Company Quick10K Filing
Canadian Pacific Railway
Price220.40 EPS17
Shares140 P/E13
MCap30,812 P/FCF16
Net Debt10,275 EBIT3,037
TEV41,087 TEV/EBIT14
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-07-22
10-Q 2020-03-31 Filed 2020-04-22
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-30 Filed 2019-10-24
10-Q 2019-06-30 Filed 2019-07-16
10-Q 2019-03-31 Filed 2019-04-24
10-K 2018-12-31 Filed 2019-02-15
10-Q 2018-09-30 Filed 2018-10-19
10-Q 2018-06-30 Filed 2018-07-19
10-Q 2018-03-31 Filed 2018-04-19
10-K 2017-12-31 Filed 2018-02-16
10-Q 2017-09-30 Filed 2017-10-18
10-Q 2017-06-30 Filed 2017-07-20
10-Q 2017-03-31 Filed 2017-04-20
10-K 2016-12-31 Filed 2017-02-16
10-Q 2016-09-30 Filed 2016-10-19
10-Q 2016-06-30 Filed 2016-07-20
10-Q 2016-03-31 Filed 2016-04-20
10-K 2015-12-31 Filed 2016-02-29
8-K 2020-07-27 Other Events, Exhibits
8-K 2020-07-22 Earnings, Exhibits
8-K 2020-07-21 Other Events, Exhibits
8-K 2020-07-07 Other Events, Exhibits
8-K 2020-06-02
8-K 2020-05-04
8-K 2020-04-21
8-K 2020-04-21
8-K 2020-04-20
8-K 2020-04-20
8-K 2020-03-20
8-K 2020-03-19
8-K 2020-03-19
8-K 2020-03-05
8-K 2020-03-03
8-K 2020-03-03
8-K 2020-02-20
8-K 2020-02-05
8-K 2020-01-31
8-K 2020-01-29
8-K 2020-01-28
8-K 2020-01-06
8-K 2019-12-30
8-K 2019-12-17
8-K 2019-12-16
8-K 2019-12-04
8-K 2019-12-02
8-K 2019-11-22
8-K 2019-11-20
8-K 2019-11-14
8-K 2019-11-14
8-K 2019-10-23
8-K 2019-09-27
8-K 2019-08-07
8-K 2019-08-01
8-K 2019-07-16
8-K 2019-07-15
8-K 2019-07-15
8-K 2019-06-19
8-K 2019-06-06
8-K 2019-06-04
8-K 2019-05-31
8-K 2019-05-07
8-K 2019-05-06
8-K 2019-05-03
8-K 2019-04-23
8-K 2019-03-20
8-K 2019-03-12
8-K 2019-03-08
8-K 2019-02-15
8-K 2019-02-15
8-K 2019-02-14
8-K 2019-02-08
8-K 2019-01-24
8-K 2019-01-23
8-K 2019-01-14
8-K 2018-12-27
8-K 2018-12-18
8-K 2018-12-18
8-K 2018-12-17
8-K 2018-12-04
8-K 2018-12-04
8-K 2018-11-07
8-K 2018-10-19
8-K 2018-10-18
8-K 2018-10-18
8-K 2018-10-04
8-K 2018-10-01
8-K 2018-09-25
8-K 2018-09-17
8-K 2018-09-12
8-K 2018-09-10
8-K 2018-08-20
8-K 2018-07-20
8-K 2018-07-18
8-K 2018-06-29
8-K 2018-06-08
8-K 2018-06-07
8-K 2018-05-30
8-K 2018-05-30
8-K 2018-05-29
8-K 2018-05-25
8-K 2018-05-16
8-K 2018-05-14
8-K 2018-05-14
8-K 2018-05-10
8-K 2018-05-10
8-K 2018-05-03
8-K 2018-04-28
8-K 2018-04-23
8-K 2018-04-19
8-K 2018-04-18
8-K 2018-04-16
8-K 2018-03-16
8-K 2018-03-15
8-K 2018-03-08
8-K 2018-03-07
8-K 2018-02-28
8-K 2018-02-16
8-K 2018-02-16
8-K 2018-02-15
8-K 2018-02-14
8-K 2018-02-09
8-K 2018-02-01
8-K 2018-01-23
8-K 2018-01-18

CP 10Q Quarterly Report

Part I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-22.1 exhibit22110-q2020q2.htm
EX-31.1 exhibit31110-q2020q2.htm
EX-31.2 exhibit31210-q2020q2.htm
EX-32.1 exhibit32110-q2020q2.htm
EX-32.2 exhibit32210-q2020q2.htm

Canadian Pacific Railway Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
25201510502015201620182020
Assets, Equity
2.11.71.30.80.40.02015201620182020
Rev, G Profit, Net Income
0.90.60.30.0-0.3-0.62015201620182020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission File Number 001-01342
Canadian Pacific Railway Limited
(Exact name of registrant as specified in its charter)
Canada
 
98-0355078
(State or Other Jurisdiction
of Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
 
7550 Ogden Dale Road S.E.
 
 
Calgary
AB
 
T2C 4X9
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (403) 319-7000
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
 
Trading Symbol(s)
 
 
Name of Each Exchange on which Registered
 
Common Shares, without par value, of
Canadian Pacific Railway Limited
 
CP
 
New York Stock Exchange
 
 
Toronto Stock Exchange
Perpetual 4% Consolidated Debenture Stock of Canadian Pacific Railway Company
 
CP/40
 
New York Stock Exchange
 
BC87
 
London Stock Exchange

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

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

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



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ
As of the close of business on July 21, 2020, there were 135,533,633 of the registrant’s Common Shares issued and outstanding.
 



CANADIAN PACIFIC RAILWAY LIMITED
FORM 10-Q
TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION


 
 
Page
Item 1.
Financial Statements:
 
 
 
 
 
Interim Consolidated Statements of Income
 
For the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
 
Interim Consolidated Statements of Comprehensive Income
 
For the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
 
Interim Consolidated Balance Sheets
 
As at June 30, 2020 and December 31, 2019
 
 
 
 
 
Interim Consolidated Statements of Cash Flows
 
For the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
 
Interim Consolidated Statements of Changes in Shareholders' Equity
 
For the Three and Six Months Ended June 30, 2020 and 2019
 
 
 
 
 
Notes to Interim Consolidated Financial Statements
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Executive Summary
 
Performance Indicators
 
Financial Highlights
 
Results of Operations
 
Share Capital
 
Liquidity and Capital Resources
 
Non-GAAP Measures
 
Off-Balance Sheet Arrangements
 
Contractual Commitments
 
Critical Accounting Estimates
 
Forward-Looking Statements
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
 
 
 
 
PART II - OTHER INFORMATION
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
 
Signature




PART I

ITEM 1. FINANCIAL STATEMENTS

INTERIM CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars, except share and per share data)
2020
2019
2020
2019
Revenues (Note 3)
 
 
 
 
Freight
$
1,752

$
1,931

$
3,752

$
3,657

Non-freight
40

46

83

87

Total revenues
1,792

1,977

3,835

3,744

Operating expenses
 
 
 
 
Compensation and benefits
347

383

745

789

Fuel
131

236

343

445

Materials
50

54

109

111

Equipment rents
33

34

69

69

Depreciation and amortization
195

183

387

343

Purchased services and other
266

265

578

622

Total operating expenses
1,022

1,155

2,231

2,379

 
 
 
 
 
Operating income
770

822

1,604

1,365

Less:
 
 
 
 
Other (income) expense (Note 4)
(86
)
(40
)
125

(87
)
Other components of net periodic benefit recovery (Note 13)
(86
)
(98
)
(171
)
(195
)
Net interest expense
118

112

232

226

Income before income tax expense
824

848

1,418

1,421

Income tax expense (Note 5)
189

124

374

263

Net income
$
635

$
724

$
1,044

$
1,158

 
 
 
 
 
Earnings per share (Note 6)
 
 
 
 
Basic earnings per share
$
4.68

$
5.19

$
7.67

$
8.28

Diluted earnings per share
$
4.66

$
5.17

$
7.64

$
8.25

 
 
 
 
 
Weighted-average number of shares (millions) (Note 6)
 
 
 
 
Basic
135.6

139.7

136.1

139.9

Diluted
136.1

140.2

136.6

140.4

 
 
 
 
 
Dividends declared per share
$
0.8300

$
0.8300

$
1.6600

$
1.4800

See Notes to Interim Consolidated Financial Statements.

2


INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars)
2020
2019
2020
2019
Net income
$
635

$
724

$
1,044

$
1,158

Net gain (loss) in foreign currency translation adjustments, net of hedging activities
31

15

(34
)
31

Change in derivatives designated as cash flow hedges
1

4

3

6

Change in pension and post-retirement defined benefit plans
45

21

90

41

Other comprehensive income before income taxes
77

40

59

78

Income tax (expense) recovery on above items
(47
)
(22
)
13

(44
)
Other comprehensive income (Note 7)
30

18

72

34

Comprehensive income
$
665

$
742

$
1,116

$
1,192

See Notes to Interim Consolidated Financial Statements.

3


INTERIM CONSOLIDATED BALANCE SHEETS AS AT
(unaudited)
 
June 30
December 31
(in millions of Canadian dollars)
2020
2019
Assets
 
 
Current assets
 
 
Cash and cash equivalents
$
277

$
133

Accounts receivable, net (Note 8)
776

805

Materials and supplies
192

182

Other current assets
110

90

 
1,355

1,210

Investments (Note 9)
223

341

Properties
20,019

19,156

Goodwill and intangible assets (Note 9)
291

206

Pension asset
1,214

1,003

Other assets
460

451

Total assets
$
23,562

$
22,367

Liabilities and shareholders’ equity
 
 
Current liabilities
 
 
Accounts payable and accrued liabilities
$
1,577

$
1,693

Long-term debt maturing within one year (Note 10, 11)
91

599

 
1,668

2,292

Pension and other benefit liabilities
784

785

Other long-term liabilities
544

562

Long-term debt (Note 10, 11)
9,457

8,158

Deferred income taxes
3,644

3,501

Total liabilities
16,097

15,298

Shareholders’ equity
 
 
Share capital
1,990

1,993

Additional paid-in capital
53

48

Accumulated other comprehensive loss (Note 7)
(2,450
)
(2,522
)
Retained earnings
7,872

7,550

 
7,465

7,069

Total liabilities and shareholders’ equity
$
23,562

$
22,367

See Contingencies (Note 15)
See Notes to Interim Consolidated Financial Statements.

4


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars)
2020
2019
2020
2019
Operating activities
 
 
 
 
Net income
$
635

$
724

$
1,044

$
1,158

Reconciliation of net income to cash provided by operating activities:
 
 
 
 
Depreciation and amortization
195

183

387

343

Deferred income tax expense (recovery) (Note 5)
49

(18
)
88

20

Pension recovery and funding (Note 13)
(62
)
(89
)
(127
)
(177
)
Foreign exchange (gain) loss on debt and lease liabilities (Note 4)
(86
)
(37
)
129

(82
)
Other operating activities, net
27

18

(45
)
63

Change in non-cash working capital balances related to operations
77

(60
)
(152
)
(191
)
Cash provided by operating activities
835

721

1,324

1,134

Investing activities
 
 
 
 
Additions to properties
(502
)
(459
)
(857
)
(683
)
Investment in Central Maine & Québec Railway (Note 9)
19


19


Proceeds from sale of properties and other assets
5

8

7

14

Other
10

(4
)
1

(5
)
Cash used in investing activities
(468
)
(455
)
(830
)
(674
)
Financing activities
 
 
 
 
Dividends paid
(112
)
(91
)
(226
)
(182
)
Issuance of CP Common Shares
5

10

29

14

Purchase of CP Common Shares (Note 12)
(44
)
(257
)
(545
)
(464
)
Issuance of long-term debt, excluding commercial paper (Note 10)
(1
)

958

397

Repayment of long-term debt, excluding commercial paper
(10
)
(480
)
(25
)
(485
)
Net (repayment) issuance of commercial paper (Note 10)
(20
)
246

(573
)
246

Net (decrease) increase in short-term borrowings (Note 10)
(140
)

5


Other


11


Cash used in financing activities
(322
)
(572
)
(366
)
(474
)
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents
(15
)
(1
)
16

(2
)
Cash position
 
 
 
 
Increase (decrease) in cash and cash equivalents
30

(307
)
144

(16
)
Cash and cash equivalents at beginning of period
247

352

133

61

Cash and cash equivalents at end of period
$
277

$
45

$
277

$
45

 
 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
 
Income taxes paid
$
5

$
108

$
144

$
257

Interest paid
$
63

$
83

$
220

$
232

See Notes to Interim Consolidated Financial Statements.

5


INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited)
 
For the three months ended June 30
(in millions of Canadian dollars except per share data)
 
Common shares (in millions)

 
Share
capital

Additional
paid-in
capital

Accumulated
other
comprehensive
loss

Retained
earnings

Total
shareholders’
equity

Balance at April 1, 2020
 
135.6

 
$
1,985

$
51

$
(2,480
)
$
7,399

$
6,955

Net income
 

 



635

635

Other comprehensive income (Note 7)
 

 


30


30

Dividends declared ($0.8300 per share)
 

 



(113
)
(113
)
Effect of stock-based compensation expense
 

 

4



4

CP Common Shares repurchased (Note 12)
 
(0.1
)
 
(3
)


(49
)
(52
)
Shares issued under stock option plan
 

 
8

(2
)


6

Balance at June 30, 2020
 
135.5

 
$
1,990

$
53

$
(2,450
)
$
7,872

$
7,465

Balance at April 1, 2019
 
139.8

 
$
1,997

$
46

$
(2,027
)
$
6,798

$
6,814

Net income
 

 



724

724

Other comprehensive income (Note 7)
 

 


18


18

Dividends declared ($0.8300 per share)
 

 



(115
)
(115
)
Effect of stock-based compensation expense
 

 

3



3

CP Common Shares repurchased (Note 12)
 
(0.9
)
 
(14
)


(282
)
(296
)
Shares issued under stock option plan
 
0.2

 
13

(4
)


9

Balance at June 30, 2019
 
139.1

 
$
1,996

$
45

$
(2,009
)
$
7,125

$
7,157

 
 
 
 
 
 
 
 
 
 
For the six months ended June 30
(in millions of Canadian dollars except per share data)
 
Common shares (in millions)

 
Share
capital

Additional
paid-in
capital

Accumulated
other
comprehensive
loss

Retained
earnings

Total
shareholders’
equity

Balance at December 31, 2019, as previously reported
 
137.0

 
$
1,993

$
48

$
(2,522
)
$
7,550

$
7,069

Impact of accounting change (Note 2)
 

 



(1
)
(1
)
Balance at January 1, 2020, as restated
 
137.0

 
$
1,993

$
48

$
(2,522
)
$
7,549

$
7,068

Net income
 

 



1,044

1,044

Other comprehensive income (Note 7)
 

 


72


72

Dividends declared ($1.6600 per share)
 

 



(225
)
(225
)
Effect of stock-based compensation expense
 

 

9



9

CP Common Shares repurchased (Note 12)
 
(1.7
)
 
(24
)


(496
)
(520
)
Shares issued under stock option plan
 
0.2

 
21

(4
)


17

Balance at June 30, 2020
 
135.5

 
$
1,990

$
53

$
(2,450
)
$
7,872

$
7,465

Balance at January 1, 2019
 
140.5

 
$
2,002

$
42

$
(2,043
)
$
6,630

$
6,631

Net income
 

 



1,158

1,158

Other comprehensive income (Note 7)
 

 


34


34

Dividends declared ($1.4800 per share)
 

 



(206
)
(206
)
Effect of stock-based compensation expense
 

 

8



8

CP Common Shares repurchased (Note 12)
 
(1.6
)
 
(24
)


(457
)
(481
)
Shares issued under stock option plan
 
0.2

 
18

(5
)


13

Balance at June 30, 2019
 
139.1

 
$
1,996

$
45

$
(2,009
)
$
7,125

$
7,157

See Notes to Interim Consolidated Financial Statements.

6


NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020
(unaudited)

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 2019 annual Consolidated Financial Statements and notes included in CP's 2019 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2019 annual Consolidated Financial Statements, except for the newly adopted accounting policy discussed in Note 2.

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    Accounting changes

Implemented in 2020

Financial Instruments - Credit Losses

On January 1, 2020, the Company adopted the new Accounting Standards Update ("ASU") 2016-13, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses. Using a modified retrospective approach, the Company recognized a cumulative-effect adjustment to its opening retained earnings balance in the period of adoption. Accordingly, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The impact of the adoption of ASC 326 as at January 1, 2020 was an increase in the allowance for credit losses of $1 million, with the offsets to "Deferred income taxes" and "Retained earnings" on the Company's Interim Consolidated Balance Sheet. See Note 8 for further discussion of the current period credit loss.

Simplification of Financial Disclosures about Guarantors

During the second quarter of 2020, the Company early adopted the Securities and Exchange Commission amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities, as specified in Rule 3-10 of Regulation S-X. The amendments simplify disclosure requirements by replacing condensed consolidating financial information (“CCFI”) with summarized financial information and expanded qualitative non-financial disclosures about the guarantees, issuers, and guarantors. This disclosure can be found in the Liquidity and Capital Resources section of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.


7


3    Revenues

The following table disaggregates the Company’s revenues from contracts with customers by major source:
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars)
2020
2019
2020
2019
Freight


 
 
Grain
$
446

$
422

$
864

$
802

Coal
131

173

281

331

Potash
146

136

258

250

Fertilizers and sulphur
77

63

147

120

Forest products
81

78

159

151

Energy, chemicals and plastics
341

346

832

661

Metals, minerals and consumer products
133

205

322

378

Automotive
34

104

121

180

Intermodal
363

404

768

784

Total freight revenues
1,752

1,931

3,752

3,657

Non-freight excluding leasing revenues
25

30

54

57

Revenues from contracts with customers
1,777

1,961

3,806

3,714

Leasing revenues
15

16

29

30

Total revenues
$
1,792

$
1,977

$
3,835

$
3,744



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

The following table summarizes the changes in contract liabilities:
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars)
2020
2019
2020
2019
Opening balance
$
112

$
73

$
146

$
2

Revenue recognized that was included in the contract liability balance at the beginning of the period
(37
)
(3
)
(73
)
(2
)
Increase due to consideration received, net of revenue recognized during the period
4

4

6

74

Closing balance
$
79

$
74

$
79

$
74



4    Other (income) expense
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars)
2020
2019
2020
2019
Foreign exchange (gain) loss on debt and lease liabilities
$
(86
)
$
(37
)
$
129

$
(82
)
Other foreign exchange losses (gains)
1

(4
)
(4
)
(6
)
Other
(1
)
1


1

Other (income) expense
$
(86
)
$
(40
)
$
125

$
(87
)



8


5    Income taxes
 
For the three months ended June 30
For the six months ended June 30
(in millions of Canadian dollars)
2020
2019
2020
2019
Current income tax expense
$
140

$
142

$
286

$
243

Deferred income tax expense (recovery)
49

(18
)
88

20

Income tax expense
$
189

$
124

$
374

$
263



The effective tax rates for the three and six months ended June 30, 2020 were 22.98% and 26.38%, respectively, compared to 14.63% and 18.50%, respectively for the same periods of 2019.

For the three months ended June 30, 2020, the effective tax rate was 25.00%, excluding the discrete item of the foreign exchange ("FX") gain of $86 million on debt and lease liabilities.

For the three months ended June 30, 2019, the effective tax rate was 25.75%, excluding the discrete items of the FX gain of $37 million on debt and lease liabilities and an $88 million deferred income tax recovery from the revaluation of deferred income tax balances as at January 1, 2019 on the enactment of Alberta provincial corporate income tax rate decrease.

For the six months ended June 30, 2020, the effective tax rate was 25.00%, excluding the discrete item of the FX loss of $129 million on debt and lease liabilities.

For the six months ended June 30, 2019, the effective tax rate was 25.75%, excluding the discrete items of the FX gain of $82 million on debt and lease liabilities and the aforementioned deferred tax recovery of $88 million on the Alberta provincial corporate income tax rate decrease.

6    Earnings per share

Basic earnings per share has been calculated using Net income for the period divided by the weighted-average number of shares outstanding during the period. The number of shares used in the earnings per share calculations are reconciled as follows:
 
For the three months ended June 30
For the six months ended June 30
(in millions)
2020
2019
2020
2019
Weighted-average basic shares outstanding
135.6

139.7

136.1

139.9

Dilutive effect of stock options
0.5

0.5

0.5

0.5

Weighted-average diluted shares outstanding
136.1

140.2

136.6

140.4



For the three and six months ended June 30, 2020, there were 0.2 million options excluded from the computation of diluted earnings per share because their effects were not dilutive (three and six months ended June 30, 2019 - nil and 0.1 million, respectively).

9


7    Changes in Accumulated other comprehensive loss ("AOCL") by component
 
For the three months ended June 30
(in millions of Canadian dollars)
Foreign currency net of hedging activities(1)

Derivatives and
other
(1)

Pension and post-
retirement defined
benefit plans
(1)

Total(1)

Opening balance, April 1, 2020
$
119

$
(52
)
$
(2,547
)
$
(2,480
)
Other comprehensive loss before reclassifications
(3
)
(2
)

(5
)
Amounts reclassified from accumulated other comprehensive loss

2

33

35

Net other comprehensive (loss) income
(3
)

33

30

Closing balance, June 30, 2020
$
116

$
(52
)
$
(2,514
)
$
(2,450
)
Opening balance, April 1, 2019
$
113

$
(61
)
$
(2,079
)
$
(2,027
)
Other comprehensive (loss) income before reclassifications
(1
)
1



Amounts reclassified from accumulated other comprehensive loss

2

16

18

Net other comprehensive (loss) income
(1
)
3

16

18

Closing balance, June 30, 2019
$
112

$
(58
)
$
(2,063
)
$
(2,009
)

(1) 
Amounts are presented net of tax.
 
For the six months ended June 30
(in millions of Canadian dollars)
Foreign currency net of hedging activities(1)

Derivatives and
other
(1)

Pension and post-
retirement defined
benefit plans
(1)

Total(1)

Opening balance, January 1, 2020
$
112

$
(54
)
$
(2,580
)
$
(2,522
)
Other comprehensive income (loss) before reclassifications
4

(2
)

2

Amounts reclassified from accumulated other comprehensive loss

4

66

70

Net other comprehensive income
4

2

66

72

Closing balance, June 30, 2020
$
116

$
(52
)
$
(2,514
)
$
(2,450
)
Opening balance, January 1, 2019
$
113

$
(62
)
$
(2,094
)
$
(2,043
)
Other comprehensive loss before reclassifications
(1
)

(1
)
(2
)
Amounts reclassified from accumulated other comprehensive loss

4

32

36

Net other comprehensive (loss) income
(1
)