Retiring CEO Rob Ritchie Leaves on a High Note CALGARY, April 25
/PRNewswire-FirstCall/ -- Canadian Pacific Railway (TSX/NYSE: CP)
reported a strong start to the year as net income grew to $111
million, a 38-per-cent improvement over first-quarter 2005. SUMMARY
OF FIRST-QUARTER 2006 COMPARED WITH FIRST-QUARTER 2005 - Excluding
foreign exchange losses on long-term debt, diluted earnings per
share increased 40 per cent to $0.74 from $0.53 - Operating ratio
improved 3 percentage points to 79.4 per cent - Revenue increased
10 per cent to $1,111 million - Operating expenses up 1 per cent,
excluding the impact of higher fuel prices "Our Execution
Excellence strategy has delivered an outstanding first quarter,"
said Rob Ritchie, CPR's Chief Executive Officer. "Revenue growth is
strong, despite the decrease in coal and potash volumes. We have
managed our cost structure effectively, responding quickly to
changes in traffic. Our Operations team has done an excellent job
delivering improved fluidity, with average train speed increasing
17 per cent, yard processing time decreasing a full 32 per cent,
and car velocity up 15 per cent over the same period last year.
With increased fluidity, we are driving more value from our assets,
delivering a better product to our customers which, in turn, is
producing better results for our shareholders." Freight revenue in
the quarter grew by double-digits in four of CPR's seven business
lines, with grain leading the way at 28 per cent, industrial and
consumer products up 13 per cent, and intermodal and automotive
each growing 12 per cent. This more than offset the declines in
coal and sulphur and fertilizer volumes. Other revenue was up $22
million over the same period last year due mainly to earlier than
planned land sales that closed at the end of the quarter. Operating
expenses were $881 million in first-quarter, up six per cent. The
increase was due primarily to fuel costs which were 17 per cent
higher and compensation and benefits costs which increased by 6 per
cent. CPR recovered almost all of the increase in fuel price
through its fuel surcharge program and fuel efficiency measures.
Higher compensation and benefits costs were a result of the impact
of rising share prices on stock-based compensation programs as well
as inflation. Increased expenses were largely offset by lower
operating costs resulting from the benefits of initiatives focused
on reducing costs and favourable operating conditions due to milder
weather. "This is my last full fiscal quarter before I retire in
May as CEO of CPR," said Mr. Ritchie. "It is with some satisfaction
that I am able to do so with the company producing solid results.
What is even more satisfying is to see a new team in place that is
strong, capable and motivated to take the company forward to even
greater success." OUTLOOK CPR's outlook for diluted earnings per
share in 2006 remains unchanged at a range of $3.60 to $3.85,
excluding foreign exchange gains and losses on long-term debt and
other specified items. The outlook assumes oil prices averaging
US$66 per barrel and an average exchange rate of $1.14 per U.S.
dollar (US$0.88). This is a revision to our previous assumptions
which were oil prices averaging US$58 per barrel and an average
exchange rate of $1.18 per U.S. dollar (US$0.85). CPR expects to
grow revenue in the range of 5 per cent to 8 per cent and expenses
are expected to increase by 3 per cent to 6 per cent in 2006.
Capital investment is anticipated to be between $810 million and
$825 million in 2006 and free cash is expected to exceed $200
million for the year. FOREIGN EXCHANGE LOSSES ON LONG-TERM DEBT CPR
had a foreign exchange loss on long-term debt of $6 million ($7
million after tax) in the first quarter of 2006, compared with a
loss of $3 million ($4 million after tax) in the same period of
2005. Presentation of non-GAAP earnings CPR presents non-GAAP
earnings in this news release to provide a basis for evaluating
underlying earnings trends in our business that can be compared
with prior periods' results of operations. These non-GAAP earnings
exclude foreign currency translation effects on long-term debt,
which can be volatile and short term, and other specified items,
which are not among CPR's normal ongoing revenues and operating
expenses. The impact of volatile short-term rate fluctuations on
foreign-denominated debt is only realized when long-term debt
matures or is settled. 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 the
first quarter of 2006, there were foreign exchange losses on
long-term debt but there were no other specified items. Earnings
that exclude foreign exchange currency translation effects on
long-term debt and other specified items, as described in this news
release, have no standardized meanings and are not defined by
Canadian generally accepted accounting principles and, therefore,
are unlikely to be comparable to similar measures presented by
other companies. 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, CPR's forward-looking information
involves numerous assumptions, inherent risks and uncertainties,
including but not limited to the following factors: changes in
business strategies; general global economic and business
conditions; risks in agricultural production such as weather
conditions and insect populations; fluctuations in the value of the
Canadian dollar relative to the U.S. dollar; 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; changes in taxes and tax rates; potential
increases in maintenance and operating costs; uncertainties of
litigation; labour disputes; timing of completion of capital and
maintenance projects; interest rate fluctuations; effects of
changes in market conditions on the financial position of pension
plans; and various events that could disrupt operations, including
severe weather conditions, security threats and governmental
response to them, and technological changes. In addition, there are
more specific factors that could cause actual results to differ
from those described in the forward-looking statements contained in
this news release. These more specific factors are identified and
discussed in the Outlook section and elsewhere in this news release
with the particular forward-looking statement in question. CPR
undertakes no obligation to update publicly or otherwise revise any
forward-looking information, whether as a result of new
information, future events or otherwise. Canadian Pacific Railway
is a transcontinental carrier operating in Canada and the U.S. Its
14,000-mile rail network serves the principal centres of Canada,
from Montreal to Vancouver, and the U.S. Northeast and Midwest
regions. CPR feeds directly into America's heartland from the East
and West coasts. Alliances with other carriers extend its market
reach throughout the U.S. and into Mexico. Canadian Pacific
Logistics Solutions provides logistics and supply chain expertise
worldwide. Canadian Pacific Railway is marking its 125th
anniversary in 2006. For more information, visit CPR's website at
http://www.cpr.ca/. STATEMENT OF CONSOLIDATED INCOME (in millions,
except per share data) For the three months ended March 31 2006
2005 (unaudited) (unaudited) -------------------------- Revenues
Freight $ 1,067.2 $ 992.6 Other 43.3 21.5
-------------------------- 1,110.5 1,014.1 Operating expenses
Compensation and benefits 349.9 331.1 Fuel 157.9 134.5 Materials
57.6 58.8 Equipment rents 44.6 48.5 Depreciation and amortization
114.8 109.5 Purchased services and other 156.6 153.0
-------------------------- 881.4 835.4 --------------------------
Operating income 229.1 178.7 Other charges (income) (Note 3) 6.8
(1.0) Foreign exchange losses on long-term debt 6.4 3.1 Interest
expense (Note 4) 47.3 51.6 Income tax expense 57.6 44.3
-------------------------- Net income $ 111.0 $ 80.7
-------------------------- -------------------------- Basic
earnings per share (Note 6) $ 0.70 $ 0.51
-------------------------- -------------------------- Diluted
earnings per share (Note 6) $ 0.69 $ 0.50
-------------------------- -------------------------- See notes to
interim consolidated financial statements. CONSOLIDATED BALANCE
SHEET (in millions) March 31 December 31 2006 2005 (unaudited)
(unaudited) -------------------------- Assets Current assets Cash
and cash equivalents $ 47.5 $ 121.8 Accounts receivable and other
current assets 530.8 524.0 Materials and supplies 153.2 140.1
Future income taxes 121.9 108.0 -------------------------- 853.4
893.9 Investments 69.5 67.3 Net properties 8,866.5 8,790.9 Other
assets and deferred charges 1,159.5 1,139.0
-------------------------- Total assets $10,948.9 $10,891.1
-------------------------- -------------------------- Liabilities
and shareholders' equity Current liabilities Accounts payable and
accrued liabilities $ 954.8 $ 1,032.8 Income and other taxes
payable 42.3 30.2 Dividends payable 29.9 23.7 Long-term debt
maturing within one year 172.8 30.0 --------------------------
1,199.8 1,116.7 Deferred liabilities 720.3 743.5 Long-term debt
2,828.1 2,970.8 Future income taxes 1,741.4 1,674.4 Shareholders'
equity Share capital (Note 7) 1,175.1 1,141.5 Contributed surplus
(Note 7) 198.8 241.6 Foreign currency translation adjustments 69.2
67.5 Retained income 3,016.2 2,935.1 --------------------------
4,459.3 4,385.7 -------------------------- Total liabilities and
shareholders' equity $10,948.9 $10,891.1 --------------------------
-------------------------- Commitments and contingencies (Note 11).
See notes to interim consolidated financial statements. STATEMENT
OF CONSOLIDATED CASH FLOWS (in millions) For the three months ended
March 31 2006 2005 (unaudited) (unaudited)
-------------------------- Operating activities Net income $ 111.0
$ 80.7 Add items not affecting cash: Depreciation and amortization
114.8 109.5 Future income taxes 44.3 40.1 Foreign exchange losses
on long-term debt 6.4 3.1 Amortization of deferred charges 4.3 5.0
Restructuring payments (27.8) (13.0) Other operating activities,
net (18.7) (20.9) Change in non-cash working capital balances
related to operations (80.5) (126.3) --------------------------
Cash provided by operating activities 153.8 78.2
-------------------------- Investing activities Additions to
properties (191.7) (143.4) Other investments 0.8 0.8 Net proceeds
from disposal of transportation properties 4.3 1.7
-------------------------- Cash used in investing activities
(186.6) (140.9) -------------------------- Financing activities
Dividends paid (23.7) (21.0) Issuance of CPR Common Shares 38.5 4.1
Purchase of CPR Common Shares (45.6) - Increase in short-term
borrowing - 8.6 Repayment of long-term debt (10.7) (7.5)
-------------------------- Cash used in financing activities (41.5)
(15.8) -------------------------- Cash position Decrease in cash
and cash equivalents (74.3) (78.5) Cash and cash equivalents at
beginning of period 121.8 353.0 -------------------------- Cash and
cash equivalents at end of period $ 47.5 $ 274.5
-------------------------- -------------------------- See notes to
interim consolidated financial statements. STATEMENT OF
CONSOLIDATED RETAINED INCOME (in millions) For the three months
ended March 31 2006 2005 (unaudited) (unaudited)
-------------------------- Balance, January 1 $ 2,935.1 $ 2,484.4
Net income for the period 111.0 80.7 Dividends (29.9) (21.0)
-------------------------- Balance, March 31 $ 3,016.2 $ 2,544.1
-------------------------- -------------------------- See notes to
interim consolidated financial statements. NOTES TO INTERIM
CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2006 (unaudited) 1
Basis of presentation These unaudited interim consolidated
financial statements and notes have been prepared using accounting
policies that are consistent with the policies used in preparing
Canadian Pacific Railway Limited's ("CPR", "the Company" or
"Canadian Pacific Railway") 2005 annual consolidated financial
statements, except as discussed in Note 2. They do not include all
disclosures required under Generally Accepted Accounting Principles
for annual financial statements and should be read in conjunction
with the annual consolidated financial statements. 2 New accounting
policy Effective January 1, 2006, the Company adopted the CICA
Accounting Standard Section 3831 "Non-Monetary Transactions". This
standard is applied prospectively to non-monetary transactions
occurring on or after that date. The standard requires that assets
or liabilities exchanged or transferred in a non-monetary
transaction that has commercial substance be valued at fair value
with any gain or loss recorded in income. Commercial substance
exists when, as a result of the transaction, there is a significant
change to future cash flows of the item transferred or the company
as a whole. Transactions that lack commercial substance or for
which the fair value of the exchanged assets cannot be reliably
measured will continue to be accounted for at carrying value. There
was no impact to CPR on adoption of this new standard as it is
applied prospectively. 3 Other charges (income) For the three
months ended March 31 2006 2005 (in millions)
------------------------ Amortization of discount on accruals
recorded at present value $ 2.5 $ 4.2 Other exchange losses (gains)
0.1 (2.0) Loss on sale of accounts receivable 1.1 0.9 Loss (gain)
on non-hedging derivative instruments 0.8 (6.2) Other 2.3 2.1
------------------------ Total other charges (income) $ 6.8 $ (1.0)
------------------------ ------------------------ 4 Interest
expense For the three months ended March 31 2006 2005 (in millions)
------------------------ Interest expense $ 49.0 $ 54.7 Interest
income (1.7) (3.1) ------------------------ Net interest expense $
47.3 $ 51.6 ------------------------ ------------------------ 5
Restructuring and environmental remediation At March 31, 2006, the
provision for restructuring and environmental remediation was
$374.1 million (December 31, 2005 - $398.8 million). This provision
primarily includes labour liabilities for restructuring plans.
Payments are expected to continue in diminishing amounts until
2025. The environmental remediation liability includes the cost of
a multi-year soil remediation program. Set out below is a
reconciliation of CPR's liabilities associated with restructuring
and environmental remediation programs: Three months ended March
31, 2006 Opening Closing Balance Amortiz- Foreign Balance Jan. 1
ation of Exchange Mar. 31 (in millions) 2006 Accrued Payments
Discount Impact 2006
---------------------------------------------------------- Labour
liability for terminations and severances $ 263.6 (1.1) (24.8) 2.6
0.2 $ 240.5 Other non-labour liabilities for exit plans 5.8 - (1.1)
- - 4.7 ----------------------------------------------------------
Total restructuring liability 269.4 (1.1) (25.9) 2.6 0.2 245.2
----------------------------------------------------------
Environmental remediation program 129.4 1.1 (1.9) - 0.3 128.9
---------------------------------------------------------- Total
restructuring and environmental remediation liability $ 398.8 -
(27.8) 2.6 0.5 $ 374.1
----------------------------------------------------------
---------------------------------------------------------- Three
months ended March 31, 2005 Opening Closing Balance Amortiz-
Foreign Balance Jan. 1 ation of Exchange Mar. 31 (in millions) 2005
Accrued Payments Discount Impact 2005
---------------------------------------------------------- Labour
liability for terminations and severances $ 269.7 (0.2) (11.8) 3.1
0.4 $ 261.2 Other non-labour liabilities for exit plans 6.1 (0.1) -
- - 6.0 ----------------------------------------------------------
Total restructuring liability 275.8 (0.3) (11.8) 3.1 0.4 267.2
----------------------------------------------------------
Environmental remediation program 172.9 - (1.2) - 0.7 172.4
---------------------------------------------------------- Total
restructuring and environmental remediation liability $ 448.7 (0.3)
(13.0) 3.1 1.1 $ 439.6
----------------------------------------------------------
----------------------------------------------------------
Amortization of Discount is charged to income as "Other Charges",
"Compensation and Benefits" and "Purchased Services and Other". 6
Earnings per share At March 31, 2006, the number of shares
outstanding was 158.6 million. Basic earnings per share have been
calculated using net income for the period divided by the weighted
average number of CPR shares outstanding during the period. Diluted
earnings per share have been calculated using the treasury stock
method, which gives effect to the dilutive value of outstanding
options. The number of shares used in earnings per share
calculations is reconciled as follows: For the three months ended
March 31 2006 2005 (in millions) ------------------------ Weighted
average shares outstanding 158.5 158.8 Dilutive effect of stock
options 1.7 1.4 ------------------------ Weighted average diluted
shares outstanding 160.2 160.2 ------------------------
------------------------ (in dollars) Basic earnings per share $
0.70 $ 0.51 Diluted earnings per share $ 0.69 $ 0.50
------------------------ ------------------------ 7 Shareholders'
equity An analysis of Common Share balances is as follows: For the
three months ended March 31 (in millions) 2006 2005 Number Amount
Number Amount -------------------------------------- Share capital,
January 1 158.2 $ 1,141.5 158.8 $ 1,120.6 Shares issued under stock
option plans 1.3 40.2 0.1 4.1 Shares repurchased (0.9) (6.6) - -
-------------------------------------- Share capital, March 31
158.6 $ 1,175.1 158.9 $ 1,124.7
--------------------------------------
-------------------------------------- An analysis of contributed
surplus balances is as follows: For the three months ended March 31
2006 2005 (in millions) ------------------------ Contributed
surplus, January 1 $ 241.6 $ 300.4 Stock-based compensation related
to stock options issued 2.2 2.3 Shares repurchased (45.0) -
------------------------ Contributed surplus, March 31 $ 198.8 $
302.7 ------------------------ ------------------------ In February
2006, the Company completed the necessary filings to expand its
normal course issuer bid to purchase, for cancellation, up to 5.5
million of its outstanding Common Shares. The normal course issuer
bid, originally filed in May 2005, was for the purchase of up to
2.5 million Common Shares. Share purchases may be made during the
12-month period that began June 6, 2005, and ends June 5, 2006. The
purchases are made at the market price on the day of purchase, with
consideration allocated to share capital up to the average carrying
amount of the shares, and any excess allocated to contributed
surplus. When shares are repurchased, it takes three days before
the transaction is settled and the shares are cancelled. The cost
of shares purchased in a given month and settled in the following
month is accrued in the month of purchase. During the first quarter
of 2006, 892,645 shares were repurchased at an average price of
$57.81. 8 Stock-based compensation In the first quarter of 2006,
under CPR's stock option plans, the Company issued 1,376,500
options to purchase Common Shares at the price of $57.70 per share,
based on the closing price on the day prior to the grant date. In
tandem with these options, 472,400 stock appreciation rights were
issued at the exercise price of $57.70. Also, all 30,000 unvested
Restricted Share Units, issued in 2005, were cancelled. Pursuant to
the employee plan, options may be exercised upon vesting, which is
between 24 months and 36 months after the grant date, and will
expire after 10 years. Some options vest after 48 months, unless
certain performance targets are achieved, in which case vesting is
accelerated. These options expire five years after the grant date.
The following is a summary of the Company's fixed stock option
plans as of March 31 (including options granted under the
Directors' Stock Option Plan, which was suspended in 2003): 2006
2005 ----------------------- ----------------------- Weighted
Weighted average average Number of exercise Number of exercise
options price options price -----------------------
----------------------- Outstanding, January 1 7,971,917 $ 32.07
7,752,080 $ 29.32 New options granted 1,376,500 57.70 1,548,000
42.05 Exercised (1,349,300) 28.48 (151,514) 27.23
Forfeited/cancelled (195,530) 39.69 (48,071) 27.36 ------------
------------ Outstanding, March 31 7,803,587 $ 37.02 9,100,495 $
31.53 ----------------------- -----------------------
----------------------- ----------------------- Options exercisable
at March 31 3,919,337 $ 29.38 2,342,965 $ 27.19
----------------------- -----------------------
----------------------- ----------------------- Compensation
expense is recognized over the vesting period for stock options
issued since January 1, 2003, based on their estimated fair values
on the date of grants, as determined by the Black-Scholes option
pricing model. Had CPR used the fair value method for options
granted between January 1, 2002, and December 31, 2002, CPR's pro
forma basis net income and earnings per share would have been as
follows: For the three months ended March 31 2006 2005 (in
millions) ------------------------ Net income (in millions) As
reported $ 111.0 $ 80.7 Pro forma $ 110.8 $ 80.6
------------------------ ------------------------ (in dollars)
Basic earnings per share As reported $ 0.70 $ 0.51 Pro forma $ 0.70
$ 0.51 ------------------------ ------------------------ Diluted
earnings per share As reported $ 0.69 $ 0.50 Pro forma $ 0.69 $
0.50 ------------------------ ------------------------ Under the
fair value method, the fair value of options at the grant date is
$11.7 million for options issued in the first quarter of 2006
(first quarter of 2005 - $10.0 million). The weighted average fair
value assumptions were approximately: For the three months ended
March 31 2006 2005 ------------------------ Expected option life
(years) 4.50 4.50 Risk-free interest rate 4.06% 3.49% Expected
stock price volatility 22% 24% Expected annual dividends per share
$ 0.75 $ 0.53 Weighted average fair value of options granted during
the year $ 12.97 $ 9.65 ------------------------
------------------------ 9 Pensions and other benefits The total
benefit cost for the Company's defined benefit pension plans,
defined contribution pension plans and post-retirement benefits for
the quarter ended March 31, 2006, was $30.9 million (quarter ended
March 31, 2005 - $20.4 million). 10 Significant customers During
the first quarter of 2006, one customer comprised 13.0% of total
revenue (first quarter of 2005 - 15.0%). At March 31, 2006, one
customer represented 6.1% of total accounts receivable (March 31,
2005 - 15.8%). 11 Commitments and contingencies In the normal
course of its operations, the Company becomes involved in various
legal actions, including claims relating to injuries and damages to
property. The Company maintains provisions it considers to be
adequate for such actions. While the final outcome with respect to
actions outstanding or pending at March 31, 2006, cannot be
predicted with certainty, it is the opinion of management that
their resolution will not have a material adverse effect on the
Company's financial position or results of operations. Capital
commitments At March 31, 2006, CPR had multi-year capital
commitments of $659.0 million, mainly for locomotive overhaul
agreements, in the form of signed contracts or letters of intent.
Payments for these commitments are due in 2006 through 2016.
Operating lease commitments At March 31, 2006, minimum payments
under operating leases were estimated at $580.4 million in
aggregate, with annual payments in each of the next 5 years of:
remainder of 2006 - $110.3 million; 2007 - $109.8 million; 2008 -
$80.0 million; 2009 - $53.6 million; 2010 - $39.3 million.
Guarantees The Company has residual value guarantees on operating
lease commitments of $233.3 million at March 31, 2006. The maximum
amount that could be payable under these and all of the Company's
other guarantees cannot be reasonably estimated due to the nature
of certain of the guarantees. All or a portion of amounts paid
under certain guarantees could be recoverable from other parties or
through insurance. The Company has accrued for all guarantees that
it expects to pay. At March 31, 2006, these accruals, which do not
include any amounts for residual value guarantees, amounted to
$14.7 million. 12 Reclassification Certain prior year's figures
have been reclassified to conform with the presentation adopted for
2006. Summary of Rail Data -------------------- First Quarter
----------------------------------------- 2006 2005(1) Variance %
----------------------------------------- Financial (millions,
except per share data) Revenues ---------- Freight revenue $
1,067.2 $ 992.6 $ 74.6 7.5 Other revenue 43.3 21.5 21.8 101.4
------------------------------ 1,110.5 1,014.1 96.4 9.5
------------------------------ Operating expenses
------------------ Compensation and benefits 349.9 331.1 18.8 5.7
Fuel 157.9 134.5 23.4 17.4 Materials 57.6 58.8 (1.2) (2.0)
Equipment rents 44.6 48.5 (3.9) (8.0) Depreciation and amortization
114.8 109.5 5.3 4.8 Purchased services and other 156.6 153.0 3.6
2.4 ------------------------------ 881.4 835.4 46.0 5.5
------------------------------ Operating income 229.1 178.7 50.4
28.2 Other charges (income) 6.8 (1.0) 7.8 - Interest expense 47.3
51.6 (4.3) (8.3) Income tax expense before foreign exchange losses
on long-term debt (2) 56.7 43.5 13.2 30.3
------------------------------ Income before foreign exchange
losses on long-term debt (2) 118.3 84.6 33.7 39.8
------------------------------ Foreign exchange losses on long-term
debt (FX on LTD) --------------------------- FX on LTD 6.4 3.1 3.3
- Income tax on FX on LTD (3) 0.9 0.8 0.1 -
------------------------------ FX on LTD (net of tax) 7.3 3.9 3.4 -
------------------------------ Net income $ 111.0 $ 80.7 $ 30.3
37.5 ------------------------------ ------------------------------
Earnings per share (EPS) ------------------------ Basic earnings
per share $ 0.70 $ 0.51 $ 0.19 37.3 Diluted earnings per share $
0.69 $ 0.50 $ 0.19 38.0 EPS before FX on LTD (2)
------------------------- Basic earnings per share $ 0.75 $ 0.53 $
0.22 41.5 Diluted earnings per share $ 0.74 $ 0.53 $ 0.21 39.6
Weighted average number of shares outstanding (millions) 158.5
158.8 (0.3) (0.2) Operating ratio (4)(%) 79.4 82.4 (3.0) - ROCE
before FX on LTD (after tax)(2)(4)(%) 9.6 7.9 1.7 - Net debt to net
debt plus equity (%) 39.8 43.3 (3.5) - EBIT before FX on LTD
(2)(4)(millions) $ 222.3 $ 179.7 $ 42.6 23.7 EBITDA before FX on
LTD (2)(4)(millions) $ 337.1 $ 289.2 $ 47.9 16.6 (1) Certain
comparative period figures have been reclassified to current
presentation. (2) These are earnings measures that are not in
accordance with GAAP and may not be comparable to similar measures
of other companies. See note on non-GAAP earnings measures attached
to commentary. (3) Income tax on FX on LTD is discussed in the
current MD&A in the "Other Income Statement Items" section -
"Income Taxes". (4) EBIT: Earnings before interest and taxes;
EBITDA: Earnings before interest, taxes, and depreciation and
amortization. ROCE (after tax): Return on capital employed (after
tax) (equal sign) earnings before interest (last 12 months) divided
by average net debt plus equity. Operating ratio: Operating
expenses divided by revenues. First Quarter
----------------------------------------- 2006 2005(1) Variance %
----------------------------------------- Commodity Data
--------------- Freight Revenues (millions) - Grain $ 211.3 $ 165.6
$ 45.7 27.6 - Coal 160.2 165.6 (5.4) (3.3) - Sulphur and
fertilizers 93.1 119.3 (26.2) (22.0) - Forest products 83.4 81.1
2.3 2.8 - Industrial and consumer products 148.3 130.9 17.4 13.3 -
Automotive 78.3 69.9 8.4 12.0 - Intermodal 292.6 260.2 32.4 12.5
------------------------------ Total Freight Revenues $ 1,067.2 $
992.6 $ 74.6 7.5 ------------------------------ Millions of Revenue
Ton-Miles (RTM) - Grain 7,474 6,137 1,337 21.8 - Coal 5,054 5,728
(674) (11.8) - Sulphur and fertilizers 3,455 5,497 (2,042) (37.1) -
Forest products 2,434 2,521 (87) (3.5) - Industrial and consumer
products 4,341 3,928 413 10.5 - Automotive 603 570 33 5.8 -
Intermodal 6,727 6,339 388 6.1 ------------------------------ Total
RTMs 30,088 30,720 (632) (2.1) ------------------------------
Freight Revenue per RTM (cents) - Grain 2.83 2.70 0.13 4.8 - Coal
3.17 2.89 0.28 9.7 - Sulphur and fertilizers 2.69 2.17 0.52 24.0 -
Forest products 3.43 3.22 0.21 6.5 - Industrial and consumer
products 3.42 3.33 0.09 2.7 - Automotive 12.99 12.26 0.73 6.0 -
Intermodal 4.35 4.10 0.25 6.1 Freight Revenue per RTM 3.55 3.23
0.32 9.9 Carloads (thousands) - Grain 92.4 75.9 16.5 21.7 - Coal
78.7 85.9 (7.2) (8.4) - Sulphur and fertilizers 39.0 55.5 (16.5)
(29.7) - Forest products 37.6 39.3 (1.7) (4.3) - Industrial and
consumer products 79.7 81.6 (1.9) (2.3) - Automotive 42.3 42.0 0.3
0.7 - Intermodal 281.8 267.3 14.5 5.4
------------------------------ Total Carloads 651.5 647.5 4.0 0.6
------------------------------ Freight Revenue per Carload - Grain
$ 2,287 $ 2,182 $ 105 4.8 - Coal 2,036 1,928 108 5.6 - Sulphur and
fertilizers 2,387 2,150 237 11.0 - Forest products 2,218 2,064 154
7.5 - Industrial and consumer products 1,861 1,604 257 16.0 -
Automotive 1,851 1,664 187 11.2 - Intermodal 1,038 973 65 6.7
Freight Revenue per Carload $ 1,638 $ 1,533 $ 105 6.8 (1) Certain
comparative period figures have been reclassified to current
presentation. First Quarter
----------------------------------------- 2006 2005(1) Variance %
----------------------------------------- Operations and
Productivity --------------------------- Freight gross ton-miles
(GTM) (millions) 57,014 58,416 (1,402) (2.4) Revenue ton-miles
(RTM) (millions) 30,088 30,720 (632) (2.1) Average number of active
employees 15,267 15,468 (201) (1.3) Number of active employees at
end of period 15,394 15,691 (297) (1.9) FRA personal injuries per
200,000 employee-hours 2.1 2.7 (0.6) (22.2) FRA train accidents per
million train-miles 1.0 3.1 (2.1) (67.7) Total operating expenses
per RTM (cents) 2.93 2.72 0.21 7.7 Total operating expenses per GTM
(cents) 1.55 1.43 0.12 8.4 Compensation and benefits expenses per
GTM (cents) 0.61 0.57 0.04 7.0 GTMs per average active employee
(000) 3,734 3,777 (43) (1.1) Average train speed - AAR definition
(mph) 25.3 21.7 3.6 16.6 Terminal dwell time - AAR definition
(hours) 21.3 31.3 (10.0) (31.9) Car miles per car day 132.1 115.2
16.9 14.7 Average daily total cars on-line - AAR definition (000)
80.9 87.2 (6.3) (7.2) U.S. gallons of locomotive fuel per 1,000
GTMs - freight & yard 1.24 1.26 (0.02) (1.6) U.S. gallons of
locomotive fuel consumed - total (millions)(2) 71.1 73.6 (2.5)
(3.4) Average foreign exchange rate (US$/Canadian$) 0.873 0.816
0.057 7.0 Average foreign exchange rate (Canadian$/US$) 1.146 1.226
(0.080) (6.5) (1) Certain comparative period figures have been
reclassified to conform with current presentation or have been
updated to reflect new information. (2) Includes gallons of fuel
consumed from freight, yard and commuter service but excludes fuel
used in capital projects and other non-freight activities.
DATASOURCE: Canadian Pacific Railway CONTACT: Media: Leslie
Pidcock, Manager, Corporate Communications, Tel.: (403) 319-6878, ;
Investment Community: Paul Bell, Vice-President, Investor
Relations, Tel.: (403) 319-3591,
Copyright