Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

Canadian Pacific Railway Company, a 100%-owned subsidiary of CPRL, is the issuer of certain debt securities, which are fully and unconditionally guaranteed by CPRL. The following tables present condensed consolidating financial information (“CCFI”) in accordance with Rule 3-10(c) of Regulation S-X.

Investments in subsidiaries are accounted for under the equity method when presenting the CCFI.

The tables include all adjustments necessary to reconcile the CCFI on a consolidated basis to CPRL’s Consolidated Financial Statements for the years presented.

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31, 2019                    

(in millions of Canadian dollars)	CPRL (Parent Guarantor)			CPRC (Subsidiary Issuer)			Non-Guarantor Subsidiaries			Consolidating Adjustments and Eliminations			CPRL Consolidated
Revenues
Freight	$	—		$	5,527		$	2,084		$	2		$	7,613
Non-freight	—			135			570			(526		)	179
Total revenues	—			5,662			2,654			(524		)	7,792
Operating expenses
Compensation and benefits	—			1,042			490			8			1,540
Fuel	—			695			187			—			882
Materials	—			142			53			15			210
Equipment rents	—			177			(9		)	(31		)	137
Depreciation and amortization	—			423			283			—			706
Purchased services and other	—			967			742			(516		)	1,193
Total operating expenses	—			3,446			1,746			(524		)	4,668
Operating income	—			2,216			908			—			3,124
Less:
Other (income) expense	(12		)	(86		)	9			—			(89		)
Other components of net periodic benefit (recovery) cost	—			(388		)	7			—			(381		)
Net interest (income) expense	(1		)	474			(25		)	—			448
Income before income tax expense and equity in net earnings of subsidiaries	13			2,216			917			—			3,146
Less: Income tax expense	3			522			181			—			706
Add: Equity in net earnings of subsidiaries	2,430			736			—			(3,166		)	—
Net income	$	2,440		$	2,430		$	736		$	(3,166	)	$	2,440

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31, 2018                    

(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

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31, 2017                    

(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

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

YEAR ENDED DECEMBER 31, 2019                    

(in millions of Canadian dollars)	CPRL (Parent Guarantor)			CPRC (Subsidiary Issuer)			Non-Guarantor Subsidiaries			Consolidating Adjustments and Eliminations			CPRL Consolidated
Net income	$	2,440		$	2,430		$	736		$	(3,166	)	$	2,440
Net gain (loss) in foreign currency translation adjustments, net of hedging activities	—			288			(251		)	—			37
Change in derivatives designated as cash flow hedges	—			10			—			—			10
Change in pension and post-retirement defined benefit plans	—			(651		)	(10		)	—			(661		)
Other comprehensive loss before income taxes	—			(353		)	(261		)	—			(614		)
Income tax recovery on above items	—			132			3			—			135
Equity accounted investments	(479		)	(258		)	—			737			—
Other comprehensive loss	(479		)	(479		)	(258		)	737			(479		)
Comprehensive income	$	1,961		$	1,951		$	478		$	(2,429	)	$	1,961

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

YEAR ENDED DECEMBER 31, 2018                    

(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 (loss) income 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

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

YEAR ENDED DECEMBER 31, 2017                    

(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

CONDENSED CONSOLIDATING BALANCE SHEETS

AS AT DECEMBER 31, 2019                

(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	$	—		$	37		$	96	$	—		$	133
Accounts receivable, net	24			597			184		—			805
Accounts receivable, intercompany	164			313			249		(726		)	—
Short-term advances to affiliates	—			1,387			3,700		(5,087		)	—
Materials and supplies	—			144			38		—			182
Other current assets	—			41			49		—			90
	188			2,519			4,316		(5,813		)	1,210
Long-term advances to affiliates	1,090			7			84		(1,181		)	—
Investments	—			32			309		—			341
Investments in subsidiaries	10,522			11,165			—		(21,687		)	—
Properties	—			10,287			8,869		—			19,156
Goodwill and intangible assets	—			—			206		—			206
Pension asset	—			1,003			—		—			1,003
Other assets	—			173			278		—			451
Deferred income taxes	4			—			—		(4		)	—
Total assets	$	11,804		$	25,186		$	14,062	$	(28,685	)	$	22,367
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities	$	146		$	1,189		$	358	$	—		$	1,693
Accounts payable, intercompany	6			402			318		(726		)	—
Short-term advances from affiliates	4,583			490			14		(5,087		)	—
Long-term debt maturing within one year	—			548			51		—			599
	4,735			2,629			741		(5,813		)	2,292
Pension and other benefit liabilities	—			698			87		—			785
Long-term advances from affiliates	—			1,174			7		(1,181		)	—
Other long-term liabilities	—			206			356		—			562
Long-term debt	—			8,145			13		—			8,158
Deferred income taxes	—			1,812			1,693		(4		)	3,501
Total liabilities	4,735			14,664			2,897		(6,998		)	15,298
Shareholders’ equity
Share capital	1,993			538			4,610		(5,148		)	1,993
Additional paid-in capital	48			406			265		(671		)	48
Accumulated other comprehensive (loss) income	(2,522		)	(2,522		)	581		1,941			(2,522		)
Retained earnings	7,550			12,100			5,709		(17,809		)	7,550
	7,069			10,522			11,165		(21,687		)	7,069
Total liabilities and shareholders’ equity	$	11,804		$	25,186		$	14,062	$	(28,685	)	$	22,367

CONDENSED CONSOLIDATING BALANCE SHEETS

AS AT DECEMBER 31, 2018                

(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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2019                    

(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	$	1,601		$	2,133		$	1,026		$	(1,770	)	$	2,990
Investing activities
Additions to properties	—			(1,243		)	(404		)	—			(1,647		)
Investment in Central Maine & Québec Railway	—			(47		)	(127		)	—			(174		)
Proceeds from sale of properties and other assets	—			21			5			—			26
Advances to affiliates	—			(263		)	(396		)	659			—
Repayment of advances to affiliates	—			468			1,350			(1,818		)	—
Capital contributions to affiliates	—			(125		)	—			125			—
Repurchase of share capital from affiliates	1,246			1,345			—			(2,591		)	—
Other	—			1			(9		)	—			(8		)
Cash provided by (used in) investing activities	1,246			157			419			(3,625		)	(1,803		)
Financing activities
Dividends paid	(412		)	(1,612		)	(158		)	1,770			(412		)
Issuance of share capital	—			—			125			(125		)	—
Return of share capital to affiliates	—			(1,246		)	(1,345		)	2,591			—
Issuance of CP Common Shares	26			—			—			—			26
Purchase of CP Common Shares	(1,132		)	(2		)	—			—			(1,134		)
Issuance of long-term debt, excluding commercial paper	—			397			—			—			397
Repayment of long-term debt, excluding commercial paper	—			(500		)	—			—			(500		)
Net issuance of commercial paper	—			524			—			—			524
Advances from affiliates	495			151			13			(659		)	—
Repayment of advances from affiliates	(1,813		)	(5		)	—			1,818			—
Other	(11		)	(1		)	—			—			(12		)
Cash used in financing activities	(2,847		)	(2,294		)	(1,365		)	5,395			(1,111		)
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents	—			(1		)	(3		)	—			(4		)
Cash position
(Decrease) increase in cash and cash equivalents	—			(5		)	77			—			72
Cash and cash equivalents at beginning of year	—			42			19			—			61
Cash and cash equivalents at end of year	$	—		$	37		$	96		$	—		$	133

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2018                    

(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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2017                    

(in millions of Canadian dollars)	CPRL (Parent Guarantor)			CPRC (Subsidiary Issuer)			Non-Guarantor Subsidiaries			Consolidating Adjustments and Eliminations			CPRL Consolidated
Cash provided by operating activities	$	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