CALGARY, Jan. 29, 2014 /PRNewswire/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) today announced record Q4 and
2013 full-year results that clearly demonstrate the significant
progress made to date in its corporate and operational
turnaround.
FOURTH-QUARTER 2013 HIGHLIGHTS
- Total revenues were $1.6 billion,
an increase of 7 per cent and a quarterly record
- Reported operating expenses were $1.5
billion, an increase of 4 per cent
- Adjusted operating expenses were $1.1
billion, a decrease of 6 per cent
- Reported operating income was $114
million, an increase of 90 per cent
- Adjusted operating income was $547
million, an increase of 45 per cent
- Adjusted operating ratio was 65.9 per cent, a 890 basis-point
improvement and an all-time record
- Free cash totaled $212 million,
an increase of 194 per cent
Reported net income in the fourth-quarter was $82 million, or $0.47 per diluted share, versus $15 million, or $0.08 per share, in the fourth-quarter 2012.
Adjusted net income in the fourth-quarter was $338 million, or $1.91 per diluted share, representing a 49 per
cent improvement versus fourth-quarter 2012.
Adjusted operating expenses, Adjusted operating income, Adjusted
operating ratio, Adjusted net income and Free cash are Non-GAAP
measures which exclude significant items (*see Non-GAAP Measures
below).
"Once again, Canadian Pacific and its outstanding team of
railroaders delivered solid results this quarter, closing a
historic year with record-setting operational and financial
performance," said E. Hunter
Harrison, Chief Executive Officer.
FULL-YEAR 2013 HIGHLIGHTS
- Total revenues were $6.1 billion,
an increase of 8 per cent and a Company record
- Reported operating expenses were $4.7
billion, a decrease of 1 per cent
- Adjusted operating expenses were $4.3
billion, a decrease of 2 per cent
- Reported operating income was $1.4
billion, an increase of 50 per cent
- Adjusted operating income was $1.8
billion, an increase of 41 per cent
- Adjusted operating ratio was 69.9 per cent, a 710 basis-point
improvement and an all-time record
- Free cash totaled $530 million
for the year, an increase of 470 per cent
Reported net income for 2013 was $875
million, or $4.96 per diluted
share, versus $484 million, or
$2.79 per share, in 2012.
Adjusted net income for the year was $1.1
billion, or $6.42 per diluted
share, representing a 48 per cent improvement versus year-end
2012.
"The transformational pace of change at CP has definitely
exceeded expectations," said Harrison. "We entered 2013 with
an aggressive agenda of change and financial targets that would put
us squarely in the path of achieving our goal of once again
becoming an industry leader. I am proud to report that we exceeded
those targets and have reestablished a sense of pride and
accomplishment to this historic organization," added Harrison.
"This journey is far from complete. Riding this positive
momentum, I fully anticipate that 2014 will be another year of
solid returns for our shareholders," said Harrison.
2014 FULL-YEAR GUIDANCE
- Revenue growth of 6 to 7 per cent
- Operating ratio of 65 per cent or lower
- Diluted earnings per share ("EPS") 30 per cent or greater
versus 2013 diluted EPS, excluding significant items (*see Non-GAAP
Measures below) of $6.42
KEY ASSUMPTIONS
- Average fuel cost per gallon of US$3.50 per U.S. Gallon
- Tax rate of 28 per cent
- Canadian to U.S. exchange rate of 1.05
- Defined benefit pension income of approximately $50 million in 2014 and 2015
- Capital expenditures of $1.2 to 1.3
billion
FOURTH-QUARTER SIGNIFICANT ITEMS
Items that impacted reported fourth-quarter 2013 and 2012
earnings include:
2013:
- $435 million ($257 million after-tax) asset impairment charge
and accruals for future costs associated with the sale of the
DM&E West which unfavourably impacted diluted EPS by
$1.45
- $7 million experience gains from
our 2012 labour restructuring initiative ($5
million after tax), which favourably impacted diluted EPS by
3 cents
- $5 million management transition
costs ($4 million after tax), which
unfavourably impacted diluted EPS by 2
cents
2012:
- $53 million labour restructuring
charge ($39 million after tax), which
unfavourably impacted diluted EPS by 22
cents
- $185 million impairment of Powder
River Basin and other investment ($111
million after tax), which unfavourably impacted diluted EPS
by 64 cents
- $80 million asset impairment of
certain locomotives ($59 million
after tax), which unfavourably impacted diluted EPS by 34 cents
FULL-YEAR SIGNIFICANT ITEMS
Items that impacted full year 2013 and 2012 earnings
include:
2013:
- In the first quarter, US $9
million (US $6 million after
tax) recovery in the complete satisfaction of certain management
transition amounts which had been subject to legal proceedings
which favourably impacted diluted EPS by 3
cents
- In the third quarter, income tax expense of $7 million as a result of the change in the
province of British Columbia's
corporate income tax rate which unfavourably impacted diluted EPS
by 4 cents
- $435 million ($257 million after-tax) asset impairment charge
and accruals for future costs associated with the sale of the
DM&E West which unfavourably impacted diluted EPS by
$1.46 for the full year
- $7 million experience gains from
our 2012 labour restructuring initiative ($5
million after tax), which favourably impacted diluted EPS by
3 cents
- $5 million management transition
costs ($4 million after tax), which
unfavourably impacted diluted EPS by 2
cents
2012:
In addition to the fourth quarter significant items of 2012
discussed earlier:
- in the second quarter a charge of $42
million ($29 million after
tax) was recorded with respect to compensation and other management
transition costs which unfavourably impacted diluted EPS by
17 cents
- during the first and second quarters of 2012, the Company
incurred advisory fees of $27 million
($20 million after tax) related to
shareholder matters which unfavourably impacted diluted EPS by
12 cents
- in the second quarter of 2012, an income tax expense of
$11 million as a result of the change
in the province of Ontario's
corporate income tax rate which unfavourably impacted diluted EPS
by 6 cents
Non-GAAP Measures
We present non-GAAP measures and cash flow information to provide a
basis for evaluating underlying earnings and liquidity trends in
our business that can be compared with the results of our
operations in prior periods. These non-GAAP measures exclude
significant items that are not among our normal ongoing revenues
and operating expenses. They have no standardized meaning and are
not defined by GAAP and, therefore, are unlikely to be comparable
to similar measures presented by other companies.
Adjusted net income provides management with a measure of income
that allows a multi-period assessment of long-term profitability
and also allows management and other external users of our
consolidated financial statements to compare profitability on a
long-term basis with that of our peers. Diluted earnings per share,
excluding significant items, also referred to as Adjusted EPS,
provides the same information on a per share basis. Operating ratio
excluding significant items, also referred to as Adjusted operating
ratio calculated as Operating expenses excluding significant items
divided by total revenues, provides the percentage of total
revenues used to operate the railway on an ongoing basis. Operating
expenses excluding significant items is also referred to as
Adjusted operating expenses.
Free cash is used by management to provide information with
respect to the relationship between cash provided by operating
activities and investment decisions and provides a comparable
measure for period to period changes.
For further information regarding non-GAAP measures, including
reconciliations to the nearest GAAP measures, see our 2012 annual
Management's Discussion and Analysis or the attached supplementary
schedule, Non-GAAP Measures.
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, 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 that is a non-GAAP financial measure,
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
"Management's Discussion and Analysis" in CP's annual and interim
reports, Annual Information Form and Form 40-F. 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 (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 a low-cost provider
that is growing with its customers, offering a suite of freight
transportation services, logistics solutions and supply chain
expertise. Visit cpr.ca to see the rail advantages of Canadian
Pacific.
CONSOLIDATED STATEMENTS OF
INCOME
(in millions of Canadian dollars, except per share data)
(unaudited)
|
|
For the three months |
|
|
For the year |
|
|
ended December 31 |
|
|
ended December 31 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Freight |
$ |
1,570 |
|
$ |
1,464 |
|
$ |
5,982 |
|
$ |
5,550 |
|
Other |
|
37 |
|
|
38 |
|
|
151 |
|
|
145 |
Total revenues |
|
1,607 |
|
|
1,502 |
|
|
6,133 |
|
|
5,695 |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
343 |
|
|
378 |
|
|
1,418 |
|
|
1,506 |
|
Fuel |
|
262 |
|
|
256 |
|
|
1,004 |
|
|
999 |
|
Materials |
|
65 |
|
|
60 |
|
|
249 |
|
|
238 |
|
Equipment rents |
|
39 |
|
|
48 |
|
|
173 |
|
|
206 |
|
Depreciation and amortization |
|
144 |
|
|
140 |
|
|
565 |
|
|
539 |
|
Purchased services and other |
|
212 |
|
|
242 |
|
|
876 |
|
|
940 |
|
Asset impairments (Note
2) |
|
435 |
|
|
265 |
|
|
435 |
|
|
265 |
|
Labour restructuring |
|
(7) |
|
|
53 |
|
|
(7) |
|
|
53 |
Total operating expenses |
|
1,493 |
|
|
1,442 |
|
|
4,713 |
|
|
4,746 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
114 |
|
|
60 |
|
|
1,420 |
|
|
949 |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Other income and charges |
|
6 |
|
|
3 |
|
|
17 |
|
|
37 |
|
Net interest expense |
|
70 |
|
|
69 |
|
|
278 |
|
|
276 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
expense |
|
38 |
|
|
(12) |
|
|
1,125 |
|
|
636 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (recovery) expense |
|
(44) |
|
|
(27) |
|
|
250 |
|
|
152 |
Net income |
$ |
82 |
|
$ |
15 |
|
$ |
875 |
|
$ |
484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.47 |
|
$ |
0.08 |
|
$ |
5.00 |
|
$ |
2.82 |
|
Diluted earnings per share |
$ |
0.47 |
|
$ |
0.08 |
|
$ |
4.96 |
|
$ |
2.79 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
175.4 |
|
|
173.3 |
|
|
174.9 |
|
|
171.8 |
|
Diluted |
|
177.0 |
|
|
174.7 |
|
|
176.5 |
|
|
173.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.3500 |
|
$ |
0.3500 |
|
$ |
1.4000 |
|
$ |
1.3500 |
|
|
|
|
|
|
|
|
|
|
|
|
See notes to interim consolidated
financial information. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
(in millions of Canadian dollars)
(unaudited)
|
|
|
|
For the three months |
|
|
For the year |
|
|
|
|
ended December 31 |
|
|
ended December 31 |
|
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
Net income |
|
|
$ |
82 |
|
$ |
15 |
|
$ |
875 |
|
$ |
484 |
|
Net gain (loss) in
foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustments, net of hedging activities |
|
|
|
4 |
|
|
(1) |
|
|
3 |
|
|
11 |
|
Change in derivatives
designated as cash flow hedges |
|
|
|
(1) |
|
|
(2) |
|
|
(1) |
|
|
9 |
|
Change in defined benefit
pension and post-retirement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plans (Note 3) |
|
|
|
1,382 |
|
|
(211) |
|
|
1,681 |
|
|
(50) |
|
Other comprehensive
income (loss) before income taxes |
|
|
|
1,385 |
|
|
(214) |
|
|
1,683 |
|
|
(30) |
|
Income tax (expense)
recovery |
|
|
|
(355) |
|
|
58 |
|
|
(418) |
|
|
- |
|
Equity accounted
investments |
|
|
|
- |
|
|
(2) |
|
|
- |
|
|
(2) |
Other comprehensive income (loss) |
|
|
|
1,030 |
|
|
(158) |
|
|
1,265 |
|
|
(32) |
Comprehensive income
(loss) |
|
|
$ |
1,112 |
|
$ |
(143) |
|
$ |
2,140 |
|
$ |
452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to interim consolidated
financial information. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited)
|
|
December 31 |
|
December 31 |
|
|
2013 |
|
2012 |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
476 |
|
$ |
333 |
|
Restricted cash and cash
equivalents |
|
411 |
|
|
- |
|
Accounts receivable, net |
|
580 |
|
|
546 |
|
Materials and supplies |
|
165 |
|
|
136 |
|
Deferred income taxes |
|
344 |
|
|
254 |
|
Other current assets |
|
53 |
|
|
60 |
|
|
|
2,029 |
|
|
1,329 |
|
|
|
|
|
|
|
Investments |
|
92 |
|
|
83 |
Properties (Note 2) |
|
13,327 |
|
|
13,013 |
Assets held for sale (Note
2) |
|
222 |
|
|
- |
Goodwill and intangible assets
(Note 2) |
|
162 |
|
|
161 |
Pension asset (Note 3) |
|
1,028 |
|
|
- |
Other assets |
|
200 |
|
|
141 |
Total assets |
$ |
17,060 |
|
$ |
14,727 |
|
|
|
|
|
|
|
Liabilities and shareholders'
equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
$ |
1,189 |
|
$ |
1,176 |
|
Long-term debt maturing within one
year |
|
189 |
|
|
54 |
|
|
|
1,378 |
|
|
1,230 |
|
|
|
|
|
|
|
Pension and other benefit liabilities
(Note 3) |
|
657 |
|
|
1,366 |
Other long-term liabilities |
|
338 |
|
|
306 |
Long-term debt |
|
4,687 |
|
|
4,636 |
Deferred income taxes |
|
2,903 |
|
|
2,092 |
Total liabilities |
|
9,963 |
|
|
9,630 |
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
Share capital |
|
2,240 |
|
|
2,127 |
|
Additional paid-in capital |
|
34 |
|
|
41 |
|
Accumulated other comprehensive
loss |
|
(1,503) |
|
|
(2,768) |
|
Retained earnings |
|
6,326 |
|
|
5,697 |
|
|
|
7,097 |
|
|
5,097 |
Total liabilities and
shareholders' equity |
$ |
17,060 |
|
$ |
14,727 |
|
|
|
|
|
|
|
See notes to interim consolidated
financial information. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
(unaudited)
|
|
|
|
|
|
For the three months |
|
|
For the year |
|
|
|
|
|
|
ended December 31 |
|
|
ended December 31 |
|
|
|
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
82 |
|
$ |
15 |
|
$ |
875 |
|
$ |
484 |
|
|
Reconciliation of net
income to cash provided by (used in) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
144 |
|
|
140 |
|
|
565 |
|
|
539 |
|
|
|
Deferred income taxes |
|
|
(48) |
|
|
(22) |
|
|
212 |
|
|
140 |
|
|
|
Pension funding in excess of
expense |
|
|
(15) |
|
|
(17) |
|
|
(55) |
|
|
(61) |
|
|
|
Asset impairments (Note
2) |
|
|
435 |
|
|
265 |
|
|
435 |
|
|
265 |
|
|
|
Labour restructuring, net |
|
|
(12) |
|
|
50 |
|
|
(29) |
|
|
50 |
|
|
|
Other operating activities,
net |
|
|
(28) |
|
|
(3) |
|
|
(51) |
|
|
(84) |
|
|
|
Change in non-cash working capital
balances related to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
101 |
|
|
41 |
|
|
(2) |
|
|
(5) |
Cash provided by operating
activities |
|
|
659 |
|
|
469 |
|
|
1,950 |
|
|
1,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to
properties |
|
|
(434) |
|
|
(336) |
|
|
(1,236) |
|
|
(1,148) |
|
Proceeds from the sale of
properties and other assets |
|
|
35 |
|
|
7 |
|
|
73 |
|
|
145 |
|
Change in restricted cash
and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
used to collateralize
letters of credit |
|
|
(65) |
|
|
- |
|
|
(411) |
|
|
- |
|
Other |
|
|
4 |
|
|
(7) |
|
|
(23) |
|
|
(8) |
Cash used in investing
activities |
|
|
(460) |
|
|
(336) |
|
|
(1,597) |
|
|
(1,011) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(61) |
|
|
(61) |
|
|
(244) |
|
|
(223) |
|
Issuance of common
shares |
|
|
14 |
|
|
62 |
|
|
83 |
|
|
198 |
|
Issuance of long-term
debt |
|
|
- |
|
|
- |
|
|
- |
|
|
71 |
|
Repayment of long-term
debt |
|
|
(11) |
|
|
(9) |
|
|
(56) |
|
|
(50) |
|
Net (decrease) in
short-term borrowing |
|
|
- |
|
|
- |
|
|
- |
|
|
(27) |
|
Other |
|
|
(3) |
|
|
1 |
|
|
(3) |
|
|
1 |
Cash used in financing
activities |
|
|
(61) |
|
|
(7) |
|
|
(220) |
|
|
(30) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency
fluctuations on U.S. dollar- |
|
|
|
|
|
|
|
|
|
|
|
|
denominated cash and cash
equivalents |
|
|
9 |
|
|
- |
|
|
10 |
|
|
(1) |
Cash position |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash
equivalents |
|
|
147 |
|
|
126 |
|
|
143 |
|
|
286 |
|
Cash and cash equivalents
at beginning of period |
|
|
329 |
|
|
207 |
|
|
333 |
|
|
47 |
Cash and cash equivalents at end of
period |
|
$ |
476 |
|
$ |
333 |
|
$ |
476 |
|
$ |
333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
(refunded) |
|
$ |
4 |
|
$ |
5 |
|
$ |
31 |
|
$ |
(3) |
|
Interest paid |
|
$ |
86 |
|
$ |
84 |
|
$ |
295 |
|
$ |
278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to interim consolidated
financial information. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
(in millions of Canadian dollars, except common share
amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
shares |
|
|
|
|
Additional |
|
other |
|
|
|
|
Total |
|
(in |
|
Share |
|
paid-in |
|
comprehensive |
|
Retained |
|
shareholders' |
|
millions) |
|
capital |
|
capital |
|
loss |
|
earnings |
|
equity |
Balance at January 1, 2013 |
173.9 |
|
$ |
2,127 |
|
$ |
41 |
|
$ |
(2,768) |
|
$ |
5,697 |
|
$ |
5,097 |
Net income |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
875 |
|
|
875 |
Other comprehensive income |
- |
|
|
- |
|
|
- |
|
|
1,265 |
|
|
- |
|
|
1,265 |
Dividends declared |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(246) |
|
|
(246) |
Effect of stock-based compensation expense |
- |
|
|
- |
|
|
17 |
|
|
- |
|
|
- |
|
|
17 |
Shares issued under stock option plans |
1.5 |
|
|
113 |
|
|
(24) |
|
|
- |
|
|
- |
|
|
89 |
Balance at December 31, 2013 |
175.4 |
|
$ |
2,240 |
|
$ |
34 |
|
$ |
(1,503) |
|
$ |
6,326 |
|
$ |
7,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
shares |
|
|
|
|
Additional |
|
other |
|
|
|
|
Total |
|
(in |
|
Share |
|
paid-in |
|
comprehensive |
|
Retained |
|
shareholders' |
|
millions) |
|
capital |
|
capital |
|
loss |
|
earnings |
|
equity |
Balance at January 1, 2012 |
170.0 |
|
$ |
1,854 |
|
$ |
86 |
|
$ |
(2,736) |
|
$ |
5,445 |
|
$ |
4,649 |
Net income |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
484 |
|
|
484 |
Other comprehensive loss |
- |
|
|
- |
|
|
- |
|
|
(32) |
|
|
- |
|
|
(32) |
Dividends declared |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(232) |
|
|
(232) |
Effect of stock-based compensation expense |
- |
|
|
- |
|
|
25 |
|
|
- |
|
|
- |
|
|
25 |
Shares issued under stock option plans |
3.9 |
|
|
273 |
|
|
(70) |
|
|
- |
|
|
- |
|
|
203 |
Balance at December 31, 2012 |
173.9 |
|
$ |
2,127 |
|
$ |
41 |
|
$ |
(2,768) |
|
$ |
5,697 |
|
$ |
5,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to interim consolidated
financial information. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CANADIAN PACIFIC RAILWAY LIMITED
NOTES TO INTERIM CONSOLIDATED FINANCIAL
INFORMATION
December 31, 2013
(unaudited)
1 Basis of presentation
This unaudited interim consolidated financial information of
Canadian Pacific Railway Limited ("CP", or "the Company") reflect
management's estimates and assumptions that are necessary for its
fair 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 annual and interim financial
statements and should be read in conjunction with the 2012
consolidated financial statements and 2013 consolidated interim
financial statements. The accounting policies used are consistent
with the accounting policies used in preparing the 2012
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 unaudited interim consolidated
financial information includes all adjustments necessary to present
fairly such information.
2 Asset impairments
On January 2, 2014, the Company
executed an agreement with Genesee & Wyoming Inc. ("G&W")
for the sale of a portion of CP's Dakota,
Minnesota & Eastern line between Tracy, Minnesota and Rapid City, South Dakota, Colony, Wyoming and Crawford, Nebraska and connecting branch lines
("DM&E West"). The sale, which is subject to regulatory
approval by the U.S. Surface Transportation Board, is expected to
generate approximately US$215 million
in gross proceeds, subject to closing adjustments.
At December 31, 2013, CP has
classified DM&E West as an asset held for sale carried at
CDN$222 million, being its estimated
fair value less estimated direct selling costs. As a result,
in the fourth quarter of 2013, the Company recorded an asset
impairment charge and accruals for future costs associated with the
sale totaling CDN$435 million
($257 million after-tax). The
components of the asset impairment charge and charge for the
accruals, which are subject to closing adjustments, that were
recorded against income as "Asset impairments" are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
For
the three months ended
December 31, 2013 |
Property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
$ |
426 |
Intangible assets |
|
|
|
|
|
|
|
|
|
|
|
2 |
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
6 |
Total asset impairment charge |
|
|
|
|
|
|
|
|
|
|
|
434 |
Accruals for future costs |
|
|
|
|
|
|
|
|
|
|
|
1 |
Total charge |
|
|
|
|
|
|
|
|
|
|
$ |
435 |
3 Pensions and other benefits
As a result of higher discount rates at December 31, 2013, compared with December 31, 2012, as well as favourable 2013
equity returns, "Pension and other benefit liabilities" decreased
by $709 million, and a "Pension
asset" was recognized of $1,028
million. In addition, "Other comprehensive income"
from the change in defined benefit pension and post-retirement
plans was $1,681 million and the
Company's deferred tax liability increased by $446 million. The Company used a discount
rate of 4.90% at December 31, 2013,
(2012 - 4.28%) to determine the pension and other benefits
obligation.
Summary of Rail Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter |
|
|
|
|
Year |
|
2013 |
|
|
2012 |
Fav/(Unfav) |
% |
|
Financial (millions, except per
share data) |
|
|
2013 |
|
|
2012 |
Fav/(Unfav) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
$ |
1,570 |
|
$ |
1,464 |
|
$ |
106 |
7 |
|
|
Freight revenue |
|
$ |
5,982 |
|
$ |
5,550 |
|
$ |
432 |
8 |
|
37 |
|
|
38 |
|
|
(1) |
(3) |
|
|
Other revenue |
|
|
151 |
|
|
145 |
|
|
6 |
4 |
|
1,607 |
|
|
1,502 |
|
|
105 |
7 |
|
Total revenues |
|
|
6,133 |
|
|
5,695 |
|
|
438 |
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
343 |
|
|
378 |
|
|
35 |
9 |
|
|
Compensation and benefits |
|
|
1,418 |
|
|
1,506 |
|
|
88 |
6 |
|
262 |
|
|
256 |
|
|
(6) |
(2) |
|
|
Fuel |
|
|
1,004 |
|
|
999 |
|
|
(5) |
(1) |
|
65 |
|
|
60 |
|
|
(5) |
(8) |
|
|
Materials |
|
|
249 |
|
|
238 |
|
|
(11) |
(5) |
|
39 |
|
|
48 |
|
|
9 |
19 |
|
|
Equipment rents |
|
|
173 |
|
|
206 |
|
|
33 |
16 |
|
144 |
|
|
140 |
|
|
(4) |
(3) |
|
|
Depreciation and amortization
|
|
|
565 |
|
|
539 |
|
|
(26) |
(5) |
|
212 |
|
|
242 |
|
|
30 |
12 |
|
|
Purchased services and other
|
|
|
876 |
|
|
940 |
|
|
64 |
7 |
|
435 |
|
|
265 |
|
|
(170) |
(64) |
|
|
Asset impairments |
|
|
435 |
|
|
265 |
|
|
(170) |
(64) |
|
(7) |
|
|
53 |
|
|
60 |
- |
|
|
Labour restructuring |
|
|
(7) |
|
|
53 |
|
|
60 |
- |
|
1,493 |
|
|
1,442 |
|
|
(51) |
(4) |
|
Total operating expenses |
|
|
4,713 |
|
|
4,746 |
|
|
33 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114 |
|
|
60 |
|
|
54 |
90 |
|
Operating income |
|
|
1,420 |
|
|
949 |
|
|
471 |
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
3 |
|
|
(3) |
(100) |
|
|
Other income and charges |
|
|
17 |
|
|
37 |
|
|
20 |
54 |
|
70 |
|
|
69 |
|
|
(1) |
(1) |
|
|
Net interest expense |
|
|
278 |
|
|
276 |
|
|
(2) |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38 |
|
|
(12) |
|
|
50 |
- |
|
Income (loss) before income tax
expense |
|
|
1,125 |
|
|
636 |
|
|
489 |
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(44) |
|
|
(27) |
|
|
17 |
63 |
|
|
Income tax (recovery) expense
|
|
|
250 |
|
|
152 |
|
|
(98) |
(64) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
82 |
|
$ |
15 |
|
$ |
67 |
447 |
|
Net income |
|
$ |
875 |
|
$ |
484 |
|
$ |
391 |
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92.9 |
|
|
96.0 |
|
|
3.1 |
310 |
bps |
|
Operating ratio (%) |
|
|
76.8 |
|
|
83.3 |
|
|
6.5 |
650 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.47 |
|
$ |
0.08 |
|
$ |
0.39 |
488 |
|
|
Basic earnings per share |
|
$ |
5.00 |
|
$ |
2.82 |
|
$ |
2.18 |
77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.47 |
|
$ |
0.08 |
|
$ |
0.39 |
488 |
|
|
Diluted earnings per share |
|
$ |
4.96 |
|
$ |
2.79 |
|
$ |
2.17 |
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
175.4 |
|
|
173.3 |
|
|
2.1 |
1 |
|
|
outstanding (millions) |
|
|
174.9 |
|
|
171.8 |
|
|
3.1 |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of diluted
shares |
|
|
|
|
|
|
|
|
|
|
|
|
177.0 |
|
|
174.7 |
|
|
2.3 |
1 |
|
|
outstanding (millions) |
|
|
176.5 |
|
|
173.2 |
|
|
3.3 |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average foreign exchange rate
|
|
|
|
|
|
|
|
|
|
|
|
|
0.96 |
|
|
1.01 |
|
|
0.05 |
5 |
|
|
(US$/Canadian$) |
|
|
0.97 |
|
|
1.00 |
|
|
0.03 |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average foreign exchange rate
|
|
|
|
|
|
|
|
|
|
|
|
|
1.04 |
|
|
0.99 |
|
|
0.05 |
5 |
|
|
(Canadian$/US$) |
|
|
1.03 |
|
|
1.00 |
|
|
0.03 |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter |
|
|
|
|
Year |
2013 |
|
2012 |
|
Fav/(Unfav) |
|
% |
|
|
|
|
2013 |
|
2012 |
|
Fav/(Unfav) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenues
(millions) |
|
|
|
|
|
|
|
|
|
|
|
$ |
385 |
|
$ |
355 |
|
$ |
30 |
|
8 |
|
|
|
- Grain |
|
$ |
1,300 |
|
$ |
1,172 |
|
$ |
128 |
|
11 |
|
157 |
|
|
156 |
|
|
1 |
|
1 |
|
|
|
- Coal |
|
|
627 |
|
|
602 |
|
|
25 |
|
4 |
|
126 |
|
|
133 |
|
|
(7) |
|
(5) |
|
|
|
- Fertilizers and sulphur |
|
|
570 |
|
|
520 |
|
|
50 |
|
10 |
|
413 |
|
|
335 |
|
|
78 |
|
23 |
|
|
|
- Industrial and consumer products |
|
|
1,548 |
|
|
1,268 |
|
|
280 |
|
22 |
|
105 |
|
|
99 |
|
|
6 |
|
6 |
|
|
|
- Automotive |
|
|
403 |
|
|
425 |
|
|
(22) |
|
(5) |
|
49 |
|
|
46 |
|
|
3 |
|
7 |
|
|
|
- Forest products |
|
|
206 |
|
|
193 |
|
|
13 |
|
7 |
|
335 |
|
|
340 |
|
|
(5) |
|
(1) |
|
|
|
- Intermodal |
|
|
1,328 |
|
|
1,370 |
|
|
(42) |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,570 |
|
$ |
1,464 |
|
$ |
106 |
|
7 |
|
|
Total Freight Revenues |
|
$ |
5,982 |
|
$ |
5,550 |
|
$ |
432 |
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions of Revenue Ton-Miles
(RTM) |
|
|
|
|
|
|
|
|
|
|
|
|
10,006 |
|
|
9,628 |
|
|
378 |
|
4 |
|
|
|
- Grain |
|
|
33,983 |
|
|
33,082 |
|
|
901 |
|
3 |
|
5,776 |
|
|
5,809 |
|
|
(33) |
|
(1) |
|
|
|
- Coal |
|
|
23,172 |
|
|
22,375 |
|
|
797 |
|
4 |
|
3,850 |
|
|
3,838 |
|
|
12 |
|
- |
|
|
|
- Fertilizers and sulphur |
|
|
18,170 |
|
|
17,058 |
|
|
1,112 |
|
7 |
|
9,988 |
|
|
8,347 |
|
|
1,641 |
|
20 |
|
|
|
- Industrial and consumer products |
|
|
37,875 |
|
|
30,469 |
|
|
7,406 |
|
24 |
|
563 |
|
|
561 |
|
|
2 |
|
- |
|
|
|
- Automotive |
|
|
2,329 |
|
|
2,482 |
|
|
(153) |
|
(6) |
|
1,036 |
|
|
1,129 |
|
|
(93) |
|
(8) |
|
|
|
- Forest products |
|
|
4,619 |
|
|
4,713 |
|
|
(94) |
|
(2) |
|
6,192 |
|
|
6,217 |
|
|
(25) |
|
- |
|
|
|
- Intermodal |
|
|
24,101 |
|
|
24,853 |
|
|
(752) |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,411 |
|
|
35,529 |
|
|
1,882 |
|
5 |
|
|
Total RTMs |
|
|
144,249 |
|
|
135,032 |
|
|
9,217 |
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenue per RTM
(cents) |
|
|
|
|
|
|
|
|
|
|
|
|
3.84 |
|
|
3.69 |
|
|
0.15 |
|
4 |
|
|
|
- Grain |
|
|
3.82 |
|
|
3.54 |
|
|
0.28 |
|
8 |
|
2.72 |
|
|
2.69 |
|
|
0.03 |
|
1 |
|
|
|
- Coal |
|
|
2.71 |
|
|
2.69 |
|
|
0.02 |
|
1 |
|
3.26 |
|
|
3.47 |
|
|
(0.21) |
|
(6) |
|
|
|
- Fertilizers and sulphur |
|
|
3.14 |
|
|
3.05 |
|
|
0.09 |
|
3 |
|
4.14 |
|
|
4.01 |
|
|
0.13 |
|
3 |
|
|
|
- Industrial and consumer products |
|
|
4.09 |
|
|
4.16 |
|
|
(0.07) |
|
(2) |
|
18.64 |
|
|
17.65 |
|
|
0.99 |
|
6 |
|
|
|
- Automotive |
|
|
17.27 |
|
|
17.12 |
|
|
0.15 |
|
1 |
|
4.74 |
|
|
4.07 |
|
|
0.67 |
|
16 |
|
|
|
- Forest products |
|
|
4.46 |
|
|
4.10 |
|
|
0.36 |
|
9 |
|
5.42 |
|
|
5.47 |
|
|
(0.05) |
|
(1) |
|
|
|
- Intermodal |
|
|
5.51 |
|
|
5.51 |
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.20 |
|
|
4.12 |
|
|
0.08 |
|
2 |
|
|
Total Freight Revenue per RTM |
|
|
4.15 |
|
|
4.11 |
|
|
0.04 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carloads (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
121 |
|
|
122 |
|
|
(1) |
|
(1) |
|
|
|
- Grain |
|
|
438 |
|
|
433 |
|
|
5 |
|
1 |
|
84 |
|
|
88 |
|
|
(4) |
|
(5) |
|
|
|
- Coal |
|
|
330 |
|
|
337 |
|
|
(7) |
|
(2) |
|
41 |
|
|
43 |
|
|
(2) |
|
(5) |
|
|
|
- Fertilizers and sulphur |
|
|
185 |
|
|
177 |
|
|
8 |
|
5 |
|
133 |
|
|
119 |
|
|
14 |
|
12 |
|
|
|
- Industrial and consumer products |
|
|
519 |
|
|
469 |
|
|
50 |
|
11 |
|
38 |
|
|
39 |
|
|
(1) |
|
(3) |
|
|
|
- Automotive |
|
|
146 |
|
|
162 |
|
|
(16) |
|
(10) |
|
15 |
|
|
16 |
|
|
(1) |
|
(6) |
|
|
|
- Forest products |
|
|
66 |
|
|
67 |
|
|
(1) |
|
(1) |
|
254 |
|
|
253 |
|
|
1 |
|
- |
|
|
|
- Intermodal |
|
|
1,004 |
|
|
1,024 |
|
|
(20) |
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
686 |
|
|
680 |
|
|
6 |
|
1 |
|
|
Total Carloads |
|
|
2,688 |
|
|
2,669 |
|
|
19 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight Revenue per
Carload |
|
|
|
|
|
|
|
|
|
|
|
$ |
3,161 |
|
$ |
2,910 |
|
$ |
251 |
|
9 |
|
|
|
- Grain |
|
$ |
2,964 |
|
$ |
2,707 |
|
$ |
257 |
|
9 |
|
1,888 |
|
|
1,773 |
|
|
115 |
|
6 |
|
|
|
- Coal |
|
|
1,904 |
|
|
1,786 |
|
|
118 |
|
7 |
|
3,065 |
|
|
3,093 |
|
|
(28) |
|
(1) |
|
|
|
- Fertilizers and sulphur |
|
|
3,083 |
|
|
2,938 |
|
|
145 |
|
5 |
|
3,105 |
|
|
2,815 |
|
|
290 |
|
10 |
|
|
|
- Industrial and consumer products |
|
|
2,982 |
|
|
2,704 |
|
|
278 |
|
10 |
|
2,797 |
|
|
2,538 |
|
|
259 |
|
10 |
|
|
|
- Automotive |
|
|
2,758 |
|
|
2,623 |
|
|
135 |
|
5 |
|
3,254 |
|
|
2,875 |
|
|
379 |
|
13 |
|
|
|
- Forest products |
|
|
3,132 |
|
|
2,881 |
|
|
251 |
|
9 |
|
1,322 |
|
|
1,344 |
|
|
(22) |
|
(2) |
|
|
|
- Intermodal |
|
|
1,324 |
|
|
1,338 |
|
|
(14) |
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,291 |
|
$ |
2,153 |
|
$ |
138 |
|
6 |
|
|
Total Freight Revenue per Carload |
|
$ |
2,226 |
|
$ |
2,079 |
|
$ |
147 |
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
|
Year |
|
2013 |
|
|
2012 (1) |
|
|
Fav/(Unfav) |
|
% |
|
|
|
|
2013 |
|
|
2012 (1) |
|
|
Fav/(Unfav) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,531 |
|
|
66,204 |
|
|
2,327 |
|
4 |
|
Freight gross ton-miles
("GTM") (millions) |
|
|
267,629 |
|
|
254,354 |
|
|
13,275 |
|
5 |
|
9,341 |
|
|
10,046 |
|
|
(705) |
|
(7) |
|
Train miles
(thousands) |
|
|
37,817 |
|
|
40,270 |
|
|
(2,453) |
|
(6) |
|
7,844 |
|
|
7,014 |
|
|
830 |
|
12 |
|
Average train weight -
excluding local
traffic (tons) |
|
|
7,573 |
|
|
6,709 |
|
|
864 |
|
13 |
|
6,668 |
|
|
6,198 |
|
|
470 |
|
8 |
|
Average train length -
excluding local
traffic (feet)(2) |
|
|
6,530 |
|
|
5,981 |
|
|
549 |
|
9 |
|
7.9 |
|
|
7.4 |
|
|
(0.5) |
|
(7) |
|
Average terminal dwell
(hours) (3) |
|
|
7.1 |
|
|
7.5 |
|
|
0.4 |
|
5 |
|
17.6 |
|
|
17.6 |
|
|
- |
|
- |
|
Average train speed
(mph)(4) |
|
|
18.2 |
|
|
18.0 |
|
|
0.2 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
223.2 |
|
|
197.1 |
|
|
26.1 |
|
13 |
|
Locomotive productivity
(daily average
GTMs/active horsepower ("HP")) |
|
|
216.0 |
|
|
179.8 |
|
|
36.2 |
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.06 |
|
|
1.14 |
|
|
0.08 |
|
7 |
|
Fuel efficiency (U.S.
gallon of fuel
consumed/1,000 GTMs) |
|
|
1.06 |
|
|
1.15 |
|
|
0.09 |
|
8 |
|
71.4 |
|
|
74.4 |
|
|
3.0 |
|
4 |
|
U.S. gallons of
locomotive fuel
consumed (millions)(5) |
|
|
281.7 |
|
|
289.2 |
|
|
7.5 |
|
3 |
|
3.51 |
|
|
3.47 |
|
|
(0.04) |
|
(1) |
|
Average fuel price (U.S.
dollars per
U.S. gallon) |
|
|
3.47 |
|
|
3.45 |
|
|
(0.02) |
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,677 |
|
|
16,369 |
|
|
1,692 |
|
10 |
|
Total employees
(average)(6)(7) |
|
|
15,011 |
|
|
16,999 |
|
|
1,988 |
|
12 |
|
14,506 |
|
|
15,713 |
|
|
1,207 |
|
8 |
|
Total employees (end of
period)(6) |
|
|
14,506 |
|
|
15,713 |
|
|
1,207 |
|
8 |
|
14,977 |
|
|
16,907 |
|
|
1,930 |
|
11 |
|
Workforce (end of
period)(8) |
|
|
14,977 |
|
|
16,907 |
|
|
1,930 |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.77 |
|
|
2.05 |
|
|
0.28 |
|
14 |
|
FRA personal injuries per
200,000
employee-hours |
|
|
1.69 |
|
|
1.55 |
|
|
(0.14) |
|
(9) |
|
1.35 |
|
|
1.68 |
|
|
0.33 |
|
20 |
|
FRA train accidents per
million train-
miles |
|
|
1.78 |
|
|
1.67 |
|
|
(0.11) |
|
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Certain prior period figures have
been revised to conform with current presentation or have been
updated to reflect new information. |
(2) |
Incorporates a new reporting
methodology where average train length is the sum of each car and
locomotive's equipment length multiplied by the distance
travelled, divided by train miles. Local trains are excluded
from this measure. |
(3) |
Incorporates a new reporting
definition where average terminal dwell measures the average time a
freight car resides within terminal boundaries. |
(4) |
Incorporates a new reporting
definition where average train speed measures the line-haul
movement from origin to destination including terminal dwell
hours. |
(5) |
Includes gallons of fuel consumed
from freight, yard and commuter service but excludes fuel used in
capital projects and other non-freight activities. |
(6) |
An employee is defined as an
individual, including trainees, who has worked more than 40 hours
in a standard biweekly pay period. This excludes part
time
employees, contractors, and consultants. |
(7) |
2012 Year-to-date average number
of employees has been adjusted for the strike. |
(8) |
Workforce is defined as total
employees plus part time employees, contractors, and
consultants. |
Non-GAAP Measures - Unaudited
We present non-GAAP measures and cash flow information to
provide a basis for evaluating underlying earnings and liquidity
trends in our business that can be compared with the results of our
operations in prior periods. These non-GAAP measures exclude
significant items that are not among our normal ongoing revenues
and operating expenses. They have no standardized meanings
and are not defined by GAAP and, therefore, are unlikely to be
comparable to similar measures presented by other companies.
Adjusted Performance Measures
Income, excluding significant items, also referred to as
Adjusted net income, provides management with a measure of income
that allows a multi-period assessment of long-term profitability
and also allows management and other external users of our
consolidated financial statements to compare profitability on a
long-term basis with that of our peers.
Operating income, excluding significant items, also referred to
as Adjusted operating income, provides a measure of the
profitability of the railway on an ongoing basis.
Operating expenses, excluding significant items, also referred
to as Adjusted operating expenses, provides relevant and useful
information for evaluating the effectiveness of our operations and
underlying business trends.
Diluted earnings per share ("EPS"), excluding significant items,
also referred to as Adjusted EPS, provides the same information on
a per share basis.
Operating ratio, excluding significant items, also referred to
as Adjusted operating ratio, and calculated as Operating expenses,
excluding significant items divided by total revenues, provides the
percentage of total revenues used to operate the railway on an
ongoing basis.
Significant items are material transactions that may include,
but are not limited to, restructuring and asset impairment charges,
gains and losses on non-routine sales of assets and other items
that are not normal course business activities.
Reconciliation of Non-GAAP measures to GAAP
measures
The following tables reconcile Adjusted operating expenses,
Adjusted operating income and Adjusted net income, to Operating
expenses, Operating income and Net income, respectively.
|
|
|
For the year |
|
|
|
For the three months |
|
|
|
|
ended December 31 |
|
|
|
ended December 31 |
(in millions of Canadian dollars) |
|
|
2013 |
|
|
2012 |
|
|
|
2013 |
|
|
2012 |
Adjusted operating
expenses |
|
$ |
4,289 |
|
$ |
4,386 |
|
|
$ |
1,060 |
|
$ |
1,124 |
Add (less) significant items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labour restructuring |
|
|
(7) |
|
|
53 |
|
|
|
(7) |
|
|
53 |
|
Asset impairments |
|
|
435 |
|
|
265 |
|
|
|
435 |
|
|
265 |
|
Management transition costs |
|
|
(4) |
|
|
42 |
|
|
|
5 |
|
|
- |
Operating expenses |
|
$ |
4,713 |
|
$ |
4,746 |
|
|
$ |
1,493 |
|
$ |
1,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income |
|
$ |
1,844 |
|
$ |
1,309 |
|
|
$ |
547 |
|
$ |
378 |
Less (add) significant items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labour restructuring |
|
|
(7) |
|
|
53 |
|
|
|
(7) |
|
|
53 |
|
Asset impairments |
|
|
435 |
|
|
265 |
|
|
|
435 |
|
|
265 |
|
Management transition costs |
|
|
(4) |
|
|
42 |
|
|
|
5 |
|
|
- |
Operating income |
|
$ |
1,420 |
|
$ |
949 |
|
|
$ |
114 |
|
$ |
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
1,132 |
|
$ |
753 |
|
|
$ |
338 |
|
$ |
224 |
Less (add) significant items, net of
tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labour restructuring |
|
|
(5) |
|
|
39 |
|
|
|
(5) |
|
|
39 |
|
Asset impairments |
|
|
257 |
|
|
170 |
|
|
|
257 |
|
|
170 |
|
Management transition costs |
|
|
(2) |
|
|
29 |
|
|
|
4 |
|
|
- |
|
Advisory fees related to shareholder matters |
|
|
- |
|
|
20 |
|
|
|
- |
|
|
- |
|
Income tax rate change |
|
|
7 |
|
|
11 |
|
|
|
- |
|
|
- |
Net income |
|
$ |
875 |
|
$ |
484 |
|
|
$ |
82 |
|
$ |
15 |
The following tables reconcile Diluted earnings per share,
excluding significant items and Adjusted operating ratio, excluding
significant items to Diluted earnings per share and Operating
ratio, respectively.
|
|
|
|
For the year |
|
For the three |
|
|
|
|
|
ended |
|
months ended |
|
Diluted earnings per share |
|
|
|
December 31 |
|
December 31 |
|
(in millions of Canadian dollars) |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Excluding significant items |
|
|
$ |
6.42 |
|
$ |
4.34 |
|
$ |
1.91 |
|
$ |
1.28 |
|
Less (add) significant items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labour restructuring |
|
|
|
(0.03) |
|
|
0.22 |
|
|
(0.03) |
|
|
0.22 |
|
|
Asset impairments |
|
|
|
1.46 |
|
|
0.98 |
|
|
1.45 |
|
|
0.98 |
|
|
Management transition costs |
|
|
|
(0.01) |
|
|
0.17 |
|
|
0.02 |
|
|
- |
|
|
Advisory fees related to shareholder matters |
|
|
|
- |
|
|
0.12 |
|
|
- |
|
|
- |
|
|
Income tax rate change |
|
|
|
0.04 |
|
|
0.06 |
|
|
- |
|
|
- |
|
Diluted earnings per share as
reported |
|
|
$ |
4.96 |
|
$ |
2.79 |
|
$ |
0.47 |
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year |
|
|
For the three |
|
|
|
|
|
ended |
|
|
months ended |
|
Operating ratio |
|
|
|
December 31 |
|
|
December 31 |
|
(in millions of Canadian dollars) |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
Excluding significant items |
|
|
|
69.9 |
% |
|
77.0 |
% |
|
65.9 |
% |
|
74.8 |
% |
Add (less) significant items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labour restructuring |
|
|
|
(0.1) |
% |
|
0.9 |
% |
|
(0.4) |
% |
|
3.5 |
% |
|
Asset impairments |
|
|
|
7.1 |
% |
|
4.7 |
% |
|
27.1 |
% |
|
17.7 |
% |
|
Management transition costs |
|
|
|
(0.1) |
% |
|
0.7 |
% |
|
0.3 |
% |
|
- |
|
Operating ratio as
reported |
|
|
|
76.8 |
% |
|
83.3 |
% |
|
92.9 |
% |
|
96.0 |
% |
Free Cash
Free cash and cash flow before dividends are non-GAAP measures
that management considers to be indicators of liquidity. The
measures are used by management to provide information with respect
to the relationship between cash provided by operating activities
and investment decisions and provide comparable measures for period
to period changes. Free cash is calculated as cash provided
by operating activities, less cash used in investing activities,
excluding changes in restricted cash and cash equivalents and
investment balances used to collateralize letters of credit, and
dividends paid, adjusted for changes in cash and cash equivalents
balances resulting from foreign exchange ("FX") fluctuations.
|
|
For the year |
|
|
For the three months |
Reconciliation of free cash to GAAP cash
position |
|
ended December 31 |
|
|
ended December 31 |
(in million of Canadian dollars) |
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
Cash provided by operating activities |
$ |
1,950 |
$ |
1,328 |
|
$ |
659 |
$ |
469 |
Cash used in investing activities |
|
(1,597) |
|
(1,011) |
|
|
(460) |
|
(336) |
Change in restricted cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
used to collateralize letters
of credit |
|
411 |
|
- |
|
|
65 |
|
- |
Dividends paid |
|
(244) |
|
(223) |
|
|
(61) |
|
(61) |
Effect of foreign currency fluctuations on U.S.
dollar- |
|
|
|
|
|
|
|
|
|
denominated cash and cash
equivalents |
|
10 |
|
(1) |
|
|
9 |
|
- |
Free cash(1) |
|
530 |
|
93 |
|
|
212 |
|
72 |
Cash provided by financing activities,
excluding |
|
|
|
|
|
|
|
|
|
dividend payment
(1) |
|
24 |
|
193 |
|
|
- |
|
54 |
Change in restricted cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
used to collateralize letters
of credit |
|
(411) |
|
- |
|
|
(65) |
|
- |
Increase in cash and cash equivalents,
as |
|
|
|
|
|
|
|
|
|
shown on the Consolidated
Statements of Cash Flows |
|
143 |
|
286 |
|
|
147 |
|
126 |
Cash and cash equivalents at beginning of
period |
|
333 |
|
47 |
|
|
329 |
|
207 |
Cash and cash equivalents at end of
period |
$ |
476 |
$ |
333 |
|
$ |
476 |
$ |
333 |
(1) |
Free cash and Cash provided by financing
activities, excluding dividend payment have no standardized
meanings
prescribed by GAAP and, therefore, are unlikely to be comparable to
similar measures presented by other companies. |
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 year ended December 31 |
|
For the three
months ended December 31 |
(in millions of |
|
|
|
|
|
|
|
|
|
Variance |
|
Adjusted |
|
FX Adj. |
|
|
|
|
|
|
|
Variance |
|
Adjusted |
|
FX Adj. |
Canadian dollars) |
|
|
|
|
2013 |
|
|
2012 |
|
due to FX |
|
2012(1) |
|
%(1) |
|
|
2013 |
|
|
2012 |
|
due to FX |
|
2012(1) |
|
%(1) |
Freight revenues |
|
|
|
$ |
5,982 |
|
$ |
5,550 |
|
$ |
83 |
|
$ |
5,633 |
|
6% |
|
$ |
1,570 |
|
$ |
1,464 |
|
$ |
42 |
|
$ |
1,506 |
|
4% |
Other revenues |
|
|
|
|
151 |
|
|
145 |
|
|
1 |
|
|
146 |
|
3% |
|
|
37 |
|
|
38 |
|
|
1 |
|
|
39 |
|
(5%) |
Total
revenues |
|
|
|
|
6,133 |
|
|
5,695 |
|
|
84 |
|
|
5,779 |
|
6% |
|
|
1,607 |
|
|
1,502 |
|
|
43 |
|
|
1,545 |
|
4% |
Total operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses |
|
|
|
|
4,713 |
|
|
4,746 |
|
|
70 |
|
|
4,816 |
|
(2%) |
|
|
1,493 |
|
|
1,442 |
|
|
41 |
|
|
1,483 |
|
1% |
Operating income |
|
|
|
$ |
1,420 |
|
$ |
949 |
|
$ |
14 |
|
$ |
963 |
|
47% |
|
$ |
114 |
|
$ |
60 |
|
$ |
2 |
|
$ |
62 |
|
84% |
(1) |
These earnings measures have no standardized
meanings prescribed by GAAP and, therefore, are unlikely to be
comparable
to similar measures presented by other companies. |
SOURCE Canadian Pacific