CPR to make Voluntary Prepayment to Canadian Defined Benefit Pension Plan
21 Novembre 2003 - 2:00PM
PR Newswire (US)
CPR to make Voluntary Prepayment to Canadian Defined Benefit
Pension Plan Railway also provides outlook CALGARY, Nov. 21
/PRNewswire-FirstCall/ -- Canadian Pacific Railway (TSX/NYSE: CP)
today announced plans to accelerate funding of future pension
obligations through a voluntary prepayment of approximately
Cdn.$300 million into the company's Canadian defined benefit
Pension Plan. The prepayment, to be made in December 2003, will be
funded from existing cash balances. "CPR's pension fund is in a
solid position, but three years of bear markets and extremely low
interest rates require some adjustments to how we manage our
funding obligations," Rob Ritchie, President and Chief Executive
Officer of CPR, said. "The prepayment is a balanced, pro-active
approach. It puts the funding requirement firmly in our control for
the medium term and does not increase the risk of a significant
surplus arising should improvements in the plan's financial
performance or interest rates exceed our assumptions." The
prepayment will be in addition to current service costs of $55
million in 2003. Mr. Ritchie said the prepayment will reduce the
Pension Plan's unfunded position by increasing the asset base.
"While there is no obligation to prepay future funding obligations,
this approach demonstrates CPR's intention and capability to
maintain a healthy Pension Plan over the long term." Equity markets
have improved this year and asset returns for the Canadian defined
benefit Pension Plan have averaged about 6 per cent for the first
nine months of 2003. Pension liabilities are also highly sensitive
to changes in long-term interest rates, which are utilized to
discount future pensioner payments to a lump sum present value. CPR
maintains defined benefit pension plans for its employees in Canada
and the United States, and has supplemental plans for management
and executive personnel. CPR's regular Canadian defined benefit
Pension Plan, with approximately Cdn.$5 billion of assets, reported
an accounting deficit of approximately $721 million at Dec. 31,
2002. The financial position of pension plans is calculated based
on the value of fund assets relative to the ability of the assets
to pay the promised pension benefits to current pensioners as well
as future retirees. Separately, CPR will provide its outlook in an
Analyst Workshop today. The company expects its freight revenues to
increase between 4 per cent and 6 per cent in 2004 over 2003.
Growth should be driven primarily by a significant recovery in
Canadian grain volumes and improved coal markets. Continued growth
in CPR's intermodal business, driven by strong consumer demand in
North America, is also expected. The company is targeting basic
earnings per share, excluding non-recurring items and foreign
exchange gains or losses on long-term debt, to grow approximately
20 per cent in 2004, compared with 2003, and expects to generate
positive free cash flow in 2004. WEBCAST Interested parties are
invited to listen to management's discussion of the foregoing and
other matters during CPR's Analyst Workshop in Montreal today,
beginning at 8:15 a.m. Eastern time. The Workshop will be webcast
on CPR's website at http://www.cpr.ca/. To listen to the webcast,
go to the Investors section of the website. CPR recommends logging
in 10 minutes prior to the scheduled start. Note on Non-GAAP
Earnings Measures: The targeted earnings measures referred to in
this release exclude foreign exchange gains and losses on long-
term debt and non-recurring items. By excluding such items, the
impact of volatile short-term exchange rate fluctuations, which can
only be realized when long-term debt matures or is settled, is
largely eliminated. By also excluding non-recurring items, the
earnings measures better reflect ongoing operations at CPR. It
should be noted that such earnings measures, excluding
non-recurring items and foreign exchange gains and losses on
long-term debt, have no standardized meanings and are not defined
by Canadian generally accepted accounting principles and,
therefore, may not be readily comparable to similar measures of
other companies. A reconciliation of CPR's income, excluding
non-recurring items and foreign exchange gains and losses on
long-term debt, to net income as presented in the company's
financial statements in respect of the three-month and nine-month
periods ended September 30, 2003, is detailed in the Summary of
Rail Data included with such statements, which have been filed with
the relevant securities regulators. Forward-Looking Information:
This news release contains forward-looking information. Actual
future results may differ materially. The risks, uncertainties and
other factors that could influence actual results are described in
CPR's annual report and annual information form, and may be updated
in CPR's consolidated interim financial statements and interim
Management's Discussion and Analysis, which are filed with
securities regulators from time to time. However, 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. Financial results in this
news release are reported in Canadian dollars. Canadian Pacific
Railway, recognized internationally for its scheduled railway
operations, is a transcontinental carrier operating in Canada and
the U.S. Its 14,000-mile rail network serves the principal centers
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. For more
information, visit CPR's website at http://www.cpr.ca/. DATASOURCE:
Canadian Pacific Railway CONTACT: Media, Len Cocolicchio, Tel.:
(403) 319-7591, ; Investment Community, Paul Bell, Vice-President,
Investor Relations, Tel.: (403) 319-3591,
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