CANADIAN PACIFIC RAILWAY LIMITED CANADIAN PACIFIC RAILWAY COMPANY (Registrants) |
||||
Date: January 29, 2008 | Signed: Donald F. Barnhardt | |||
By: | Name: | Donald F. Barnhardt | ||
Title: | Corporate Secretary |
Ø | Income before foreign exchange gains and losses on long-term debt and other specified items increased two per cent to $185 million from $181 million, due primarily to lower income tax rates in the quarter. | ||
Ø | Diluted earnings per share increased four per cent to $1.20 from $1.15 excluding foreign exchange gains and losses on long-term debt and other specified items. | ||
Ø | Operating ratio was 74.3 per cent compared with 73.1 per cent in 2006. | ||
Ø | Total revenues were flat at $1.19 billion. |
Ø | Income increased seven per cent to $673 million from $628 million. | ||
Ø | Diluted earnings per share grew nine per cent to $4.32 from $3.95. | ||
Ø | Operating ratio improved 10 basis points to 75.3 per cent from 75.4 per cent. | ||
Ø | Total revenue increased three per cent to $4.7 billion. |
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Ø | Operating expenses increased three per cent to $3.5 billion. |
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Contacts: Media |
Investment Community | |
Leslie Pidcock
|
Janet Weiss, Assistant Vice-President | |
Tel.: (403) 319-6878
|
Investor Relations | |
email: leslie_pidcock@cpr.ca
|
Tel.: (403) 319-3591 | |
email: investor@cpr.ca |
4
For the three months | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Revenues |
||||||||
Freight |
$ | 1,142.6 | $ | 1,151.5 | ||||
Other |
45.7 | 38.9 | ||||||
1,188.3 | 1,190.4 | |||||||
Operating expenses |
||||||||
Compensation and benefits |
308.4 | 322.2 | ||||||
Fuel |
196.3 | 171.2 | ||||||
Materials |
47.9 | 53.7 | ||||||
Equipment rents |
45.1 | 47.8 | ||||||
Depreciation and amortization |
116.3 | 115.9 | ||||||
Purchased services and other |
168.8 | 159.5 | ||||||
882.8 | 870.3 | |||||||
Operating income |
305.5 | 320.1 | ||||||
Other (income) charges (Note 4) |
(3.8 | ) | 6.4 | |||||
Foreign exchange (gains) losses on long-term debt |
(8.3 | ) | 44.9 | |||||
Interest expense (Note 5) |
63.4 | 49.8 | ||||||
Income tax (recovery) expense (Note 6) |
(88.1 | ) | 73.4 | |||||
Net income |
$ | 342.3 | $ | 145.6 | ||||
Basic earnings per share (Note 7) |
$ | 2.23 | $ | 0.93 | ||||
Diluted earnings per share (Note 7) |
$ | 2.21 | $ | 0.92 | ||||
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For the year | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Revenues |
||||||||
Freight |
$ | 4,555.2 | $ | 4,427.3 | ||||
Other |
152.4 | 155.9 | ||||||
4,707.6 | 4,583.2 | |||||||
Operating expenses |
||||||||
Compensation and benefits |
1,284.2 | 1,327.6 | ||||||
Fuel |
746.8 | 650.5 | ||||||
Materials |
215.5 | 212.9 | ||||||
Equipment rents |
207.5 | 181.2 | ||||||
Depreciation and amortization |
472.0 | 464.1 | ||||||
Purchased services and other |
617.4 | 618.3 | ||||||
3,543.4 | 3,454.6 | |||||||
Operating income |
1,164.2 | 1,128.6 | ||||||
Other charges (Note 4) |
17.3 | 27.8 | ||||||
Change in fair value of Canadian third party
asset-backed commercial paper (Note 9) |
21.5 | | ||||||
Foreign exchange (gains) losses on long-term debt |
(169.8 | ) | 0.1 | |||||
Interest expense (Note 5) |
204.3 | 194.5 | ||||||
Income tax expense (Note 6) |
144.7 | 109.9 | ||||||
Net income |
$ | 946.2 | $ | 796.3 | ||||
Basic earnings per share (Note 7) |
$ | 6.14 | $ | 5.06 | ||||
Diluted earnings per share (Note 7) |
$ | 6.08 | $ | 5.02 | ||||
6
For the three months | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Comprehensive income |
||||||||
Net income |
$ | 342.3 | $ | 145.6 | ||||
Other comprehensive income |
||||||||
Net change in foreign currency translation
adjustments, net of hedging activities |
(3.5 | ) | (1.1 | ) | ||||
Net change in gains on derivatives
designated as cash flow hedges |
(17.9 | ) | | |||||
Other comprehensive loss before income taxes |
(21.4 | ) | (1.1 | ) | ||||
Income tax recovery |
7.2 | 3.7 | ||||||
Other comprehensive (loss) income (Note 12) |
(14.2 | ) | 2.6 | |||||
Comprehensive income |
$ | 328.1 | $ | 148.2 | ||||
For the year | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Comprehensive income |
||||||||
Net income |
$ | 946.2 | $ | 796.3 | ||||
Other comprehensive income |
||||||||
Net change in foreign currency translation
adjustments, net of hedging activities |
(7.4 | ) | (1.6 | ) | ||||
Net change in gains on derivatives
designated as cash flow hedges |
(36.8 | ) | | |||||
Other comprehensive loss before income taxes |
(44.2 | ) | (1.6 | ) | ||||
Income tax recovery |
3.4 | 0.5 | ||||||
Other comprehensive loss (Note 12) |
(40.8 | ) | (1.1 | ) | ||||
Comprehensive income |
$ | 905.4 | $ | 795.2 | ||||
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December 31 | December 31 | |||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 378.1 | $ | 124.3 | ||||
Accounts receivable and other current assets |
542.8 | 615.7 | ||||||
Materials and supplies |
179.5 | 158.6 | ||||||
Future income taxes |
67.3 | 106.3 | ||||||
1,167.7 | 1,004.9 | |||||||
Investments (Note 9) |
1,668.6 | 64.9 | ||||||
Net properties |
9,293.1 | 9,122.9 | ||||||
Other assets and deferred charges |
1,235.6 | 1,223.2 | ||||||
Total assets |
$ | 13,365.0 | $ | 11,415.9 | ||||
Liabilities and shareholders equity |
||||||||
Current liabilities |
||||||||
Short-term borrowing |
$ | 229.7 | $ | | ||||
Accounts payable and accrued liabilities |
980.8 | 1,002.6 | ||||||
Income and other taxes payable |
68.8 | 16.0 | ||||||
Dividends payable |
34.5 | 29.1 | ||||||
Long-term debt maturing within one year |
31.0 | 191.3 | ||||||
1,344.8 | 1,239.0 | |||||||
Deferred liabilities |
714.6 | 725.7 | ||||||
Long-term debt (Note 10) |
4,146.2 | 2,813.5 | ||||||
Future income taxes |
1,701.5 | 1,781.2 | ||||||
Shareholders equity |
||||||||
Share capital (Note 11) |
1,188.6 | 1,175.7 | ||||||
Contributed surplus |
42.4 | 32.3 | ||||||
Accumulated other comprehensive income (Note 12) |
39.6 | 66.4 | ||||||
Retained income |
4,187.3 | 3,582.1 | ||||||
5,457.9 | 4,856.5 | |||||||
Total liabilities and shareholders equity |
$ | 13,365.0 | $ | 11,415.9 | ||||
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For the three months | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Operating activities |
||||||||
Net income |
$ | 342.3 | $ | 145.6 | ||||
Add (deduct) items not affecting cash: |
||||||||
Depreciation and amortization |
116.3 | 115.9 | ||||||
Future income taxes |
(129.6 | ) | 73.0 | |||||
Foreign exchange (gains) losses on long-term debt |
(8.3 | ) | 44.9 | |||||
Amortization of deferred charges |
2.9 | 3.4 | ||||||
Restructuring and environmental remediation payments (Note 8) |
(22.0 | ) | (27.1 | ) | ||||
Other operating activities, net |
20.6 | (73.4 | ) | |||||
Change in non-cash working capital balances related to
operations |
58.8 | 33.7 | ||||||
Cash provided by operating activities |
381.0 | 316.0 | ||||||
Investing activities |
||||||||
Additions to properties |
(324.6 | ) | (204.5 | ) | ||||
Reductions in investments and other assets (Note 14) |
16.8 | 23.3 | ||||||
Acquisition of Dakota, Minnesota & Eastern Railroad
Corporation (Note 9) |
(1,492.6 | ) | | |||||
Net proceeds from disposal of transportation properties |
5.6 | 18.7 | ||||||
Cash used in investing activities |
(1,794.8 | ) | (162.5 | ) | ||||
Financing activities |
||||||||
Dividends paid |
(34.5 | ) | (29.4 | ) | ||||
Issuance of CP Common Shares |
1.2 | 14.3 | ||||||
Purchase of CP Common Shares |
| (59.5 | ) | |||||
Net increase in short-term borrowing |
229.7 | | ||||||
Issuance of long-term debt (Note 10) |
1,260.2 | 2.8 | ||||||
Repayment of long-term debt |
(3.9 | ) | (3.8 | ) | ||||
Cash provided by (used in) financing activities |
1,452.7 | (75.6 | ) | |||||
Cash position |
||||||||
Increase in cash and cash equivalents |
38.9 | 77.9 | ||||||
Cash and cash equivalents at beginning of period |
339.2 | 46.4 | ||||||
Cash and cash equivalents at end of period |
$ | 378.1 | $ | 124.3 | ||||
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For the year | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Operating activities |
||||||||
Net income |
$ | 946.2 | $ | 796.3 | ||||
Add (deduct) items not affecting cash: |
||||||||
Depreciation and amortization |
472.0 | 464.1 | ||||||
Future income taxes |
38.7 | 75.3 | ||||||
Change in fair value of Canadian third party
asset-backed commercial paper (Note 9) |
21.5 | | ||||||
Foreign exchange (gains) losses on long-term debt |
(169.8 | ) | 0.1 | |||||
Amortization of deferred charges |
12.1 | 16.5 | ||||||
Restructuring and environmental remediation payments (Note 8) |
(61.0 | ) | (96.3 | ) | ||||
Other operating activities, net |
4.6 | (103.4 | ) | |||||
Change in non-cash working capital balances related to
operations |
50.3 | (101.6 | ) | |||||
Cash provided by operating activities |
1,314.6 | 1,051.0 | ||||||
Investing activities |
||||||||
Additions to properties |
(893.2 | ) | (793.7 | ) | ||||
Reductions in investments and other assets (Note 14) |
0.2 | 2.2 | ||||||
Acquisition of Dakota, Minnesota & Eastern Railroad
Corporation (Note 9) |
(1,492.6 | ) | | |||||
Net proceeds from disposal of transportation properties |
14.9 | 97.8 | ||||||
Investment in Canadian third party asset-backed commercial
paper (Note 9) |
(143.6 | ) | | |||||
Cash used in investing activities |
(2,514.3 | ) | (693.7 | ) | ||||
Financing activities |
||||||||
Dividends paid |
(133.1 | ) | (112.4 | ) | ||||
Issuance of CP Common Shares |
30.4 | 66.6 | ||||||
Purchase of CP Common Shares |
(231.1 | ) | (286.4 | ) | ||||
Net increase in short-term borrowing |
229.7 | | ||||||
Issuance of long-term debt (Note 10) |
1,745.3 | 2.8 | ||||||
Repayment of long-term debt |
(187.7 | ) | (25.4 | ) | ||||
Cash provided by (used in) financing activities |
1,453.5 | (354.8 | ) | |||||
Cash position |
||||||||
Increase in cash and cash equivalents |
253.8 | 2.5 | ||||||
Cash and cash equivalents at beginning of year |
124.3 | 121.8 | ||||||
Cash and cash equivalents at end of year |
$ | 378.1 | $ | 124.3 | ||||
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For the three months | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
Restated | ||||||||
(see Note 2) | ||||||||
(unaudited) | ||||||||
Share capital |
||||||||
Balance, beginning of period |
$ | 1,187.2 | $ | 1,166.6 | ||||
Shares issued under stock option plans |
1.4 | 15.1 | ||||||
Shares purchased |
| (6.0 | ) | |||||
Balance, end of period |
1,188.6 | 1,175.7 | ||||||
Contributed surplus |
||||||||
Balance, beginning of period |
40.6 | 51.9 | ||||||
Movement in stock-based compensation |
1.8 | 2.3 | ||||||
Shares purchased |
| (21.9 | ) | |||||
Balance, end of period |
42.4 | 32.3 | ||||||
Accumulated other comprehensive income |
||||||||
Balance, beginning of period |
53.8 | 63.8 | ||||||
Other comprehensive (loss) income (Note 12) |
(14.2 | ) | 2.6 | |||||
Balance, end of period |
39.6 | 66.4 | ||||||
Retained income |
||||||||
Balance, beginning of period |
3,879.5 | 3,491.9 | ||||||
Net income for the period |
342.3 | 145.6 | ||||||
Shares purchased |
| (26.5 | ) | |||||
Dividends |
(34.5 | ) | (28.9 | ) | ||||
Balance, end of period |
4,187.3 | 3,582.1 | ||||||
Total accumulated other comprehensive income and
retained income |
4,226.9 | 3,648.5 | ||||||
Shareholders equity, end of period |
$ | 5,457.9 | $ | 4,856.5 | ||||
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For the year | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
Restated | ||||||||
(see Note 2) | ||||||||
(unaudited) | ||||||||
Share capital |
||||||||
Balance, beginning of year |
$ | 1,175.7 | $ | 1,141.5 | ||||
Shares issued under stock option plans |
37.4 | 71.0 | ||||||
Shares purchased |
(24.5 | ) | (36.8 | ) | ||||
Balance, end of year |
1,188.6 | 1,175.7 | ||||||
Contributed surplus |
||||||||
Balance, beginning of year |
32.3 | 245.1 | ||||||
Movement in stock-based compensation |
10.1 | 10.3 | ||||||
Shares purchased |
| (223.1 | ) | |||||
Balance, end of year |
42.4 | 32.3 | ||||||
Accumulated other comprehensive income |
||||||||
Balance, beginning of year |
66.4 | 67.5 | ||||||
Adjustment for change in accounting policy (Note 2) |
14.0 | | ||||||
Adjusted balance, beginning of year |
80.4 | 67.5 | ||||||
Other comprehensive loss (Note 12) |
(40.8 | ) | (1.1 | ) | ||||
Balance, end of year |
39.6 | 66.4 | ||||||
Retained income |
||||||||
Balance, beginning of year |
3,582.1 | 2,930.0 | ||||||
Adjustment for change in accounting policy (Note 2) |
4.0 | | ||||||
Adjusted balance, beginning of year |
3,586.1 | 2,930.0 | ||||||
Net income for the year |
946.2 | 796.3 | ||||||
Shares purchased |
(206.6 | ) | (26.5 | ) | ||||
Dividends |
(138.4 | ) | (117.7 | ) | ||||
Balance, end of year |
4,187.3 | 3,582.1 | ||||||
Total accumulated other comprehensive income and
retained income |
4,226.9 | 3,648.5 | ||||||
Shareholders equity, end of year |
$ | 5,457.9 | $ | 4,856.5 | ||||
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1 | Basis of presentation | |
These unaudited interim consolidated financial statements and notes have been prepared using accounting policies that are consistent with the policies used in preparing Canadian Pacific Railway Limiteds (CP, the Company or Canadian Pacific Railway) 2006 annual consolidated financial statements, except as discussed below and in Note 2 for the adoption of new accounting standards for financial instruments, hedges and comprehensive income. They do not include all disclosures required under Generally Accepted Accounting Principles for annual financial statements and should be read in conjunction with the annual consolidated financial statements. | ||
CPs 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. | ||
Financial Instruments | ||
From January 1, 2007, certain financial instruments, including those classified as loans and receivables, available for sale, held for trading and financial liabilities, are initially measured at fair value and subsequently measured at fair value or amortized cost. Amortization is calculated using the effective interest rate for the instrument. Financial instruments that will be realized within the normal operating cycle are measured at their carrying amount as this approximates fair value. | ||
Transaction costs related to the issuance of long-term debt are netted against the fair value of the related instrument on issue and are amortized to income in conjunction with the amortization of the instrument using the effective interest rate method. | ||
Derivative financial and commodity instruments | ||
Derivative financial and commodity instruments may be used from time to time by the Company to manage its exposure to price risks relating to foreign currency exchange rates, stock-based compensation, interest rates and fuel prices. When CP utilizes derivative instruments in hedging relationships, CP identifies, designates and documents those hedging transactions and regularly tests the transactions to demonstrate effectiveness in order to continue hedge accounting. | ||
Commencing from January 1, 2007, all derivative instruments are recorded at their fair value. Any change in the fair value of derivatives not designated as hedges is recognized in the period in which the change occurs in the Statement of Consolidated Income in the line item to which the derivative instrument is related. On the Consolidated Balance Sheet they are classified in Other assets and deferred charges, Deferred liabilities, Accounts receivable and other current assets or Accounts payable and accrued liabilities as applicable. Prior to 2007, only derivative instruments that did not qualify as hedges or were not designated as hedges were carried at fair value on the Consolidated Balance Sheet in Other assets and deferred charges or Deferred liabilities. Gains and losses arising from derivative instruments will affect the following income statement lines: Revenues, Compensation and benefits, Fuel, Other (income) charges, Foreign exchange (gains) losses on long-term debt and Interest expense. | ||
For fair value hedges, the periodic change in value is recognized in income, on the same line as the changes in values of the hedged items are also recorded. For a cash flow hedge, the change in value of the effective portion is recognized in Other comprehensive income. Any ineffectiveness within an effective cash flow hedge is recognized in income as it arises in the same income account as the hedged item when realized. Should the hedging of a cash flow hedge relationship become ineffective, previously unrealized gains and losses remain within Accumulated other comprehensive income until the hedged item is settled and, prospectively, future changes in value of the derivative are recognized in income. The change in value of the effective portion of a cash flow hedge remains in Accumulated other comprehensive income until the related hedged item settles, at which time amounts recognized in Accumulated other comprehensive income are reclassified to the same income or balance sheet account that records the hedged item. Prior to January 1, 2007, the periodic change in the fair value of an effective hedging instrument prior to settlement was not recognized in the financial statements. |
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1 | Basis of presentation (continued) | |
In the Statement of Consolidated Cash Flows, cash flows relating to derivative instruments designated as hedges are included in the same line as the related item. | ||
The transitional date for the assessment of embedded derivatives was January 1, 2001. | ||
2 | New accounting policies | |
Financial instruments, hedging and comprehensive income | ||
On January 1, 2007, the Company adopted the following accounting standards issued by the Canadian Institute of Chartered Accountants (CICA): Section 3855 Financial Instruments - Recognition and Measurement, Section 3861 Financial Instruments Disclosure and Presentation, Section 3865 Hedges and Section 1530 Comprehensive Income. These sections require certain financial instruments and hedge positions to be recorded at their fair value. They also introduce the concept of comprehensive income and accumulated other comprehensive income. Adoption of these standards was on a prospective basis without retroactive restatement of prior periods, except for the restatement of equity balances to reflect the reclassification of Foreign currency translation adjustments to Accumulated other comprehensive income. | ||
The impact of the adoption of these standards on January 1, 2007, was an increase in net assets of $18.0 million, a reduction in Foreign currency translation adjustments of $66.4 million, an increase in Retained earnings of $4.0 million, and the recognition of Accumulated other comprehensive income of $80.4 million. | ||
The fair value of hedging instruments at January 1, 2007, was $31.7 million reflected in Other assets and deferred charges and Accounts receivable and other current assets and $4.8 million reflected in Deferred liabilities and Accounts payable and accrued liabilities. The inclusion of transaction costs within Long-term debt at amortized cost reduced Long-term debt by $33.4 million with an associated reduction in Other assets and deferred charges of $26.9 million. Deferred gains and losses on previously settled hedges were reclassified to Accumulated other comprehensive income and Retained earnings with a resultant decrease in Other assets and deferred charges of $4.8 million. The recognition of certain other financial instruments at fair value or amortized cost resulted in reductions in Long-term debt of $2.8 million, Investments of $1.5 million and Other assets and deferred charges of $0.4 million. The adoption of these standards increased the liability for Future income taxes by $11.6 million. Accumulated other comprehensive income is comprised of foreign currency gains and losses on the net investment in self-sustaining foreign subsidiaries, foreign currency gains and losses related to long-term debt designated as a hedge of the net investment in self-sustaining foreign subsidiaries, effective portions of gains and losses resulting from changes in the fair value of cash flow hedging instruments, and the reclassification of cumulative foreign currency translation adjustments. The adjustment to opening retained earnings reflects the change in measurement basis, from original cost to fair value or amortized cost, of certain financial assets, financial liabilities, transaction costs associated with the Companys long-term debt and previously deferred gains and losses on derivative instruments that were settled in prior years and which, had they currently existed, did not meet the criteria for hedge accounting under Accounting Standard Section 3865. The amounts recorded on the adoption of these standards differed from the estimated amounts disclosed in Note 3 to the 2006 annual financial statements as a result of the refinement of certain estimates used at the year end. | ||
Accounting Changes | ||
Effective from January 1, 2007, the CICA amended Accounting Standard Section 1506 Accounting Changes to prescribe the criteria for changing accounting policies and related accounting treatment and disclosures of accounting changes. Changes in accounting policies are permitted when required by a primary source of GAAP, for example when a new accounting section is first adopted, or when the change in accounting policy results in more reliable and relevant financial information being reflected in the financial statements. | ||
The adoption of this amended accounting standard did not impact the financial statements of the Company. |
14
3 | Future accounting changes | |
Financial Instrument and Capital Disclosures | ||
The CICA has issued the following accounting standards effective for fiscal years beginning on or after January 1, 2008: Section 3862 Financial Instruments Disclosures, Section 3863 Financial Instruments Presentation, and Section 1535 Capital Disclosures. | ||
Section 3862 Financial Instruments Disclosures and Section 3863 Financial Instruments Presentation replace Section 3861 Financial Instruments Disclosure and Presentation, revising disclosures related to financial instruments, including hedging instruments, and carrying forward unchanged presentation requirements. | ||
Section 1535 Capital Disclosures will require the Company to provide disclosures about the Companys capital and how it is managed. | ||
It is not anticipated that the adoption of these new accounting standards will impact the amounts reported in the Companys financial statements as they primarily relate to disclosure. | ||
Inventories | ||
Effective January 1, 2008, the CICA has issued accounting standard Section 3031 Inventories. Section 3031 Inventories provides guidance on the method of determining the cost of the Companys materials and supplies. The new accounting standard specifies that inventories are to be valued at the lower of cost and net realizable value. The Company currently reflects materials and supplies at the lower of cost and replacement value. The standard requires the reversal of previously recorded write downs to realizable value when there is clear evidence that net realizable value has increased. Additional disclosures will also be required. Adoption of Section 3031 Inventories will be recognized in 2008 as an adjustment to opening inventory and opening retained earnings and is not expected to have a material impact on the Companys financial statements. | ||
4 | Other (income) charges |
For the three months | For the year | |||||||||||||||
ended December 31 | ended December 31 | |||||||||||||||
(in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Amortization of discount on
accruals recorded at present value |
$ | 1.9 | $ | 1.9 | $ | 8.1 | $ | 10.0 | ||||||||
Other exchange losses |
1.5 | 2.0 | 5.8 | 6.5 | ||||||||||||
Loss on sale of accounts receivable |
1.6 | 1.3 | 5.8 | 5.0 | ||||||||||||
Losses (gains) on non-hedging
derivative instruments |
1.4 | (0.8 | ) | 1.5 | (1.2 | ) | ||||||||||
Equity income in Dakota, Minnesota &
Eastern Railroad Corporation |
(12.3 | ) | | (12.3 | ) | | ||||||||||
Other |
2.1 | 2.0 | 8.4 | 7.5 | ||||||||||||
Total other (income) charges |
$ | (3.8 | ) | $ | 6.4 | $ | 17.3 | $ | 27.8 | |||||||
15
5 | Interest expense |
For the three months | For the year | |||||||||||||||
ended December 31 | ended December 31 | |||||||||||||||
(in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Interest expense |
$ | 67.0 | $ | 51.4 | $ | 219.6 | $ | 200.5 | ||||||||
Interest income |
(3.6 | ) | (1.6 | ) | (15.3 | ) | (6.0 | ) | ||||||||
Total interest expense |
$ | 63.4 | $ | 49.8 | $ | 204.3 | $ | 194.5 | ||||||||
6 | Income taxes | |
During the three months ended December 31, 2007, legislation was substantively enacted to reduce Canadian Federal corporate income tax rates. As a result of these changes, the Company recorded a $145.8 million benefit in future tax liability and income tax expense for the three months ended December 31, 2007, related to the revaluation of its future income tax balances as at December 31, 2006. | ||
During the three months ended June 30, 2007, legislation was substantively enacted to reduce Canadian corporate income tax rates. As a result of these changes, the Company recorded a $17.1 million benefit in future tax liability and income tax expense for the three months ended December 31, 2007, related to the revaluation of its future income tax balances as at December 31, 2006. | ||
In the second quarter of 2006, federal and provincial legislation was substantively enacted to reduce Canadian corporate income tax rates over a period of several years. As a result of these changes, the Company recorded a $176.0 million reduction in future tax liability and income tax expense related to the revaluation of its future income tax balances as at December 31, 2005. | ||
Cash taxes refunded for the three months ended December 31, 2007, was $2.2 million (three months ended December 31, 2006 cash taxes paid was $24.3 million). Cash taxes paid in the year ended December 31, 2007, was $6.7 million (year ended December 31, 2006 $50.9 million). |
16
7 | Earnings per share | |
At December 31, 2007, the number of shares outstanding was 153.3 million (December 31, 2006 155.5 million). | ||
Basic earnings per share have been calculated using net income for the period divided by the weighted average number of CP shares outstanding during the period. | ||
Diluted earnings per share have been calculated using the treasury stock method, which gives effect to the dilutive value of outstanding options. | ||
The number of shares used in earnings per share calculations is reconciled as follows: |
For the three months | For the year | |||||||||||||||
ended December 31 | ended December 31 | |||||||||||||||
(in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Weighted average shares
outstanding |
153.2 | 155.8 | 154.0 | 157.3 | ||||||||||||
Dilutive effect of stock options |
1.4 | 1.6 | 1.6 | 1.5 | ||||||||||||
Weighted average diluted
shares outstanding |
154.6 | 157.4 | 155.6 | 158.8 | ||||||||||||
(in dollars) |
||||||||||||||||
Basic earnings per share |
$ | 2.23 | $ | 0.93 | $ | 6.14 | $ | 5.06 | ||||||||
Diluted earnings per share |
$ | 2.21 | $ | 0.92 | $ | 6.08 | $ | 5.02 |
17
8 | Restructuring and environmental remediation | |
At December 31, 2007, the provision for restructuring and environmental remediation was $234.0 million (December 31, 2006 $309.0 million). This provision primarily includes labour liabilities for restructuring plans. Payments are expected to continue in diminishing amounts until 2025. The environmental remediation liability includes the cost of a multi-year soil remediation program. | ||
Set out below is a reconciliation of CPs liabilities associated with restructuring and environmental remediation programs: | ||
Three months ended December 31, 2007 |
Opening | Closing | |||||||||||||||||||||||
Balance | Foreign | Balance | ||||||||||||||||||||||
Oct. 1 | Accrued | Amortization | Exchange | Dec. 31 | ||||||||||||||||||||
(in millions) | 2007 | (reduced) | Payments | of Discount | Impact | 2007 | ||||||||||||||||||
Labour liability
for terminations
and severances |
$ | 152.8 | (11.2 | ) | (14.0 | ) | 1.4 | 0.2 | $ | 129.2 | ||||||||||||||
Other non-labour
liabilities for
exit plans |
0.8 | | | | | 0.8 | ||||||||||||||||||
Total restructuring
liability |
153.6 | (11.2 | ) | (14.0 | ) | 1.4 | 0.2 | 130.0 | ||||||||||||||||
Environmental
remediation program |
106.7 | 5.3 | (8.0 | ) | | | 104.0 | |||||||||||||||||
Total restructuring
and environmental remediation liability |
$ | 260.3 | (5.9 | ) | (22.0 | ) | 1.4 | 0.2 | $ | 234.0 | ||||||||||||||
Opening | Closing | |||||||||||||||||||||||
Balance | Foreign | Balance | ||||||||||||||||||||||
Oct. 1 | Accrued | Amortization | Exchange | Dec. 31 | ||||||||||||||||||||
(in millions) | 2006 | (reduced) | Payments | of Discount | Impact | 2006 | ||||||||||||||||||
Labour liability
for terminations
and severances |
$ | 204.6 | (4.5 | ) | (15.9 | ) | 1.7 | 1.5 | $ | 187.4 | ||||||||||||||
Other non-labour
liabilities for
exit plans |
2.0 | | (0.6 | ) | | | 1.4 | |||||||||||||||||
Total restructuring
liability |
206.6 | (4.5 | ) | (16.5 | ) | 1.7 | 1.5 | 188.8 | ||||||||||||||||
Environmental
remediation program |
125.0 | 3.1 | (10.6 | ) | | 2.7 | 120.2 | |||||||||||||||||
Total restructuring
and environmental remediation liability |
$ | 331.6 | (1.4 | ) | (27.1 | ) | 1.7 | 4.2 | $ | 309.0 | ||||||||||||||
18
8 | Restructuring and environmental remediation (continued) | |
Year ended December 31, 2007 |
Opening | Closing | |||||||||||||||||||||||
Balance | Foreign | Balance | ||||||||||||||||||||||
Jan. 1 | Accrued | Amortization | Exchange | Dec. 31 | ||||||||||||||||||||
(in millions) | 2007 | (reduced) | Payments | of Discount | Impact | 2007 | ||||||||||||||||||
Labour liability
for terminations
and severances |
$ | 187.4 | (12.8 | ) | (46.8 | ) | 6.1 | (4.7 | ) | $ | 129.2 | |||||||||||||
Other non-labour
liabilities for
exit plans |
1.4 | (0.2 | ) | (0.2 | ) | | (0.2 | ) | 0.8 | |||||||||||||||
Total restructuring
liability |
188.8 | (13.0 | ) | (47.0 | ) | 6.1 | (4.9 | ) | 130.0 | |||||||||||||||
Environmental
remediation program |
120.2 | 7.5 | (14.0 | ) | | (9.7 | ) | 104.0 | ||||||||||||||||
Total restructuring
and environmental remediation liability |
$ | 309.0 | (5.5 | ) | (61.0 | ) | 6.1 | (14.6 | ) | $ | 234.0 | |||||||||||||
Opening | Closing | |||||||||||||||||||||||
Balance | Foreign | Balance | ||||||||||||||||||||||
Jan. 1 | Accrued | Amortization | Exchange | Dec. 31 | ||||||||||||||||||||
(in millions) | 2006 | (reduced) | Payments | of Discount | Impact | 2006 | ||||||||||||||||||
Labour liability
for terminations
and severances |
$ | 263.6 | (14.1 | ) | (71.8 | ) | 9.8 | (0.1 | ) | 187.4 | ||||||||||||||
Other non-labour
liabilities for
exit plans |
5.8 | 0.7 | (5.0 | ) | 0.1 | (0.2 | ) | 1.4 | ||||||||||||||||
Total restructuring
liability |
269.4 | (13.4 | ) | (76.8 | ) | 9.9 | (0.3 | ) | 188.8 | |||||||||||||||
Environmental
remediation program |
129.4 | 10.5 | (19.5 | ) | | (0.2 | ) | 120.2 | ||||||||||||||||
Total restructuring
and environmental remediation liability |
$ | 398.8 | (2.9 | ) | (96.3 | ) | 9.9 | (0.5 | ) | $ | 309.0 | |||||||||||||
Amortization of Discount is charged to income as Other (Income) Charges, Compensation and Benefits and Purchased Services and Other as applicable. New accruals and adjustments to previous accruals are reflected in Compensation and Benefits and Purchased Services and Other as applicable. |
19
9 | Investments |
For the year ended | ||||||||
December 31 | ||||||||
(in millions) | 2007 | 2006 | ||||||
Rail investments accounted for on an equity basis |
$ | 1,528.6 | $ | 37.9 | ||||
Other investments |
140.0 | 27.0 | ||||||
Total investments |
$ | 1,668.6 | $ | 64.9 | ||||
Dakota, Minnesota & Eastern Railroad Corporation (DM&E) | ||
Effective October 4, 2007, the Company acquired all of the issued and outstanding shares of DM&E, a Class II railroad operating in the U.S. Midwest, for a purchase price of approximately US$1.5 billion, including acquisition costs. | ||
Future contingent payments of up to US$1.05 billion, may become payable up to December 31, 2025, upon the achievement of certain milestones towards the completion of a track expansion into the Powder River Basin and the achievement of certain traffic volume targets. Any contingent payments that may be made would be recorded as additional goodwill. The acquisition has been financed with cash on hand and debt. On October 4, 2007, the Company drew down US$1.27 billion from an eighteen-month US$1.8 billion credit agreement entered into in October 2007 specifically to fund the acquisition of DM&E. The credit facility bears interest at a variable rate based on London Interbank Offered Rate (LIBOR). | ||
The purchase is subject to review and approval by the U.S. Surface Transportation Board (STB), during which time the shares of DM&E have been placed in a voting trust and are administered by an independent trustee. The Company anticipates that the STB will complete its review and provide a final ruling in 2008. During the review period, the investment in the DM&E is accounted for on an equity basis. Equity income for the three months ended and year ended December 31, 2007, of $12.3 million (2006 nil) has been included in Other (Income) Charges (See Note 4) | ||
If the proposed transaction is approved by the STB, the acquisition will be accounted for prospectively using the purchase method of accounting. Under this method, the Company will prepare its consolidated financial statements reflecting a line-by-line consolidation of DM&E and the allocation of the purchase price to acquire DM&E to the fair values of their assets and liabilities. | ||
Asset-backed Commercial Paper (ABCP) | ||
At December 31, 2007, the Company held Canadian third party asset-backed commercial paper (ABCP) issued by a number of trusts with an original cost of $143.6 million. At the dates the Company acquired these investments they were rated R1 (High) by Dominion Bond Rating Service (DBRS), the highest credit rating issued for commercial paper, and backed by R1 (High) rated assets and liquidity agreements. These investments matured during the third quarter of 2007 but, as a result of liquidity issues in the ABCP market, did not settle on maturity. As a result, the Company has classified its ABCP as long-term assets within Investments after initially classifying them as Cash and cash equivalents. | ||
On August 16, 2007, an announcement was made by a group representing banks, asset providers and major investors that they had agreed in principle to a long-term proposal and interim agreement to convert the ABCP into long-term floating rate notes maturing no earlier than the scheduled maturity of the underlying assets. On September 6, 2007, a pan-Canadian restructuring committee consisting of major investors was formed. The committee was created to propose a solution to the liquidity problem affecting the ABCP market and has retained legal and financial advisors to oversee the proposed restructuring process. | ||
The ABCP in which the Company has invested has not traded in an active market since mid-August 2007 and there are currently no market quotations available. The ABCP in which the Company has invested continues to be rated R1 (High, Under Review with Developing Implications) by DBRS. |
20
9 | Investments (continued) | |
Through to January 31, 2008, a Standstill Agreement is in place that commits investors not to take any action that would precipitate an event of default. It is expected that the restructuring of the ABCP will occur in March 2008 if approval by investors is obtained to do so. This approval will be requested on a trust by trust basis most likely during February 2008. | ||
On December 23, 2007, the pan-Canadian restructuring committee provided certain details about the expected restructuring. Based on this and other public information it is estimated that, of the $143.6 million of ABCP in which the Company has invested: |
| $12.5 million is represented by traditional securitized assets and the Company will, on restructuring, receive replacement long-term floating rate notes that are expected to receive a AAA credit rating; | ||
| $119.0 million is represented by a combination of leveraged collaterized debt, synthetic assets and traditional securitized assets and the Company will, on restructuring, receive replacement senior and subordinated long-term floating rate notes. The senior notes are expected to obtain a AAA rating while the subordinated notes are likely to be unrated; and | ||
| $12.1 million is represented by assets that have an exposure to US sub-prime mortgages. On restructuring, the Company is likely to receive long-term floating rate notes that may be rated, although at this time the pan-Canadian restructuring committee has provided no indication of the likely rating these notes may receive. |
Probability weighted average interest rate
|
4.6 per cent | |
Weighted average discount rate
|
5.3 per cent | |
Maturity of long-term floating rate notes
|
five to seven years | |
Credit losses
|
nil to 25 per cent on a going concern basis | |
5 per cent to 50 per cent on a liquidation basis |
21
9 | Investments (continued) | |
In addition, assumptions have also been made as to the amount of restructuring costs that the Company will bear. | ||
Based on additional information that became publicly available during the fourth quarter of 2007, the probability weighted cash flows resulted in an estimated fair value of the Companys investment in ABCP of $122.1 million at December 31, 2007. This was unchanged from the estimated fair value at September 30, 2007. The reduction in the fair value of $21.5 million compared to the original cost of the ABCP was recorded as a charge to income in the third quarter of 2007 with no further charges required in the fourth quarter of 2007. | ||
Continuing uncertainties regarding the value of the assets which underlie the ABCP, the amount and timing of cash flows and the outcome of the restructuring process could give rise to a further material change in the value of the Companys investment in ABCP which could impact the Companys near term earnings. | ||
10 | Long-term debt | |
During the year ended December 31, 2007, the Company issued US$450 million of 5.95% 30 - year notes. The notes are unsecured, but carry a negative pledge. | ||
Also, during October 2007, the Company entered into an eighteen-month US$1.80 billion credit agreement. The credit facility bears interest at a variable rate based on London Interbank Offered Rate (LIBOR), and is unsecured. As at December 31, 2007, the Company had drawn down US$1.27 billion from the credit facility specifically to fund the acquisition of DM&E. | ||
11 | Shareholders equity | |
An analysis of Common Share balances is as follows: |
For the three months | For the year ended | |||||||||||||||
ended December 31 | December 31 | |||||||||||||||
(millions of shares) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Share capital, beginning of period |
153.2 | 155.9 | 155.5 | 158.2 | ||||||||||||
Shares issued under stock option
plans |
0.1 | 0.5 | 1.0 | 2.3 | ||||||||||||
Shares purchased |
| (0.9 | ) | (3.2 | ) | (5.0 | ) | |||||||||
Share capital, end of period |
153.3 | 155.5 | 153.3 | 155.5 | ||||||||||||
22
11 | Shareholders equity (continued) | |
In March 2007, the Company completed the filing for a new normal course issuer bid (2007 NCIB) to cover the period of March 28, 2007 to March 27, 2008, to authorize the purchase, for cancellation, up to 5.0 million of its outstanding Common Shares. Effective April 30, 2007, the 2007 NCIB was amended to authorize the purchase, for cancellation, up to 15.3 million of its outstanding Common Shares. Of the 15.3 million shares authorized under the 2007 NCIB, 2.7 million shares were purchased at an average price per share of $73.64. | ||
In addition, pursuant to a notice of intention to make an exempt issuer bid filed on March 23, 2007, the Company purchased, for cancellation, 0.3 million shares through a private agreement with an arms length third party on March 29, 2007, at an average price of $63.12. | ||
For the three months ended December 31, 2007, there were no shares purchased (2006 0.9 million shares were purchased at an average price per share of $63.85) and for the year ended December 31, 2007, 3.2 million shares were purchased at an average price per share of $71.99 (2006 5.0 million shares were purchased at an average price per share of $57.28). | ||
The purchases are made at the market price on the day of purchase, with consideration allocated to share capital up to the average carrying amount of the shares, and any excess allocated first to contributed surplus and then to retained earnings. When shares are purchased, it takes three days before the transaction is settled and the shares are cancelled. The cost of shares purchased in a given month and settled in the following month is accrued in the month of purchase. |
23
12 | Other comprehensive income and accumulated other comprehensive income | |
Components of other comprehensive income and the related tax effects are as follows: |
For the three months ended December 31 | ||||||||||||
2007 | ||||||||||||
Income tax | ||||||||||||
Before tax | (expense) | Net of tax | ||||||||||
(in millions) | amount | recovery | amount | |||||||||
Unrealized foreign exchange gain on translation of
U.S. dollar-denominated long-term debt designated as a
hedge of the net investment in U.S. subsidiaries |
$ | 3.5 | $ | 0.7 | $ | 4.2 | ||||||
Unrealized foreign exchange loss on translation of the
net investment in U.S. subsidiaries |
(7.0 | ) | | (7.0 | ) | |||||||
Realized gain on cash flow hedges settled in the period |
(1.6 | ) | 0.9 | (0.7 | ) | |||||||
Decrease in unrealized holding gains on cash flow
hedges |
(17.0 | ) | 5.9 | (11.1 | ) | |||||||
Realized loss on cash flow hedges settled in prior
periods |
0.7 | (0.3 | ) | 0.4 | ||||||||
Other comprehensive loss |
$ | (21.4 | ) | $ | 7.2 | $ | (14.2 | ) | ||||
For the three months ended December 31 | ||||||||||||
2006 | ||||||||||||
Before tax | Income tax | Net of tax | ||||||||||
(in millions) | amount | recovery | amount | |||||||||
Unrealized foreign
exchange loss on
translation of U.S.
dollar-denominated
long-term debt designated
as a hedge of the net
investment in U.S.
subsidiaries |
$ | (23.6 | ) | $ | 3.7 | $ | (19.9 | ) | ||||
Unrealized foreign
exchange gain on
translation of the net
investment in U.S.
subsidiaries |
22.5 | | 22.5 | |||||||||
Other comprehensive income |
$ | (1.1 | ) | $ | 3.7 | $ | 2.6 | |||||
24
12 | Other comprehensive income and accumulated other comprehensive income (continued) |
For the year ended December 31 | ||||||||||||
2007 | ||||||||||||
Income tax | ||||||||||||
Before tax | (expense) | Net of tax | ||||||||||
(in millions) | amount | recovery | amount | |||||||||
Unrealized foreign exchange gain on translation of
U.S. dollar-denominated long-term debt designated as a
hedge of the net investment in U.S. subsidiaries |
$ | 71.0 | $ | (9.7 | ) | $ | 61.3 | |||||
Unrealized foreign exchange loss on translation of the
net investment in U.S. subsidiaries |
(78.4 | ) | | (78.4 | ) | |||||||
Realized gain on cash flow hedges settled in the period |
(12.8 | ) | 4.8 | (8.0 | ) | |||||||
Decrease in unrealized holding gains on cash flow
hedges |
(26.2 | ) | 9.1 | (17.1 | ) | |||||||
Realized loss on cash flow hedges settled in prior
periods |
2.2 | (0.8 | ) | 1.4 | ||||||||
Other comprehensive loss |
$ | (44.2 | ) | $ | 3.4 | $ | (40.8 | ) | ||||
For the year ended December 31 | ||||||||||||
2006 | ||||||||||||
Before tax | Income tax | Net of tax | ||||||||||
(in millions) | amount | recovery | amount | |||||||||
Unrealized foreign
exchange loss on
translation of U.S.
dollar-denominated
long-term debt
designated as a hedge
of the net investment
in U.S. subsidiaries |
$ | (3.7 | ) | $ | 0.5 | $ | (3.2 | ) | ||||
Unrealized foreign
exchange gain on
translation of the net
investment in U.S.
subsidiaries |
2.1 | | 2.1 | |||||||||
Other comprehensive loss |
$ | (1.6 | ) | $ | 0.5 | $ | (1.1 | ) | ||||
25
12 | Other comprehensive income and accumulated other comprehensive income (continued) | |
Changes in the balances of each classification within Accumulated other comprehensive income are as follows: | ||
Three months ended December 31, 2007 |
Closing | ||||||||||||
Opening | Balance, | |||||||||||
Balance, | Period | Dec. 31, | ||||||||||
(in millions) | Oct. 1, 2007 | change | 2007 | |||||||||
Foreign exchange
on U.S. dollar
debt designated as
a hedge of the net
investment in U.S.
subsidiaries |
$ | 292.4 | $ | 4.2 | $ | 296.6 | ||||||
Foreign exchange
on net investment
in U.S.
subsidiaries |
(239.9 | ) | (7.0 | ) | (246.9 | ) | ||||||
Increase
(decrease) in
unrealized
effective gains of
cash flow hedges |
5.6 | (11.8 | ) | (6.2 | ) | |||||||
Unrealized loss on
settled hedge
instruments |
(4.3 | ) | 0.4 | (3.9 | ) | |||||||
Accumulated other
comprehensive
income |
$ | 53.8 | $ | (14.2 | ) | $ | 39.6 | |||||
Closing | ||||||||||||
Opening | Balance, | |||||||||||
Balance, | Period | Dec. 31, | ||||||||||
(in millions) | Oct. 1, 2006 | change | 2006 | |||||||||
Foreign exchange
on U.S. dollar
debt designated as
a hedge of the net
investment in U.S.
subsidiaries |
$ | 254.8 | $ | (19.9 | ) | $ | 234.9 | |||||
Foreign exchange
on net investment
in U.S.
subsidiaries |
(191.0 | ) | 22.5 | (168.5 | ) | |||||||
Accumulated other
comprehensive
income |
$ | 63.8 | $ | 2.6 | $ | 66.4 | ||||||
26
12 | Other comprehensive income and accumulated other comprehensive income (continued) | |
Year ended December 31, 2007 |
Adjustment | ||||||||||||||||||||
Opening | for change | Adjusted | Closing | |||||||||||||||||
Balance, | in | Opening | Balance, | |||||||||||||||||
Jan. 1, | accounting | Balance, | Period | Dec. 31, | ||||||||||||||||
(in millions) | 2007 | policy | Jan. 1, 2007 | change | 2007 | |||||||||||||||
Foreign exchange
on U.S. dollar
debt designated as
a hedge of the net
investment in U.S.
subsidiaries |
$ | 234.9 | $ | 0.4 | $ | 235.3 | $ | 61.3 | $ | 296.6 | ||||||||||
Foreign exchange
on net investment
in U.S.
subsidiaries |
(168.5 | ) | | (168.5 | ) | (78.4 | ) | (246.9 | ) | |||||||||||
Increase
(decrease) in
unrealized
effective gains of
cash flow hedges |
| 18.9 | 18.9 | (25.1 | ) | (6.2 | ) | |||||||||||||
Unrealized loss on
settled hedge
instruments |
| (5.3 | ) | (5.3 | ) | 1.4 | (3.9 | ) | ||||||||||||
Accumulated other
comprehensive
income |
$ | 66.4 | $ | 14.0 | $ | 80.4 | $ | (40.8 | ) | $ | 39.6 | |||||||||
Opening | Closing | |||||||||||
Balance, | Balance, | |||||||||||
Jan. 1, | Period | Dec. 31, | ||||||||||
(in millions) | 2006 | change | 2006 | |||||||||
Foreign exchange
on U.S. dollar
debt designated as
a hedge of the net
investment in U.S.
subsidiaries |
$ | 238.1 | $ | (3.2 | ) | $ | 234.9 | |||||
Foreign exchange
on net investment
in U.S.
subsidiaries |
(170.6 | ) | 2.1 | (168.5 | ) | |||||||
Accumulated other
comprehensive
income |
$ | 67.5 | $ | (1.1 | ) | $ | 66.4 | |||||
27
13 | Fair value of financial instruments | |
The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arms length transaction between willing parties. The Company uses the following methods and assumptions to estimate fair value of each class of financial instruments for which carrying amounts are included in the Consolidated Balance Sheet as follows: | ||
Loans and receivables Accounts receivable and other current assets The carrying amounts included in the Consolidated Balance Sheet approximate fair value because of the short maturity of these instruments. |
||
Investments Long-term receivable balances are carried at amortized cost based on an initial fair value determined using discounted cash flow analysis using observable market based inputs. | ||
Financial liabilities Accounts payable and accrued liabilities and short-term borrowings The carrying amounts included in the Consolidated Balance Sheet approximate fair value because of the short maturity of these instruments. |
||
Long-term debt The carrying amount of long-term debt is at amortized cost based on an initial fair value determined using the quoted market prices for the same or similar debt instruments. | ||
Available for sale Investments The Companys equity investments recorded on a cost basis have a carrying value that equals cost as fair value cannot be reliably established. The Companys equity investments recorded on an equity basis have a carrying value equal to cost plus the Companys share of the investees net income, less any dividends received, which approximates fair value. These investments are not traded on a liquid market. |
||
Held for trading Other assets and deferred charges and Deferred liabilities Derivative instruments that are designated as hedging instruments are measured at fair value determined using the quoted market prices for the same or similar instruments. Derivative instruments that are not designated in hedging relationships are classified as held for trading and measured at fair value determined by using quoted market prices for the same or similar instruments and changes in the fair values of such derivative instruments are recognized in net income as they arise. |
||
Cash and cash equivalents The carrying amounts included in the Consolidated Balance Sheet approximate fair value because of the short maturity of these instruments. | ||
Investments ABCP is carried at fair value, which has been determined using valuation techniques that incorporate probability weighted discounted future cash flows reflecting market conditions and other factors that a market participant would consider (See Note 9). | ||
Carrying value and fair value of financial instruments The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt which has a carrying value of approximately $4,177.2 million and a fair value of approximately $4,308.3 million at December 31, 2007. |
||
14 | Reductions in investments and other assets | |
Reductions in investments and other assets includes the acquisition of freight car assets which were purchased in anticipation of a sale and lease back arrangement with a financial institution. For the three months ended December 31, 2007, $4.7 million in assets were acquired and $19.2 million were sold; and for the year ended December 31, 2007, $19.2 million in assets were acquired and $20.2 million sold. For the three months ended December 31, 2006, $4.6 million in assets were acquired and $26.7 million were sold; and for the year ended December 31, 2006, $137.1 million in assets were acquired and $136.1 million sold. No gains or losses were incurred in these sale and leaseback arrangements. |
28
15 | Stock-based compensation | |
In 2007, under CPs stock option plans, the Company issued 1,304,500 options to purchase Common Shares at the weighted average price of $62.60 per share, based on the closing price on the day prior to the grant date. In tandem with these options, 434,400 stock appreciation rights were issued at the weighted average exercise price of $62.60. | ||
Pursuant to the employee plan, options may be exercised upon vesting, which is between 24 months and 36 months after the grant date, and will expire after 10 years. Some options vest after 48 months, unless certain performance targets are achieved, in which case vesting is accelerated. These options expire five years after the grant date. Other options only vest if certain performance targets are achieved and expire approximately five years after the grant date. | ||
The following is a summary of the Companys fixed stock option plans as of December 31 (including options granted under the Directors Stock Option Plan, which was suspended in 2003): |
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
options | exercise price | options | exercise price | |||||||||||||
Outstanding, January 1 |
6,807,644 | $ | 38.50 | 7,971,917 | $ | 32.07 | ||||||||||
New options granted |
1,304,500 | 62.60 | 1,467,900 | 57.80 | ||||||||||||
Exercised |
(972,281 | ) | 31.99 | (2,330,664 | ) | 28.59 | ||||||||||
Forfeited/cancelled |
(158,755 | ) | 35.76 | (301,509 | ) | 39.07 | ||||||||||
Outstanding, December 31 |
6,981,108 | $ | 43.97 | 6,807,644 | $ | 38.50 | ||||||||||
Options exercisable at December 31 |
4,035,008 | $ | 34.12 | 2,918,294 | $ | 29.64 | ||||||||||
Compensation expense is recognized over the vesting period for stock options issued since January 1, 2003, based on their estimated fair values on the date of grants, as determined by the Black-Scholes option pricing model. | ||
Under the fair value method, the fair value of options at the grant date was $11.3 million for options issued during the year ended December 31, 2007 (year ended December 31, 2006 $12.4 million). The weighted average fair value assumptions were approximately: |
For the year | ||||||||
ended December 31 | ||||||||
2007 | 2006 | |||||||
Expected option life (years) |
4.00 | 4.50 | ||||||
Risk-free interest rate |
3.90 | % | 4.07 | % | ||||
Expected stock price volatility |
22 | % | 22 | % | ||||
Expected annual dividends per share |
$ | 0.90 | $ | 0.75 | ||||
Weighted average fair value of options
granted during the year |
$ | 12.97 | $ | 12.99 | ||||
29
16 | Pensions and other benefits | |
The total benefit cost for the Companys defined benefit pension plans and post-retirement benefits for the three months ended December 31, 2007, was $26.4 million (three months ended December 31, 2006 $30.3 million) and for the year ended December 31, 2007, was $95.0 million (year ended December 31, 2006 $119.0 million). | ||
17 | Significant customers | |
During the year ended 2007, one customer comprised 11.5% of total revenue (year ended 2006 11.5%). At December 31, 2007, that same customer represented 6.2% of total accounts receivable (December 31, 2006 5.6%). | ||
18 | Commitments and contingencies | |
In the normal course of its operations, the Company becomes involved in various legal actions, including claims relating to injuries and damages to property. The Company maintains provisions it considers to be adequate for such actions. While the final outcome with respect to actions outstanding or pending at December 31, 2007, cannot be predicted with certainty, it is the opinion of management that their resolution will not have a material adverse effect on the Companys financial position or results of operations. | ||
Capital commitments | ||
At December 31, 2007, the Company had multi-year capital commitments of $504.2 million, mainly for locomotive overhaul agreements, in the form of signed contracts. Payments for these commitments are due in 2008 through 2016. | ||
Operating lease commitments | ||
At December 31, 2007, minimum payments under operating leases were estimated at $614.9 million in aggregate, with annual payments in each of the next five years of: 2008 $120.3 million; 2009 $86.8 million; 2010 $68.9 million; 2011 $60.9 million; 2012 $58.0 million. | ||
Guarantees | ||
The Company had residual value guarantees on operating lease commitments of $321.7 million at December 31, 2007. The maximum amount that could be payable under these and all of the Companys other guarantees cannot be reasonably estimated due to the nature of certain of the guarantees. All or a portion of amounts paid under certain guarantees could be recoverable from other parties or through insurance. The Company has accrued for all guarantees that it expects to pay. At December 31, 2007, these accruals amounted to $7.0 million. |
30
Fourth Quarter | Year | |||||||||||||||||||||||||||||||
2007 | 2006 | Variance | % | 2007 | 2006 | Variance | % | |||||||||||||||||||||||||
Financial (millions, except per share data and ratios) |
||||||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||||||
$ | 1,142.6 | $ | 1,151.5 | $ | (8.9 | ) | (0.8 | ) | Freight revenue |
$ | 4,555.2 | $ | 4,427.3 | $ | 127.9 | 2.9 | ||||||||||||||||
45.7 | 38.9 | 6.8 | 17.5 | Other revenue |
152.4 | 155.9 | (3.5 | ) | (2.2 | ) | ||||||||||||||||||||||
1,188.3 | 1,190.4 | (2.1 | ) | (0.2 | ) | 4,707.6 | 4,583.2 | 124.4 | 2.7 | |||||||||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||||||||||
308.4 | 322.2 | (13.8 | ) | (4.3 | ) | Compensation and benefits |
1,284.2 | 1,327.6 | (43.4 | ) | (3.3 | ) | ||||||||||||||||||||
196.3 | 171.2 | 25.1 | 14.7 | Fuel |
746.8 | 650.5 | 96.3 | 14.8 | ||||||||||||||||||||||||
47.9 | 53.7 | (5.8 | ) | (10.8 | ) | Materials |
215.5 | 212.9 | 2.6 | 1.2 | ||||||||||||||||||||||
45.1 | 47.8 | (2.7 | ) | (5.6 | ) | Equipment rents |
207.5 | 181.2 | 26.3 | 14.5 | ||||||||||||||||||||||
116.3 | 115.9 | 0.4 | 0.3 | Depreciation and amortization |
472.0 | 464.1 | 7.9 | 1.7 | ||||||||||||||||||||||||
168.8 | 159.5 | 9.3 | 5.8 | Purchased services and other |
617.4 | 618.3 | (0.9 | ) | (0.1 | ) | ||||||||||||||||||||||
882.8 | 870.3 | 12.5 | 1.4 | 3,543.4 | 3,454.6 | 88.8 | 2.6 | |||||||||||||||||||||||||
305.5 | 320.1 | (14.6 | ) | (4.6 | ) | Operating income |
1,164.2 | 1,128.6 | 35.6 | 3.2 | ||||||||||||||||||||||
(3.8 | ) | 6.4 | (10.2 | ) | | Other (income) charges, including DM&E equity income (1) |
17.3 | 27.8 | (10.5 | ) | (37.8 | ) | ||||||||||||||||||||
63.4 | 49.8 | 13.6 | 27.3 | Interest expense |
204.3 | 194.5 | 9.8 | 5.0 | ||||||||||||||||||||||||
60.8 | 82.9 | (22.1 | ) | (26.7 | ) | Income tax expense before foreign exchange (gains)
losses on long-term debt and other specified items (2) |
269.8 | 278.8 | (9.0 | ) | (3.2 | ) | ||||||||||||||||||||
185.1 | 181.0 | 4.1 | 2.3 | Income before foreign exchange (gains) losses on long-term
debt and other specified items (2) |
672.8 | 627.5 | 45.3 | 7.2 | ||||||||||||||||||||||||
Foreign exchange (gains) losses on long-term debt (FX on LTD) |
||||||||||||||||||||||||||||||||
(8.3 | ) | 44.9 | (53.2 | ) | | FX on LTD |
(169.8 | ) | 0.1 | (169.9 | ) | | ||||||||||||||||||||
(3.1 | ) | (9.5 | ) | 6.4 | | Income tax on FX on LTD (3) |
44.3 | 7.1 | 37.2 | | ||||||||||||||||||||||
(11.4 | ) | 35.4 | (46.8 | ) | | FX on LTD (net of tax) |
(125.5 | ) | 7.2 | (132.7 | ) | | ||||||||||||||||||||
Other specified items |
||||||||||||||||||||||||||||||||
| | | | Change in estimated fair value of Canadian third party
asset-backed commercial paper (ABCP) |
21.5 | | 21.5 | | ||||||||||||||||||||||||
| | | | Income tax on change in estimated fair value of ABCP |
(6.5 | ) | | (6.5 | ) | | ||||||||||||||||||||||
| | | | Change in estimated fair value of ABCP (net of tax) |
15.0 | | 15.0 | | ||||||||||||||||||||||||
(145.8 | ) | | (145.8 | ) | | Income tax benefits due to rate reductions on opening
future income tax balances |
(162.9 | ) | (176.0 | ) | 13.1 | | ||||||||||||||||||||
$ | 342.3 | $ | 145.6 | $ | 196.7 | 135.1 | Net income |
$ | 946.2 | $ | 796.3 | $ | 149.9 | 18.8 | ||||||||||||||||||
Earnings per share (EPS) |
||||||||||||||||||||||||||||||||
$ | 2.23 | $ | 0.93 | $ | 1.30 | 139.8 | Basic earnings per share |
$ | 6.14 | $ | 5.06 | $ | 1.08 | 21.3 | ||||||||||||||||||
$ | 2.21 | $ | 0.92 | $ | 1.29 | 140.2 | Diluted earnings per share |
$ | 6.08 | $ | 5.02 | $ | 1.06 | 21.1 | ||||||||||||||||||
EPS before FX on LTD and other specified items (2) |
||||||||||||||||||||||||||||||||
$ | 1.21 | $ | 1.16 | $ | 0.05 | 4.3 | Basic earnings per share |
$ | 4.37 | $ | 3.99 | $ | 0.38 | 9.5 | ||||||||||||||||||
$ | 1.20 | $ | 1.15 | $ | 0.05 | 4.3 | Diluted earnings per share |
$ | 4.32 | $ | 3.95 | $ | 0.37 | 9.4 | ||||||||||||||||||
153.2 | 155.8 | (2.6 | ) | (1.7 | ) | Weighted average (avg)number of shares outstanding (millions) |
154.0 | 157.3 | (3.3 | ) | (2.1 | ) | ||||||||||||||||||||
154.6 | 157.4 | (2.8 | ) | (1.8 | ) | Weighted avg number of diluted shares outstanding (millions) |
155.6 | 158.8 | (3.2 | ) | (2.0 | ) | ||||||||||||||||||||
74.3 | 73.1 | 1.2 | | Operating ratio (2) (4) (%) |
75.3 | 75.4 | (0.1 | ) | | |||||||||||||||||||||||
9.5 | 10.2 | (0.7 | ) | | ROCE before FX on LTD and
other specified items (after tax)(2) (4)(%) |
9.5 | 10.2 | (0.7 | ) | | ||||||||||||||||||||||
42.5 | 37.2 | 5.3 | | Net debt to net debt plus equity (%) |
42.5 | 37.2 | 5.3 | | ||||||||||||||||||||||||
$ | 309.3 | $ | 313.7 | $ | (4.4 | ) | (1.4 | ) | EBIT before FX on LTD and other specified items (2) (4) |
$ | 1,146.9 | $ | 1,100.8 | $ | 46.1 | 4.2 | ||||||||||||||||
$ | 425.6 | $ | 429.6 | $ | (4.0 | ) | (0.9 | ) | EBITDA before FX on LTD and other specified items (2) (4) |
$ | 1,618.9 | $ | 1,564.9 | $ | 54.0 | 3.5 |
(1) | Dakota, Minnesota & Eastern Railroad Corporation (DM&E) equity income is $12.3 million, net of tax. | |
(2) | These earnings measures have no standardized meanings prescribed by GAAP and may not be comparable to similar measures of other companies. | |
See note on non-GAAP earnings measures attached to commentary. | ||
(3) | Income tax on FX on LTD is discussed in the MD&A in the Other Income Statement Items section Income Taxes. |
(4)
|
EBIT: | Earnings before interest and taxes. | ||
EBITDA: | Earnings before interest, taxes, and depreciation and amortization. | |||
ROCE (after tax): | Return on capital employed (after tax) = earnings before after-tax interest expense (last 12 months) divided by average net debt plus equity. | |||
Operating ratio: | Operating expenses divided by revenues. |
31
Fourth Quarter | Year | |||||||||||||||||||||||||||||||
2007 | 2006 | Variance | % | 2007 | 2006 | Variance | % | |||||||||||||||||||||||||
Commodity Data |
||||||||||||||||||||||||||||||||
Freight Revenues (millions) |
||||||||||||||||||||||||||||||||
$ | 257.5 | $ | 261.6 | $ | (4.1 | ) | (1.6 | ) | - Grain |
$ | 938.9 | $ | 904.6 | $ | 34.3 | 3.8 | ||||||||||||||||
131.2 | 149.3 | (18.1 | ) | (12.1 | ) | - Coal |
573.6 | 592.0 | (18.4 | ) | (3.1 | ) | ||||||||||||||||||||
121.2 | 122.0 | (0.8 | ) | (0.7 | ) | - Sulphur and fertilizers |
502.0 | 439.3 | 62.7 | 14.3 | ||||||||||||||||||||||
61.5 | 71.2 | (9.7 | ) | (13.6 | ) | - Forest products |
275.8 | 316.4 | (40.6 | ) | (12.8 | ) | ||||||||||||||||||||
157.9 | 148.5 | 9.4 | 6.3 | - Industrial and consumer products |
627.9 | 603.8 | 24.1 | 4.0 | ||||||||||||||||||||||||
77.0 | 74.9 | 2.1 | 2.8 | - Automotive |
319.0 | 314.4 | 4.6 | 1.5 | ||||||||||||||||||||||||
336.3 | 324.0 | 12.3 | 3.8 | - Intermodal |
1,318.0 | 1,256.8 | 61.2 | 4.9 | ||||||||||||||||||||||||
$ | 1,142.6 | $ | 1,151.5 | $ | (8.9 | ) | (0.8 | ) | Total Freight Revenues |
$ | 4,555.2 | $ | 4,427.3 | $ | 127.9 | 2.9 | ||||||||||||||||
Millions of Revenue Ton-Miles (RTM) |
||||||||||||||||||||||||||||||||
8,283 | 8,463 | (180 | ) | (2.1 | ) | - Grain |
30,690 | 30,127 | 563 | 1.9 | ||||||||||||||||||||||
4,812 | 4,986 | (174 | ) | (3.5 | ) | - Coal |
20,629 | 19,650 | 979 | 5.0 | ||||||||||||||||||||||
5,202 | 5,065 | 137 | 2.7 | - Sulphur and fertilizers |
21,259 | 17,401 | 3,858 | 22.2 | ||||||||||||||||||||||||
1,673 | 1,930 | (257 | ) | (13.3 | ) | - Forest products |
7,559 | 8,841 | (1,282 | ) | (14.5 | ) | ||||||||||||||||||||
4,449 | 4,030 | 419 | 10.4 | - Industrial and consumer products |
16,987 | 16,844 | 143 | 0.8 | ||||||||||||||||||||||||
621 | 572 | 49 | 8.6 | - Automotive |
2,471 | 2,450 | 21 | 0.9 | ||||||||||||||||||||||||
7,500 | 7,009 | 491 | 7.0 | - Intermodal |
29,757 | 27,561 | 2,196 | 8.0 | ||||||||||||||||||||||||
32,540 | 32,055 | 485 | 1.5 | Total RTMs |
129,352 | 122,874 | 6,478 | 5.3 | ||||||||||||||||||||||||
Freight Revenue per RTM (cents) |
||||||||||||||||||||||||||||||||
3.11 | 3.09 | 0.02 | 0.6 | - Grain |
3.06 | 3.00 | 0.06 | 2.0 | ||||||||||||||||||||||||
2.73 | 2.99 | (0.26 | ) | (8.7 | ) | - Coal |
2.78 | 3.01 | (0.23 | ) | (7.6 | ) | ||||||||||||||||||||
2.33 | 2.41 | (0.08 | ) | (3.3 | ) | - Sulphur and fertilizers |
2.36 | 2.52 | (0.16 | ) | (6.3 | ) | ||||||||||||||||||||
3.68 | 3.69 | (0.01 | ) | (0.3 | ) | - Forest products |
3.65 | 3.58 | 0.07 | 2.0 | ||||||||||||||||||||||
3.55 | 3.68 | (0.13 | ) | (3.5 | ) | - Industrial and consumer products |
3.70 | 3.58 | 0.12 | 3.4 | ||||||||||||||||||||||
12.40 | 13.09 | (0.69 | ) | (5.3 | ) | - Automotive |
12.91 | 12.83 | 0.08 | 0.6 | ||||||||||||||||||||||
4.48 | 4.62 | (0.14 | ) | (3.0 | ) | - Intermodal |
4.43 | 4.56 | (0.13 | ) | (2.9 | ) | ||||||||||||||||||||
3.51 | 3.59 | (0.08 | ) | (2.2 | ) | Freight Revenue per RTM |
3.52 | 3.60 | (0.08 | ) | (2.2 | ) | ||||||||||||||||||||
Carloads (thousands) |
||||||||||||||||||||||||||||||||
103.6 | 105.0 | (1.4 | ) | (1.3 | ) | - Grain |
385.0 | 382.8 | 2.2 | 0.6 | ||||||||||||||||||||||
64.9 | 68.6 | (3.7 | ) | (5.4 | ) | - Coal |
269.1 | 281.7 | (12.6 | ) | (4.5 | ) | ||||||||||||||||||||
50.7 | 48.7 | 2.0 | 4.1 | - Sulphur and fertilizers |
209.8 | 178.3 | 31.5 | 17.7 | ||||||||||||||||||||||||
26.0 | 30.7 | (4.7 | ) | (15.3 | ) | - Forest products |
114.1 | 135.0 | (20.9 | ) | (15.5 | ) | ||||||||||||||||||||
80.4 | 77.1 | 3.3 | 4.3 | - Industrial and consumer products |
313.3 | 316.0 | (2.7 | ) | (0.9 | ) | ||||||||||||||||||||||
41.8 | 39.8 | 2.0 | 5.0 | - Automotive |
168.5 | 165.3 | 3.2 | 1.9 | ||||||||||||||||||||||||
315.1 | 292.9 | 22.2 | 7.6 | - Intermodal |
1,238.1 | 1,159.0 | 79.1 | 6.8 | ||||||||||||||||||||||||
682.5 | 662.8 | 19.7 | 3.0 | Total Carloads |
2,697.9 | 2,618.1 | 79.8 | 3.0 | ||||||||||||||||||||||||
Freight Revenue per Carload |
||||||||||||||||||||||||||||||||
$ | 2,486 | $ | 2,491 | $ | (5 | ) | (0.2 | ) | - Grain |
$ | 2,439 | $ | 2,363 | $ | 76 | 3.2 | ||||||||||||||||
2,022 | 2,176 | (154 | ) | (7.1 | ) | - Coal |
2,132 | 2,102 | 30 | 1.4 | ||||||||||||||||||||||
2,391 | 2,505 | (114 | ) | (4.6 | ) | - Sulphur and fertilizers |
2,393 | 2,464 | (71 | ) | (2.9 | ) | ||||||||||||||||||||
2,365 | 2,319 | 46 | 2.0 | - Forest products |
2,417 | 2,344 | 73 | 3.1 | ||||||||||||||||||||||||
1,964 | 1,926 | 38 | 2.0 | - Industrial and consumer products |
2,004 | 1,911 | 93 | 4.9 | ||||||||||||||||||||||||
1,842 | 1,882 | (40 | ) | (2.1 | ) | - Automotive |
1,893 | 1,902 | (9 | ) | (0.5 | ) | ||||||||||||||||||||
1,067 | 1,106 | (39 | ) | (3.5 | ) | - Intermodal |
1,065 | 1,084 | (19 | ) | (1.8 | ) | ||||||||||||||||||||
$ | 1,674 | $ | 1,737 | $ | (63 | ) | (3.6 | ) | Freight Revenue per Carload |
$ | 1,688 | $ | 1,691 | $ | (3 | ) | (0.2 | ) |
32
Fourth Quarter | Year | |||||||||||||||||||||||||||||||
2007 | 2006 | Variance | % | 2007 | 2006 | Variance | % | |||||||||||||||||||||||||
Operations and Productivity |
||||||||||||||||||||||||||||||||
62,104 | 62,190 | (86 | ) | (0.1 | ) | Freight gross ton-miles (GTM) (millions) |
246,322 | 236,405 | 9,917 | 4.2 | ||||||||||||||||||||||
32,540 | 32,055 | 485 | 1.5 | Revenue ton-miles (RTM) (millions) |
129,352 | 122,874 | 6,478 | 5.3 | ||||||||||||||||||||||||
15,801 | 15,821 | (20 | ) | (0.1 | ) | Average number of active employees |
15,675 | 15,947 | (272 | ) | (1.7 | ) | ||||||||||||||||||||
15,382 | 15,327 | 55 | 0.4 | Number of employees at end of period |
15,382 | 15,327 | 55 | 0.4 | ||||||||||||||||||||||||
2.3 | 2.4 | (0.1 | ) | (4.2 | ) | FRA personal injuries per 200,000 employee-hours (1) |
2.1 | 2.0 | 0.1 | 5.0 | ||||||||||||||||||||||
1.6 | 1.9 | (0.3 | ) | (15.8 | ) | FRA train accidents per million train-miles (1) |
2.0 | 1.6 | 0.4 | 25.0 | ||||||||||||||||||||||
2.71 | 2.72 | (0.01 | ) | (0.4 | ) | Total operating expenses per RTM (cents) |
2.74 | 2.81 | (0.07 | ) | (2.5 | ) | ||||||||||||||||||||
1.42 | 1.40 | 0.02 | 1.4 | Total operating expenses per GTM (cents) |
1.44 | 1.46 | (0.02 | ) | (1.4 | ) | ||||||||||||||||||||||
0.50 | 0.52 | (0.02 | ) | (3.8 | ) | Compensation and benefits expense per GTM (cents) |
0.52 | 0.56 | (0.04 | ) | (7.1 | ) | ||||||||||||||||||||
3,930 | 3,931 | (1 | ) | | GTMs per average active employee (000) |
15,714 | 14,824 | 890 | 6.0 | |||||||||||||||||||||||
13,199 | 13,260 | (61 | ) | (0.5 | ) | Miles of road operated at end of period (2) |
13,199 | 13,260 | (61 | ) | (0.5 | ) | ||||||||||||||||||||
22.6 | 24.1 | (1.5 | ) | (6.2 | ) | Average train speed AAR definition (mph) |
23.2 | 24.8 | (1.6 | ) | (6.5 | ) | ||||||||||||||||||||
23.3 | 21.7 | 1.6 | 7.4 | Terminal dwell time AAR definition (hours) |
22.2 | 20.8 | 1.4 | 6.7 | ||||||||||||||||||||||||
140.0 | 141.7 | (1.7 | ) | (1.2 | ) | Car miles per car day |
142.3 | 137.3 | 5.0 | 3.6 | ||||||||||||||||||||||
83.9 | 80.6 | 3.3 | 4.1 | Average daily total cars on-line AAR definition (000) |
82.0 | 80.9 | 1.1 | 1.4 | ||||||||||||||||||||||||
1.23 | 1.20 | 0.03 | 2.5 | U.S. gallons of locomotive fuel per 1,000 GTMs freight & yard |
1.21 | 1.20 | 0.01 | 0.8 | ||||||||||||||||||||||||
75.7 | 74.3 | 1.4 | 1.9 | U.S. gallons of locomotive fuel consumed total (millions) (3) |
296.7 | 283.4 | 13.3 | 4.7 | ||||||||||||||||||||||||
1.020 | 0.887 | 0.133 | 15.0 | Average foreign exchange rate (US$/Canadian$) |
0.925 | 0.885 | 0.040 | 4.5 | ||||||||||||||||||||||||
0.980 | 1.128 | (0.148 | ) | (13.1 | ) | Average foreign exchange rate (Canadian$/US$) |
1.081 | 1.130 | (0.049 | ) | (4.3 | ) |
(1) | Certain prior period figures have been revised to conform with current presentation or have been updated to reflect new information. | |
(2) | Excludes track on which CP has haulage rights. | |
(3) | Includes gallons of fuel consumed from freight, yard and commuter service but excludes fuel used in capital projects and other non-freight activities. |
33