value of ABCP (net of tax) 15.0 - 15.0 - Income tax benefits due to Federal / Provincial income tax rate reductions - - - - -------------------------------- Net income $ 218.6 $ 163.8 $ 54.8 33.5 -------------------------------- -------------------------------- Earnings per share (EPS) ------------------------ Basic earnings per share $ 1.43 $ 1.05 $ 0.38 36.2 Diluted earnings per share $ 1.41 $ 1.04 $ 0.37 35.6 EPS before FX on LTD and ------------------------ other specified items(2) ------------------------ Basic earnings per share $ 1.24 $ 1.08 $ 0.16 14.8 Diluted earnings per share $ 1.23 $ 1.07 $ 0.16 15.0 Weighted average number of shares outstanding (millions) 153.2 156.7 (3.5) (2.2) Weighted average number of diluted shares outstanding (millions) 155.0 158.3 (3.3) (2.1) Operating ratio(2)(4)(%) 72.9 74.0 (1.1) - ROCE before FX on LTD and other specified items (after tax)(2)(4)(%) 10.4 10.2 0.2 - Net debt to net debt plus equity (%) 33.4 37.5 (4.1) - EBIT before FX on LTD and other specified items(2)(4) (millions) $ 313.6 $ 292.2 $ 21.4 7.3 EBITDA before FX on LTD and other specified items(2)(4) (millions) $ 431.6 $ 407.8 $ 23.8 5.8 Year-to-date ------------------------------------------- 2007 2006(1) Variance % ------------------------------------------- Financial (millions, except --------------------------- per share data) --------------- Revenues -------- Freight revenue $3,412.6 $3,275.8 $ 136.8 4.2 Other revenue 106.7 117.0 (10.3) (8.8) -------------------------------- 3,519.3 3,392.8 126.5 3.7 -------------------------------- Operating Expenses ------------------ Compensation and benefits 975.8 1,005.4 (29.6) (2.9) Fuel 550.5 479.3 71.2 14.9 Materials 167.6 159.2 8.4 5.3 Equipment rents 162.4 133.4 29.0 21.7 Depreciation and amortization 355.7 348.2 7.5 2.2 Purchased services and other 448.6 458.8 (10.2) (2.2) -------------------------------- 2,660.6 2,584.3 76.3 3.0 -------------------------------- Operating income 858.7 808.5 50.2 6.2 Other charges 21.1 21.4 (0.3) (1.4) Interest expense 140.9 144.7 (3.8) (2.6) Income tax expense before foreign exchange (gains) losses on long-term debt and other specified items(2) 209.0 195.9 13.1 6.7 -------------------------------- Income before foreign exchange (gains) losses on long-term debt and other specified items(2) 487.7 446.5 41.2 9.2 -------------------------------- Foreign exchange (gains) losses ------------------------------- on long-term debt (FX on LTD) ----------------------------- FX on LTD (161.5) (44.8) (116.7) - Income tax on FX on LTD(3) 47.4 16.6 30.8 - -------------------------------- FX on LTD (net of tax) (114.1) (28.2) (85.9) - Other specified items --------------------- Change in estimated fair value of Canadian third party asset-backed commercial paper (ABCP) 21.5 - 21.5 - Income tax on change in estimated fair value of ABCP (6.5) - (6.5) - -------------------------------- Change in estimated fair value of ABCP (net of tax) 15.0 - 15.0 - Income tax benefits due to Federal / Provincial income tax rate reductions (17.1) (176.0) 158.9 - -------------------------------- Net income $ 603.9 $ 650.7 $ (46.8) (7.2) -------------------------------- -------------------------------- Earnings per share (EPS) ------------------------ Basic earnings per share $ 3.91 $ 4.13 $ (0.22) (5.3) Diluted earnings per share $ 3.87 $ 4.09 $ (0.22) (5.4) EPS before FX on LTD and ------------------------ other specified items(2) ------------------------ Basic earnings per share $ 3.16 $ 2.83 $ 0.33 11.7 Diluted earnings per share $ 3.13 $ 2.79 $ 0.34 12.2 Weighted average number of shares outstanding (millions) 154.3 157.8 (3.5) (2.2) Weighted average number of diluted shares outstanding (millions) 155.9 159.6 (3.7) (2.3) Operating ratio(2)(4)(%) 75.6 76.2 (0.6) - ROCE before FX on LTD and other specified items (after tax)(2)(4)(%) 10.4 10.2 0.2 - Net debt to net debt plus equity (%) 33.4 37.5 (4.1) - EBIT before FX on LTD and other specified items(2)(4) (millions) $ 837.6 $ 787.1 $ 50.5 6.4 EBITDA before FX on LTD and other specified items(2)(4) (millions) $1,193.3 $1,135.3 $ 58.0 5.1 (1) Certain comparative period figures have been restated for retroactive application of a new accounting standard adopted in 2006 related to stock-based compensation for employees eligible to retire before the vesting date. (2) These earnings measures have no standardized meanings prescribed by 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) = earnings before after-tax interest expense (last 12 months) divided by average net debt plus equity. Operating ratio: Operating expenses divided by revenues. Third Quarter ------------------------------------------- 2007 2006 Variance % ------------------------------------------- Commodity Data -------------- Freight Revenues (millions) - Grain $ 237.8 $ 225.3 $ 12.5 5.5 - Coal 148.7 139.0 9.7 7.0 - Sulphur and fertilizers 113.9 118.7 (4.8) (4.0) - Forest products 68.0 86.0 (18.0) (20.9) - Industrial and consumer products 159.3 156.7 2.6 1.7 - Automotive 71.4 69.3 2.1 3.0 - Intermodal 348.5 327.2 21.3 6.5 -------------------------------- Total Freight Revenues $1,147.6 $1,122.2 $ 25.4 2.3 -------------------------------- Millions of Revenue Ton-Miles (RTM) - Grain 7,614 7,142 472 6.6 - Coal 5,400 4,875 525 10.8 - Sulphur and fertilizers 4,967 5,023 (56) (1.1) - Forest products 1,867 2,213 (346) (15.6) - Industrial and consumer products 4,228 4,311 (83) (1.9) - Automotive 566 529 37 7.0 - Intermodal 7,907 6,770 1,137 16.8 -------------------------------- Total RTMs 32,549 30,863 1,686 5.5 -------------------------------- Freight Revenue per RTM (cents) - Grain 3.12 3.15 (0.03) (1.0) - Coal 2.75 2.85 (0.10) (3.5) - Sulphur and fertilizers 2.29 2.36 (0.07) (3.0) - Forest products 3.64 3.89 (0.25) (6.4) - Industrial and consumer products 3.77 3.63 0.14 3.9 - Automotive 12.61 13.10 (0.49) (3.7) - Intermodal 4.41 4.83 (0.42) (8.7) Freight Revenue per RTM 3.53 3.64 (0.11) (3.0) Carloads (thousands) - Grain 100.9 96.2 4.7 4.9 - Coal 70.7 65.9 4.8 7.3 - Sulphur and fertilizers 47.6 49.0 (1.4) (2.9) - Forest products 28.1 32.9 (4.8) (14.6) - Industrial and consumer products 78.0 78.3 (0.3) (0.4) - Automotive 38.6 36.4 2.2 6.0 - Intermodal 323.5 288.8 34.7 12.0 -------------------------------- Total Carloads 687.4 647.5 39.9 6.2 -------------------------------- Freight Revenue per Carload - Grain $ 2,357 $ 2,342 $ 15 0.6 - Coal 2,103 2,109 (6) (0.3) - Sulphur and fertilizers 2,393 2,422 (29) (1.2) - Forest products 2,420 2,614 (194) (7.4) - Industrial and consumer products 2,042 2,001 41 2.0 - Automotive 1,850 1,904 (54) (2.8) - Intermodal 1,077 1,133 (56) (4.9) Freight Revenue per Carload $ 1,669 $ 1,733 $ (64) (3.7) Year-to-date ------------------------------------------- 2007 2006 Variance % ------------------------------------------- Commodity Data -------------- Freight Revenues (millions) - Grain $ 681.4 $ 643.0 $ 38.4 6.0 - Coal 442.4 442.7 (0.3) (0.1) - Sulphur and fertilizers 380.8 317.3 63.5 20.0 - Forest products 214.3 245.2 (30.9) (12.6) - Industrial and consumer products 470.0 455.3 14.7 3.2 - Automotive 242.0 239.5 2.5 1.0 - Intermodal 981.7 932.8 48.9 5.2 -------------------------------- Total Freight Revenues $3,412.6 $3,275.8 $ 136.8 4.2 -------------------------------- Millions of Revenue Ton-Miles (RTM) - Grain 22,407 21,664 743 3.4 - Coal 15,817 14,664 1,153 7.9 - Sulphur and fertilizers 16,057 12,336 3,721 30.2 - Forest products 5,886 6,911 (1,025) (14.8) - Industrial and consumer products 12,538 12,814 (276) (2.2) - Automotive 1,850 1,878 (28) (1.5) - Intermodal 22,257 20,552 1,705 8.3 -------------------------------- Total RTMs 96,812 90,819 5,993 6.6 -------------------------------- Freight Revenue per RTM (cents) - Grain 3.04 2.97 0.07 2.4 - Coal 2.80 3.02 (0.22) (7.3) - Sulphur and fertilizers 2.37 2.57 (0.20) (7.8) - Forest products 3.64 3.55 0.09 2.5 - Industrial and consumer products 3.75 3.55 0.20 5.6 - Automotive 13.08 12.75 0.33 2.6 - Intermodal 4.41 4.54 (0.13) (2.9) Freight Revenue per RTM 3.53 3.61 (0.08) (2.2) Carloads (thousands) - Grain 281.4 277.8 3.6 1.3 - Coal 204.2 213.1 (8.9) (4.2) - Sulphur and fertilizers 159.1 129.6 29.5 22.8 - Forest products 88.1 104.3 (16.2) (15.5) - Industrial and consumer products 232.9 238.9 (6.0) (2.5) - Automotive 126.7 125.5 1.2 1.0 - Intermodal 923.0 866.1 56.9 6.6 -------------------------------- Total Carloads 2,015.4 1,955.3 60.1 3.1 -------------------------------- Freight Revenue per Carload - Grain $ 2,421 $ 2,315 $ 106 4.6 - Coal 2,167 2,077 90 4.3 - Sulphur and fertilizers 2,393 2,448 (55) (2.2) - Forest products 2,432 2,351 81 3.4 - Industrial and consumer products 2,018 1,906 112 5.9 - Automotive 1,910 1,908 2 0.1 - Intermodal 1,064 1,077 (13) (1.2) Freight Revenue per Carload $ 1,693 $ 1,675 $ 18 1.1 Third Quarter ------------------------------------------- 2007 2006(1) Variance % ------------------------------------------- Operations and Productivity --------------------------- Freight gross ton-miles (GTM) (millions) 62,177 59,102 3,075 5.2 Revenue ton-miles (RTM) (millions) 32,549 30,863 1,686 5.5 Average number of active employees 16,136 16,420 (284) (1.7) Number of employees at end of period 16,037 16,315 (278) (1.7) FRA personal injuries per 200,000 employee-hours 2.0 1.9 0.1 5.3 FRA train accidents per million train-miles 2.0 1.0 1.0 100.0 Total operating expenses per RTM (cents) 2.66 2.76 (0.10) (3.6) Total operating expenses per GTM (cents) 1.39 1.44 (0.05) (3.5) Compensation and benefits expense per GTM (cents) 0.50 0.56 (0.06) (10.7) GTMs per average active employee (000) 3,853 3,599 254 7.1 Miles of road operated at end of period(2) 13,260 13,529 (269) (2.0) Average train speed - AAR definition (mph) 23.8 25.1 (1.3) (5.2) Terminal dwell time - AAR definition (hours) 20.1 19.9 0.2 1.0 Car miles per car day 147.4 141.7 5.7 4.0 Average daily total cars on-line - AAR definition (000) 81.3 79.8 1.5 1.9 U.S. gallons of locomotive fuel per 1,000 GTMs - freight & yard 1.17 1.17 - - U.S. gallons of locomotive fuel consumed - total (millions)(3) 71.9 68.9 3.0 4.4 Average foreign exchange rate (US$/Canadian$) 0.941 0.895 0.046 5.1 Average foreign exchange rate (Canadian$/US$) 1.063 1.118 (0.055) (4.9) Year-to-date ------------------------------------------- 2007 2006(1) Variance % ------------------------------------------- Operations and Productivity --------------------------- Freight gross ton-miles (GTM) (millions) 184,218 174,215 10,003 5.7 Revenue ton-miles (RTM) (millions) 96,812 90,819 5,993 6.6 Average number of active employees 15,633 15,988 (355) (2.2) Number of employees at end of period 16,037 16,315 (278) (1.7) FRA personal injuries per 200,000 employee-hours 1.9 1.9 - - FRA train accidents per million train-miles 2.0 1.4 0.6 42.9 Total operating expenses per RTM (cents) 2.75 2.85 (0.10) (3.5) Total operating expenses per GTM (cents) 1.44 1.48 (0.04) (2.7) Compensation and benefits expense per GTM (cents) 0.53 0.58 (0.05) (8.6) GTMs per average active employee (000) 11,784 10,897 887 8.1 Miles of road operated at end of period(2) 13,260 13,529 (269) (2.0) Average train speed - AAR definition (mph) 23.5 25.1 (1.6) (6.4) Terminal dwell time - AAR definition (hours) 21.9 20.4 1.5 7.4 Car miles per car day 143.1 135.8 7.3 5.4 Average daily total cars on-line - AAR definition (000) 81.4 81.0 0.4 0.5 U.S. gallons of locomotive fuel per 1,000 GTMs - freight & yard 1.20 1.20 - - U.S. gallons of locomotive fuel consumed - total (millions)(3) 221.0 209.1 11.9 5.7 Average foreign exchange rate (US$/Canadian$) 0.897 0.884 0.013 1.5 Average foreign exchange rate (Canadian$/US$) 1.115 1.131 (0.016) (1.4) (1) Certain comparative period figures have been restated for retroactive application of a new accounting standard adopted in 2006 related to stock-based compensation for employees eligible to retire before the vesting date or have been updated to reflect new information. (2) Excludes track on which CP has haulage rights. (3) 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: PRNewswire - - 10/29/2007

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