01—Abstract
Summary
Summary of the 6-K filed November 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Canadian Pacific Railway Limited (CP) filed a Form 6-K on November 24, 2015, to furnish its recast audited consolidated financial statements for the years ended December 31, 2014, 2013, and 2012.
The primary driver for this filing was the retrospective adoption of Accounting Standards Update (ASU) 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This change impacts the presentation of debt issuance costs, moving them from an "Other assets" classification to a direct reduction of the carrying amount of the related debt on the balance sheet. Investors should note that while the overall financial performance for the period remains substantially the same, the balance sheet presentation has been adjusted. Specifically, "Other assets" and "Long-term debt" figures have been recast.
The filing also incorporates a supplemental Note 33, the "CCFI Note," which presents condensed consolidating financial information, providing a more detailed view of the company's financial position. This 6-K report is incorporated by reference into several of CP's S-8 registration statements, indicating its relevance to equity compensation plans.
02—Key points
Key Highlights
- Canadian Pacific Railway Limited (CP) filed a Form 6-K on November 24, 2015.
- The filing contains recast audited consolidated financial statements for the years ended December 31, 2014, 2013, and 2012.
- The primary reason for recasting the financials is the adoption of ASU 2015-03 regarding the presentation of debt issuance costs.
- Debt issuance costs are now presented as a direct reduction of long-term debt, affecting the "Other assets" and "Long-term debt" line items on the balance sheet.
- The financial statements include supplemental Note 33 (CCFI Note) with condensed consolidating financial information.
- This report is incorporated by reference into multiple S-8 registration statements related to CP's equity plans.
03—Questions
Frequently Asked Questions
What is the main purpose of this 8-K filing?
The main purpose of this filing is to present Canadian Pacific Railway Limited's (CP) recast audited consolidated financial statements for the years ended December 31, 2014, 2013, and 2012. This recasting is due to the adoption of a new accounting standard, ASU 2015-03, which simplifies the presentation of debt issuance costs.
How does the adoption of ASU 2015-03 affect CP's financial statements?
The adoption of ASU 2015-03 requires debt issuance costs to be presented as a direct reduction of the carrying amount of the related debt on the balance sheet, rather than being classified as 'Other assets'. This change has led to a retrospective adjustment of the balance sheets for the periods presented, specifically impacting the 'Other assets' and 'Long-term debt' line items.
Are the historical financial results of CP significantly changed by this accounting update?
The filing states that, except as otherwise indicated, the historical financial information contained in the 2014 Annual Financial Statements remains unchanged. The change primarily impacts the balance sheet presentation, not the underlying operational performance or profitability for the periods presented.
What is the significance of the CCFI Note?
The CCFI Note (Note 33) presents condensed consolidating financial information. This provides investors with a more detailed breakdown and understanding of the financial position of the parent company and its various subsidiaries or guarantees, which can be important for assessing overall financial health and specific segment performance.
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