.NET Authors: Srinivasan Sundara Rajan, Nitin Bandugula, Pat Romanski, Yakov Fain, Elizabeth White

News Feed Item

Canadian Pacific reports Q1-2014 net income of C$254M or C$1.44 per diluted share

Delivers best first quarter financial results in company's history

CALGARY, April 22, 2014 /PRNewswire/ - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) today announced record Q1 2014 financial results.

Reported net income in the first quarter was $254 million, or $1.44 per diluted share, versus $217 million, or $1.24 per share, in the first quarter of 2013. This represents a 16 per cent year-over year improvement in earnings per share.


  • Total revenues were $1,509 million, an increase of 1 per cent
  • Operating expenses were $1,086 million, a decrease of 4 per cent
  • Operating income was $423 million, an increase of 17 per cent
  • Operating ratio was 72.0 per cent, a 380 basis point improvement

"CP delivered solid results in a period that was severely impacted by extraordinary cold and severe winter weather conditions," said E. Hunter Harrison, Chief Executive Officer. "In the face of such difficult operating conditions, I am particularly proud of the women and men of CP who remained on the job 24/7, to keep the railway operating."

"Despite a slow start to the year and the reduced capacity which limited our ability to meet strong customer demand, we still have the utmost confidence in our ability to achieve our financial targets for 2014."

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, purchases of common shares for cancellation under CP's share repurchase program, future sources of capital, 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. 

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 www.cpr.ca to see the rail advantages of Canadian Pacific.

(in millions of Canadian dollars, except per share data)

      For the three months
      ended March 31
      2014      2013 
  Freight $ 1,474    $ 1,459 
  Other   35      36 
Total revenues   1,509      1,495 
Operating expenses          
  Compensation and benefits (Note 2)   355      402 
  Fuel   271      270 
  Materials   89      72 
  Equipment rents   41      46 
  Depreciation and amortization   141      141 
  Purchased services and other   189      202 
Total operating expenses   1,086      1,133 
Operating income   423      362 
  Other income and charges      
  Net interest expense    70      70 
Income before income tax expense   353      289 
Income tax expense (Note 3)   99      72 
Net income $ 254    $ 217 
Earnings per share (Note 4)          
  Basic earnings per share  $ 1.45    $ 1.25 
  Diluted earnings per share $ 1.44    $ 1.24 
Weighted-average number of shares (millions) (Note 4)          
  Basic   175.5      174.3 
  Diluted   177.0      175.8 
Dividends declared per share $ 0.3500    $ 0.3500 
See Notes to Interim Consolidated Financial Statements.          

(in millions of Canadian dollars)

      For the three months
        ended March 31
          2014      2013 
Net income $ 254    $ 217 
  Net loss on foreign currency translation           
     adjustments, net of hedging activities       (2)
  Change in derivatives designated as cash flow hedges   (1)    
  Change in pension and post-retirement defined benefit          
     plans   31      188 
  Other comprehensive income before income tax expense     30      187 
  Income tax recovery (expense)       (40)
Other comprehensive income (Note 2)   38      147 
Comprehensive income $ 292    $ 364 
See Notes to Interim Consolidated Financial Statements.          

(in millions of Canadian dollars)

      March 31   December 31
      2014    2013 
Current assets          
  Cash and cash equivalents  $ 279    $ 476 
  Restricted cash and cash equivalents   409      411 
  Accounts receivable, net   723      580 
  Materials and supplies   190      165 
  Deferred income taxes (Note 3)   345      344 
  Other current assets   64      53 
        2,010      2,029 
Investments   98      92 
Properties   13,518      13,327 
Assets held for sale   230      222 
Goodwill and intangible assets    168      162 
Pension asset (Note 8)   1,092      1,028 
Other assets    199      200 
Total assets $ 17,315    $ 17,060 
Liabilities and shareholders' equity          
Current liabilities          
  Accounts payable and accrued liabilities $ 1,144    $ 1,189 
  Long-term debt maturing within one year (Note 6)   95      189 
        1,239      1,378 
Pension and other benefit liabilities (Note 8)   663      657 
Other long-term liabilities   348      338 
Long-term debt (Note 6)   4,774      4,687 
Deferred income taxes   3,028      2,903 
Total liabilities   10,052      9,963 
Shareholders' equity          
  Share capital (Note 5)   2,253      2,240 
  Additional paid-in capital    36      34 
  Accumulated other comprehensive loss (Note 2)   (1,465)     (1,503)
  Retained earnings   6,439      6,326 
        7,263      7,097 
Total liabilities and shareholders' equity $ 17,315    $ 17,060 
Contingencies (Note 9)          
See Notes to Interim Consolidated Financial Statements.          

(in millions of Canadian dollars)

    For the three months
    ended March 31
    2014      2013 
Operating activities          
  Net income $ 254    $ 217 
  Reconciliation of net income to cash provided by operating activities:          
    Depreciation and amortization   141      141 
    Deferred income taxes (Note 3)   89      63 
    Pension funding in excess of expense (Note 8)   (32)     (9)
  Other operating activities, net    17     
  Change in non-cash working capital balances related to operations   (182)     (147)
Cash provided by operating activities   287      267 
Investing activities          
  Additions to properties   (224)     (203)
  Proceeds from sale of properties and other assets       16 
  Change in restricted cash and cash equivalents used to collateralize letters of credit      
  Other       (25)
Cash used in investing activities   (217)     (212)
Financing activities          
  Dividends paid   (61)     (61)
  Issuance of CP common shares   14      40 
  Purchase of CP common shares (Note 5)   (85)    
  Repayment of long-term debt   (143)     (19)
Cash used in financing activities   (275)     (40)
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash       (1)
Cash position          
  (Decrease) increase in cash and cash equivalents   (197)     14 
  Cash and cash equivalents at beginning of period    476      333 
Cash and cash equivalents at end of period $ 279    $ 347 
Supplemental disclosures of cash flow information:          
  Income taxes paid $   $
  Interest paid $ 72    $ 66 
See Notes to Interim Consolidated Financial Statements.          

(in millions of Canadian dollars, except common share amounts)

      Common           Accumulated        
      shares       Additional other     Total
      (in   Share paid-in comprehensive Retained shareholders'
      millions)   capital capital loss earnings equity
Balance at January 1, 2014 175.4    $ 2,240  $ 34  $ (1,503) $ 6,326  $ 7,097 
Net income            254    254 
Other comprehensive income (Note 2)         38      38 
Dividends declared           (61)   (61)
Effect of stock-based compensation                        
CP common shares repurchased (Note 5) (0.6)     (7)       (80)   (87)
Shares issued under stock option                        
   plans 0.3      20    (4)       16 
Balance at March 31, 2014 175.1    $ 2,253  $ 36  $ (1,465) $ 6,439  $ 7,263 
      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            217    217 
Other comprehensive income (Note 2)         147      147 
Dividends declared           (62)   (62)
Effect of stock-based compensation                        
Shares issued under stock option                        
   plans 0.8      56    (12)       44 
Balance at March 31, 2013 174.7    $ 2,183  $ 35  $ (2,621) $ 5,852  $ 5,449 
See Notes to Interim Consolidated Financial Statements.                

March 31, 2014

1 Basis of presentation
  These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited ("CP", or "the Company"), expressed in Canadian dollars, reflect management's estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America ("GAAP").  They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2013 annual consolidated financial statements.  The accounting policies used are consistent with the accounting policies used in preparing the 2013 annual consolidated financial statements.
  CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues.  This seasonality could impact quarter-over-quarter comparisons.
  In management's opinion, the unaudited interim consolidated financial statements include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly such information.  Interim results are not necessarily indicative of the results expected for the fiscal year.
2 Changes in accumulated other comprehensive loss ("AOCL") by component  
    For the three months ended March 31
  (in millions of Canadian dollars) Foreign
currency net of
Derivatives and
Pension and
  January 1, 2014 $ 105 $ (15) $ (1,593) $ (1,503)
  Other comprehensive income        
       before reclassifications 17  10  - 27 
  Amounts reclassified from        
       accumulated other        
       comprehensive loss - (11) 22  11 
  Net current-period other        
      comprehensive income (loss) 17  (1) 22  38 
  March 31, 2014 $ 122 (16) (1,571) (1,465)
  January 1, 2013 $ 74 $ (14) $ (2,828) $ (2,768)
  Other comprehensive income (loss)        
       before reclassifications (7) 94  95 
  Amounts reclassified from        
       accumulated other        
       comprehensive loss - 46  52 
  Net current-period other        
       comprehensive income (loss) (1) 140  147 
  March 31, 2013 $ 82 $ (15) $ (2,688) $ (2,621)
  (1)Amounts are presented net of tax.
  (2) Amounts reclassified from accumulated other comprehensive loss.

    For the three months ended
March 31
    2014  2013 
  Amortization of prior service costs(a) $ (17) $ (6)
  Recognition of net actuarial loss(a) 48  67 
  Total before income tax 31  61 
  Income tax recovery (9) (15)
  Net of income tax $ 22 $ 46
  (a)Impacts Compensation and benefits on the Interim Consolidated Statements of Income.

3 Income taxes
    For the three months
    ended March 31
      2014    2013 
  (in millions of Canadian dollars)             
  Current income tax expense   $ 10    $
  Deferred income tax expense     89      63 
  Income tax expense   $ 99    $ 72 
  The effective income tax rate for the three months ended March 31, 2014 was 28.0% (three months ended March 31, 2013 - 24.8%). The lower rate in 2013 was the result of a benefit recognized for a U.S. federal track maintenance credit of $6 million for 2012 enacted and reported in the first quarter of 2013.

4 Earnings per share
  At March 31, 2014, the number of shares outstanding was 175.1 million (March 31, 2013 - 174.7 million).
  Basic earnings per share have been calculated using net income for the period divided by the weighted- average number of shares outstanding during the period.
  The number of shares used in earnings per share calculations is reconciled as follows:
      For the three months
ended March 31
  (in millions)   2014    2013 
  Weighted-average basic shares      
     outstanding   175.5  174.3 
  Dilutive effect of stock options   1.5    1.5 
  Weighted-average diluted   177.0  175.8 
     shares outstanding      
  For the three months ended March 31, 2014,122,017 options were excluded from the computation of diluted
earnings per share because their effects were not dilutive (three months ended March 31, 2013 - no

5 Shareholders' Equity
  On February 20, 2014, the Board of Directors of the Company approved a share repurchase program, and in March 2014, the Company filed a new normal course issuer bid to purchase, for cancellation, up to 5.3 million of its outstanding common shares. Under the filing, share purchases may be made during the 12-month period that began March 17, 2014, and ends March 16, 2015.  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 to retained earnings. 
  The following table provides the activity under the share repurchase program:
      For the three months
      ended March 31
  Number of common shares repurchased     567,750
  Weighted-average price per share(1)   $ 154.07 
  Amount of repurchase (in millions)(1)   $ 87 
(1) Includes brokerage fees.

6 Financial instruments
  A.     Fair values of financial instruments
  The Company categorizes its financial assets and liabilities measured at fair value in line with the fair value hierarchy established by GAAP that prioritizes, with respect to reliability, the inputs to valuation techniques used to measure fair value.  This hierarchy consists of three broad levels.  Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets and liabilities and give the highest priority to these inputs.  Level 2 and 3 inputs are based on significant other observable inputs and significant unobservable inputs, respectively, and give lower priority to these inputs.
  When possible, the estimated fair value is based on quoted market prices and, if not available, estimates from third party brokers.  For non-exchange traded derivatives classified in Level 2, the Company uses standard valuation techniques to calculate fair value.  Primary inputs to these techniques include observable market prices (interest, foreign exchange and commodity) and volatility, depending on the type of derivative and nature of the underlying risk.  The Company uses inputs and data used by willing market participants when valuing derivatives and considers its own credit default swap spread as well as those of its counterparties in its determination of fair value.
  The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt which has a fair value of approximately $5,715 million at March 31, 2014 (December 31, 2013 - $5,572 million) and a carrying value of $4,869 million at March 31, 2014 (December 31, 2013 - $4,876 million). The estimated fair value of current and long-term borrowings has been determined based on market information where available, or by discounting future payments of interest and principal at estimated interest rates expected to be available to the Company at period end.  All derivatives and long-term debt are classified as Level 2.
  B.   Financial risk management
  Derivative financial instruments
  Derivative financial instruments may be used to selectively reduce volatility associated with fluctuations in interest rates, foreign exchange ("FX") rates, the price of fuel and stock-based compensation expense.  Where derivatives are designated as hedging instruments, the relationship between the hedging instruments and their associated hedged items is documented, as well as the risk management objective and strategy for the use of the hedging instruments.  This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the Interim Consolidated Balance Sheets, commitments or forecasted transactions.  At the time a derivative contract is entered into, and at least quarterly thereafter, an assessment is made whether the derivative item is effective in offsetting the changes in fair value or cash flows of the hedged items.  The derivative qualifies for hedge accounting treatment if it is effective in substantially mitigating the risk it was designed to address.
  It is not the Company's intent to use financial derivatives or commodity instruments for trading or speculative purposes.
  Foreign exchange management
  The Company conducts business transactions and owns assets in both Canada and the United States.  As a result, the Company is exposed to fluctuations in value of financial commitments, assets, liabilities, income or cash flows due to changes in FX rates.  The Company may enter into foreign exchange risk management transactions primarily to manage fluctuations in the exchange rate between Canadian and U.S. currencies.  FX exposure is primarily mitigated through natural offsets created by revenues, expenditures and balance sheet positions incurred in the same currency.  Where appropriate, the Company may negotiate with customers and suppliers to reduce the net exposure.
  Occasionally the Company may enter into short-term FX forward contracts as part of its cash management strategy.
  Net investment hedge
  The FX gains and losses on long-term debt are mainly unrealized and can only be realized when U.S. dollar denominated long-term debt matures or is settled.  The Company also has long-term FX exposure on its investment in U.S. affiliates.  The majority of the Company's U.S. dollar denominated long-term debt has been designated as a hedge of the net investment in foreign subsidiaries.  This designation has the effect of mitigating volatility on net income by offsetting long-term FX gains and losses on U.S. dollar denominated long-term debt and gains and losses on its net investment.  The effective portion recognized in "Other comprehensive income" for the three months ended March 31, 2014 was an unrealized foreign exchange loss of $131 million (three months ended March 31, 2013 - $67 million).  There was no ineffectiveness during the three months ended March 31, 2014 and March 31, 2013.
  Foreign exchange forward contracts
  The Company may enter into FX forward contracts to lock-in the amount of Canadian dollars it has to pay on its U.S. denominated debt maturities.
  At March 31, 2014, the Company had FX forward contracts to fix the exchange rate on US$175 million of its 6.50% Notes due in May 2018, and US$100 million of its 7.25% Notes due in May 2019.  At December 31, 2013, the Company had FX forward contracts to fix the exchange rate on US$100 million of principal outstanding on a capital lease due in January 2014, US$175 million of its 6.50% Notes due in May 2018, and US$100 million of its 7.25% Notes due in May 2019.  These derivatives, which are accounted for as cash flow hedges, guarantee the amount of Canadian dollars that the Company will repay when these obligations mature.
  During the three months ended March 31, 2014, the Company settled the FX forward contract related to the repayment of a capital lease due in January 2014 for proceeds of $8 million.
  During the three months ended March 31, 2014, the combined realized and unrealized foreign exchange gain of $11 million (three months ended March 31, 2013 - unrealized gain of $5 million) was recorded in "Other income and charges" in relation to these derivatives.  These gains recorded in "Other income and charges" were largely offset by the realized and unrealized losses on the underlying debt which the derivatives were designated to hedge.
  At March 31, 2014, the unrealized gain derived from these FX forwards was $27 million which was recorded in "Other assets" with the offset reflected as an unrealized gain of $4 million in "Accumulated other comprehensive loss" and as an unrealized gain of $23 million in "Retained earnings".  At December 31, 2013, the unrealized gain derived from these FX forwards was $25 million of which $6 million was included in "Other current assets" and $19 million in "Other assets" with the offset reflected as an unrealized gain of $5 million in "Accumulated other comprehensive loss" and as an unrealized gain of $20 million in "Retained earnings".
  At March 31, 2014, the Company expected that, during the next twelve months, unrealized pre-tax losses of $1 million would be reclassified to "Other income and charges".

7 Stock-based compensation
  At March 31, 2014, the Company had several stock-based compensation plans, including stock option plans, various cash settled liability plans and an employee stock savings plan.  These plans resulted in an expense for the three months ended March 31, 2014 of $22 million (three months ended March 31, 2013 - $33 million).
  Regular options
  In the first three months of 2014, under CP's stock option plans, the Company issued 366,050 regular options at the weighted average price of $168.88 per share, based on the closing price on the grant date.
  Pursuant to the employee plan, these regular options may be exercised upon vesting, which is between 12 months and 48 months after the grant date, and will expire after 10 years.
  Under the fair value method, the fair value of the regular options at the grant date was approximately $17 million. The weighted average fair value assumptions were approximately:
          For the three months  
          ended March, 31 2014  
    Grant price   $ 168.88     
    Expected option life (years)(1)     5.82     
    Risk-free interest rate(2)     1.64  %  
    Expected stock price volatility(3)     28.63  %  
    Expected annual dividends per share(4)   $ 1.40     
    Expected forfeiture rate(5)     1.4  %  
  (1) Represents the period of time that awards are expected to be outstanding.  Historical data on exercise
behaviour, or when available, specific expectations regarding future exercise behaviour, were used to
estimate the expected life of the option.
  (2) Based on the implied yield available on zero-coupon government issues with an equivalent remaining
term at the time of the grant.
  (3) Based on the historical stock price volatility of the Company's stock over a period commensurate with the
expected term of the option.
  (4) Determined by the current annual dividend at the time of grant.  The Company does not employ different
dividend yields throughout the contractual term of the option.
  (5) The Company estimated forfeitures based on past experience.  This rate is monitored on a periodic basis.
  Performance share unit ("PSU") plan
  In the three months ended March 31, 2014, the Company issued 163,760 PSUs with a grant date fair value of approximately $25 million.  These units attract dividend equivalents in the form of additional units based on the dividends paid on the Company's Common Shares.  PSUs vest and are settled in cash, or in CP common shares approximately three years after the grant date, contingent upon CP's performance (performance factor).  The fair value of PSUs is measured, both on the grant date and each subsequent quarter until settlement, using a Monte Carlo simulation model.  The model utilizes multiple input variables that determine the probability of satisfying the performance and market conditions stipulated in the grant.
  Deferred share unit ("DSU") plan
  In the three months ended March 31, 2014, the Company granted 46,034 DSUs with a grant date fair value of approximately $7.5 million.  DSUs vest over various periods of up to 48 months and are only redeemable for a specified period after employment is terminated.  An expense to income for DSUs is recognized over the vesting period for both the initial subscription price and the change in value between reporting periods.

8 Pensions and other benefits
  In the three months ended March 31, 2014, the Company made contributions of $19 million (in the three months ended March 31, 2013 - $30 million) to its defined benefit pension plans.  The elements of net periodic benefit cost for defined benefit pension plans and other benefits recognized in the quarter included the following components:

      For the three months
      ended March 31
      Pensions     Other benefits
  (in millions of Canadian dollars)   2014      2013      2014      2013 
  Current service cost (benefits                      
     earned by employees in the                      
     period) $ 27    $ 35    $   $
  Interest cost on benefit obligation   119      112         
  Expected return on fund assets   (189)     (186)        
  Recognized net actuarial loss   47      66         
  Amortization of prior service costs   (17)     (6)        
  Net periodic benefit cost (recovery) $ (13)   $ 21    $ 10    $ 10 

9 Contingencies
  In the normal course of its operations, the Company becomes involved in various legal actions, including claims relating to injuries and damage 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 March 31, 2014 cannot be predicted with certainty, it is the opinion of management that their resolution will not have a material adverse effect on the Company's financial position or results of operations individually and in aggregate.
  On July 6, 2013, a train carrying crude oil operated by Montreal Maine and Atlantic Railway ("MM&A") derailed and exploded in Lac-Megantic, Quebec on a section of railway line owned by MM&A.  The day before CP had interchanged the train to MM&A, but after the interchange MM&A exercised exclusive control over the train.
  Following this incident, the Minister of Sustainable Development, Environment, Wildlife and Parks of Quebec issued an order directing named parties to recover the contaminants and to clean up and decontaminate the derailment site.  CP was later added as a named party in the administrative action on August 14, 2013.
  A class action lawsuit has also been filed in the Superior Court of Quebec on behalf of a class of persons and entities residing in, owning or leasing property in, operating a business in or physically present in Lac-Megantic.  The lawsuit seeks damages caused by the derailment including for wrongful deaths, personal injuries, and property damages.  CP was added as a defendant on August 16, 2013.  In the wake of the derailment and ensuing litigation, MM&A filed for bankruptcy in Canada and the United States.
  At this early stage in the legal proceedings, any potential liability and the quantum of potential loss cannot be determined.  Nevertheless, CP denies liability for MM&A's derailment and will vigorously defend itself in both proceedings or any proceeding that may be commenced in the future.
  Environmental remediation accruals cover site-specific remediation programs.  Environmental remediation accruals are measured on an undiscounted basis and are recorded when the costs to remediate are probable and reasonably estimable.
  The accruals for environmental remediation represent CP's best estimate of its probable future obligation and include both asserted and unasserted claims, without reduction for anticipated recoveries from third parties.  Although the recorded accruals include CP's best estimate of all probable costs, CP's total environmental remediation costs cannot be predicted with certainty.  Accruals for environmental remediation may change from time to time as new information about previously untested sites becomes known, environmental laws and regulations evolve and advances are made in environmental remediation technology.  The accruals may also vary as the courts decide legal proceedings against outside parties responsible for contamination.  These potential charges, which cannot be quantified at this time, are not expected to be material to CP's financial position, but may materially affect income in the particular period in which a charge is recognized.  Costs related to existing, but as yet unknown, or future contamination will be accrued in the period in which they become probable and reasonably estimable.
  The expense included in "Purchased services and other" for the three months ended March 31, 2014 was $1 million (three months ended March 31, 2013 - $1 million).  Provisions for environmental remediation costs are recorded in "Other long-term liabilities", except for the current portion which is recorded in "Accounts payable and accrued liabilities".  The total amount provided at March 31, 2014 was $93 million (December 31, 2013 - $ 90 million).  Payments are expected to be made over 10 years to 2024.

Summary of Rail Data  
      First Quarter  
Financial (millions, except per share data)   2014    2013   Fav/(Unfav)   %
  Freight revenue   $ 1,474    $ 1,459   $ 15   
  Other revenue     35      36     (1)   (3)
Total revenues     1,509      1,495     14   
Operating expenses                        
  Compensation and benefits     355      402     47    12 
  Fuel     271      270     (1)  
  Materials     89      72     (17)   (24)
  Equipment rents     41      46       11 
  Depreciation and amortization     141      141      
  Purchased services and other     189      202     13   
Total operating expenses     1,086      1,133     47   
Operating income     423      362     61    17 
  Other income and charges         3       100 
  Net interest expense     70      70      
Income before income tax expense     353      289     64    22 
  Income tax expense     99      72     (27)   (38)
Net income   $ 254    $ 217   $ 37    17 
Operating ratio (%)     72.0      75.8     3.8    380  bps
Basic earnings per share   $ 1.45    $ 1.25   $ 0.20    16 
Diluted earnings per share   $ 1.44    $ 1.24   $ 0.20    16 
Shares Outstanding                        
  Weighted average number of shares outstanding (millions)     175.5      174.3     1.2   
  Weighted average number of diluted shares outstanding (millions)     177.0      175.8     1.2   
Foreign Exchange                        
  Average foreign exchange rate (US$/Canadian$)     0.92      0.99     0.07   
  Average foreign exchange rate (Canadian$/US$)     1.09      1.01     0.08   

            First Quarter
          2014    2013 Fav/(Unfav)   %
  Commodity Data                    
    Freight Revenues (millions)                    
      - Grain   $ 327    $ 314 $ 13   
      - Coal     148      149   (1)   (1)
      - Fertilizers and sulphur     134      152   (18)   (12)
      - Industrial and consumer products     412      372   40    11 
      - Automotive     88      97   (9)   (9)
      - Forest products     48      53   (5)   (9)
      - Intermodal     317      322   (5)   (2)
    Total Freight Revenues   $ 1,474    $ 1,459 $ 15   
    Millions of Revenue Ton-Miles (RTM)                    
      - Grain     8,385      8,430   (45)   (1)
      - Coal     5,441      5,640   (199)   (4)
      - Fertilizers and sulphur     4,367      4,952   (585)   (12)
      - Industrial and consumer products     9,277      9,536   (259)   (3)
      - Automotive     514      604   (90)   (15)
      - Forest products     920      1,223   (303)   (25)
      - Intermodal     5,471      5,778   (307)   (5)
    Total RTMs     34,375      36,163   (1,788)   (5)
    Freight Revenue per RTM (cents)                    
      - Grain     3.90      3.73   0.17   
      - Coal     2.72      2.64   0.08   
      - Fertilizers and sulphur     3.07      3.06   0.01   
      - Industrial and consumer products     4.44      3.90   0.54    14 
      - Automotive     17.23      16.09   1.14   
      - Forest products     5.18      4.33   0.85    20 
      - Intermodal     5.79      5.58   0.21   
    Total Freight Revenue per RTM     4.29      4.04   0.25   
    Carloads (thousands)                    
      - Grain     101      108   (7)   (6)
      - Coal     78      81   (3)   (4)
      - Fertilizers and sulphur     43      49   (6)   (12)
      - Industrial and consumer products     125      127   (2)   (2)
      - Automotive     30      35   (5)   (14)
      - Forest products     14      18   (4)   (22)
      - Intermodal     227      241   (14)   (6)
    Total Carloads     618      659   (41)   (6)
    Freight Revenue per Carload                    
      - Grain   $ 3,238    $ 2,906 $ 332    11 
      - Coal     1,897      1,849   48   
      - Fertilizers and sulphur     3,155      3,067   88   
      - Industrial and consumer products     3,290      2,921   369    13 
      - Automotive     2,913      2,742   171   
      - Forest products     3,400      3,028   372    12 
      - Intermodal     1,396      1,339   57   
    Total Freight Revenue per Carload   $ 2,385    $ 2,214 $ 171   

    First Quarter
    2014    2013 (1)   Fav/(Unfav)   %
Operations Performance                
Freight gross ton-miles (millions)   62,349    67,679   (5,330)   (8)
Revenue ton-miles (millions)   34,375   36,163   (1,788)   (5)
Train miles (thousands)   8,727    9,993   (1,266)   (13)
Average train weight - excluding local traffic (tons)   7,653    7,209   444   
Average train length - excluding local traffic (feet)   6,371    6,298   73   
Average terminal dwell (hours)(2)   10.3    6.6   (3.7)   (56)
Average train speed (mph)(3)   15.9    18.0   (2.1)   (12)
Locomotive productivity (daily average GTMs/active HP)   204.3    205.5   (1.2)   (1)
Fuel efficiency(4)   1.11    1.13   0.02   
U.S. gallons of locomotive fuel consumed (millions)(5)   68.3    75.7   7.4    10 
Average fuel price (U.S. dollars per U.S. gallon)   3.63    3.55   (0.08)   (2)
Total employees (average)(6)   14,246    14,920   674   
Total employees (end of period)(6)   14,446    15,112   666   
Workforce (end of period)(7)   14,774    16,108   1,334   
FRA personal injuries per 200,000 employee-hours   1.50    1.74   0.24    14 
FRA train accidents per million train-miles   0.92    1.96   1.04    53 

(1)      Certain prior period figures have been revised to conform with current presentation or have been updated to reflect new
(2)      Incorporates a new reporting definition where average terminal dwell measures the average time a freight car resides
within terminal boundaries.
(3)      Incorporates a new reporting definition where average train speed measures the line-haul movement from origin to
destination including terminal dwell hours.
(4)      Fuel efficiency is defined as U.S. gallons of locomotive fuel consumed per 1,000 GTMs - freight and yard.
(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)      Workforce is defined as total employees plus part time employees, contractors, and consultants.



SOURCE Canadian Pacific

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.
SYS-CON Media announced that Cisco, a worldwide leader in IT that helps companies seize the opportunities of tomorrow, has launched a new ad campaign in Cloud Computing Journal. The ad campaign, a webcast titled 'Is Your Data Center Ready for the Application Economy?', focuses on the latest data center networking technologies, including SDN or ACI, and how customers are using SDN and ACI in their organizations to achieve business agility. The Cisco webcast is available on-demand.
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
Dale Kim is the Director of Industry Solutions at MapR. His background includes a variety of technical and management roles at information technology companies. While his experience includes work with relational databases, much of his career pertains to non-relational data in the areas of search, content management, and NoSQL, and includes senior roles in technical marketing, sales engineering, and support engineering. Dale holds an MBA from Santa Clara University, and a BA in Computer Science from the University of California, Berkeley.
The Internet of Things (IoT) is rapidly in the process of breaking from its heretofore relatively obscure enterprise applications (such as plant floor control and supply chain management) and going mainstream into the consumer space. More and more creative folks are interconnecting everyday products such as household items, mobile devices, appliances and cars, and unleashing new and imaginative scenarios. We are seeing a lot of excitement around applications in home automation, personal fitness, and in-car entertainment and this excitement will bleed into other areas. On the commercial side, m...
The Internet of Things (IoT) promises to evolve the way the world does business; however, understanding how to apply it to your company can be a mystery. Most people struggle with understanding the potential business uses or tend to get caught up in the technology, resulting in solutions that fail to meet even minimum business goals. In his session at @ThingsExpo, Jesse Shiah, CEO / President / Co-Founder of AgilePoint Inc., showed what is needed to leverage the IoT to transform your business. He discussed opportunities and challenges ahead for the IoT from a market and technical point of vie...
Things are being built upon cloud foundations to transform organizations. This CEO Power Panel at 15th Cloud Expo, moderated by Roger Strukhoff, Cloud Expo and @ThingsExpo conference chair, addressed the big issues involving these technologies and, more important, the results they will achieve. Rodney Rogers, chairman and CEO of Virtustream; Brendan O'Brien, co-founder of Aria Systems, Bart Copeland, president and CEO of ActiveState Software; Jim Cowie, chief scientist at Dyn; Dave Wagstaff, VP and chief architect at BSQUARE Corporation; Seth Proctor, CTO of NuoDB, Inc.; and Andris Gailitis, C...
SYS-CON Events announced today that CodeFutures, a leading supplier of database performance tools, has been named a “Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. CodeFutures is an independent software vendor focused on providing tools that deliver database performance tools that increase productivity during database development and increase database performance and scalability during production.
Today’s enterprise is being driven by disruptive competitive and human capital requirements to provide enterprise application access through not only desktops, but also mobile devices. To retrofit existing programs across all these devices using traditional programming methods is very costly and time consuming – often prohibitively so. In his session at @ThingsExpo, Jesse Shiah, CEO, President, and Co-Founder of AgilePoint Inc., discussed how you can create applications that run on all mobile devices as well as laptops and desktops using a visual drag-and-drop application – and eForms-buildi...
"People are a lot more knowledgeable about APIs now. There are two types of people who work with APIs - IT people who want to use APIs for something internal and the product managers who want to do something outside APIs for people to connect to them," explained Roberto Medrano, Executive Vice President at SOA Software, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Performance is the intersection of power, agility, control, and choice. If you value performance, and more specifically consistent performance, you need to look beyond simple virtualized compute. Many factors need to be considered to create a truly performant environment. In his General Session at 15th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, discussed how to take advantage of a multitude of compute options and platform features to make cloud the cornerstone of your online presence.
SYS-CON Media announced that Splunk, a provider of the leading software platform for real-time Operational Intelligence, has launched an ad campaign on Big Data Journal. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. The ads focus on delivering ROI - how improved uptime delivered $6M in annual ROI, improving customer operations by mining large volumes of unstructured data, and how data tracking delivers uptime when it matters most.
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
“The age of the Internet of Things is upon us,” stated Thomas Svensson, senior vice-president and general manager EMEA, ThingWorx, “and working with forward-thinking companies, such as Elisa, enables us to deploy our leading technology so that customers can profit from complete, end-to-end solutions.” ThingWorx, a PTC® (Nasdaq: PTC) business and Internet of Things (IoT) platform provider, announced on Monday that Elisa, Finnish provider of mobile and fixed broadband subscriptions, will deploy ThingWorx® platform technology to enable a new Elisa IoT service in Finland and Estonia.
Advanced Persistent Threats (APTs) are increasing at an unprecedented rate. The threat landscape of today is drastically different than just a few years ago. Attacks are much more organized and sophisticated. They are harder to detect and even harder to anticipate. In the foreseeable future it's going to get a whole lot harder. Everything you know today will change. Keeping up with this changing landscape is already a daunting task. Your organization needs to use the latest tools, methods and expertise to guard against those threats. But will that be enough? In the foreseeable future attacks w...
As enterprises move to all-IP networks and cloud-based applications, communications service providers (CSPs) – facing increased competition from over-the-top providers delivering content via the Internet and independently of CSPs – must be able to offer seamless cloud-based communication and collaboration solutions that can scale for small, midsize, and large enterprises, as well as public sector organizations, in order to keep and grow market share. The latest version of Oracle Communications Unified Communications Suite gives CSPs the capability to do just that. In addition, its integration ...
SYS-CON Events announced today that ActiveState, the leading independent Cloud Foundry and Docker-based PaaS provider, has been named “Silver Sponsor” of SYS-CON's DevOps Summit New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. ActiveState believes that enterprises gain a competitive advantage when they are able to quickly create, deploy and efficiently manage software solutions that immediately create business value, but they face many challenges that prevent them from doing so. The Company is uniquely positioned to help address these challenges thro...
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, a...
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
Disruptive macro trends in technology are impacting and dramatically changing the "art of the possible" relative to supply chain management practices through the innovative use of IoT, cloud, machine learning and Big Data to enable connected ecosystems of engagement. Enterprise informatics can now move beyond point solutions that merely monitor the past and implement integrated enterprise fabrics that enable end-to-end supply chain visibility to improve customer service delivery and optimize supplier management. Learn about enterprise architecture strategies for designing connected systems tha...