CANADIAN PACIFIC RAILWAY LTD/CNfalse2022Q20000016875--12-3100000168752022-01-012022-06-300000016875us-gaap:CommonClassAMember2022-01-012022-06-300000016875cp:Perpetual4ConsolidatedDebentureStockDomain2022-01-012022-06-3000000168752022-07-27xbrli:shares0000016875us-gaap:CargoAndFreightMember2022-04-012022-06-30iso4217:CAD0000016875us-gaap:CargoAndFreightMember2021-04-012021-06-300000016875us-gaap:CargoAndFreightMember2022-01-012022-06-300000016875us-gaap:CargoAndFreightMember2021-01-012021-06-300000016875cp:NonFreightMember2022-04-012022-06-300000016875cp:NonFreightMember2021-04-012021-06-300000016875cp:NonFreightMember2022-01-012022-06-300000016875cp:NonFreightMember2021-01-012021-06-3000000168752022-04-012022-06-3000000168752021-04-012021-06-3000000168752021-01-012021-06-30iso4217:CADxbrli:shares00000168752022-06-3000000168752021-12-3100000168752022-03-3100000168752021-03-3100000168752020-12-3100000168752021-06-300000016875us-gaap:CommonStockMember2022-03-310000016875us-gaap:AdditionalPaidInCapitalMember2022-03-310000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000016875us-gaap:RetainedEarningsMember2022-03-310000016875us-gaap:CommonStockMember2022-04-012022-06-300000016875us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000016875us-gaap:RetainedEarningsMember2022-04-012022-06-300000016875us-gaap:CommonStockMember2022-06-300000016875us-gaap:AdditionalPaidInCapitalMember2022-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000016875us-gaap:RetainedEarningsMember2022-06-300000016875us-gaap:CommonStockMember2021-03-310000016875us-gaap:AdditionalPaidInCapitalMember2021-03-310000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000016875us-gaap:RetainedEarningsMember2021-03-310000016875us-gaap:CommonStockMember2021-04-012021-06-300000016875us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000016875us-gaap:RetainedEarningsMember2021-04-012021-06-300000016875us-gaap:CommonStockMember2021-06-300000016875us-gaap:AdditionalPaidInCapitalMember2021-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000016875us-gaap:RetainedEarningsMember2021-06-300000016875us-gaap:CommonStockMember2021-12-310000016875us-gaap:AdditionalPaidInCapitalMember2021-12-310000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000016875us-gaap:RetainedEarningsMember2021-12-310000016875us-gaap:CommonStockMember2022-01-012022-06-300000016875us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300000016875us-gaap:RetainedEarningsMember2022-01-012022-06-300000016875us-gaap:CommonStockMember2020-12-310000016875us-gaap:AdditionalPaidInCapitalMember2020-12-310000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000016875us-gaap:RetainedEarningsMember2020-12-310000016875us-gaap:CommonStockMember2021-01-012021-06-300000016875us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300000016875us-gaap:RetainedEarningsMember2021-01-012021-06-300000016875cp:GrainRevenueMember2022-04-012022-06-300000016875cp:GrainRevenueMember2021-04-012021-06-300000016875cp:GrainRevenueMember2022-01-012022-06-300000016875cp:GrainRevenueMember2021-01-012021-06-300000016875cp:CoalRevenueMember2022-04-012022-06-300000016875cp:CoalRevenueMember2021-04-012021-06-300000016875cp:CoalRevenueMember2022-01-012022-06-300000016875cp:CoalRevenueMember2021-01-012021-06-300000016875cp:PotashRevenueMember2022-04-012022-06-300000016875cp:PotashRevenueMember2021-04-012021-06-300000016875cp:PotashRevenueMember2022-01-012022-06-300000016875cp:PotashRevenueMember2021-01-012021-06-300000016875cp:FertilizerandSulphurRevenueMember2022-04-012022-06-300000016875cp:FertilizerandSulphurRevenueMember2021-04-012021-06-300000016875cp:FertilizerandSulphurRevenueMember2022-01-012022-06-300000016875cp:FertilizerandSulphurRevenueMember2021-01-012021-06-300000016875cp:ForestProductsRevenueMember2022-04-012022-06-300000016875cp:ForestProductsRevenueMember2021-04-012021-06-300000016875cp:ForestProductsRevenueMember2022-01-012022-06-300000016875cp:ForestProductsRevenueMember2021-01-012021-06-300000016875cp:EnergyChemicalsandPlasticRevenueMember2022-04-012022-06-300000016875cp:EnergyChemicalsandPlasticRevenueMember2021-04-012021-06-300000016875cp:EnergyChemicalsandPlasticRevenueMember2022-01-012022-06-300000016875cp:EnergyChemicalsandPlasticRevenueMember2021-01-012021-06-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2022-04-012022-06-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2021-04-012021-06-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2022-01-012022-06-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2021-01-012021-06-300000016875cp:AutomotiveMember2022-04-012022-06-300000016875cp:AutomotiveMember2021-04-012021-06-300000016875cp:AutomotiveMember2022-01-012022-06-300000016875cp:AutomotiveMember2021-01-012021-06-300000016875cp:IntermodalMember2022-04-012022-06-300000016875cp:IntermodalMember2021-04-012021-06-300000016875cp:IntermodalMember2022-01-012022-06-300000016875cp:IntermodalMember2021-01-012021-06-300000016875cp:NonfreightexcludingleasingrevenuesMember2022-04-012022-06-300000016875cp:NonfreightexcludingleasingrevenuesMember2021-04-012021-06-300000016875cp:NonfreightexcludingleasingrevenuesMember2022-01-012022-06-300000016875cp:NonfreightexcludingleasingrevenuesMember2021-01-012021-06-30xbrli:pure0000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2022-04-012022-06-300000016875cp:KansasCitySouthernMember2022-04-012022-06-30iso4217:USD0000016875cp:KansasCitySouthernMember2021-04-012021-06-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2022-01-012022-06-300000016875cp:KansasCitySouthernMember2022-01-012022-06-300000016875cp:KansasCitySouthernMember2021-01-012021-06-300000016875us-gaap:EmployeeStockOptionMember2022-04-012022-06-300000016875us-gaap:EmployeeStockOptionMember2022-01-012022-06-300000016875us-gaap:EmployeeStockOptionMember2021-04-012021-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-03-310000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-03-310000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-04-012022-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-04-012022-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-04-012022-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-03-310000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-03-310000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-310000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-03-310000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-04-012021-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-04-012021-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-04-012021-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-04-012021-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-12-310000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-01-012022-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2020-12-310000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-01-012021-06-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-300000016875us-gaap:CargoAndFreightMember2022-06-300000016875cp:NonFreightMember2022-06-300000016875us-gaap:CargoAndFreightMember2021-12-310000016875cp:NonFreightMember2021-12-310000016875us-gaap:CargoAndFreightMember2022-03-310000016875cp:NonFreightMember2022-03-310000016875us-gaap:CargoAndFreightMember2021-03-310000016875cp:NonFreightMember2021-03-310000016875us-gaap:CargoAndFreightMember2021-06-300000016875cp:NonFreightMember2021-06-300000016875us-gaap:CargoAndFreightMember2020-12-310000016875cp:NonFreightMember2020-12-310000016875cp:KansasCitySouthernMember2022-06-300000016875cp:KansasCitySouthernMember2022-01-012022-06-300000016875cp:KansasCitySouthernMember2022-04-012022-06-300000016875cp:KansasCitySouthernMembercp:IncomeLossFromEquityMethodInvestmentsMember2022-04-012022-06-300000016875cp:KansasCitySouthernMembercp:IncomeLossFromEquityMethodInvestmentsMember2022-01-012022-06-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2021-04-012021-06-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2021-01-012021-06-300000016875cp:KansasCitySouthernMemberus-gaap:OtherNonoperatingIncomeExpenseMember2021-04-012021-06-300000016875cp:KansasCitySouthernMemberus-gaap:OtherNonoperatingIncomeExpenseMember2021-01-012021-06-300000016875cp:A510010YearNotesMember2022-01-012022-06-300000016875cp:A510010YearNotesMember2022-06-300000016875cp:A510010YearNotesMember2022-01-012022-06-300000016875cp:A450010YearNotesMember2022-01-012022-06-300000016875cp:A450010YearNotesMember2022-06-300000016875cp:A450010YearNotesMember2022-01-012022-06-300000016875cp:A699FinanceLeaseMember2022-01-012022-06-300000016875cp:A699FinanceLeaseMember2022-06-300000016875cp:TermCreditFacilityMember2022-06-300000016875cp:TermCreditFacilityMember2021-12-310000016875us-gaap:CommercialPaperMember2022-06-300000016875us-gaap:RevolvingCreditFacilityMember2022-06-300000016875us-gaap:CommercialPaperMember2021-12-310000016875us-gaap:NetInvestmentHedgingMember2022-04-012022-06-300000016875us-gaap:NetInvestmentHedgingMember2022-01-012022-06-300000016875us-gaap:NetInvestmentHedgingMember2021-04-012021-06-300000016875us-gaap:NetInvestmentHedgingMember2021-01-012021-06-300000016875cp:A2021NormalCourseIssuerBidNCIBMember2021-01-290000016875us-gaap:PensionPlansDefinedBenefitMember2022-04-012022-06-300000016875us-gaap:PensionPlansDefinedBenefitMember2022-01-012022-06-300000016875us-gaap:PensionPlansDefinedBenefitMember2021-04-012021-06-300000016875us-gaap:PensionPlansDefinedBenefitMember2021-01-012021-06-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-04-012022-06-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-04-012021-06-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-012022-06-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-06-300000016875us-gaap:EmployeeStockOptionMember2022-01-012022-06-300000016875us-gaap:EmployeeStockOptionMembersrt:MinimumMember2022-01-012022-06-300000016875us-gaap:EmployeeStockOptionMembersrt:MaximumMember2022-01-012022-06-300000016875us-gaap:PerformanceSharesMember2022-01-012022-06-300000016875cp:PerformanceDeferredShareUnitsMember2022-01-012022-06-300000016875cp:PSUsandPDSUsMember2022-01-012022-06-300000016875cp:PerformanceDeferredShareUnitsMember2022-06-300000016875us-gaap:PerformanceSharesMember2021-01-012021-12-310000016875us-gaap:PerformanceSharesMember2022-01-012022-03-310000016875cp:DeferredShareUnitMember2022-01-012022-06-300000016875cp:ClaimedLossorDamagesDuetoDerailmentMembercp:LacMeganticRailAccidentMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:QuebecMinisterofSustainableDevelopmentandEnvironmentMember2022-01-012022-06-300000016875cp:QuebecAttorneyGeneralMembercp:LacMeganticRailAccidentMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:InitialInsurerClaimantsMembercp:SubrogatedInsuranceClaimMember2022-06-30cp:claim0000016875cp:LacMeganticRailAccidentMembercp:InitialInsurerClaimantsMembercp:SubrogatedInsuranceClaimMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:AdditionalInsurerClaimantsMembercp:SubrogatedInsuranceClaimMember2022-06-300000016875cp:LacMeganticRailAccidentMembercp:AdditionalInsurerClaimantsMembercp:SubrogatedInsuranceClaimMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:PlaintiffMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:DamagesforlossinbusinessvalueMembercp:MMARMember2022-01-012022-06-300000016875cp:LadingLossRecoveryMembercp:LacMeganticRailAccidentMembercp:TheWDTrusteeMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:ReimbursementforsettlementpaidbyconsignorMembercp:TheWDTrusteeMember2022-01-012022-06-300000016875cp:LacMeganticRailAccidentMembercp:ReimbursementforsettlementpaidbyconsigneeMembercp:TheWDTrusteeMember2022-01-012022-06-300000016875cp:PurchasedServicesandOtherMember2022-04-012022-06-300000016875cp:PurchasedServicesandOtherMember2022-01-012022-06-300000016875cp:PurchasedServicesandOtherMember2021-04-012021-06-300000016875cp:PurchasedServicesandOtherMember2021-01-012021-06-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission File Number 001-01342
Canadian Pacific Railway Limited
(Exact name of registrant as specified in its charter)
Canada 98-0355078
(State or Other Jurisdiction
of Incorporation or Organization)
 (IRS Employer
Identification No.)
  
7550 Ogden Dale Road S.E. 
CalgaryABT2C 4X9
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (403) 319-7000
Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class Trading Symbol(s)  Name of Each Exchange on which Registered 
Common Shares, without par value, of
Canadian Pacific Railway Limited
CP New York Stock Exchange
Toronto Stock Exchange
Perpetual 4% Consolidated Debenture Stock of Canadian Pacific Railway CompanyCP/40New York Stock Exchange
BC87London Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes  þ    No o

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  þ    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
 þ
Accelerated Filer
Non-accelerated Filer
Smaller Reporting Company
Emerging Growth Company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ
As of the close of business on July 27, 2022, there were 929,917,325 of the registrant’s Common Shares issued and outstanding.




CANADIAN PACIFIC RAILWAY LIMITED
FORM 10-Q
TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Page
Item 1.Financial Statements:
Interim Consolidated Statements of Income
For the Three and Six Months Ended June 30, 2022 and 2021
Interim Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended June 30, 2022 and 2021
Interim Consolidated Balance Sheets
As at June 30, 2022 and December 31, 2021
Interim Consolidated Statements of Cash Flows
For the Three and Six Months Ended June 30, 2022 and 2021
Interim Consolidated Statements of Changes in Shareholders' Equity
For the Three and Six Months Ended June 30, 2022 and 2021
Notes to Interim Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
Performance Indicators
Financial Highlights
Results of Operations
Liquidity and Capital Resources
Share Capital
Non-GAAP Measures
Critical Accounting Estimates
Forward-Looking Statements
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4.Controls and Procedures
PART II - OTHER INFORMATION
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5. Other Information
Item 6.Exhibits
Signature






PART I

ITEM 1. FINANCIAL STATEMENTS

INTERIM CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars, except share and per share data)2022202120222021
Revenues (Note 3)
Freight$2,154 $2,008 $3,950 $3,926 
Non-freight48 46 90 87 
Total revenues2,202 2,054 4,040 4,013 
Operating expenses
Compensation and benefits348 379 761 784 
Fuel370 218 643 424 
Materials63 54 125 113 
Equipment rents29 28 64 61 
Depreciation and amortization211 200 421 402 
Purchased services and other (Note 10)
313 355 623 629 
Total operating expenses1,334 1,234 2,637 2,413 
Operating income868 820 1,403 1,600 
Less:
Equity earnings of Kansas City Southern (Note 10)
(208) (406) 
Other expense (Note 4, 10)7 157 6 129 
Merger termination fee (Note 10)
 (845) (845)
Other components of net periodic benefit recovery (Note 15)(101)(96)(202)(191)
Net interest expense160 101 320 211 
Income before income tax expense1,010 1,503 1,685 2,296 
Income tax expense (Note 5)
245 257 330 448 
Net income$765 $1,246 $1,355 $1,848 
Earnings per share (Note 6)
Basic earnings per share$0.82 $1.87 $1.46 $2.77 
Diluted earnings per share$0.82 $1.86 $1.45 $2.76 
Weighted-average number of shares (millions) (Note 6)
Basic929.9 666.7 929.8 666.6 
Diluted932.6 669.9 932.7 669.8 
Dividends declared per share $0.190 $0.190 $0.380 $0.380 
See Notes to Interim Consolidated Financial Statements.
2


INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Net income$765 $1,246 $1,355 $1,848 
Net gain in foreign currency translation adjustments, net of hedging activities719 10 383 20 
Change in derivatives designated as cash flow hedges2 (97)3 (72)
Change in pension and post-retirement defined benefit plans38 52 77 105 
Equity accounted investments73  135  
Other comprehensive income (loss) before income taxes832 (35)598 53 
Income tax recovery (expense) on above items2  (34)(30)
Other comprehensive income (loss) (Note 7)834 (35)564 23 
Comprehensive income$1,599 $1,211 $1,919 $1,871 
See Notes to Interim Consolidated Financial Statements.
3


INTERIM CONSOLIDATED BALANCE SHEETS AS AT
(unaudited)
June 30December 31
(in millions of Canadian dollars)20222021
Assets
Current assets
Cash and cash equivalents $154 $69 
Restricted cash and cash equivalents 13 
Accounts receivable, net (Note 8)
962 819 
Materials and supplies271 235 
Other current assets224 216 
1,611 1,352 
Investment in Kansas City Southern (Note 11)
43,203 42,309 
Investments217 209 
Properties21,502 21,200 
Goodwill and intangible assets374 371 
Pension asset2,538 2,317 
Other assets429 419 
Total assets$69,874 $68,177 
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities$1,511 $1,609 
Long-term debt maturing within one year (Note 12, 13)
1,698 1,550 
3,209 3,159 
Pension and other benefit liabilities 724 718 
Other long-term liabilities509 542 
Long-term debt (Note 12, 13)
18,372 18,577 
Deferred income taxes11,646 11,352 
Total liabilities34,460 34,348 
Shareholders’ equity
Share capital 25,488 25,475 
Additional paid-in capital73 66 
Accumulated other comprehensive loss (Note 7)(1,539)(2,103)
Retained earnings11,392 10,391 
35,414 33,829 
Total liabilities and shareholders’ equity$69,874 $68,177 
See Contingencies (Note 17).
See Notes to Interim Consolidated Financial Statements.
4


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Operating activities
Net income$765 $1,246 $1,355 $1,848 
Reconciliation of net income to cash provided by operating activities:
Depreciation and amortization211 200 421 402 
Deferred income tax expense (Note 5)114 9 113 60 
Pension recovery and funding (Note 15)(72)(65)(144)(126)
Equity earnings of Kansas City Southern (Note 10)
(208) (406) 
Foreign exchange gain on debt and lease liabilities (Note 4) (52) (85)
Dividend from Kansas City Southern (Note 10)
  334  
Other operating activities, net(16)52 (99)(36)
Change in non-cash working capital balances related to operations(87)564 (254)473 
Cash provided by operating activities707 1,954 1,320 2,536 
Investing activities
Additions to properties(370)(416)(596)(739)
Proceeds from sale of properties and other assets11 12 26 49 
Other(3)(1)2 (1)
Cash used in investing activities(362)(405)(568)(691)
Financing activities
Dividends paid(176)(126)(353)(253)
Issuance of CP Common Shares1 8 9 16 
Repayment of long-term debt, excluding commercial paper (Note 12)
(10)(10)(552)(31)
Repayment of term loan (Note 12)
(132) (132) 
Net issuance (repayment) of commercial paper (Note 11)20 (872)340 (779)
Acquisition-related financing fees (Note 10)
 (12) (45)
Other (4) (4)
Cash used in financing activities(297)(1,016)(688)(1,096)
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents8 (1)8 (4)
Cash position
Increase in cash, cash equivalents, and restricted cash56 532 72 745 
Cash, cash equivalents, and restricted cash at beginning of period98 360 82 147 
Cash and cash equivalents at end of period$154 $892 $154 $892 
Supplemental disclosures of cash flow information:
Income taxes paid $93 $139 $252 $272 
Interest paid$169 $57 $319 $212 
See Notes to Interim Consolidated Financial Statements.
5


INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited)
For the three months ended June 30
(in millions of Canadian dollars except per share data)Common Shares (in millions)Share
capital
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained
earnings
Total
shareholders’
equity
Balance as at April 1, 2022929.9 $25,486 $68 $(2,373)$10,804 $33,985 
Net income    765 765 
Other comprehensive income (Note 7)   834  834 
Dividends declared ($0.190 per share)    (177)(177)
Effect of stock-based compensation expense  5   5 
Shares issued under stock option plan0.1 2    2 
Balance as at June 30, 2022930.0 $25,488 $73 $(1,539)$11,392 $35,414 
Balance as at April 1, 2021666.6 $1,993 $58 $(2,756)$8,571 $7,866 
Net income—    1,246 1,246 
Other comprehensive loss (Note 7)—   (35) (35)
Dividends declared ($0.190 per share)
—    (127)(127)
Effect of stock-based compensation expense—  7   7 
Shares issued under stock option plan0.2 10 (2)  8 
Balance as at June 30, 2021666.8 $2,003 $63 $(2,791)$9,690 $8,965 
For the six months ended June 30
(in millions of Canadian dollars except per share data)Common Shares (in millions)Share
capital
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained
earnings
Total
shareholders’
equity
Balance as at January 1, 2022929.7 $25,475 $66 $(2,103)$10,391 $33,829 
Net income    1,355 1,355 
Other comprehensive income (Note 7)   564  564 
Dividends declared ($0.380 per share)    (354)(354)
Effect of stock-based compensation expense  12   12 
Shares issued for Kansas City Southern acquisition  (2)  (2)
Shares issued under stock option plan0.3 13 (3)  10 
Balance as at June 30, 2022930.0 $25,488 $73 $(1,539)$11,392 $35,414 
Balance as at January 1, 2021666.3 $1,983 $55 $(2,814)$8,095 $7,319 
Net income—    1,848 1,848 
Other comprehensive income (Note 7)—   23  23 
Dividends declared ($0.380 per share)
—    (253)(253)
Effect of stock-based compensation expense—  12   12 
Shares issued under stock option plan0.5 20 (4)  16 
Balance as at June 30, 2021666.8 $2,003 $63 $(2,791)$9,690 $8,965 
See Notes to Interim Consolidated Financial Statements.
6


NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022
(unaudited)

1    Basis of presentation

These unaudited Interim Consolidated Financial Statements ("Interim Consolidated Financial Statements") of Canadian Pacific Railway Limited ("CPRL") and its subsidiaries (collectively, “CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2021 annual Consolidated Financial Statements and notes included in CP's 2021 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2021 annual Consolidated Financial Statements.

CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons.

In management’s opinion, the Interim Consolidated Financial Statements include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year.

2    Accounting changes

Implemented in 2022

Government Assistance

On January 1, 2022, the Company adopted the new Accounting Standards Update ("ASU") 2021-10, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 832, Government Assistance. The amendment is made to increase transparency by introducing specific disclosure requirements for entities who apply a grant or contribution model by analogy to account for transactions with a government. This update is applied to government assistance transactions within the scope of this amendment that are in the financial statements at the date of initial application and prospectively to new transactions entered into after initial application. See Note 9 for further discussion on government assistance.

All other accounting pronouncements that became effective during the period covered by the Interim Consolidated Financial Statements did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Future changes

Contract Assets and Contract Liabilities Acquired in a Business Combination

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This amendment introduces the requirement for an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers, rather than at fair value. This amendment will be effective prospectively from January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of this amendment.

All other accounting pronouncements recently issued, but not effective until after June 30, 2022, have been assessed and are not expected to have a material impact on the Company's Consolidated Financial Statements and related disclosures.


7


3    Revenues

The following table disaggregates the Company’s revenues from contracts with customers by major source:

For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Freight
Grain$370 $444 $730 $892 
Coal163 170 302 333 
Potash171 134 275 235 
Fertilizers and sulphur85 78 163 155 
Forest products104 90 190 170 
Energy, chemicals and plastics340 369 650 757 
Metals, minerals and consumer products228 180 409 339 
Automotive120 98 211 206 
Intermodal573 445 1,020 839 
Total freight revenues2,154 2,008 3,950 3,926 
Non-freight excluding leasing revenues27 26 49 50 
Revenues from contracts with customers2,181 2,034 3,999 3,976 
Leasing revenues21 20 41 37 
Total revenues$2,202 $2,054 $4,040 $4,013 

Contract liabilities       
                  
Contract liabilities represent payments received for performance obligations not yet satisfied and relate to deferred revenue and are presented as components of "Accounts payable and accrued liabilities" and "Other long-term liabilities" on the Company's Interim Consolidated Balance Sheets.

The following table summarizes the changes in contract liabilities:
For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Opening balance$67 $114 $67 $61 
Revenue recognized that was included in the contract liability balance at the beginning of the period(7)(19)(11)(23)
Increase due to consideration received, net of revenue recognized during the period9 150 13 207 
Closing balance$69 $245 $69 $245 

4    Other expense

For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Foreign exchange gain on debt and lease liabilities$ $(52)$ $(85)
Other foreign exchange gains (3)(2)(2)
Acquisition-related costs (Note 10)
 209  212 
Other7 3 8 4 
Other expense$7 $157 $6 $129 

8


5    Income taxes

For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Current income tax expense$131 $248 $217 $388 
Deferred income tax expense 114 9 113 60 
Income tax expense$245 $257 $330 $448 

The effective tax rates including discrete items for the three and six months ended June 30, 2022 were 24.21% and 19.59%, respectively, compared to 17.10% and 19.50%, respectively for the same periods of 2021.

For the three months ended June 30, 2022, the effective tax rate was 24.25%, excluding the discrete items of equity earnings of Kansas City Southern ("KCS"), acquisition-related costs incurred by CP of $19 million, and outside basis deferred tax expense of $49 million arising from the difference between the carrying amount of CP's investment in KCS for financial reporting and the underlying tax basis of this investment.

For the three months ended June 30, 2021, the effective tax rate was 24.60%, excluding the discrete items of the merger termination fee of $845 million (U.S. $700 million) received in connection with KCS's termination of the Original Merger Agreement, foreign exchange ("FX") gain of $52 million on debt and lease liabilities, and acquisition-related costs of $308 million.

For the six months ended June 30, 2022, the effective tax rate was 24.25%, excluding the discrete items of equity earnings of KCS, acquisition-related costs incurred by CP of $39 million, and outside basis deferred tax expense of $17 million arising from the difference between the carrying amount of CP's investment in KCS for financial reporting and the underlying tax basis of this investment.

For the six months ended June 30, 2021, the effective tax rate was 24.60%, excluding the discrete items of the merger termination fee of $845 million (U.S. $700 million), FX gain of $85 million on debt and lease liabilities, and acquisition-related costs of $344 million.

6    Earnings per share

Basic earnings per share has been calculated using Net income for the period divided by the weighted-average number of shares outstanding during the period. The number of shares used in the earnings per share calculations are reconciled as follows:
For the three months ended June 30For the six months ended June 30
(in millions)2022202120222021
Weighted-average basic shares outstanding929.9 666.7 929.8 666.6 
Dilutive effect of stock options2.7 3.2 2.9 3.2 
Weighted-average diluted shares outstanding932.6 669.9 932.7 669.8 

For the three and six months ended June 30, 2022, there were 0.8 million and 0.4 million options, respectively, excluded from the computation of diluted earnings per share because their effects were not dilutive (three and six months ended June 30, 2021 - nil).

9


7    Changes in Accumulated other comprehensive loss ("AOCL") by component

For the three months ended June 30
(in millions of Canadian dollars)
Foreign currency net of hedging activities(1)
Derivatives(1)(2)
Pension and post-
retirement defined
benefit plans
(1)
Equity accounted investments(1)(2)
Total(1)
Opening balance, April 1, 2022$(531)$(3)$(1,884)$45 $(2,373)
Other comprehensive income before reclassifications748   57 805 
Amounts reclassified from accumulated other comprehensive loss 1 28  29 
Net other comprehensive income748 1 28 57 834 
Closing balance, June 30, 2022$217 $(2)$(1,856)$102 $(1,539)
Opening balance, April 1, 2021$112 $(21)$(2,839)$(8)$(2,756)
Other comprehensive loss before reclassifications(2)(72) (2)(76)
Amounts reclassified from accumulated other comprehensive loss 2 39  41 
Net other comprehensive (loss) income(2)(70)39 (2)(35)
Closing balance, June 30, 2021$110 $(91)$(2,800)$(10)$(2,791)
(1)Amounts are presented net of tax.
(2) Comparative figures have been reclassified to conform with current period presentation.

For the six months ended June 30
(in millions of Canadian dollars)
Foreign currency net of hedging activities(1)
Derivatives(1)(2)
Pension and post-
retirement defined
benefit plans
(1)
Equity accounted investments(1)(2)
Total(1)
Opening balance, January 1, 2022$(182)$(4)$(1,915)$(2)$(2,103)
Other comprehensive income before reclassifications399   103 502 
Amounts reclassified from accumulated other comprehensive loss 2 59 1 62 
Net other comprehensive income399 2 59 104 564 
Closing balance, June 30, 2022$217 $(2)$(1,856)$102 $(1,539)
Opening balance, January 1, 2021$112 $(40)$(2,878)$(8)$(2,814)
Other comprehensive loss before reclassifications(2)(55) (2)(59)
Amounts reclassified from accumulated other comprehensive loss 4 78  82 
Net other comprehensive (loss) income(2)(51)78 (2)23 
Closing balance, June 30, 2021$110 $(91)$(2,800)$(10)$(2,791)
(1)Amounts are presented net of tax.
(2) Comparative figures have been reclassified to conform with current period presentation.

10


Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL are as follows:

For the three months ended June 30For the six months ended June 30
(in millions of Canadian dollars)2022202120222021
Recognition of net actuarial loss(1)
$38 $52 $77 $105 
Income tax recovery(10)(13)(18)(27)
Total net of income tax$28 $39 $59 $78 
(1)Impacts "Other components of net periodic benefit recovery" on the Interim Consolidated Statements of Income.

8    Accounts receivable, net

As at June 30, 2022As at December 31, 2021
(in millions of Canadian dollars)FreightNon-freightTotalFreightNon-freightTotal
Total accounts receivable$736 $265 $1,001 $614 $239 $853 
Allowance for credit losses(24)(15)(39)(20)(14)(34)
Total accounts receivable, net$712 $250 $962 $594