financial instruments (Tables)
|
6 Months Ended |
Jun. 30, 2019 |
|---|
| financial instruments |
|
| Schedule of maximum exposure (excluding income tax effects) to credit risk |
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
As at (millions)
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Cash and temporary investments, net
|
|
$
|
217
|
|
$
|
414
|
|
Accounts receivable
|
|
|
1,835
|
|
|
1,600
|
|
Contract assets
|
|
|
1,281
|
|
|
1,318
|
|
Derivative assets
|
|
|
12
|
|
|
103
|
|
|
|
$
|
3,345
|
|
$
|
3,435
|
|
| Analysis of the age of customer accounts receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
|
As at (millions)
|
|
Gross
|
|
Allowance
|
|
Net 1
|
|
Gross
|
|
Allowance
|
|
Net 1
|
|
|
Customer accounts receivable, net of allowance for doubtful accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 30 days past billing date
|
|
$
|
934
|
|
$
|
(12)
|
|
$
|
922
|
|
$
|
762
|
|
$
|
(13)
|
|
$
|
749
|
|
|
30-60 days past billing date
|
|
|
224
|
|
|
(8)
|
|
|
216
|
|
|
354
|
|
|
(10)
|
|
|
344
|
|
|
61-90 days past billing date
|
|
|
59
|
|
|
(6)
|
|
|
53
|
|
|
80
|
|
|
(8)
|
|
|
72
|
|
|
More than 90 days past billing date
|
|
|
68
|
|
|
(16)
|
|
|
52
|
|
|
67
|
|
|
(22)
|
|
|
45
|
|
|
|
|
$
|
1,285
|
|
$
|
(42)
|
|
$
|
1,243
|
|
$
|
1,263
|
|
$
|
(53)
|
|
$
|
1,210
|
|
|
(1)
| |
Net amounts represent customer accounts receivable for which an allowance had not been made as at the dates of the Consolidated statements of financial position (see Note 6(b)). |
|
| Summary of activity related to the allowance for doubtful accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
|
|
Six months
|
|
Periods ended June 30 (millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Balance, beginning of period
|
|
$
|
43
|
|
$
|
47
|
|
$
|
53
|
|
$
|
43
|
|
Additions (doubtful accounts expense)
|
|
|
10
|
|
|
11
|
|
|
21
|
|
|
27
|
|
Accounts written off, net of recoveries
|
|
|
(11)
|
|
|
(13)
|
|
|
(33)
|
|
|
(27)
|
|
Other
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
3
|
|
Balance, end of period
|
|
$
|
42
|
|
$
|
46
|
|
$
|
42
|
|
$
|
46
|
|
| Summary of contract assets and related impairment allowance activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
As at (millions)
|
|
Gross
|
|
Allowance
|
|
Net (Note 6(c))
|
|
Gross
|
|
Allowance
|
|
Net (Note 6(c))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract assets, net of impairment allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To be billed and thus reclassified to accounts receivable during:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 12-month period ending one year hence
|
|
$
|
1,073
|
|
$
|
(54)
|
|
$
|
1,019
|
|
$
|
1,068
|
|
$
|
(51)
|
|
$
|
1,017
|
|
The 12-month period ending two years hence
|
|
|
430
|
|
|
(23)
|
|
|
407
|
|
|
466
|
|
|
(22)
|
|
|
444
|
|
Thereafter
|
|
|
16
|
|
|
(1)
|
|
|
15
|
|
|
15
|
|
|
(1)
|
|
|
14
|
|
|
|
$
|
1,519
|
|
$
|
(78)
|
|
$
|
1,441
|
|
$
|
1,549
|
|
$
|
(74)
|
|
$
|
1,475
|
|
| Schedule of contractual maturities of undiscounted financial liabilities, Non-derivative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative
|
|
Derivative
|
|
|
|
|
|
Non-interest
|
|
|
|
|
Construction
|
|
Long-term
|
|
Composite long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
bearing
|
|
|
|
|
credit facility
|
|
debt, excluding
|
|
|
|
Currency swap agreement
|
|
|
|
|
Currency swap agreement
|
|
|
|
|
|
|
financial
|
|
Short-term
|
|
commitment
|
|
leases 1
|
|
Leases
|
|
amounts to be exchanged 2
|
|
|
|
|
amounts to be exchanged
|
|
|
|
|
As at June 30, 2019 (millions)
|
|
liabilities
|
|
borrowings 1
|
|
(Note 21)
|
|
(Note 26)
|
|
(Notes 2(c), 26)
|
|
(Receive)
|
|
Pay
|
|
Other
|
|
(Receive)
|
|
Pay
|
|
Total
|
|
2019 (balance of year)
|
|
$
|
2,408
|
|
$
|
2
|
|
$
|
28
|
|
$
|
1,610
|
|
$
|
173
|
|
$
|
(356)
|
|
$
|
356
|
|
$
|
—
|
|
$
|
(273)
|
|
$
|
272
|
|
$
|
4,220
|
|
2020
|
|
|
339
|
|
|
3
|
|
|
—
|
|
|
571
|
|
|
332
|
|
|
(119)
|
|
|
118
|
|
|
—
|
|
|
(221)
|
|
|
223
|
|
|
1,246
|
|
2021
|
|
|
91
|
|
|
103
|
|
|
—
|
|
|
1,622
|
|
|
239
|
|
|
(119)
|
|
|
118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,054
|
|
2022
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
2,120
|
|
|
191
|
|
|
(119)
|
|
|
118
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
2,331
|
|
2023
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
944
|
|
|
173
|
|
|
(119)
|
|
|
118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,124
|
|
2024-2028
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
6,468
|
|
|
482
|
|
|
(1,980)
|
|
|
1,991
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,964
|
|
Thereafter
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,912
|
|
|
428
|
|
|
(3,116)
|
|
|
3,092
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,316
|
|
Total
|
|
$
|
2,865
|
|
$
|
108
|
|
$
|
28
|
|
$
|
23,247
|
|
$
|
2,018
|
|
$
|
(5,928)
|
|
$
|
5,911
|
|
$
|
5
|
|
$
|
(494)
|
|
$
|
495
|
|
$
|
28,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (Note 26(g))
|
|
|
|
|
$
|
25,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
| |
Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at June 30, 2019. |
|
(2)
| |
The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar-denominated long-term debt, and the corresponding amounts in the long-term debt currency swaps receive column, have been determined based upon the currency exchange rates in effect as at June 30, 2019. The hedged U.S. dollar-denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swaps pay column as gross cash flows are exchanged pursuant to the currency swap agreements. |
|
| Schedule of contractual maturities of undiscounted financial liabilities, Derivative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative
|
|
|
|
|
Derivative
|
|
|
|
|
|
|
Non-interest
|
|
|
|
|
Construction
|
|
Composite long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
bearing
|
|
|
|
|
credit facilities
|
|
|
|
|
|
|
|
Currency swap agreement
|
|
|
|
|
Currency swap agreement
|
|
|
|
|
|
|
financial
|
|
Short-term
|
|
commitment
|
|
Long-term
|
|
Finance
|
|
amounts to be exchanged 2
|
|
|
|
|
amounts to be exchanged
|
|
|
|
|
As at December 31, 2018 (millions)
|
|
liabilities
|
|
borrowings 1
|
|
(Note 21)
|
|
debt 1
|
|
leases 1
|
|
(Receive)
|
|
Pay
|
|
Other
|
|
(Receive)
|
|
Pay
|
|
Total
|
|
2019
|
|
$
|
2,372
|
|
$
|
3
|
|
$
|
45
|
|
$
|
1,349
|
|
$
|
55
|
|
$
|
(877)
|
|
$
|
851
|
|
$
|
—
|
|
$
|
(542)
|
|
$
|
516
|
|
$
|
3,772
|
|
2020
|
|
|
251
|
|
|
3
|
|
|
—
|
|
|
1,567
|
|
|
51
|
|
|
(95)
|
|
|
89
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1,867
|
|
2021
|
|
|
102
|
|
|
103
|
|
|
—
|
|
|
1,567
|
|
|
—
|
|
|
(95)
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,766
|
|
2022
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
2,086
|
|
|
—
|
|
|
(95)
|
|
|
89
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2,099
|
|
2023
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
886
|
|
|
—
|
|
|
(95)
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
899
|
|
2024-2028
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
6,240
|
|
|
—
|
|
|
(1,917)
|
|
|
1,847
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,190
|
|
Thereafter
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,744
|
|
|
—
|
|
|
(1,964)
|
|
|
1,832
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,612
|
|
Total
|
|
$
|
2,782
|
|
$
|
109
|
|
$
|
45
|
|
$
|
21,439
|
|
$
|
106
|
|
$
|
(5,138)
|
|
$
|
4,886
|
|
$
|
2
|
|
$
|
(542)
|
|
$
|
516
|
|
$
|
24,205
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
21,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
| |
Cash outflows in respect of interest payments on our short-term borrowings, commercial paper and amounts drawn under our credit facilities (if any) have been calculated based upon the interest rates in effect as at December 31, 2018. |
|
(2)
| |
The amounts included in undiscounted non-derivative long-term debt in respect of U.S. dollar-denominated long-term debt, and the corresponding amounts in the long-term debt currency swaps receive column, have been determined based upon the currency exchange rates in effect as at December 31, 2018. The hedged U.S. dollar-denominated long-term debt contractual amounts at maturity, in effect, are reflected in the long-term debt currency swaps pay column as gross cash flows are exchanged pursuant to the currency swap agreements. |
|
| Sensitivity analysis of exposure to market risks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
Other comprehensive income
|
|
Comprehensive income
|
|
Six-month periods ended June 30 (increase (decrease) in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Reasonably possible changes in market risks 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10% change in C$: US$ exchange rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian dollar appreciates
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(55)
|
|
$
|
(17)
|
|
$
|
(55)
|
|
$
|
(17)
|
|
Canadian dollar depreciates
|
|
$
|
—
|
|
$
|
—
|
|
$
|
55
|
|
$
|
17
|
|
$
|
55
|
|
$
|
17
|
|
25 basis point change in interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rates increase
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4
|
|
$
|
4
|
|
$
|
4
|
|
$
|
4
|
|
Interest rates decrease
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(4)
|
|
$
|
(3)
|
|
$
|
(4)
|
|
$
|
(3)
|
|
25% 2 change in Common Share price 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price increases
|
|
$
|
(4)
|
|
$
|
(15)
|
|
$
|
1
|
|
$
|
20
|
|
$
|
(3)
|
|
$
|
5
|
|
Price decreases
|
|
$
|
19
|
|
$
|
23
|
|
$
|
(1)
|
|
$
|
(20)
|
|
$
|
18
|
|
$
|
3
|
|
(1)
| |
These sensitivities are hypothetical and should be used with caution. Changes in net income and/or other comprehensive income generally cannot be extrapolated because the relationship of the change in assumption to the change in net income and/or other comprehensive income may not be linear. In this table, the effect of a variation in a particular assumption on the amount of net income and/or other comprehensive income is calculated without changing any other factors; in reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities. |
The sensitivity analysis assumes that we would realize the changes in exchange rates; in reality, the competitive marketplace in which we operate would have an effect on this assumption.
No consideration has been made for a difference in the notional number of Common Shares associated with share-based compensation awards made during the reporting period that may have arisen due to a difference in the Common Share price.
|
(2)
| |
To facilitate ongoing comparison of sensitivities, a constant variance of approximate magnitude has been used. Reflecting a six-month data period and calculated on a monthly basis, the volatility of our Common Share price as at June 30, 2019, was 12.5% (2018 – 7.7%). |
|
(3)
| |
The hypothetical effects of changes in the price of our Common Shares are restricted to those which would arise from our share-based compensation awards that are accounted for as liability instruments and the associated cash-settled equity swap agreements. |
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| Schedule of derivative financial instruments measured at fair value on a recurring basis |
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June 30, 2019
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December 31, 2018
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Maximum
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Fair value 1
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Maximum
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Fair value 1
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maturity
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Notional
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and carrying
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Price or
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maturity
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Notional
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and carrying
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Price or
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As at (millions)
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Designation
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date
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amount
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value
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rate
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date
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amount
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value
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rate
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Current Assets 2
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Derivatives used to manage
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Currency risk arising from U.S. dollar-denominated purchases
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HFH 3
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2020
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$
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155
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$
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2
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US$1.00: C$
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1.29
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2019
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$
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414
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$
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25
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US$1.00: C$
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1.28
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Currency risk arising from U.S. dollar revenues
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HFT 4
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2019
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$
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53
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2
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US$1.00: C$
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1.31
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2019
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$
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74
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1
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US$1.00: C$
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1.36
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Changes in share-based compensation costs (Note 14(b))
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HFH 3
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2019
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$
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66
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6
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$
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45.53
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2019
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$
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63
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2
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$
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45.46
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Currency risk arising from U.S. dollar-denominated long-term debt (Note 26(b)-(c))
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HFH 3
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—
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$
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—
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—
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—
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2019
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$
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761
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21
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US$1.00: C$
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1.33
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$
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10
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$
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49
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Other Long-Term Assets 2
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Derivatives used to manage
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Changes in share-based compensation costs (Note 14(b))
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HFH 3
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2020
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$
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67
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$
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2
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$
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48.71
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$
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—
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$
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—
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—
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Currency risks arising from U.S. dollar-denominated long-term debt 5 (Note 26(b)-(c))
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HFH 3
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—
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$
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—
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—
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—
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2048
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$
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3,134
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54
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US$1.00: C$
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1.28
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$
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2
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$
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54
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Current Liabilities 2
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Derivatives used to manage
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Currency risk arising from U.S. dollar-denominated purchases
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HFH 3
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2020
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$
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287
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$
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3
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US$1.00: C$
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1.32
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2019
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$
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11
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$
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—
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US$1.00: C$
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1.36
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Currency risk arising from U.S. dollar revenues
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HFT 4
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—
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$
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—
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—
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—
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2019
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$
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18
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—
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US$1.00: C$
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1.36
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Changes in share-based compensation costs (Note 14(b))
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HFH 3
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—
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$
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—
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—
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—
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2019
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$
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2
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—
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$
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47.39
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Currency risk arising from U.S. dollar-denominated long-term debt (Note 26(b)-(c))
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HFH 3
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2019
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$
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296
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2
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US$1.00: C$
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1.31
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—
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$
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—
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—
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—
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Interest rate risk associated with non-fixed rate credit facility amounts drawn (Note 26(e))
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HFH 3
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2020
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$
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8
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—
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2.64%
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2019
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$
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8
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—
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2.64%
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Interest rate risk associated with refinancing of debt maturing
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HFH 3
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—
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$
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—
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—
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—
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—
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2019
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$
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250
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9
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2.40%, GOC 10-year term
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$
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5
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$
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9
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Other Long-Term Liabilities 2
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Derivatives used to manage
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Changes in share-based compensation costs (Note 14(b))
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HFH 3
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—
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$
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—
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$
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—
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—
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2020
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$
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67
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$
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3
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$
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48.71
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Currency risk arising from U.S. dollar-denominated long-term debt 5 (Note 26(b)-(c))
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HFH 3
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2049
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$
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5,614
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90
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US$1.00: C$
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1.30
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2027
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$
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991
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2
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US$1.00: C$
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1.33
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Interest rate risk associated with non-fixed rate credit facility amounts drawn (Note 26(e))
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HFH 3
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2022
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$
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135
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4
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2.64%
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2022
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$
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145
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1
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2.64%
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$
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94
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$
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6
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(1)
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Fair value measured at reporting date using significant other observable inputs (Level 2). |
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(2)
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Derivative financial assets and liabilities are not set off. |
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(3)
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Designated as held for hedging (HFH) upon initial recognition (cash flow hedging item); hedge accounting is applied. Unless otherwise noted, hedge ratio is 1:1 and is established by assessing the degree of matching between the notional amounts of hedging items and the notional amounts of the associated hedged items. |
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(4)
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Designated as held for trading (HFT) and classified as fair value through net income upon initial recognition; hedge accounting is not applied. |
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(5)
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We designate only the spot element as the hedging item. As at June 30, 2019, the foreign currency basis spread included in the fair value of the derivative instruments, and which is used for purposes of assessing hedge ineffectiveness, was $36 (December 31, 2018 – $29). |
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| Schedule of long-term debt amortized cost and fair value |
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June 30, 2019
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December 31, 2018
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Carrying
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Carrying
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As at (millions)
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value
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Fair value
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value
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Fair value
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Long-term debt, excluding leases (Note 26)
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$
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15,025
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$
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16,105
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$
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13,999
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$
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14,107
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| Schedule of gains and losses, excluding income tax effects, on derivative instruments classified as cash flow hedging items |
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Amount of gain (loss)
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recognized in other
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Gain (loss) reclassified from other comprehensive
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comprehensive income
|
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income to income (effective portion) (Note 11)
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(effective portion) (Note 11)
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Amount
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Periods ended June 30 (millions)
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Note
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2019
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2018
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Location
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2019
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2018
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THREE-MONTHS
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Derivatives used to manage currency risk
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Arising from U.S. dollar-denominated purchases
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$
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(7)
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$
|
6
|
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Goods and services purchased
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$
|
4
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$
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(1)
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Arising from U.S. dollar-denominated long-term debt 1
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26(b)-(c)
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(29)
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|
15
|
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Financing costs
|
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(58)
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|
53
|
|
|
|
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(36)
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|
21
|
|
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(54)
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|
52
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Derivatives used to manage other market risk
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Arising from changes in share-based compensation costs
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14(b)
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(5)
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8
|
|
Employee benefits expense
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(1)
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|
5
|
|
|
|
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$
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(41)
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$
|
29
|
|
|
|
$
|
(55)
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$
|
57
|
|
SIX-MONTHS
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|
|
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|
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Derivatives used to manage currency risk
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|
|
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|
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|
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|
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Arising from U.S. dollar-denominated purchases
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$
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(15)
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$
|
19
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Goods and services purchased
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$
|
9
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$
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(6)
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Arising from U.S. dollar-denominated long-term debt 1
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|
26(b)-(c)
|
|
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(151)
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|
58
|
|
Financing costs
|
|
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(123)
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|
|
120
|
|
|
|
|
|
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(166)
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|
|
77
|
|
|
|
|
(114)
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|
|
114
|
|
Derivatives used to manage other market risk
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Arising from changes in share-based compensation costs
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14(b)
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|
5
|
|
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(1)
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Employee benefits expense
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|
|
6
|
|
|
2
|
|
|
|
|
|
$
|
(161)
|
|
$
|
76
|
|
|
|
$
|
(108)
|
|
$
|
116
|
|
(1)
| |
Amounts recognized in other comprehensive income are net of the change in the foreign currency basis spread (which is used for purposes of assessing hedge ineffectiveness) included in the fair value of the derivative instruments; such amount for the three-month and six-month periods ended June 30, 2019, were $NIL (2018 – $(8)) and $7 (2018 – $(11)), respectively. |
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| Schedule of gains and losses arising from derivative instruments classified as held for trading |
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Gain (loss) recognized in income on derivatives
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Three months
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Six months
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Periods ended June 30 (millions)
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Location
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2019
|
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2018
|
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2019
|
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2018
|
|
Derivatives used to manage currency risk
|
|
Financing costs
|
|
$
|
(3)
|
|
$
|
1
|
|
$
|
(5)
|
|
$
|
—
|
|