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Canadian Pacific announces 2010 results 

January 26, 2011  |  Calgary, AB 

Canadian Pacific Railway Limited (TSX/NYSE: CP) announced its fourth-quarter and full-year 2010 results today.  Revenue in the fourth-quarter increased 13 per cent with gains across all lines of business.  Reported net income in the fourth-quarter was $186 million, an increase of 27 per cent and diluted earnings per share was $1.09 for the quarter and $3.85 for the full year.  Adjusted diluted earnings per share was $1.12 for the quarter and $3.87 for the full year.

"Fourth quarter saw double digit revenue growth, a continuation of our year-to-date trend," said Fred Green, President and Chief Executive Officer. "We delivered an improvement in our operating ratio by staying focused on three priorities: safety, asset velocity, and productivity. During the year we once again improved our industry leading train safety performance, a great accomplishment while moving a significant increase in volumes."


  • Total revenues increased 13 per cent to $1.3 billion
  • Adjusted operating income increased 34 per cent to $298 million
  • Adjusted operating ratio improved 360 basis points to 77.0 per cent
  • Adjusted diluted earnings per share increased 51 per cent to $1.12 per share


  • Total revenues increased 13 per cent to $5.0 billion
  • Adjusted operating income increased 39 per cent to $1.1 billion
  • Adjusted operating ratio improved 410 basis points to 77.6 per cent
  • Adjusted diluted earnings per share increased 54 per cent to $3.87 per share
  • Made a pension prepayment of $650 million and reduced long-term debt by approximately $250 million
  • Increased the current dividend rate by 9% to $1.08 per share

 "We continue to see strong demand for rail service across all lines of business," added Fred Green.  "We are ramping up our resources and making long-term investments in our company to meet growing demand, further improve customer service, and achieve our three to five year target of a low 70's operating ratio."

2011 Assumptions

The 2011 defined benefit pension contributions are currently estimated to be between $100 million to $125 million, lower than our previous estimates of $150 million to $200 million.  Defined benefit pension contributions for 2012 to 2015 are estimated to be between $125 million to $175 million.  The contribution levels reflect the Company's intention with respect to application of voluntary prepayments.  Defined benefit pension expenses in 2011 are expected to be $46 million up from $36 million in 2010.

CP plans to spend in the range of $950 million to $1.05 billion on capital programs in 2011, as announced on January 12, 2011. 

CP expects its tax rate to be in the 24 per cent to 26 per cent range in 2011.

Presentation of non-GAAP earnings measures

CP presents non-GAAP earnings measures in this news release to provide an additional basis for evaluating underlying earnings and liquidity trends in its business that can be compared with prior periods' results of operations.  Income, diluted earnings per share, operating expense and operating ratio, excluding foreign exchange gains and losses on long-term debt and other specified items, are referred to in this news release as "Adjusted earnings", "Adjusted diluted earnings per share", "Adjusted operating expense" and "Adjusted operating ratio".

When foreign exchange gains and losses on long-term debt and other specified items are excluded from diluted earnings per share, income and income tax expense, these are non-GAAP measures. 

These non-GAAP earnings measures exclude foreign currency translation effects on long-term debt, and related income taxes, which can be volatile and short term.  The impact of volatile short-term rate fluctuations on foreign-denominated debt is only realized when long-term debt matures or is settled.  Other specified items are material transactions that may include, but are not limited to, restructuring and asset impairment charges, gains and losses on non-routine sales of assets, unusual income tax adjustments, and other items that do not typify normal business activities.  A reconciliation of income, excluding foreign exchange gains and losses on long-term debt and other specified items, to net income as presented in the financial statements is detailed in the attached Summary of Rail Data.  In addition, these non-GAAP measures exclude other specified items (described below) that are not a part of CP's normal ongoing revenues and operating expenses. 

The non-GAAP earnings measures described in this news release have no standardized meanings and are not defined by accounting principles generally accepted in the United States and, therefore, are unlikely to be comparable to similar measures presented by other companies.

Foreign exchange gain and loss on long-term debt and other specified items

In fourth-quarter 2009, CP recorded a loss of $38 million after tax charge on the early termination of a shortline railway contract. As well, a tax rate change and an income tax settlement related to a prior year resulted in a net benefit of $56 million.

For the full year 2009, in addition to the other specified items noted above, there was a $69 million after tax gain on the sale of a partnership interest and a $68 million after tax gain on the sale of significant real estate. CP also had a gain on long-term floating rate notes of $5 million after tax, compared to a gain of $2 million after tax, recorded for full year 2010.

CP had a net foreign exchange loss after tax of $5 million on long-term debt in the fourth quarter of 2010, compared with a gain of $3 million after tax in fourth-quarter 2009.

For the full year 2010, CP had a net foreign exchange loss on long-term debt of $6 million, compared with a net foreign exchange loss of $28 million after tax for the full year 2009.

As part of a consolidated financing strategy, CP structures its U.S. dollar long-term debt in different taxing jurisdictions.  As well, a portion of this debt is designated as a net investment hedge against our net investment in foreign subsidiaries.  Although the taxes on foreign exchange gains and losses on long-term debt generally offset one another, because they may be in different tax jurisdictions, the resulting net tax can vary significantly.

CP began reporting its financial results in accordance with U.S. GAAP as of January 1, 2010.  All prior period comparative numbers contained in this release conform to U.S. GAAP.  Additional historical U.S. GAAP financial reports can be found at www.cpr.ca.

Note on forward-looking information

This news release contains certain forward-looking statements relating but not limited to our operations, anticipated financial performance and business prospects, including statements relating to our target operating ratio, and expected 2011 pension expenses, capital programs and tax rate.  Undue reliance should not be placed on forward-looking information as actual results may differ materially.

By its nature, CP's forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in 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 laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods, timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments, including long-term floating rate notes; and various events that could disrupt operations, including severe weather conditions, security threats and governmental response to them, and technological changes.

Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.

About Canadian Pacific

Canadian Pacific (CP: TSX/NYSE) operates a North American transcontinental railroad providing freight transportation services, logistics solutions and supply chain expertise.  Incorporating best-in-class technology and environmental practices, CP is re-defining itself as a modern 21st century transportation company built on safety, service reliability and operational efficiency. Visit cpr.ca and see how Canadian Pacific is Driving the Digital Railway.


Media                                                  Investment Community
Mike LoVecchio                                   Janet Weiss
Senior Manager - Media Relations       Assistant Vice President - Investor Relations
Canadian Pacific                                  Canadian Pacific
Tel.: (778) 772-9636                           Tel.: (403) 319-3591
24/7 Media Pager: (416) 814-0948     email: investor@cpr.ca  
email: mike_lovecchio@cpr.ca  

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