CP 2019 ANNUAL REPORT /  56 Reconciliation of GAAP Performance Measures to Non-GAAP Performance Measures The following tables reconcile the most directly comparable measures presented in accordance with GAAP to the Non-GAAP measures presented in Item 6. Selected Financial Data and discussed further in other sections of this Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Adjusted income is calculated as Net income reported on a GAAP basis adjusted for significant items. $^{(1)}$ The tax effect of adjustments was calculated as the pre-tax effect of the adjustments multiplied by the applicable tax rate for the above items of 8.55%, 10.64%, 15.27%, 7.17% and 9.29% for the years presented, respectively. The applicable tax rates reflect the taxable jurisdictions and nature, being on account of capital or income, of the significant items. Adjusted diluted earnings per share is calculated using Adjusted income, as defined above, divided by the weighted-average diluted number of Common Shares outstanding during the period as determined in accordance with GAAP. $^{(1)}$ The tax effect of adjustments was calculated as the pre-tax effect of the adjustments multiplied by the applicable tax rate for the above items of 8.55%, 10.64%, 15.27%, 7.17% and 9.29% for the years presented, respectively. The applicable tax rates reflect the taxable jurisdictions and nature, being on account of capital or income, of the significant items. For the year ended December 31 (in millions) 2019 2018 2017 2016 2015 Net income as reported $ 2,440 $ 1,951 $ 2,405 $ 1,599 $ 1,352 Less significant items (pre-tax): Legal settlement charge — — — (25 ) — Insurance recovery of legal settlement — — 10 — — Charge on hedge roll and de-designation — — (13 ) — — Gain on sale of D&H South — — — — 68 Management transition recovery — — 51 — — Impact of FX translation gain (loss) on debt and lease liabilities 94 (168) 186 79 (297) Early redemption premium on notes — — — — (47 ) Add: Tax effect of adjustments (1) 8 (18 ) 36 4 (26 ) Income tax rate changes (88) (21) (541) — 23 Provision for uncertain tax item 24 — — — — Adjusted income $ 2,290 $ 2,080 $ 1,666 $ 1,549 $ 1,625 For the year ended December 31 2019 2018 2017 2016 2015 Diluted earnings per share as reported $ 17.52 $ 13.61 $ 16.44 $ 10.63 $ 8.40 Less significant items (pre-tax): Legal settlement charge — — — (0.17 ) — Insurance recovery of legal settlement — — 0.07 — — Charge on hedge roll and de-designation — — (0.09 ) — — Gain on sale of D&H South — — — — 0.42 Management transition recovery — — 0.35 — — Impact of FX translation gain (loss) on debt and lease liabilities 0.67 (1.17) 1.27 0.53 (1.84) Early redemption premium on notes — — — — (0.30 ) Add: Tax effect of adjustments (1) 0.05 (0.12 ) 0.25 0.02 (0.16 ) Income tax rate changes (0.63) (0.15) (3.70) — 0.14 Provision for uncertain tax item 0.17 — — — — Adjusted diluted earnings per share $ 16.44 $ 14.51 $ 11.39 $ 10.29 $ 10.10