Canadian Pacific Announces Strong Operating Performance and Fourth-Quarter Results

CALGARY, Jan. 26, 2012 /PRNewswire/ - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced its fourth-quarter and full year 2011 results today.  Fourth-quarter CP reported net income of $221 million and diluted earnings per share of $1.30, inclusive of $0.22 per share income tax benefit.  For the full year, the company reported net income of $570 million and diluted earnings per share of $3.34.

"We exited 2011 having made meaningful progress on the three pillars of our Multi-Year Plan: driving growth, expanding network capacity to safely and efficiently support higher volumes and controlling costs.  During the fourth quarter we delivered record asset velocity, a direct link to better service, positioning us for a lower operating ratio," said Fred Green, President and Chief Executive Officer.  "We begin 2012 with operating momentum, excellent service levels and a stronger, more resilient rail network.  We are aggressively executing on our Multi-Year Plan, which is instrumental in creating long-term value for shareholders."

RECORD OPERATING PERFORMANCE

  • Car miles per car day and terminal dwell both improved 20 per cent during the quarter
  • Active cars online improved 14 per cent while handling five per cent more gross ton miles (GTMs) during the quarter
  • Fuel efficiency of 1.17 gallons per 1,000 GTMs, matching best ever fourth-quarter performance
  • Train weights set new full year record

FOURTH-QUARTER 2011 RESULTS COMPARED WITH FOURTH-QUARTER 2010

  • Total revenues were $1.4 billion, an increase of $114 million
  • Operating expenses were $1.1 billion, an increase of $109 million
  • Average fuel price increased 29 per cent to $3.45 U.S. dollars per U.S. gallon
  • Operating income was $303 million, an increase of $5 million
  • Net income was $221 million, an increase of $35 million
  • Diluted earnings per share were $1.30 per share, an increase of $0.21 per share

FULL YEAR 2011 RESULTS COMPARED WITH FULL YEAR 2010

  • Total revenues were $5.2 billion, an increase of $196 million
  • Operating expenses were $4.2 billion, an increase of $345 million
  • Average fuel price increased 35 per cent to $3.38 U.S. dollars per U.S. gallon
  • Operating income was $967 million, a decrease of $149 million
  • Net income was $570 million, a decrease of $81 million
  • Diluted earnings per share were $3.34 per share, a decrease of $0.51 per share
  • Made a pension prepayment of $600 million in 2011 and $650 million in 2010
  • Increased dividends to shareholders by 11 per cent to $1.1700 per share

MULTI-YEAR PLAN

"Our operational metrics are a leading indicator of both customer satisfaction and financial results.  The operational improvements we have already achieved will now begin to drive enhanced financial results in the first quarter of 2012 and, as we continue to execute on our Multi-Year Plan, further operational improvements will deliver financial benefits," added Fred Green. "Given our recent market successes and operating trends, we can now with confidence, narrow our target operating ratio range to 70 to 72 per cent in three years and we have no intention of stopping there."

2012 ASSUMPTIONS

Defined benefit pension contributions are currently estimated to be between $100 million and $125 million in each of the next few years, a decrease from previous estimates of $125 million to $150 million. These contribution levels reflect the Company's intentions with respect to application of voluntary prepayments.  Defined benefit pension expense for 2012 is expected to be $41 million.  For 2013, defined benefit pension expense is expected to be approximately $125 million, assuming normal equity market returns and modest increases in bond yields in 2012.

CP plans to spend in the range of $1.1 billion to $1.2 billion on capital programs in 2012, as announced on January 17, 2012.

CP expects its tax rate to be in the 25 per cent to 27 per cent range in 2012.

CONFERENCE CALL INFORMATION

CP will discuss its results with analysts in a conference call beginning at 11:00 a.m. Eastern time (9:00 a.m. Mountain time) on January 26, 2012.

Toronto/International participants dial in number: (647) 427-7450
Operator assisted toll free dial in number: 1-888-231-8191
Callers should dial in 10 minutes prior to the call.

WEBCAST

For those with Internet access we encourage you to listen via CP's website at www.cpr.ca. To access the webcast and the presentation material, click on "Invest In CP" tab.

A replay of the conference call will be available by phone through February 29, 2012 at (416) 849-0833 or toll free 1-855-859-2056, passcode 36730106. A webcast of the presentation and an audio file will be available at www.cpr.ca under "Invest In CP" tab.

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.  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; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and 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, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes.  Other risks are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States.  Reference should be made to "Management's Discussion and Analysis" in CP's annual and interim reports, Annual Information Form and Form 40-F.

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: CP) operates a North American transcontinental railway 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.


CONSOLIDATED STATEMENTS OF INCOME     
(in millions of Canadian dollars, except per share data)
(unaudited)

        For the three months     For the year
        ended December 31     ended December 31
        2011     2010     2011     2010
Revenues                      
  Freight $ 1,375    $ 1,262    $ 5,052    $ 4,853 
  Other   33      32      125      128 
Total revenue   1,408      1,294      5,177      4,981 
Operating expenses                      
  Compensation and benefits   389      362      1,426      1,431 
  Fuel   267      202      968      728 
  Materials   58      56      243      214 
  Equipment rents   51      48      209      206 
  Depreciation and amortization   123      121      490      489 
  Purchased services and other    217      207      874      797 
Total operating expenses   1,105      996      4,210      3,865 
Operating income   303      298      967      1,116 
Less:                      
  Other (income) and charges (Note 3)   10      (5)     18      (12)
  Net interest expense    61      65      252      257 
                           
Income before income tax expense   232      238      697      871 
                           
  Income tax expense (Note 2)   11      52      127      220 
Net income $ 221    $ 186    $ 570    $ 651 
                         
                         
Earnings per share                      
  Basic $ 1.31    $ 1.10    $ 3.37    $ 3.86 
  Diluted $ 1.30    $ 1.09    $ 3.34    $ 3.85 
                           
Weighted average number of shares (millions)                      
  Basic   169.8      169.1      169.5      168.8 
  Diluted   170.8      169.7      170.6      169.2 
                           
Dividends declared per share $ 0.3000    $ 0.2700    $ 1.1700    $ 1.0575 
                           
                           
See notes to interim consolidated financial information.                      
                       
                       
                       

CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited)

      December 31   December 31
      2011    2010 
Assets          
Current assets          
  Cash and cash equivalents  $ 47    $ 361 
  Accounts receivable, net   518      459 
  Materials and supplies   138      114 
  Deferred income taxes   101      222 
  Other current assets   52      48 
        856      1,204 
               
Investments   167      145 
Net properties   12,752      11,997 
Goodwill and intangible assets    192      190 
Other assets    143      140 
Total assets $ 14,110    $ 13,676 
               
Liabilities and shareholders' equity          
Current liabilities          
  Short-term borrowing $ 27    $
  Accounts payable and accrued liabilities   1,133      1,008 
  Long-term debt maturing within one year   50      282 
        1,210      1,290 
               
Pension and other benefit liabilities (Note 4)   1,372      1,116 
Other long-term liabilities   365      468 
Long-term debt (Note 3)   4,695      4,033 
Deferred income taxes   1,819      1,945 
Total liabilities   9,461      8,852 
               
Shareholders' equity          
  Share capital   1,854      1,813 
  Additional paid-in capital    86      24 
  Accumulated other comprehensive loss   (2,736)     (2,086)
  Retained earnings   5,445      5,073 
        4,649      4,824 
Total liabilities and shareholders' equity $ 14,110    $ 13,676 
               
             
See notes to interim consolidated financial information.          
 
 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
(unaudited)

          For the three months   For the year
          ended December 31   ended December 31
            2011      201     2011      2010 
Operating activities                      
  Net income $ 221    $ 186    $ 570    $ 651 
    Reconciliation of net income to cash provided by (used in)                      
    operating activities:                      
      Depreciation and amortization   123      121      490      489 
      Deferred income taxes (Note 2)   68      51      187      211 
      Pension funding (in excess of) less than expense (Note 4)   (607)         (647)     (801)
      Other operating activities, net     (65)     (38)     (112)     (32)
      Change in non-cash working capital balances related to                       
      operations    99      56      24      (16)
Cash (used in) provided by operating activities   (161)     381      512      502 
                               
Investing activities                      
  Additions to properties   (400)     (282)     (1,104)     (726)
  Proceeds from the sale of properties and other assets   30      43      71      89 
  Other   (4)         (11)    
Cash used in investing activities   (374)     (238)     (1,044)     (635)
                               
Financing activities                      
  Dividends paid   (51)     (46)     (193)     (174)
  Issuance of common shares   16          29      32 
  Collection of receivable from financial institution               220 
  Issuance of long-term debt (Note 3)   757          757      355 
  Repayment of long-term debt (Note 3)   (257)     (8)     (401)     (613)
  Net increase in short-term borrowing   28          28     
  Other   (3)         (3)    
Cash provided by (used in) financing activities   490      (39)     217      (168)
                               
Effect of foreign currency fluctuations on U.S. dollar-                      
denominated cash and cash equivalents   (5)     (11)         (17)
Cash position                      
  (Decrease) increase in cash and cash equivalents   (50)     93      (314)     (318)
  Cash and cash equivalents at beginning of period    97      268      361      679 
Cash and cash equivalents at end of period $ 47    $ 361    $ 47    $ 361 
                               
Supplemental disclosures of cash flow information:                      
  Income taxes paid  $   $   $   $
  Interest paid $ 91    $ 95    $ 271    $ 347 
                               
                               
See notes to interim consolidated financial information.                      
 
 
 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in millions of Canadian dollars, except common share amounts)
(unaudited)

                         
    Common         Accumulated        
    shares     Additional other     Total
    (in Share paid-in comprehensive Retained shareholders'
    millions) capital capital loss earnings equity
Balance at December 31, 2010 169.2  $ 1,813  $ 24  $ (2,086) $ 5,073  $ 4,824 
Net income          570    570 
Other comprehensive loss       (650)     (650)
Dividends declared         (198)   (198)
Effect of stock-based compensation expense     16        16 
Changes to stock compensation awards     57        57 
Shares issued under stock option plans 0.8    41    (11)       30 
Balance at December 31, 2011 170.0  $ 1,854  $ 86  $ (2,736) $ 5,445  $ 4,649 
                         
              Other        
              comprehensive Net Comprehensive
              loss income loss
Comprehensive loss - three months ended December 31, 2011   $ (743) $ 221  $ (522)
Comprehensive loss - year ended December 31, 2011   $ (650) $ 570  $ (80)
                         
    Common         Accumulated        
    shares     Additional other     Total
    (in Share paid-in comprehensive Retained shareholders'
    millions) capital capital loss earnings equity
Balance at December 31, 2009 168.5  $ 1,771  $ 31  $ (1,745) $ 4,601  $ 4,658 
Net income          651    651 
Other comprehensive loss       (341)     (341)
Dividends declared         (179)   (179)
Effect of stock-based compensation expense          
Shares issued under stock option plans 0.7    42    (8)       34 
Balance at December 31, 2010 169.2  $ 1,813  $ 24  $ (2,086) $ 5,073  $ 4,824 
                         
              Other        
              comprehensive Net Comprehensive
              loss income income (loss)
Comprehensive loss - three months ended December 31, 2010   $ (393) $ 186  $ (207)
Comprehensive income - year ended December 31, 2010   $ (341) $ 651  $ 310 
                         
                         
See notes to interim consolidated financial information.            
 
 

NOTES TO INTERIM CONSOLIDATED FINANCIAL INFORMATION
December 31, 2011
(unaudited)

1  Basis of presentation

This unaudited interim consolidated financial information of Canadian Pacific Railway Limited ("CP", or "the Company") reflects management's estimates and assumptions that are necessary for its fair presentation in conformity with accounting principles generally accepted in the United States of America ("GAAP").  This information does not include all disclosures required under GAAP for annual and interim financial statements and should be read in conjunction with the 2010 consolidated financial statements and 2011 consolidated interim financial statements.  The policies used are consistent with the policies used in preparing the 2010 consolidated financial statements.  The Company's investments in which CP has significant influence, which are not consolidated, are accounted for using the equity method.

CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues.  This seasonality could impact quarter-over-quarter comparisons.

In management's opinion, the unaudited interim consolidated financial information includes all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly such information.

2  Income taxes

Income tax expense for the fourth quarter of 2011 reflects a tax recovery of $37 million resulting from the resolution of certain income tax matters and adjustments related to previous year's tax filings and estimates.

3 Long-term debt

On September 13, 2011, the Company announced a cash tender offer and consent solicitation for any or all its outstanding US$246 million 6.25% Notes due October 15, 2011.  Notes tendered with a principal value of US$204 million were redeemed on October 12, 2011, and the remaining US$42 million Notes not tendered were redeemed on October 17, 2011.  Upon redemption of the Notes a net loss of $1 million was recognized to "Other income and charges" in the fourth quarter of 2011.

During December 2011, the Company issued $125 million 5.10% 10-year Notes, US$250 million 4.50% 10-year Notes and US$250 million 5.75% 30-year Notes.  Net proceeds from these offerings were $618 million and were largely used to make a $600 million voluntary prepayment to the Company's main Canadian defined benefit pension plan (see Note 4).

During the fourth quarter of 2011, the Company issued US$139 million 3.88% Series A and B Senior Secured Notes due in 2026 for net proceeds of $139 million.  These Notes are secured by locomotives previously acquired by the Company with a carrying value of $139 million at December 31, 2011.  The Company pays equal blended semi-annual payments of principal and interest up to and including December 2026. Final repayment of the remaining principal of US$69 million is due in the fourth quarter of 2026.

4  Pensions and other benefits

During the fourth quarter of 2011, the Company made a $600 million voluntary prepayment to the Company's main Canadian defined benefit pension plan.  The Company made a voluntary prepayment of $650 million to the Company's main Canadian defined benefit plan in September 2010.

As a result of lower discount rates at December 31, 2011, compared with December 31, 2010, as well as unfavourable 2011 equity returns, pension and post-retirement benefit liabilities increased by $1,040 million, other comprehensive loss was increased by $768 million and the Company's deferred tax liability was reduced by $272 million.  The Company used a discount rate of 4.55% at December 31, 2011, (2010 - 5.20%) to determine the pension and other post-retirement benefit obligation.

   
Summary of Rail Data  
                               
Fourth Quarter           Year  
  2011     2010   Fav/(Unfav) %   Financial (millions, except per share data)     2011     2010   Fav/(Unfav) %
                               
                      Revenues                      
$ 1,375    $ 1,262    $ 113      Freight revenue   $ 5,052    $ 4,853    $ 199 
  33      32          Other revenue     125      128      (3) (2)
  1,408      1,294      114            5,177      4,981      196 
                                               
                                               
                      Operating expenses                      
  389      362      (27) (7)     Compensation and benefits     1,426      1,431     
  267      202      (65) (32)     Fuel     968      728      (240) (33)
  58      56      (2) (4)     Materials     243      214      (29) (14)
  51      48      (3) (6)     Equipment rents     209      206      (3) (1)
  123      121      (2) (2)     Depreciation and amortization     490      489      (1)
  217      207      (10) (5)     Purchased services and other     874      797      (77) (10)
  1,105      996      (109) (11)           4,210      3,865      (345) (9)
                                               
                                               
  303      298        Operating income     967      1,116      (149) (13)
                                               
                      Less:                      
                                               
  10      (5)     (15)  -     Other (income) and charges     18      (12)     (30) -
  61      65          Net interest expense     252      257     
                                               
                                               
  232      238      (6) (3)   Income before income tax expense     697      871      (174) (20)
                                               
  11      52      41  79      Income tax expense     127      220      93  42 
                                               
                                               
$ 221    $ 186    $ 35  19    Net income   $ 570    $ 651    $ (81) (12)
                                               
                                               
  78.5      77.0      (1.5) (150) bps   Operating ratio (%)     81.3      77.6      (3.7) (370) bps
                                               
                                               
$ 1.31    $ 1.1   $ 0.21  19      Basic earnings per share   $ 3.37    $ 3.86    $ (0.49) (13)
                                               
                                               
$ 1.3   $ 1.09    $ 0.21  19      Diluted earnings per share   $ 3.3   $ 3.85    $ (0.51) (13)
                                               
                                               
                                               
                      Shares Outstanding                      
                                               
                        Weighted average number of shares                      
  169.8      169.1      0.7      outstanding (millions)     169.5      168.8      0.7 
                                               
                        Weighted average number of diluted shares                      
  170.8      169.7      1.1      outstanding (millions)     170.6      169.2      1.4 
                                               
                                               
                      Foreign Exchange                      
                                               
                        Average foreign exchange rate                      
  0.98      0.98          (US$/Canadian$)     1.01      0.97      (0.04) (4)
                                               
                        Average foreign exchange rate                      
  1.02      1.02          (Canadian$/US$)     0.99      1.03      (0.04) (4)
                                               

   
Summary of Rail Data (Page 2)
                                                 
  Fourth Quarter             Year
  2011     2010   Fav/(Unfav)   %             2011     2010   Fav/(Unfav)   %
                                                 
                      Commodity Data                      
                                                 
                        Freight Revenues (millions)                      
$ 323    $ 299    $ 24          - Grain   $ 1,100    $ 1,135    $ (35)   (3)
  158      126      32    25        - Coal     556      491      65    13 
  133      132              - Sulphur and fertilizers     549      475      74    16 
  47      50      (3)   (6)       - Forest products     189      185       
  288      240      48    20        - Industrial and consumer products     1,017      903      114    13 
  94      75      19    25        - Automotive     338      316      22   
  332      340      (8)   (2)       - Intermodal     1,303      1,348      (45)   (3)
                                                 
$ 1,375    $ 1,262    $ 113        Total Freight Revenues   $ 5,052    $ 4,853    $ 199   
                                                 
                        Millions of Revenue Ton-Miles (RTM)                      
  9,111      8,775      336          - Grain     32,481      34,556      (2,075)   (6)
  5,860      4,814      1,046    22        - Coal     21,041      19,021      2,020    11 
  4,899      4,963      (64)   (1)       - Sulphur and fertilizers     20,468      17,687      2,781    16 
  1,176      1,344      (168)   (13)       - Forest products (1)     4,960      5,091      (131)   (3)
  6,478      6,046      432          - Industrial and consumer products (1)     24,122      22,143      1,979   
  535      501      34          - Automotive     2,080      2,067      13   
  6,025      6,440      (415)   (6)       - Intermodal     23,907      25,863      (1,956)   (8)
                                                 
  34,084      32,883      1,201        Total RTMs     129,059      126,428      2,631   
                                                 
                        Freight Revenue per RTM (cents)                      
  3.55      3.41      0.14          - Grain     3.39      3.28      0.11   
  2.70      2.62      0.08          - Coal     2.64      2.58      0.06   
  2.71      2.66      0.05          - Sulphur and fertilizers     2.68      2.69      (0.01)  
  4.00      3.72      0.28          - Forest products (1)     3.81      3.63      0.18   
  4.45      3.97      0.48    12        - Industrial and consumer products (1)     4.22      4.08      0.14   
  17.57      14.97      2.60    17        - Automotive     16.25      15.29      0.96   
  5.51      5.28      0.23          - Intermodal     5.45      5.21      0.24   
                                                 
  4.03      3.84      0.19        Total Freight Revenue per RTM     3.91      3.84      0.07   
                                                 
                        Carloads (thousands)                      
  121      118              - Grain     450      467      (17)   (4)
  87      87              - Coal     313      341      (28)   (8)
  48      48              - Sulphur and fertilizers     199      177      22    12 
  17      19      (2)   (11)       - Forest products     72      72       
  114      102      12    12        - Industrial and consumer products     421      397      24   
  39      34        15        - Automotive     145      137       
  250      266      (16)   (6)       - Intermodal     997      1,070      (73)   (7)
                                                 
  676      674            Total Carloads     2,597      2,661      (64)   (2)
                                                 
                        Freight Revenue per Carload                      
$ 2,669    $ 2,534    $ 135          - Grain   $ 2,444    $ 2,430    $ 14   
  1,816      1,448      368    25        - Coal     1,776      1,440      336    23 
  2,771      2,750      21          - Sulphur and fertilizers     2,759      2,684      75   
  2,765      2,632      133          - Forest products     2,625      2,569      56   
  2,526      2,353      173          - Industrial and consumer products     2,416      2,275      141   
  2,410      2,206      204          - Automotive     2,331      2,307      24   
  1,328      1,278      50          - Intermodal     1,307      1,260      47   
                                                 
$ 2,034    $ 1,872    $ 162        Total Freight Revenue per Carload   $ 1,945    $ 1,824    $ 121   
                                                 
(1)  Certain prior period figures have been updated to reflect new information.
 

   
Summary of Rail Data (Page 3)
                                 
Fourth Quarter       Year
201   2010 (1)   Fav/(Unfav)   %       2011    201(1)   Fav/(Unfav)   %
                                 
                Operations Performance                
                                 
65,472    62,498    2,974      Freight gross ton-miles (millions)(2)   247,955    242,757    5,198   
10,611    10,132    479      Train miles (thousands)   40,145    39,576    569   
16,616    15,637    (979)   (6)   Average number of active employees - Total   16,097    15,460    (637)   (4)
14,459    13,918    (541)   (4)   Average number of active employees - Expense   14,169    13,879    (290)   (2)
16,428    15,250    (1,178)   (8)   Number of employees at end of period - Total   16,428    15,250    (1,178)   (8)
14,764    14,048    (716)   (5)   Number of employees at end of period - Expense   14,764    14,048    (716)   (5)
46.7    54.1    7.4    14    Average daily active cars on-line (thousands)   51.4    50.9    (0.5)   (1)
1,085    1,048    (37)   (4)   Average daily active road locomotives on-line   1,085    1,016    (69)   (7)
76.0    74.3    (1.7)   (2)   U.S. gallons of locomotive fuel consumed (millions)(3)   290.8    282.0    (8.8)   (3)
3.45    2.68    (0.77)   (29)   Average fuel price (U.S. dollars per U.S. gallon)   3.38    2.50    (0.88)   (35)
                                 
23.4    21.7    1.7      Average train speed - AAR definition (mph)   21.3    22.7    (1.4)   (6)
17.7    22.2    4.5    20    Average terminal dwell  - AAR definition (hours)   19.9    21.4    1.5   
183.5    152.7    30.8    20    Car miles per car day   160.1    159.4    0.7   
1.17    1.20    0.03      Fuel efficiency(4)   1.18    1.17    (0.01)   (1)
                                 
6,587    6,559    28      Average train weight - excluding local traffic (tons)   6,593    6,519    74   
5,654    5,652        Average train length - excluding local traffic (feet)   5,665    5,660     
175.1    175.2    (0.1)     Locomotive productivity (daily average GTMs/active HP)   166.7    176.6    (9.9)   (6)
4.5    4.5        Employee productivity (million GTMs/expense employee)   17.5    17.5    -   -
                                 
1.75    1.80    0.05      FRA personal injuries per 200,000 employee-hours   1.86    1.67    (0.19)   (11)
1.38    1.27    (0.11)   (9)   FRA train accidents per million train-miles   1.85    1.65    (0.20)   (12)
                                 
1.69    1.59    (0.10)   (6)   Total operating expenses per GTM (cents)   1.70    1.59    (0.11)   (7)
                Operating expenses, less land sales and                
1.63    1.63        the impact of fuel price, per GTM (cents)(5)   1.61    1.60    (0.01)   (1)

(1) Certain prior period figures have been revised to conform with current presentation or have been updated to reflect new information.
(2) Gross Ton-Miles (GTM) is  the movement of the combined tons (freight car tare, inactive locomotive tare, and contents) a distance of one mile.
(3) Includes gallons of fuel consumed from freight, yard and commuter service but excludes fuel used in capital projects and other non-freight activities.
(4) Fuel efficiency is defined as U.S. gallons of locomotive fuel consumed per 1,000 GTMs - freight and yard.
(5) Operating expenses, less land sales and the impact of fuel price, per GTM is calculated consistently with total operating expenses per GTM except for the exclusion of net gains on land sales and the fuel price impact, the latter to remove the volatility of fuel prices and to provide comparative fuel expenses at the 2010 fuel price.  Net gains on land sales were $20 million and $22 million for the three months ended December 31, 2011 and 2010, respectively, and $25 million and $28 million for the year ended December 31, 2011 and 2010, respectively. The impact in fuel price was $58 million for the three months ended December 31, 2011 and $247 million for the year ended December 31, 2011.
 

SOURCE Canadian Pacific



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