
23.5
|
21.4
|
2.1
|
10
|
Fuel
efficiency(3)
|
0.996
|
0.996
|
—
|
—
|
|
0.980
|
0.999
|
(0.019)
|
(2)
|
U.S. gallons of
locomotive fuel consumed (millions)(4)
|
61.6
|
65.8
|
(4.2)
|
(6)
|
|
236.2
|
261.7
|
(25.5)
|
(10)
|
Average fuel price
(U.S. dollars per U.S. gallon)
|
2.01
|
1.91
|
0.10
|
5
|
|
1.80
|
2.13
|
(0.33)
|
(15)
|
|
|
|
|
|
|
|
|
|
|
Total employees
(average)(5)
|
11,803
|
13,163
|
(1,360)
|
(10)
|
|
12,082
|
13,858
|
(1,776)
|
(13)
|
Total employees (end
of period)(5)
|
11,653
|
12,817
|
(1,164)
|
(9)
|
|
11,653
|
12,817
|
(1,164)
|
(9)
|
Workforce (end of
period)(6)
|
11,698
|
12,899
|
(1,201)
|
(9)
|
|
11,698
|
12,899
|
(1,201)
|
(9)
|
|
|
|
|
|
|
|
|
|
|
Safety
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FRA personal injuries
per 200,000 employee-hours
|
1.90
|
1.99
|
(0.09)
|
(5)
|
|
1.64
|
1.84
|
(0.20)
|
(11)
|
FRA train accidents
per million train miles
|
1.19
|
1.41
|
(0.22)
|
(16)
|
|
0.97
|
1.33
|
(0.36)
|
(27)
|
|
(1)
Certain figures have been revised to conform with current
presentation or have been updated to reflect new
information.
|
(2) The
reporting definition for average train speed measures the line-haul
movement from origin to destination including terminal dwell hours,
and excluding foreign railroad and customer delays.
|
(3) Fuel
efficiency is defined as U.S. gallons of locomotive fuel consumed
per 1,000 GTMs – freight and yard.
|
(4)
Includes gallons of fuel consumed from freight, yard and commuter
service but excludes fuel used in capital projects and other
non-freight activities.
|
(5) An
employee is defined as an individual currently engaged in full-time
or part-time employment with CP.
|
(6)
Workforce is defined as total employees plus contractors and
consultants.
|
Non-GAAP Measures - Unaudited
The Company presents non-GAAP measures and cash flow information
to provide a basis for evaluating underlying earnings and liquidity
trends in the Company's business that can be compared with the
results of operations in prior periods. In addition, these non-GAAP
measures facilitate a multi-period assessment of long-term
profitability allowing management and other external users of the
Company's consolidated financial information to compare
profitability on a long-term basis, including assessing future
profitability, with that of the Company's peers.
These non-GAAP measures have no standardized meaning and are not
defined by GAAP and, therefore, may not be comparable to similar
measures presented by other companies. The presentation of these
non-GAAP measures is not intended to be considered in isolation
from, as a substitute for, or as superior to, the financial
information presented in accordance with GAAP.
Adjusted Performance Measures
The Company uses Adjusted income, Adjusted diluted earnings per
share, Adjusted operating income and Adjusted operating ratio to
evaluate the Company's operating performance and for planning and
forecasting future business operations and future profitability.
These non-GAAP measures provide meaningful supplemental information
regarding operating results because they exclude certain
significant items that are not considered indicative of future
financial trends either by nature or amount. As a result, these
items are excluded for management assessment of operational
performance, allocation of resources and preparation of annual
budgets. These significant items may include, but are not limited
to, restructuring and asset impairment charges, individually
significant gains and losses from sales of assets and certain items
outside the control of management. These items may not be
non-recurring. However, excluding these significant items from GAAP
results allows for a consistent understanding of the Company's
consolidated financial performance when performing a multi-period
assessment including assessing the likelihood of future results.
Accordingly, these non-GAAP financial measures may provide insight
to investors and other external users of the Company's consolidated
financial information.
Significant items that impacted reported fourth-quarter 2016 and
2015 earnings include:
2016:
- $74 million non-cash loss
($64 million after deferred tax) due
to foreign exchange ("FX") translation on U.S. dollar denominated
long-term debt which unfavourably impacted diluted earnings per
share ("Diluted EPS") by 43 cents;
and
2015:
- $115 million non-cash loss
($100 million after deferred tax) due
to FX translation on U.S. dollar denominated long-term debt which
unfavourably impacted Diluted EPS by 64
cents.
In addition to the fourth quarter significant items discussed
above, other items that impacted full year 2016 and 2015 earnings
include:
2016:
- in the third quarter, a $25
million expense ($18 million
after current tax) related to a legal settlement which unfavourably
impacted Diluted EPS by 12
cents;
- during the first nine months of the year, a net non-cash gain
of $153 million ($132 million after deferred tax) due to FX
translation of the Company's U.S. dollar-denominated debt as
follows:
- in the third quarter, a $46
million loss ($40 million
after deferred tax) which unfavourably impacted Diluted EPS by
27 cents;
- in the second quarter, a $18
million gain ($16 million
after deferred tax) which favourably impacted Diluted EPS by
10 cents; and
- in the first quarter, a $181
million gain ($156 million
after deferred tax) which favourably impacted Diluted EPS by
$1.01;
2015:
- in the third quarter, a $68
million gain ($42 million
after current tax) related to the sale of Delaware and Hudson Railway south of
Schenectady ("D&H South") which 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 which unfavourably impacted Diluted EPS by 22 cents;
- in the second quarter, an income tax expense of $23 million as a result of the change in the
Alberta provincial corporate
income tax rate which unfavourably impacted Diluted EPS by
14 cents; and
- during the first nine months of the year, a net non-cash loss
of $182 million ($157 million after deferred tax) due to FX
translation of the Company's U.S. dollar-denominated debt as
follows:
- in the third quarter, a $128
million loss ($111 million
after deferred tax) which unfavourably impacted Diluted EPS by
69 cents;
- in the second quarter, a $10
million gain ($9 million after
deferred tax) which favourably impacted Diluted EPS by 5 cents; and
- in the first quarter, a $64
million loss ($55 million
after deferred tax) which unfavourably impacted Diluted EPS by
34 cents.
Reconciliation of Non-GAAP performance measures to
GAAP performance measures
The following tables reconcile Adjusted income, Adjusted diluted
earnings per share, Adjusted operating income and Adjusted
operating ratio to Net income, Diluted earnings per share,
Operating income and Operating ratio, respectively.
|
For the three months
|
For the year
|
Net
income
|
ended December 31
|
ended December 31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
2016
|
2015
|
Adjusted
income
|
$
|
448
|
$
|
419
|
$
|
1,549
|
$
|
1,625
|
Add significant
items, pretax:
|
|
|
|
|
|
Legal settlement
charge
|
—
|
—
|
(25)
|
—
|
|
Gain on sale of
D&H South
|
—
|
—
|
—
|
68
|
|
Impact of FX
translation on U.S. dollar-denominated debt
|
(74)
|
(115)
|
79
|
(297)
|
|
Early redemption
premium on notes
|
—
|
—
|
—
|
(47)
|
|
Income tax rate
change
|
—
|
—
|
—
|
(23)
|
Tax effect of
adjustments(1)
|
10
|
15
|
(4)
|
26
|
Net income as
reported
|
$
|
384
|
$
|
319
|
$
|
1,599
|
$
|
1,352
|
(1) Tax
effect of adjustments was calculated as the pretax effect of the
adjustments multiplied by the effective tax rate for each of the
above items for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
For the three months
|
For the year
|
Diluted earnings
per share
|
ended December 31
|
ended December 31
|
|
2016
|
2015
|
2016
|
2015
|
Adjusted diluted
earnings per share
|
$
|
3.04
|
$
|
2.72
|
$
|
10.29
|
$
|
10.10
|
Add significant
items, pretax:
|
|
|
|
|
|
Legal settlement
charge
|
—
|
—
|
(0.17)
|
—
|
|
Gain on sale of
D&H South
|
—
|
—
|
—
|
0.42
|
|
Impact of FX
translation on U.S. dollar-denominated debt
|
(0.50)
|
(0.74)
|
0.53
|
(1.84)
|
|
Early redemption
premium on notes
|
—
|
—
|
—
|
(0.30)
|
|
Income tax rate
change
|
—
|
—
|
—
|
(0.14)
|
Tax effect of
adjustments(1)
|
0.07
|
0.10
|
(0.02)
|
0.16
|
Diluted earnings
per share as reported
|
$
|
2.61
|
$
|
2.08
|
$
|
10.63
|
$
|
8.40
|
(1) Tax
effect of adjustments was calculated as the pretax effect of the
adjustments multiplied by the effective tax rate for each of the
above items for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
For the three months
|
For the year
|
Operating
income
|
ended December 31
|
ended December 31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
2016
|
2015
|
Adjusted operating
income
|
$
|
717
|
$
|
677
|
$
|
2,578
|
$
|
2,620
|
Add significant
item:
|
|
|
|
|
|
Gain on sale of
D&H South
|
—
|
—
|
—
|
68
|
Operating income
as reported
|
$
|
717
|
$
|
677
|
$
|
2,578
|
$
|
2,688
|
|
|
|
|
|
|
|
For the three months
|
For the year
|
Operating
ratio
|
ended December 31
|
ended December 31
|
|
2016
|
2015
|
2016
|
2015
|
Adjusted operating
ratio
|
56.2%
|
59.8%
|
58.6%
|
61.0%
|
Add significant
item:
|
|
|
|
|
|
Gain on sale of
D&H South
|
—%
|
—%
|
—%
|
(1.0)%
|
Operating ratio as
reported
|
56.2%
|
59.8%
|
58.6%
|
60.0%
|
Free Cash
Free cash is calculated as Cash provided by operating activities,
less Cash used in investing activities, adjusted for changes in
cash and cash equivalents balances resulting from FX fluctuations.
Free cash is a measure that management considers to be an indicator
of liquidity. Free cash is useful to investors and other external
users of the consolidated financial information as it assists with
the evaluation of the Company's ability to generate cash from its
operations without incurring additional external financing.
Positive Free cash indicates the amount of cash available for
reinvestment in the business, or cash that can be returned to
investors through dividends, stock repurchase programs, debt
retirements or a combination of these. Conversely, negative Free
cash indicates the amount of cash that must be raised from
investors through new debt or equity issues, reduction in available
cash balances or a combination of these. Free cash should be
considered in addition to, rather than as a substitute for, Cash
provided by operating activities.
Reconciliation of Cash provided by operating activities to
Free cash
|
For the three months
|
For the year
|
|
ended December 31
|
ended December 31
|
(in millions of
Canadian dollars)
|
2016
|
2015(1)
|
2016
|
2015(1)
|
Cash provided by
operating activities
|
$
|
768
|
$
|
623
|
$
|
2,089
|
$
|
2,459
|
Cash used in
investing activities
|
(252)
|
(415)
|
(1,069)
|
(1,123)
|
Effect of foreign
currency fluctuations on U.S. dollar- denominated cash
and cash equivalents
|
3
|
22
|
(13)
|
45
|
Free cash
|
$
|
519
|
$
|
230
|
$
|
1,007
|
$
|
1,381
|
(1) The
definition of Free cash has been revised to exclude the deduction
of dividends paid.
|
Foreign Exchange Adjusted Variance
Foreign exchange adjusted variance ("FX adj. variance") allows
certain financial results to be viewed without the impact of
fluctuations in foreign currency exchange rates, thereby
facilitating period-to-period comparisons in the analysis of trends
in business performance. Financial results at constant currency are
obtained by translating the comparable period of the prior year
results denominated in U.S. dollars at the foreign exchange rates
of the current period. Measures at constant currency are considered
non-GAAP measures and do not have any standardized meanings
prescribed by GAAP and, therefore, are unlikely to be comparable to
similar measures presented by other companies.
|
For the three
months ended December 31
|
For the year ended
December 31
|
(in millions
of
Canadian
dollars)
|
Reported
2016
|
Reported
2015
|
Variance
due to FX
|
Adjusted
2015
|
FX Adj.
%
|
Reported
2016
|
Reported
2015
|
Variance
due to FX
|
Adjusted
2015
|
FX Adj.
%
|
Freight
revenues
|
$
|
1,596
|
$
|
1,645
|
$
|
—
|
$
|
1,645
|
(3)%
|
$
|
6,060
|
$
|
6,552
|
$
|
145
|
$
|
6,697
|
(10)%
|
Non-freight
revenues
|
41
|
42
|
—
|
42
|
(2)%
|
172
|
160
|
1
|
161
|
7%
|
Total
revenues
|
1,637
|
1,687
|
—
|
1,687
|
(3)%
|
6,232
|
6,712
|
146
|
6,858
|
(9)%
|
Compensation and
benefits
|
282
|
333
|
—
|
333
|
(15)%
|
1,189
|
1,371
|
18
|
1,389
|
(14)%
|
Fuel
|
173
|
166
|
—
|
166
|
4%
|
567
|
708
|
25
|
733
|
(23)%
|
Materials
|
47
|
40
|
—
|
40
|
18%
|
180
|
184
|
2
|
186
|
(3)%
|
Equipment
rents
|
41
|
44
|
—
|
44
|
(7)%
|
173
|
174
|
5
|
179
|
(3)%
|
Depreciation and
amortization
|
162
|
155
|
—
|
155
|
5%
|
640
|
595
|
5
|
600
|
7%
|
Purchased services
and other
|
215
|
272
|
—
|
272
|
(21)%
|
905
|
1,060
|
21
|
1,081
|
(16)%
|
Gain on sale of
D&H South
|
—
|
—
|
—
|
—
|
—%
|
—
|
(68)
|
1
|
(67)
|
(100)%
|
Total operating
expenses
|
920
|
1,010
|
—
|
1,010
|
(9)%
|
3,654
|
4,024
|
77
|
4,101
|
(11)%
|
Operating
income
|
$
|
717
|
$
|
677
|
$
|
—
|
$
|
677
|
6%
|
$
|
2,578
|
$
|
2,688
|
$
|
69
|
$
|
2,757
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Canadian Pacific