10-Q 1 cp-20220930.htm 10-Q cp-20220930
CANADIAN PACIFIC RAILWAY LTD/CNfalse2022Q30000016875--12-3100000168752022-01-012022-09-300000016875us-gaap:CommonClassAMember2022-01-012022-09-300000016875cp:Perpetual4ConsolidatedDebentureStockDomain2022-01-012022-09-3000000168752022-10-25xbrli:shares0000016875us-gaap:CargoAndFreightMember2022-07-012022-09-30iso4217:CAD0000016875us-gaap:CargoAndFreightMember2021-07-012021-09-300000016875us-gaap:CargoAndFreightMember2022-01-012022-09-300000016875us-gaap:CargoAndFreightMember2021-01-012021-09-300000016875cp:NonFreightMember2022-07-012022-09-300000016875cp:NonFreightMember2021-07-012021-09-300000016875cp:NonFreightMember2022-01-012022-09-300000016875cp:NonFreightMember2021-01-012021-09-3000000168752022-07-012022-09-3000000168752021-07-012021-09-3000000168752021-01-012021-09-30iso4217:CADxbrli:shares00000168752022-09-3000000168752021-12-3100000168752022-06-3000000168752021-06-3000000168752020-12-3100000168752021-09-300000016875us-gaap:CommonStockMember2022-06-300000016875us-gaap:AdditionalPaidInCapitalMember2022-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000016875us-gaap:RetainedEarningsMember2022-06-300000016875us-gaap:CommonStockMember2022-07-012022-09-300000016875us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000016875us-gaap:RetainedEarningsMember2022-07-012022-09-300000016875us-gaap:CommonStockMember2022-09-300000016875us-gaap:AdditionalPaidInCapitalMember2022-09-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000016875us-gaap:RetainedEarningsMember2022-09-300000016875us-gaap:CommonStockMember2021-06-300000016875us-gaap:AdditionalPaidInCapitalMember2021-06-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000016875us-gaap:RetainedEarningsMember2021-06-300000016875us-gaap:CommonStockMember2021-07-012021-09-300000016875us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000016875us-gaap:RetainedEarningsMember2021-07-012021-09-300000016875us-gaap:CommonStockMember2021-09-300000016875us-gaap:AdditionalPaidInCapitalMember2021-09-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000016875us-gaap:RetainedEarningsMember2021-09-300000016875us-gaap:CommonStockMember2021-12-310000016875us-gaap:AdditionalPaidInCapitalMember2021-12-310000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000016875us-gaap:RetainedEarningsMember2021-12-310000016875us-gaap:CommonStockMember2022-01-012022-09-300000016875us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300000016875us-gaap:RetainedEarningsMember2022-01-012022-09-300000016875us-gaap:CommonStockMember2020-12-310000016875us-gaap:AdditionalPaidInCapitalMember2020-12-310000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000016875us-gaap:RetainedEarningsMember2020-12-310000016875us-gaap:CommonStockMember2021-01-012021-09-300000016875us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300000016875us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000016875us-gaap:RetainedEarningsMember2021-01-012021-09-300000016875cp:GrainRevenueMember2022-07-012022-09-300000016875cp:GrainRevenueMember2021-07-012021-09-300000016875cp:GrainRevenueMember2022-01-012022-09-300000016875cp:GrainRevenueMember2021-01-012021-09-300000016875cp:CoalRevenueMember2022-07-012022-09-300000016875cp:CoalRevenueMember2021-07-012021-09-300000016875cp:CoalRevenueMember2022-01-012022-09-300000016875cp:CoalRevenueMember2021-01-012021-09-300000016875cp:PotashRevenueMember2022-07-012022-09-300000016875cp:PotashRevenueMember2021-07-012021-09-300000016875cp:PotashRevenueMember2022-01-012022-09-300000016875cp:PotashRevenueMember2021-01-012021-09-300000016875cp:FertilizerandSulphurRevenueMember2022-07-012022-09-300000016875cp:FertilizerandSulphurRevenueMember2021-07-012021-09-300000016875cp:FertilizerandSulphurRevenueMember2022-01-012022-09-300000016875cp:FertilizerandSulphurRevenueMember2021-01-012021-09-300000016875cp:ForestProductsRevenueMember2022-07-012022-09-300000016875cp:ForestProductsRevenueMember2021-07-012021-09-300000016875cp:ForestProductsRevenueMember2022-01-012022-09-300000016875cp:ForestProductsRevenueMember2021-01-012021-09-300000016875cp:EnergyChemicalsandPlasticRevenueMember2022-07-012022-09-300000016875cp:EnergyChemicalsandPlasticRevenueMember2021-07-012021-09-300000016875cp:EnergyChemicalsandPlasticRevenueMember2022-01-012022-09-300000016875cp:EnergyChemicalsandPlasticRevenueMember2021-01-012021-09-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2022-07-012022-09-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2021-07-012021-09-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2022-01-012022-09-300000016875cp:MetalsMineralsandConsumerProductsRevenueMember2021-01-012021-09-300000016875cp:AutomotiveMember2022-07-012022-09-300000016875cp:AutomotiveMember2021-07-012021-09-300000016875cp:AutomotiveMember2022-01-012022-09-300000016875cp:AutomotiveMember2021-01-012021-09-300000016875cp:IntermodalMember2022-07-012022-09-300000016875cp:IntermodalMember2021-07-012021-09-300000016875cp:IntermodalMember2022-01-012022-09-300000016875cp:IntermodalMember2021-01-012021-09-300000016875cp:NonfreightexcludingleasingrevenuesMember2022-07-012022-09-300000016875cp:NonfreightexcludingleasingrevenuesMember2021-07-012021-09-300000016875cp:NonfreightexcludingleasingrevenuesMember2022-01-012022-09-300000016875cp:NonfreightexcludingleasingrevenuesMember2021-01-012021-09-30xbrli:pure0000016875cp:KansasCitySouthernMember2022-07-012022-09-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2022-07-012022-09-300000016875cp:KansasCitySouthernMember2021-07-012021-09-300000016875cp:KansasCitySouthernMember2022-01-012022-09-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2022-01-012022-09-300000016875cp:KansasCitySouthernMember2021-01-012021-09-30iso4217:USD0000016875us-gaap:EmployeeStockOptionMember2022-07-012022-09-300000016875us-gaap:EmployeeStockOptionMember2022-01-012022-09-300000016875us-gaap:EmployeeStockOptionMember2021-07-012021-09-300000016875us-gaap:EmployeeStockOptionMember2021-01-012021-09-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-07-012022-09-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-012022-09-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-07-012022-09-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-07-012022-09-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-09-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-09-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-09-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-09-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-06-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-06-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-06-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-06-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-07-012021-09-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-012021-09-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-07-012021-09-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-07-012021-09-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-09-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-09-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-09-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-09-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-12-310000016875us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-09-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-09-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-09-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2022-01-012022-09-300000016875us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2020-12-310000016875us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-09-300000016875us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-09-300000016875us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-09-300000016875cp:AccumulatedEquityMethodInvestmentsAdjustmentAttributableToParentMember2021-01-012021-09-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300000016875us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300000016875us-gaap:CargoAndFreightMember2022-09-300000016875cp:NonFreightMember2022-09-300000016875us-gaap:CargoAndFreightMember2021-12-310000016875cp:NonFreightMember2021-12-310000016875us-gaap:CargoAndFreightMember2022-06-300000016875cp:NonFreightMember2022-06-300000016875us-gaap:CargoAndFreightMember2021-06-300000016875cp:NonFreightMember2021-06-300000016875us-gaap:CargoAndFreightMember2021-09-300000016875cp:NonFreightMember2021-09-300000016875us-gaap:CargoAndFreightMember2020-12-310000016875cp:NonFreightMember2020-12-310000016875cp:KansasCitySouthernMember2022-09-300000016875cp:KansasCitySouthernMember2022-01-012022-09-300000016875cp:KansasCitySouthernMember2022-07-012022-09-300000016875cp:KansasCitySouthernMembercp:IncomeLossFromEquityMethodInvestmentsMember2022-07-012022-09-300000016875cp:KansasCitySouthernMembercp:IncomeLossFromEquityMethodInvestmentsMember2022-01-012022-09-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2021-07-012021-09-300000016875cp:KansasCitySouthernMembercp:PurchasedServicesandOtherMember2021-01-012021-09-300000016875cp:KansasCitySouthernMemberus-gaap:OtherNonoperatingIncomeExpenseMember2021-07-012021-09-300000016875cp:KansasCitySouthernMemberus-gaap:OtherNonoperatingIncomeExpenseMember2021-01-012021-09-300000016875cp:KansasCitySouthernMember2021-09-152021-09-150000016875cp:KansasCitySouthernMember2022-07-012022-09-300000016875cp:KansasCitySouthernMember2022-01-012022-09-300000016875cp:A510010YearNotesMember2022-01-012022-09-300000016875cp:A510010YearNotesMember2022-09-300000016875cp:A510010YearNotesMember2022-01-012022-09-300000016875cp:A450010YearNotesMember2022-01-012022-09-300000016875cp:A450010YearNotesMember2022-09-300000016875cp:A450010YearNotesMember2022-01-012022-09-300000016875cp:A699FinanceLeaseMember2022-01-012022-09-300000016875cp:A699FinanceLeaseMember2022-09-300000016875cp:TermCreditFacilityMember2022-03-140000016875cp:TermCreditFacilityMember2022-04-012022-06-300000016875cp:TermCreditFacilityMember2022-07-012022-09-300000016875us-gaap:CommercialPaperMember2022-09-300000016875us-gaap:RevolvingCreditFacilityMember2022-09-300000016875us-gaap:CommercialPaperMember2021-12-310000016875us-gaap:NetInvestmentHedgingMember2022-07-012022-09-300000016875us-gaap:NetInvestmentHedgingMember2022-01-012022-09-300000016875us-gaap:NetInvestmentHedgingMember2021-07-012021-09-300000016875us-gaap:NetInvestmentHedgingMember2021-01-012021-09-300000016875cp:A2021NormalCourseIssuerBidNCIBMember2021-01-290000016875us-gaap:PensionPlansDefinedBenefitMember2022-07-012022-09-300000016875us-gaap:PensionPlansDefinedBenefitMember2022-01-012022-09-300000016875us-gaap:PensionPlansDefinedBenefitMember2021-07-012021-09-300000016875us-gaap:PensionPlansDefinedBenefitMember2021-01-012021-09-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-07-012022-09-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-07-012021-09-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-012022-09-300000016875us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-09-300000016875us-gaap:EmployeeStockOptionMember2022-01-012022-09-300000016875us-gaap:EmployeeStockOptionMembersrt:MinimumMember2022-01-012022-09-300000016875us-gaap:EmployeeStockOptionMembersrt:MaximumMember2022-01-012022-09-300000016875us-gaap:PerformanceSharesMember2022-01-012022-09-300000016875cp:PerformanceDeferredShareUnitsMember2022-01-012022-09-300000016875cp:PSUsandPDSUsMember2022-01-012022-09-300000016875cp:PerformanceDeferredShareUnitsMember2022-09-300000016875us-gaap:PerformanceSharesMember2019-01-012019-12-310000016875us-gaap:PerformanceSharesMember2022-01-012022-03-310000016875us-gaap:PerformanceSharesMember2021-01-012021-12-310000016875cp:DeferredShareUnitMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:ClaimedLossorDamagesDuetoDerailmentMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:QuebecMinisterofSustainableDevelopmentandEnvironmentMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:QuebecAttorneyGeneralMember2022-01-012022-09-300000016875cp:InitialInsurerClaimantsMembercp:LacMeganticRailAccidentMembercp:SubrogatedInsuranceClaimMember2022-09-30cp:claim0000016875cp:InitialInsurerClaimantsMembercp:LacMeganticRailAccidentMembercp:SubrogatedInsuranceClaimMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:AdditionalInsurerClaimantsMembercp:SubrogatedInsuranceClaimMember2022-09-300000016875cp:LacMeganticRailAccidentMembercp:AdditionalInsurerClaimantsMembercp:SubrogatedInsuranceClaimMember2022-01-012022-09-300000016875cp:PlaintiffMembercp:LacMeganticRailAccidentMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:MMARMembercp:DamagesforlossinbusinessvalueMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:TheWDTrusteeMembercp:LadingLossRecoveryMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:TheWDTrusteeMembercp:ReimbursementforsettlementpaidbyconsignorMember2022-01-012022-09-300000016875cp:LacMeganticRailAccidentMembercp:TheWDTrusteeMembercp:ReimbursementforsettlementpaidbyconsigneeMember2022-01-012022-09-300000016875cp:RemingtonDevelopmentCorporationLegalClaimMemberus-gaap:SubsequentEventMembercp:RemingtonDevelopmentCorporationMembercp:BreachOfContractMember2022-10-202022-10-20

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

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

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

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



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ
As of the close of business on October 25, 2022, there were 930,123,568 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 Nine Months Ended September 30, 2022 and 2021
Interim Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30, 2022 and 2021
Interim Consolidated Balance Sheets
As at September 30, 2022 and December 31, 2021
Interim Consolidated Statements of Cash Flows
For the Three and Nine Months Ended September 30, 2022 and 2021
Interim Consolidated Statements of Changes in Shareholders' Equity
For the Three and Nine Months Ended September 30, 2022 and 2021
Notes to Interim Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
Performance Indicators
Financial Highlights
Results of Operations
Liquidity and Capital Resources
Share Capital
Non-GAAP Measures
Critical Accounting Estimates
Forward-Looking Statements
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4.Controls and Procedures
PART II - OTHER INFORMATION
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5. Other Information
Item 6.Exhibits
Signature






PART I

ITEM 1. FINANCIAL STATEMENTS

INTERIM CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars, except share and per share data)2022202120222021
Revenues (Note 3)
Freight$2,264 $1,896 $6,214 $5,822 
Non-freight48 46 138 133 
Total revenues2,312 1,942 6,352 5,955 
Operating expenses
Compensation and benefits393 381 1,154 1,165 
Fuel358 199 1,001 623 
Materials66 51 191 164 
Equipment rents33 31 97 92 
Depreciation and amortization213 203 634 605 
Purchased services and other (Note 10)
312 303 935 932 
Total operating expenses1,375 1,168 4,012 3,581 
Operating income937 774 2,340 2,374 
Less:
Equity earnings of Kansas City Southern (Note 10)
(221) (627) 
Other expense (Note 4, 10)7 124 13 253 
Merger termination fee (Note 10)
   (845)
Other components of net periodic benefit recovery (Note 15)(102)(95)(304)(286)
Net interest expense166 104 486 315 
Income before income tax expense1,087 641 2,772 2,937 
Income tax expense (Note 5)
196 169 526 617 
Net income$891 $472 $2,246 $2,320 
Earnings per share (Note 6)
Basic earnings per share$0.96 $0.71 $2.42 $3.48 
Diluted earnings per share$0.96 $0.70 $2.41 $3.46 
Weighted-average number of shares (millions) (Note 6)
Basic930.0 666.9 929.9 666.7 
Diluted932.9 669.8 932.8 669.8 
Dividends declared per share $0.190 $0.190 $0.570 $0.570 
See Notes to Interim Consolidated Financial Statements.
2


INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Net income$891 $472 $2,246 $2,320 
Net gain (loss) in foreign currency translation adjustments, net of hedging activities1,565 (17)1,948 3 
Change in derivatives designated as cash flow hedges2 141 5 69 
Change in pension and post-retirement defined benefit plans22 53 99 158 
Equity accounted investments47  182  
Other comprehensive income before income taxes1,636 177 2,234 230 
Income tax recovery (expense) on above items36 (29)2 (59)
Other comprehensive income (Note 7)1,672 148 2,236 171 
Comprehensive income$2,563 $620 $4,482 $2,491 
See Notes to Interim Consolidated Financial Statements.
3


INTERIM CONSOLIDATED BALANCE SHEETS AS AT
(unaudited)
September 30December 31
(in millions of Canadian dollars)20222021
Assets
Current assets
Cash and cash equivalents $138 $69 
Restricted cash and cash equivalents 13 
Accounts receivable, net (Note 8)
1,053 819 
Materials and supplies267 235 
Other current assets186 216 
1,644 1,352 
Investment in Kansas City Southern (Note 11)
45,964 42,309 
Investments230 209 
Properties22,150 21,200 
Goodwill and intangible assets390 371 
Pension asset2,631 2,317 
Other assets426 419 
Total assets$73,435 $68,177 
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities$1,575 $1,609 
Long-term debt maturing within one year (Note 12, 13)
1,236 1,550 
2,811 3,159 
Pension and other benefit liabilities 726 718 
Other long-term liabilities519 542 
Long-term debt (Note 12, 13)
19,339 18,577 
Deferred income taxes12,226 11,352 
Total liabilities35,621 34,348 
Shareholders’ equity
Share capital 25,498 25,475 
Additional paid-in capital77 66 
Accumulated other comprehensive income (loss) (Note 7)133 (2,103)
Retained earnings12,106 10,391 
37,814 33,829 
Total liabilities and shareholders’ equity$73,435 $68,177 
See Contingencies (Note 17).
See Notes to Interim Consolidated Financial Statements.
4


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Operating activities
Net income$891 $472 $2,246 $2,320 
Reconciliation of net income to cash provided by operating activities:
Depreciation and amortization213 203 634 605 
Deferred income tax expense (Note 5)38 130 151 190 
Pension recovery and funding (Note 15)(74)(62)(218)(188)
Equity earnings of Kansas City Southern (Note 10)
(221) (627) 
Foreign exchange loss (gain) on debt and lease liabilities (Note 4) 46  (39)
Dividend from Kansas City Southern (Note 10)
259  593  
Other operating activities, net(3)(14)(102)(50)
Change in non-cash working capital balances related to operations(1)(227)(255)246 
Cash provided by operating activities1,102 548 2,422 3,084 
Investing activities
Additions to properties(422)(372)(1,018)(1,111)
Payment to Kansas City Southern (Note 10)
 (1,773) (1,773)
Proceeds from sale of properties and other assets11 16 37 65 
Other1  3 (1)
Cash used in investing activities(410)(2,129)(978)(2,820)
Financing activities
Dividends paid(177)(127)(530)(380)
Issuance of CP Common Shares9 4 18 20 
Repayment of long-term debt, excluding commercial paper (Note 12)
(7)(318)(559)(349)
Repayment of term loan (Note 12)
(504) (636) 
Proceeds from term loan
 633  633 
Net (repayment) issuance of commercial paper (Note 12)(42)713 298 (66)
Acquisition-related financing fees (Note 10)
   (45)
Other (3) (7)
Cash (used in) provided by financing activities(721)902 (1,409)(194)
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents13 10 21 6 
Cash position
(Decrease) increase in cash, cash equivalents, and restricted cash(16)(669)56 76 
Cash, cash equivalents, and restricted cash at beginning of period154 892 82 147 
Cash, cash equivalents, and restricted cash at end of period$138 $223 $138 $223 
Supplemental disclosures of cash flow information:
Income taxes paid $67 $129 $319 $401 
Interest paid$148 $153 $467 $365 
See Notes to Interim Consolidated Financial Statements.
5


INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited)
For the three months ended September 30
(in millions of Canadian dollars except per share data)Common Shares (in millions)Share
capital
Additional
paid-in
capital
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Total
shareholders’
equity
Balance as at July 1, 2022
930.0 $25,488 $73 $(1,539)$11,392 $35,414 
Net income    891 891 
Other comprehensive income (Note 7)   1,672  1,672 
Dividends declared ($0.190 per share)
    (177)(177)
Effect of stock-based compensation expense  5   5 
Shares issued under stock option plan0.1 10 (1)  9 
Balance as at September 30, 2022
930.1 $25,498 $77 $133 $12,106 $37,814 
Balance as at July 1, 2021
666.8 $2,003 $63 $(2,791)$9,690 $8,965 
Net income—    472 472 
Other comprehensive income (Note 7)—   148  148 
Dividends declared ($0.190 per share)
—    (127)(127)
Effect of stock-based compensation expense—  6   6 
Shares issued under stock option plan0.1 5 (1)  4 
Balance as at September 30, 2021
666.9 $2,008 $68 $(2,643)$10,035 $9,468 
For the nine months ended September 30
(in millions of Canadian dollars except per share data)Common Shares (in millions)Share
capital
Additional
paid-in
capital
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Total
shareholders’
equity
Balance as at January 1, 2022929.7 $25,475 $66 $(2,103)$10,391 $33,829 
Net income    2,246 2,246 
Other comprehensive income (Note 7)   2,236  2,236 
Dividends declared ($0.570 per share)
    (531)(531)
Effect of stock-based compensation expense  17   17 
Shares issued for Kansas City Southern acquisition  (2)  (2)
Shares issued under stock option plan0.4 23 (4)  19 
Balance as at September 30, 2022
930.1 $25,498 $77 $133 $12,106 $37,814 
Balance as at January 1, 2021666.3 $1,983 $55 $(2,814)$8,095 $7,319 
Net income—    2,320 2,320 
Other comprehensive income (Note 7)—   171  171 
Dividends declared ($0.570 per share)
—    (380)(380)
Effect of stock-based compensation expense—  18   18 
Shares issued under stock option plan0.6 25 (5)  20 
Balance as at September 30, 2021
666.9 $2,008 $68 $(2,643)$10,035 $9,468 
See Notes to Interim Consolidated Financial Statements.
6


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

1    Basis of presentation

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

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

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

2    Accounting changes

Implemented in 2022

Government Assistance

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

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

Future changes

Contract Assets and Contract Liabilities Acquired in a Business Combination

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

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


7


3    Revenues

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

For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Freight
Grain$391 $352 $1,121 $1,244 
Coal156 158 458 491 
Potash170 113 445 348 
Fertilizers and sulphur81 72 244 227 
Forest products109 89 299 259 
Energy, chemicals and plastics360 392 1,010 1,149 
Metals, minerals and consumer products246 196 655 535 
Automotive111 83 322 289 
Intermodal640 441 1,660 1,280 
Total freight revenues2,264 1,896 6,214 5,822 
Non-freight excluding leasing revenues28 25 77 75 
Revenues from contracts with customers2,292 1,921 6,291 5,897 
Leasing revenues20 21 61 58 
Total revenues$2,312 $1,942 $6,352 $5,955 

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 September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Opening balance$69 $245 $67 $61 
Revenue recognized that was included in the contract liability balance at the beginning of the period(8)(93)(16)(36)
Increase due to consideration received, net of revenue recognized during the period4 4 14 131 
Closing balance$65 $156 $65 $156 

4    Other expense

For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Foreign exchange loss (gain) on debt and lease liabilities$ $46 $ $(39)
Other foreign exchange losses (gains)2 (7)1 (9)
Acquisition-related costs (Note 10)
 83  295 
Other5 2 12 6 
Other expense$7 $124 $13 $253 

8


5    Income taxes

For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Current income tax expense$158 $39 $375 $427 
Deferred income tax expense 38 130 151 190 
Income tax expense$196 $169 $526 $617 

During the three months ended September 30, 2022, legislation was enacted to decrease the Iowa state corporate income tax rate. As a result of this change, the Company recorded a deferred tax recovery of $12 million related to the revaluation of deferred income tax balances as at January 1, 2022.

The effective tax rates including discrete items for the three and nine months ended September 30, 2022 were 18.01% and 18.97%, respectively, compared to 26.36% and 21.00%, respectively for the same periods of 2021.

For the three months ended September 30, 2022, the effective tax rate was 24.25%, excluding the discrete items of the equity earnings of Kansas City Southern ("KCS") of $221 million, acquisition-related costs incurred by CP of $18 million, the deferred tax recovery of $12 million described above, and an outside basis deferred tax recovery of $9 million arising from the difference between the carrying amount of CP's investment in KCS for financial reporting and the underlying tax basis of this investment.

For the three months ended September 30, 2021, the effective tax rate was 24.60%, excluding the discrete items of acquisition-related costs incurred by CP of $98 million, and a foreign exchange ("FX") loss of $46 million on debt and lease liabilities.

For the nine months ended September 30, 2022, the effective tax rate was 24.25%, excluding the discrete items of the equity earnings of KCS of $627 million, acquisition-related costs incurred by CP of $57 million, the deferred tax recovery of $12 million described above, and an outside basis deferred tax expense of $8 million arising from the difference between the carrying amount of CP's investment in KCS for financial reporting and the underlying tax basis of this investment.

For the nine months ended September 30, 2021, the effective tax rate was 24.60%, excluding the discrete items of acquisition-related costs incurred by CP of $442 million, the merger termination payment received in connection with KCS's termination of the Agreement and Plan of Merger (the "Original Merger Agreement") of $845 million (U.S. $700 million), and an FX gain of $39 million on debt and lease liabilities.

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 September 30For the nine months ended September 30
(in millions)2022202120222021
Weighted-average basic shares outstanding930.0 666.9 929.9 666.7 
Dilutive effect of stock options2.9 2.9 2.9 3.1 
Weighted-average diluted shares outstanding932.9 669.8 932.8 669.8 

For the three and nine months ended September 30, 2022, there were nil and 0.3 million options, respectively, excluded from the computation of diluted earnings per share because their effects were not dilutive (three and nine months ended September 30, 2021 - 0.2 million and 0.1 million, respectively).

9


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

For the three months ended September 30
(in millions of Canadian dollars)
Foreign currency net of hedging activities(1)
Derivatives(1)(2)
Pension and post-
retirement defined
benefit plans
(1)
Equity accounted investments(1)(2)
Total(1)
Opening balance,
July 1, 2022
$217 $(2)$(1,856)$102 $(1,539)
Other comprehensive income (loss) before reclassifications1,618  (14)37 1,641 
Amounts reclassified from accumulated other comprehensive income 1 30  31 
Net other comprehensive income1,618 1 16 37 1,672 
Closing balance,
September 30, 2022
$1,835 $(1)$(1,840)$139 $133 
Opening balance, July 1, 2021$110 $(91)$(2,800)$(10)$(2,791)
Other comprehensive income before reclassifications6 101   107 
Amounts reclassified from accumulated other comprehensive loss 2 39  41 
Net other comprehensive income6 103 39  148 
Closing balance,
September 30, 2021
$116 $12 $(2,761)$(10)$(2,643)
(1)Amounts are presented net of tax.
(2) Comparative figures have been reclassified to conform with current period presentation.

For the nine months ended September 30
(in millions of Canadian dollars)
Foreign currency net of hedging activities(1)
Derivatives(1)(2)
Pension and post-
retirement defined
benefit plans
(1)
Equity accounted investments(1)(2)
Total(1)
Opening balance, January 1, 2022$(182)$(4)$(1,915)$(2)$(2,103)
Other comprehensive income (loss) before reclassifications2,017  (14)140 2,143 
Amounts reclassified from accumulated other comprehensive income 3 89 1 93 
Net other comprehensive income2,017 3 75 141 2,236 
Closing balance, September 30, 2022$1,835 $(1)$(1,840)$139 $133 
Opening balance, January 1, 2021$112 $(40)$(2,878)$(8)$(2,814)
Other comprehensive income (loss) before reclassifications4 46  (2)48 
Amounts reclassified from accumulated other comprehensive loss 6 117  123 
Net other comprehensive income (loss)4 52 117 (2)171 
Closing balance, September 30, 2021$116 $12 $(2,761)$(10)$(2,643)
(1)Amounts are presented net of tax.
(2) Comparative figures have been reclassified to conform with current period presentation.

10


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

For the three months ended September 30For the nine months ended September 30
(in millions of Canadian dollars)2022202120222021
Recognition of net actuarial loss(1)
$39 $53 $116 $158 
Income tax recovery(9)(14)(