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What Changed
Risk factors · Feb 27, 2025 → Feb 26, 2026
110 added · 89 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
For the year ended December 31 2025 2024 Diluted EPS as reported $ 4.51 $ 3.98 Less: Significant items (pre-tax): Gain on sale of equity investment 0.36 — Acquisition-related costs (0.08) (0.12) KCS purchase accounting (0.43) (0.38) Add: Tax effect of adjustments (1) (0.05) (0.14) Income tax rate changes — (0.09) Core adjusted diluted EPS $ 4.61 $ 4.25 (1) The tax effect of adjustments was calculated as the pre-tax effect of the significant items and KCS purchase accounting listed above multiplied by the applicable tax rate for the above items of 34.76% for the year ended December 31, 2025 and 27.13% for the year ended December 31, 2024.
For the year ended December 31 2025 2024 Operating ratio as reported 62.8 % 64.4 % Less: Acquisition-related costs 0.4 % 0.8 % KCS purchase accounting in Operating expenses 2.5 % 2.3 % Core adjusted operating ratio 59.9 % 61.3 % 52 / CPKC 2025 ANNUAL REPORT Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgements that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts and classification of revenues, expenses and other income items during the reporting period.
This Management's Discussion and Analysis of Financial Condition and Results of Operations and Annual Report on Form 10-K includes forward-looking statements concerning, but not limited to, the integration of KCS and the realization and timing of anticipated benefits and synergies from the CP-KCS combination, the expected impact of changes in FX rates (including the U.S. dollar and Mexican peso relative to the Canadian dollar), expected long-term rate of return on plan assets, net periodic benefit recovery in 2026, anticipated 2026 capital programs, expected core adjusted effective tax rate, share-price sensitivity of stock-based compensation, the impact of fuel prices, including the timing of recoveries under the Company’s fuel cost adjustment program, the Company’s operations, anticipated financial performance, business prospects and strategies, the sufficiency of cash flow from operations and available financing to meet short-term and long-term obligations, and future payments, including income taxes.
Kennedy, Director, Chair of the Board Chair of the Audit and Finance Committee 64 / CPKC 2025 ANNUAL REPORT CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31 (in millions of Canadian dollars) 2025 2024 2023 Operating activities Net income $ 4,137 $ 3,713 $ 3,923 Reconciliation of net income to cash provided by operating activities: Depreciation and amortization 2,019 1,900 1,543 Deferred income tax expense (recovery) (Note 7) 171 28 ( 7,885 ) Pension recovery and funding (Note 23) ( 367 ) ( 305 ) ( 306 ) Equity earnings of Kansas City Southern (Note 11, 12) — — ( 230 ) Remeasurement loss of Kansas City Southern (Note 11) — — 7,175 Gain on sale of equity investment (Note 6) ( 333 ) — — Dividends from Kansas City Southern (Note 12) — — 300 Settlement of Mexican taxes (Note 7) ( 12 ) ( 12 ) ( 135 ) Settlement of foreign currency forward contracts (Note 18) — ( 65 ) — Other operating activities, net ( 110 ) ( 14 ) 60 Change in non-cash working capital balances related to operations (Note 22) ( 196 ) 24 ( 308 ) Net cash provided by operating activities 5,309 5,269 4,137 Investing activities Additions to properties ( 3,102 ) ( 2,825 ) ( 2,468 ) Additions to Meridian Speedway properties ( 38 ) ( 38 ) ( 31 ) Proceeds from sale of properties and other assets 58 64 57 Proceeds from sale of equity investment (Note 6) 493 — — Cash acquired on control of Kansas City Southern (Note 11) — — 298 Investment in government securities (Note 17) — — ( 267 ) Proceeds from settlement of government securities (Note 17) — — 274 Other investing activities, net ( 76 ) 3 ( 25 ) Net cash used in investing activities ( 2,665 ) ( 2,796 ) ( 2,162 ) Financing activities Dividends paid ( 796 ) ( 709 ) ( 707 ) Issuance of Common Shares (Note 21) 73 69 69 Purchase of Common Shares (Note 21) ( 3,942 ) — — Repayment of long-term debt, excluding commercial paper (Note 17) ( 951 ) ( 2,327 ) ( 2,395 ) Issuance of long-term debt, excluding commercial paper (Note 17) 3,102 — — Net (repayment) issuance of commercial paper (Note 17) ( 346 ) 439 1,095 Net (repayment) issuance in short-term borrowings (Note 17) ( 278 ) 274 — Acquisition-related financing fees — — ( 17 ) Other financing activities, net ( 8 ) 2 — Net cash used in financing activities ( 3,146 ) ( 2,252 ) ( 1,955 ) Effect of foreign currency fluctuations on foreign-denominated cash and cash equivalents ( 53 ) 54 ( 7 ) Cash position (Decrease) increase in cash and cash equivalents ( 555 ) 275 13 Cash and cash equivalents at beginning of period 739 464 451 Cash and cash equivalents at end of year $ 184 $ 739 $ 464 Supplemental disclosures of cash flow information: Income taxes paid $ 1,155 $ 958 $ 906 Interest paid $ 863 $ 814 $ 825 See Notes to Consolidated Financial Statements.
CPKC 2025 ANNUAL REPORT / 65 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in millions of Canadian dollars, except per share data) Share capital Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Total shareholders’ equity Non-controlling interest Total equity Balance as at December 31, 2022 $ 25,516 $ 78 $ 91 $ 13,201 $ 38,886 $ — $ 38,886 Net income (loss) — — — 3,927 3,927 ( 4 ) 3,923 Other comprehensive loss (Note 9) — — ( 709 ) — ( 709 ) ( 9 ) ( 718 ) Dividends declared ($ 0.760 per share) — — — ( 708 ) ( 708 ) — ( 708 ) Effect of stock-based compensation expense — 27 — — 27 — 27 Shares issued under stock option plan (Note 21) 86 ( 17 ) — — 69 — 69 Non-controlling interest in connection with business acquisition (Note 11) — — — — — 932 932 Balance as at December 31, 2023 25,602 88 ( 618 ) 16,420 41,492 919 42,411 Net income (loss) — — — 3,718 3,718 ( 5 ) 3,713 Contribution from non-controlling interest — — — — — 2 2 Other comprehensive income (Note 9) — — 3,298 — 3,298 82 3,380 Dividends declared ($ 0.760 per share) — — — ( 709 ) ( 709 ) — ( 709 ) Effect of stock-based compensation expense — 24 — — 24 — 24 Shares issued under stock option plan (Note 21) 87 ( 18 ) — — 69 — 69 Balance as at December 31, 2024 25,689 94 2,680 19,429 47,892 998 48,890 Net income (loss) — — — 4,141 4,141 ( 4 ) 4,137 Contribution from non-controlling interest — — — — — 2 2 Other comprehensive loss (Note 9) — — ( 1,442 ) — ( 1,442 ) ( 48 ) ( 1,490 ) Dividends declared ($ 0.874 per share) — — — ( 796 ) ( 796 ) — ( 796 ) Effect of stock-based compensation expense — 28 — — 28 — 28 Common Shares repurchased (Note 21) ( 1,028 ) — — ( 2,991 ) ( 4,019 ) — ( 4,019 ) Shares issued under stock option plan (Note 21) 90 ( 17 ) — — 73 — 73 Balance as at December 31, 2025 $ 24,751 $ 105 $ 1,238 $ 19,783 $ 45,877 $ 948 $ 46,825 See Notes to Consolidated Financial Statements. 66 / CPKC 2025 ANNUAL REPORT CANADIAN PACIFIC KANSAS CITY LIMITED Notes to Consolidated Financial Statements December 31, 2025 1.
These significant items may include, but are not limited to, restructuring and asset impairment charges, individually significant gains and losses from sales of assets, acquisition-related costs, adjustments to provisions and settlements of Mexican taxes, a gain on sale of an equity investment, discrete tax items, changes in income tax rates, changes to uncertain tax items, and certain items outside the control of management.
North American and global economic growth and conditions; industry capacity; shifts in market demand; changes in commodity prices and commodity demand; uncertainty surrounding timing and volumes of commodities being shipped by the Company; inflation; geopolitical instability; changes in laws, regulations and government policies, including, without limitation, those relating to regulation of rates, tariffs, import/export, trade, wages, labour and immigration; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; disruption of fuel supplies; uncertainties of investigations, proceedings or other types of claims and litigation; compliance with environmental regulations; labour disputes; changes in labour costs and labour difficulties; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; sufficiency of budgeted capital expenditures in carrying out business plans; services and infrastructure; the satisfaction by third parties of their obligations; currency and interest rate fluctuations;
These and other factors that could cause actual results to differ materially from those described in the forward-looking statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations and Annual Report on Form 10-K are detailed from time to time in reports filed by the Company with securities regulators in Canada and the U.S., which can be accessed on SEDAR+ (www.sedarplus.ca) and EDGAR (www.sec.gov).
Acquisition-related costs include legal, consulting, integration costs including third-party services and system migration, restructuring and special termination benefit costs, employee retention and synergy incentive costs.
Lower fuel prices, which includes lower carbon levy surcharge revenue due to the elimination of the Canadian federal carbon tax program effective April 1, 2025, and the unfavourable impact of the timing of recoveries under the Company's fuel cost adjustment program, resulted in a decrease in "Total revenues" of $205 million from 2024.
During 2025, the Company issued U.S. $600 million 4.80% 5-year unsecured notes due March 30, 2030 for net proceeds of U.S. $596 million ($857 million), $500 million 4.00% 7-year unsecured notes due June 13, 2032 for net proceeds of $498 million, U.S. $600 million 5.20% 10-year unsecured notes due March 30, 2035 for net proceeds of U.S. $593 million ($853 million), $600 million 4.40% 10.5-year unsecured notes due January 13, 2036 for net proceeds of $598 million, and $300 million 4.80% 30-year unsecured notes due June 13, 2055 for net proceeds of $296 million.
In 2025, the Company repaid, at maturity, the remaining balance of U.S. $642 million ($930 million) on its 2.90% 10-year notes. 44 / CPKC 2025 ANNUAL REPORT Effective August 20, 2025, the Company entered into a facility agreement to extend the maturity dates under the revolving credit facility.
No longer disclosed
For example, the operating ratio, which is used to reconcile to Core adjusted combined operating ratio, did not include KCS's operating ratio for the period January 1 through April 13, 2023, as equity income was recognized within non-operating earnings.
The most directly comparable GAAP measures to certain Non-GAAP measures already include KCS's net income attributable to shareholders as a result of applying the equity method of accounting following the acquisition of shares of KCS on December 14, 2021.
In 2023, there were five significant items included in Net income attributable to controlling shareholders as reported on a GAAP basis as follows: • in the second quarter, a remeasurement loss of KCS of $7,175 million recognized in "Remeasurement loss of Kansas City Southern" due to the derecognition of CPKC’s previously held equity method investment in KCS and remeasurement at its Control Date fair value, that unfavourably impacted Diluted EPS by $7.68; • during the course of the year, a total current tax expense of $16 million related to a tax settlement with the Servicio de Administracion Tributaria ("SAT") of $13 million and a reserve for the estimated impact of potential future audit settlements of $3 million, that unfavourably impacted Diluted EPS by 2 cents as follows: – in the fourth quarter, a current tax expense of $1 million related to a tax settlement with the SAT that had minimal impact on Diluted EPS; and – in the third quarter, a total current tax expense of $15 million related to a tax settlement with the SAT of $9 million and reserves for the estimated impact of potential future audit settlements of $6 million of which $3 million was settled in the fourth quarter, that unfavourably impacted Diluted EPS by 2 cents; • during the course of the year, a deferred income tax recovery of $72 million on account of changes in tax rates and apportionment, that favourably impacted Diluted EPS by 7 cents as follows: – in the fourth quarter, a deferred income tax recovery of $7 million due to CPKC unitary state apportionment changes, that favourably impacted Diluted EPS by 1 cent; – in the third quarter, a deferred income tax recovery of $14 million due to decreases in the Iowa and Arkansas state corporate income tax rates, that favourably impacted Diluted EPS by 2 cents; and – in the second quarter, a deferred income tax recovery of $51 million due to CPKC unitary state apportionment changes, that favourably impacted Diluted EPS by 5 cents; • during the course of the year, deferred income tax recovery of $7,855 million on changes in the outside basis difference on the equity investment in KCS, that favourably impacted Diluted EPS by $8.42 as follows: – in the second quarter, a deferred income tax recovery of $7,832 million related to the elimination of the deferred income tax liability on the outside basis difference of the investment in KCS, that favourably impacted Diluted EPS by $8.39; and – in the first quarter, a deferred income tax recovery of $23 million on changes in the outside basis difference of the equity investment in KCS that favourably impacted Diluted EPS by 3 cents; and • during the course of the year, acquisition-related costs of $201 million in connection with the KCS acquisition ($164 million after current income tax recovery of $37 million), including an expense of $71 million recognized in "Compensation and benefits", $2 million recognized in "Materials", $111 million recognized in "Purchased services and other", $6 million recognized in "Other (income) expense", and $11 million recognized in "Equity earnings of Kansas City Southern", that unfavourably impacted Diluted EPS by 17 cents as follows: – in the fourth quarter, acquisition-related costs of $32 million ($24 million after current income tax recovery of $8 million), including costs of $7 million recognized in "Compensation and benefits", $1 million recognized in "Materials", and $24 million recognized in "Purchased services and other", that unfavourably impacted Diluted EPS by 2 cents; – in the third quarter, acquisition-related costs of $24 million ($18 million after current income tax recovery of $6 million), including costs of $1 million recognized in "Compensation and benefits", $1 million recognized in "Materials", and $22 million recognized in "Purchased services and other", that unfavourably impacted Diluted EPS by 2 cents; – in the second quarter, acquisition-related costs of $120 million ($101 million after current income tax recovery of $19 million), including costs of $63 million recognized in "Compensation and benefits", $53 million recognized in "Purchased services and other", $3 million recognized in "Other (income) expense", and $1 million recognized in "Equity earnings of Kansas City Southern", that unfavourably impacted Diluted EPS by 11 cents; and – in the first quarter, acquisition-related costs of $25 million ($21 million after current income tax recovery of $4 million), including costs of $12 million recognized in "Purchased services and other", $3 million recognized in "Other (income) expense", and $10 million recognized in "Equity earnings of Kansas City Southern", that unfavourably impacted Diluted EPS by 2 cents. 50 / CPKC 2024 ANNUAL REPORT KCS purchase accounting included in Net income attributable to controlling shareholders as reported on a GAAP basis was as follows: 2024: • during the course of the year, KCS purchase accounting of $352 million ($256 million after deferred income tax recovery of $96 million), including costs of $333 million recognized in "Depreciation and amortization", $3 million recognized in "Purchased services and other" related to the amortization of equity investments, $20 million recognized in "Net interest expense", $3 million recognized in "Other (income) expense", and a recovery of $7 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 27 cents as follows: – in the fourth quarter, KCS purchase accounting of $93 million ($68 million after deferred income tax recovery of $25 million), including costs of $87 million recognized in "Depreciation and amortization", $1 million recognized in "Purchased services and other" related to the amortization of equity investments, $6 million recognized in "Net interest expense", $1 million recognized in "Other (income) expense", and a recovery of $2 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 8 cents; – in the third quarter, KCS purchase accounting of $89 million ($65 million after deferred income tax recovery of $24 million), including costs of $85 million recognized in "Depreciation and amortization", $4 million recognized in "Net interest expense", $1 million recognized in "Other (income) expense", and a recovery of $1 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 7 cents; – in the second quarter, KCS purchase accounting of $86 million ($62 million after deferred income tax recovery of $24 million), including costs of $82 million recognized in "Depreciation and amortization", $1 million recognized in "Purchased services and other" related to the amortization of equity investments, $5 million recognized in "Net interest expense", and a recovery of $2 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 6 cents; and – in the first quarter, KCS purchase accounting of $84 million ($61 million after deferred income tax recovery of $23 million), including costs of $79 million recognized in "Depreciation and amortization", $1 million recognized in "Purchased services and other" related to the amortization of equity investments, $5 million recognized in "Net interest expense", $1 million recognized in "Other (income) expense", and a recovery of $2 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 7 cents. 2023: • during the course of the year, KCS purchase accounting of $297 million ($228 million after deferred income tax recovery of $69 million), including costs of $234 million recognized in "Depreciation and amortization", $1 million recognized in "Purchased services and other" related to the amortization of equity investments, $17 million recognized in "Net interest expense", $2 million recognized in "Other (income) expense", $48 million recognized in "Equity earnings of Kansas City Southern", and a recovery of $5 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 25 cents as follows: – in the fourth quarter, KCS purchase accounting of $87 million ($62 million after deferred income tax recovery of $25 million), including costs of $85 million recognized in "Depreciation and amortization", $1 million recognized in "Purchased services and other" related to the amortization of equity investments, $6 million recognized in "Net interest expense", and a recovery of $5 million recognized in "Net loss attributable to non-controlling interest", that unfavourably impacted Diluted EPS by 7 cents; – in the third quarter, KCS purchase accounting of $87 million ($63 million after deferred income tax recovery of $24 million), including costs of $81 million recognized in "Depreciation and amortization", $5 million recognized in "Net interest expense", and $1 million in recognized in "Other (income) expense", that unfavourably impacted Diluted EPS by 7 cents; – in the second quarter, KCS purchase accounting of $81 million ($61 million after deferred income tax recovery of $20 million), including costs of $68 million recognized in "Depreciation and amortization", $6 million recognized in "Net interest expense", $1 million recognized in "Other (income) expense", and $6 million recognized in "Equity earnings of Kansas City Southern", that unfavourably impacted Diluted EPS by 6 cents; and – in the first quarter, KCS purchase accounting of $42 million recognized in "Equity earnings of Kansas City Southern", that unfavourably impacted Diluted EPS by 5 cents.
CPKC 2024 ANNUAL REPORT / 51 For the year ended December 31 2024 2023 CPKC diluted earnings per share as reported $ 3.98 $ 4.21 Less: Significant items (pre-tax): Remeasurement loss of Kansas City Southern — (7.68) Acquisition-related costs (0.12) (0.21) KCS purchase accounting (0.38) (0.32) Add: Tax effect of adjustments (1) (0.14) (0.11) Adjustments to provisions and settlements of Mexican taxes — 0.02 Income tax rate changes (0.09) (0.07) Deferred income tax recovery on the outside basis difference of the investment in KCS — (8.42) Core adjusted combined diluted earnings per share $ 4.25 $ 3.84 (1) The tax effect of adjustments was calculated as the pre-tax effect of the significant items and KCS purchase accounting listed above multiplied by the applicable tax rate for the above items of 27.13% for the year ended December 31, 2024 and 1.37% for the year ended December 31, 2023.
In 2024: • during the course of the year, adjustments to provisions and settlements of Mexican taxes of $4 million recovery recognized in "Compensation and benefits", that had minimal impact on operating ratio as follows: – in the fourth quarter, adjustments to provisions and settlements of Mexican taxes of $7 million recovery recognized in "Compensation and benefits", that favourably impacted operating ratio by 0.2%; – in the third quarter, adjustments to provisions and settlements of Mexican taxes of $7 million recovery recognized in "Compensation and benefits", that favourably impacted operating ratio by 0.2%; and – in the first quarter, adjustments to provisions and settlements of Mexican taxes of $10 million expense recognized in "Compensation and benefits", that unfavourably impacted operating ratio by 0.3%; and • during the course of the year, acquisition-related costs were $112 million in connection with the KCS acquisition including costs of $18 million recognized in "Compensation and benefits", $6 million recognized in"Materials", and $88 million recognized in "Purchased services and other", that unfavourably impacted operating ratio on a combined basis by 0.8%: – in the fourth quarter, acquisition-related costs of $22 million including costs of $1 million recognized in "Compensation and benefits", $1 million recognized in "Materials", and $20 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 0.5%; – in the third quarter, acquisition-related costs of $36 million including costs of $11 million recognized in "Compensation and benefits", $1 million recognized in "Materials", and $24 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 1.0%; – in the second quarter, acquisition-related costs of $28 million including costs of $2 million recognized in "Compensation and benefits", $2 million recognized in "Materials", and $24 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 0.7%; and – in the first quarter, acquisition-related costs of $26 million including costs of $4 million recognized in "Compensation and benefits", $2 million recognized in "Materials", and $20 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 0.8%. 52 / CPKC 2024 ANNUAL REPORT In 2023, acquisition-related costs were $197 million in connection with the KCS acquisition including costs of $82 million recognized in "Compensation and benefits", $2 million recognized in "Materials", and $113 million recognized in "Purchased services and other", that unfavourably impacted operating ratio on a combined basis, calculated in a manner consistent with Article 11, by 1.4%: • in the fourth quarter, acquisition-related costs of $32 million including costs of $7 million recognized in "Compensation and benefits", $1 million recognized in "Materials", and $24 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 0.8%; • in the third quarter, acquisition-related costs of $24 million including costs of $1 million recognized in "Compensation and benefits", $1 million recognized in "Materials", and $22 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 0.8%; • in the second quarter, acquisition-related costs of $116 million including costs of $63 million recognized in "Compensation and benefits", and $53 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 3.5%; and • in the first quarter, acquisition-related costs of $25 million including costs of $11 million recognized in "Compensation and benefits", and $14 million recognized in "Purchased services and other", that unfavourably impacted operating ratio by 0.7%.
CPKC 2024 ANNUAL REPORT / 53 For the year ended December 31 2024 2023 CPKC operating ratio as reported 64.4 % 65.0 % Add: KCS operating income as reported prior to Control Date (1) — % — % Pro forma Article 11 transaction accounting adjustments (2) — % 0.8 % 64.4 % 65.8 % Less: Acquisition-related costs 0.8 % 1.4 % KCS purchase accounting in Operating expenses 2.3 % 2.4 % Core adjusted combined operating ratio 61.3 % 62.0 % (1) KCS's historical amounts in U.S. dollars were translated into Canadian dollars at the Bank of Canada average exchange rate for the period from January 1 to April 13, 2023 with an effective exchange rate of $1.35.
For more information about these pro forma transaction accounting adjustments for the three months ended March 31, 2023, please see Exhibit 99.1 “Selected Unaudited Combined Summary of Historical Financial Data” of CPKC’s Current Report on Form 8-K furnished with the SEC on May 15, 2023. 54 / CPKC 2024 ANNUAL REPORT Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts and classification of revenues, expenses and other income items during the reporting period.
A provisional purchase price allocation was determined at the Control Date using the best available information at that time, and the accounting for the acquisition of KCS was completed on April 13, 2024, with the end of the measurement period and the final validation of the fair values assigned to acquired assets and assumed liabilities and non-controlling interest.
CPKC 2024 ANNUAL REPORT / 57 The fair value of the Concession rights and related assets assigned through the Purchase Price Allocation following the acquisition of KCS and as adjusted through the measurement period, are capitalized and depreciated using the group method of depreciation over the lesser of the current expected concession term, including probable renewal of an additional 50-year term, or the estimated useful lives of the assets and rights.
By their nature, forward-looking statements involve numerous inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including but not limited to the following factors: changes in business strategies and strategic opportunities; general North American and global social, economic, political, credit and business conditions; risks associated with 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 and commodity demand; uncertainty surrounding timing and volumes of commodities being shipped via the Company; inflation; geopolitical instability; changes in laws, regulations and government policies, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; disruption of fuel supplies; uncertainties of investigations, proceedings or other types of claims and litigation; compliance with environmental regulations; labour disputes; changes in labour costs and labour difficulties; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; sufficiency of budgeted capital expenditures in carrying out business plans; services and infrastructure; the satisfaction by third parties of their obligations; currency and interest rate fluctuations; exchange rates; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; trade restrictions, including the imposition of any tariffs, or other changes to international trade arrangements; the effects of current and future multinational trade agreements on or other developments affecting the level of trade among Canada, the U.S. and Mexico; climate change and the market and regulatory responses to climate change; anticipated in-service dates; success of hedging activities; operational performance and reliability; customer, regulatory and other stakeholder approvals and support; regulatory and legislative decisions and actions; the adverse impact of any termination or revocation by the Mexican government of the Concession; public opinion; various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches, volcanism and earthquakes, and cybersecurity attacks, as well as security threats and governmental response to them, and technological changes; acts of terrorism, war or other acts of violence or crime or risk of such activities; insurance coverage limitations; material adverse changes in economic and industry conditions; the outbreak of a pandemic or contagious disease and the resulting effects on economic conditions; the demand environment for logistics requirements and energy prices; restrictions imposed by CPKC 2024 ANNUAL REPORT / 59 public health authorities or governments; fiscal and monetary policy responses by governments and financial institutions; disruptions to global supply chains; the realization of anticipated benefits and synergies of the CP-KCS transaction and the timing thereof; the satisfaction of the conditions imposed by the U.S.
For example, CPKC's year ended December 31, 2023 diluted EPS, which included equity earnings of KCS for the period January 1 through April 13, 2023, is used to reconcile to Core adjusted combined diluted EPS.
It is not reasonably likely that the probability of renewal will change in the foreseeable future, however, the Business Acquisition section above provides details of the change in the fair value of the Concession at the Control Date based on a 10% change in probability of renewal.