CANADIAN PACIFIC ANNOUNCES 2010 RESULTS

CALGARY, Jan. 26 /CNW/ - 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."

FOURTH-QUARTER 2010 RESULTS

    <<
    -   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
    >>

FULL YEAR 2010 RESULTS

    <<
    -   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.

    <<
    CANADIAN PACIFIC RAILWAY LIMITED

    CONSOLIDATED STATEMENT 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
                                    2010        2009        2010        2009
                                            Restated                Restated
                                         (see Note 2)            (see Note 2)
                              ----------------------- -----------------------
                              ----------------------- -----------------------

    Revenues
      Freight                 $  1,262.1  $  1,115.8  $  4,853.3  $  4,279.8
      Other                         32.2        27.4       128.2       122.4
                              ----------------------- -----------------------
                                 1,294.3     1,143.2     4,981.5     4,402.2

    Operating expenses
      Compensation and
       benefits                    362.3       316.7     1,431.0     1,306.6
      Fuel                         202.4       157.6       728.1       580.3
      Materials                     56.0        42.1       214.2       217.6
      Equipment rents               48.5        53.0       206.0       226.0
      Depreciation and
       amortization                121.2       122.2       489.6       483.2
      Purchased services and
       other                       206.2       229.6       796.5       783.0
      Gain on sale of
       significant properties          -           -           -       (79.1)
      Loss on termination of
       lease with shortline
       railway                         -        54.5           -        54.5
                             ------------------------ -----------------------
                                   996.6       975.7     3,865.4     3,572.1
                             ------------------------ -----------------------
    Operating income               297.7       167.5     1,116.1       830.1

    Gain on sale of
     partnership interest              -           -           -        81.2

    Less:
      Other (income) and
       charges                      (4.7)       (7.0)      (12.0)       12.4
      Interest expense              65.2        68.4       257.3       267.6
                             ------------------------ -----------------------

    Income before income tax
     expense                       237.2       106.1       870.8       631.3

    Income tax expense
     (recovery)                     51.4       (40.1)      220.1        81.3

                             ------------------------ -----------------------
    Net income                $    185.8  $    146.2  $    650.7  $    550.0
                             ------------------------ -----------------------
                             ------------------------ -----------------------

    Earnings per share
      Basic earnings per
       share                  $     1.10  $     0.87  $     3.86  $     3.31
      Diluted earnings per
       share                  $     1.09  $     0.87  $     3.85  $     3.30
    Weighted average number
     of shares (millions)
      Basic                        169.1       168.3       168.8       166.3
      Diluted                      169.7       168.9       169.2       166.8
    Dividends declared per
     share                    $   0.2700  $   0.2475  $   1.0575  $   0.9900

    See notes to interim consolidated financial information.



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

                                                     December 31  December 31
                                                         2010        2009
                                                                   Restated
                                                                 (see Note 2)
                                                     -----------------------
    Assets
    Current assets
      Cash and cash equivalents                       $    360.6  $    679.1
      Accounts receivable, net                             459.0       655.1
      Materials and supplies                               114.1       132.7
      Deferred income taxes                                222.3       128.1
      Other current assets                                  47.8        46.5
                                                     -----------------------
                                                         1,203.8     1,641.5

    Investments                                            144.9       156.7
    Net properties                                      11,996.8    11,978.5
    Goodwill and intangible assets                         189.8       202.3
    Other assets                                           140.6       175.8
                                                     -----------------------
    Total assets                                      $ 13,675.9  $ 14,154.8
                                                     -----------------------
                                                     -----------------------


    Liabilities and shareholders' equity
    Current liabilities
      Accounts payable and accrued liabilities        $  1,007.8  $  1,000.7
      Long-term debt maturing within one year              281.7       605.3
                                                     -----------------------
                                                         1,289.5     1,606.0

    Pension and other benefits liabilities (Note 3)      1,115.7     1,453.9
    Other long-term liabilities                            468.0       479.9
    Long-term debt                                       4,033.2     4,138.2
    Deferred income taxes                                1,944.8     1,818.7
                                                     -----------------------

    Total liabilities                                    8,851.2     9,496.7

    Shareholders' equity
      Share capital                                      1,812.8     1,771.1
      Additional paid-in capital                            24.7        30.8
      Accumulated other comprehensive loss              (2,085.8)   (1,744.7)
      Retained earnings                                  5,073.0     4,600.9
                                                     -----------------------
                                                         4,824.7     4,658.1
                                                     -----------------------
    Total liabilities and shareholders' equity        $ 13,675.9  $ 14,154.8
                                                     -----------------------
                                                     -----------------------

    See notes to interim consolidated financial information.



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

                                For the three months            For the year
                                   ended December 31       ended December 31
                                     2010       2009         2010       2009
                                            Restated                Restated
                                         (see Note 2)            (see Note 2)
                              ----------------------- -----------------------
                              ----------------------- -----------------------

    Operating activities
      Net income              $    185.8  $    146.2  $    650.7  $    550.0
      Reconciliation of net
       income to cash
       provided by
       operating activities:
        Depreciation and
         amortization              121.2       122.2      489.6        483.2
        Deferred income taxes       50.8       (25.6)     211.2        133.0
        Gain on sale of
         partnership interest          -           -          -        (81.2)
        Gain on sale of
         significant properties        -           -          -        (79.1)
        Pension funding
         less than / in
         (excess) of expense
         (Note 3)                    4.7      (524.4)    (800.9)      (572.0)
        Other operating
         activities, net           (37.9)      (44.7)     (32.2)       (85.7)
        Change in non-cash
         working capital
         balances related to
         operations                 56.2       106.2      (16.3)       102.7
                              ----------------------- -----------------------
      Cash provided by (used
       in) operating activities    380.8      (220.1)      502.1       450.9
                              ----------------------- -----------------------
    Investing activities
      Additions to properties     (282.2)     (139.4)     (726.1)     (703.5)
      Proceeds from the sale
       of properties and other
       assets                       42.7        49.9        88.9       337.4
      Other, net                     1.6         7.4         1.6         7.4
                              ----------------------- -----------------------
      Cash used in investing
       activities                 (237.9)      (82.1)     (635.6)     (358.7)
                              ----------------------- -----------------------

    Financing activities
      Dividends paid               (45.6)      (41.6)     (174.5)     (162.9)
      Issuance of CP Common
       Shares                        5.5         9.0        32.4       513.5
      Collection of receivable
       from financial
       institution                     -           -       219.8           -
      Issuance of long-term
       debt                            -       463.2       355.2       872.7
      Repayment of long-term
       debt                         (8.3)       (4.6)     (612.8)     (617.9)
      Net increase (decrease)
       in short-term borrowing       9.0       (57.7)        9.0      (150.1)
      Other financing
       activities                      -           -         3.1        34.1
                              ----------------------- -----------------------
      Cash (used in) provided
       by financing
       activities                  (39.4)      368.3      (167.8)      489.4
                              ----------------------- -----------------------
    Effect of foreign
     exchange fluctuations on
     U.S. dollar-denominated
     cash and cash equivalents     (10.7)       (2.9)      (17.2)      (20.0)
                              ----------------------- -----------------------
    Cash position
      Increase (decrease) in
       cash and cash
       equivalents                  92.8        63.2      (318.5)      561.6
      Cash and cash
       equivalents at
       beginning of period         267.8       615.9       679.1       117.5
                              ----------------------- -----------------------
    Cash and cash equivalents
     at end of period         $    360.6  $    679.1  $    360.6  $    679.1
                              ----------------------- -----------------------
                              ----------------------- -----------------------

    Supplemental disclosures
     of cash flow information
      Income taxes paid
       (refunded)             $      1.8  $     (2.5) $      8.3  $    (38.9)
                              ----------------------- -----------------------
                              ----------------------- -----------------------
      Interest paid           $     94.5  $     92.4  $    346.8  $    289.3
                              ----------------------- -----------------------
                              ----------------------- -----------------------

    See notes to interim consolidated financial information.



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

                 ---------- -------------------------------------------------
                                                Accumulated
                   Common                          other              Total
                   shares            Additional   compre-             share-
                    (in       Share    paid-in    hensive  Retained  holders'
                  millions)  capital   capital     loss    earnings   equity
                 ---------- -------------------------------------------------
    Balance at
     December 31,
     2009, as
     previously
     reported        168.5  $1,771.1  $  30.8  $(1,746.3) $4,665.2  $4,720.8
    Cumulative
     adjustment
     for change
     in accounting
     policy
     (Note 2)            -         -        -        1.6     (64.3)    (62.7)
                 ---------- -------------------------------------------------
    Balance at
     December 31,
     2009, as
     restated        168.5   1,771.1     30.8   (1,744.7)  4,600.9   4,658.1
                 ---------- -------------------------------------------------

    Net income           -         -        -          -     650.7     650.7
    Other
     comprehensive
     income              -         -        -     (341.1)        -    (341.1)
                 ---------- -------------------------------------------------
    Comprehensive
     income              -         -        -     (341.1)    650.7     309.6
                 ---------- -------------------------------------------------
    Dividends
     declared            -         -        -          -    (178.6)   (178.6)
    Stock
     compensation
     expense             -         -      1.2          -         -       1.2
    Shares issued
     under stock
     option plans      0.7      41.7     (7.3)         -         -      34.4
                 ---------- -------------------------------------------------
    Balance at
     December 31,
     2010            169.2  $1,812.8  $  24.7  $(2,085.8) $5,073.0  $4,824.7
                 ---------- -------------------------------------------------
                 ---------- -------------------------------------------------


                                              -------------------------------
                                                   Other
                                                 compre-             Compre-
                                                 hensive       Net   hensive
                                                  income    income    income
                                              -------------------------------
    Comprehensive income  -
     three months ended
     December 31, 2010                         $  (393.3) $  185.8  $(207.5)
                                              -------------------------------
                                              -------------------------------

    See notes to interim consolidated financial information.




    CANADIAN PACIFIC RAILWAY LIMITED

    NOTES TO INTERIM CONSOLIDATED FINANCIAL INFORMATION
    DECEMBER 31, 2010
    (unaudited)

    1   Basis of presentation

        These unaudited consolidated financial statements of Canadian Pacific
        Railway Limited ("CP", "the Company" or "Canadian Pacific Railway")
        reflect management's estimates and assumptions that are necessary for
        their fair presentation in conformity with accounting principles
        generally accepted in the United States ("GAAP"). They do not include
        all disclosures required under GAAP for annual financial statements
        and should be read in conjunction with the 2009 U.S. GAAP
        consolidated financial statements. The policies used are consistent
        with the policies used in preparing the 2009 U.S. GAAP consolidated
        financial statements, except as discussed in Note 2. 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. The
        irregular pace of the recovery in 2010 from the global recession has
        affected financial results such that seasonal fluctuations may not be
        consistent with those in prior years. The timing of a return to
        seasonal trends consistent with years prior to 2009 will depend on
        the continued recovery of the economy and the related impact on the
        Company's customers.

    2   Accounting changes

        Consolidations

        In June 2009, the Financial Accounting Standards Board ("FASB")
        issued Amendments to Consolidation of Variable Interest Entities. The
        guidance retains the scope of the previous guidance and removes the
        exemption of entities previously considered qualifying special
        purpose entities. In addition, it replaces the previous quantitative
        approach with a qualitative analysis approach for determining whether
        the enterprise's variable interest or interests give it a controlling
        financial interest in a variable interest entity. The guidance is
        further amended to require ongoing reassessments of whether an
        enterprise is the primary beneficiary of a variable interest entity
        and requires enhanced disclosures about an enterprise's involvement
        in a variable interest entity. The guidance is applicable to all
        variable interest entities that existed at January 1, 2010, the date
        of adoption, or are created thereafter. The Company has variable
        interests in variable interest entities, however, the adoption of the
        new guidance did not change the previous assessment that the Company
        is not the primary beneficiary and as such does not consolidate the
        variable interest entities.

        Accounting for transfers of financial assets

        The FASB has released additional guidance with respect to the
        accounting and disclosure of transfers of financial assets such as
        securitized accounts receivable. Although the Company currently does
        not have an accounts receivable securitization program, the guidance,
        which includes revisions to the derecognition criteria in a transfer
        and the treatment of qualifying special purpose entities, would be
        applicable to any future securitization. The new guidance is
        effective for the Company from January 1, 2010. The adoption of this
        guidance had no impact to the Company's financial statements.

        Fair value measurement and disclosure

        In January 2010, the FASB amended the disclosure requirements related
        to fair value measurements. The update provides for new disclosures
        regarding transfers in and out of Level 1 and Level 2 financial asset
        and liability categories and expanded disclosures in the Level 3
        reconciliation. The update also provides clarification that the level
        of disaggregation should be at the class level and that disclosures
        about inputs and valuation techniques are required for both recurring
        and nonrecurring fair value measurements that fall in either Level 2
        or Level 3. New disclosures and clarifications of existing
        disclosures are effective for interim and annual reporting periods
        beginning after December 15, 2009, except for the expanded
        disclosures in the Level 3 reconciliation, which are effective for
        fiscal years beginning after December 15, 2010.

        Rail grinding

        During the second quarter of 2010, the Company changed its accounting
        policy for the treatment of rail grinding costs. In prior periods, CP
        had capitalized such costs and depreciated them over the expected
        economic life of the rail grinding. The Company concluded that,
        although the accounting treatment was within acceptable accounting
        standards, it is preferable to expense the costs as incurred, given
        the subjectivity in determining the expected economic life and the
        associated depreciation methodology. The accounting policy change has
        been accounted for on a retrospective basis. The effects of the
        adjustment to January 1, 2010 resulted in an adjustment to decrease
        net properties by $89.0 million, deferred income taxes by $26.3
        million, and shareholders equity by $62.7 million. As a result of the
        change the following increases (decreases) to financial statement
        line items occurred:


    (in millions of Canadian dollars, except per share data)

                                    For the three
                                     months ended          For the year
                                      December 31        ended December 31
                                    2010     2009     2010     2009     2008
                                 --------------------------------------------

    Changes to Consolidated Statement of Income and Comprehensive Income

      Depreciation and
       amortization               $ (4.3)  $ (3.5)  $(15.7)  $(14.0)  $ (8.9)

      Compensation and benefits      0.8      1.0      2.3      2.8      2.7
      Fuel                             -      0.1        -      0.1      0.1
      Materials                      0.3      0.7      0.8      1.8      1.7
      Purchased services and other   4.5      5.2     13.8     15.9     15.4
                                 --------------------------------------------

    Total operating expenses         1.3      3.5      1.2      6.6     11.0

    Income tax expense              (0.5)    (0.2)    (0.7)    (1.2)    (3.2)
                                 --------------------------------------------
    Net income                    $ (0.8)  $ (3.3)  $ (0.5)  $ (5.4)  $ (7.8)
                                 --------------------------------------------

      Basic earnings per share    $    -   $(0.02)  $    -   $(0.03)  $(0.05)
      Diluted earnings per share  $    -   $(0.02)  $    -   $(0.03)  $(0.05)

      Other comprehensive
       income (loss)                 0.6      0.3      0.9      2.4     (2.8)
                                 --------------------------------------------
    Comprehensive income          $ (0.2)  $ (3.0)  $  0.4   $ (3.0)  $(10.6)
                                 --------------------------------------------
                                 --------------------------------------------

    Changes to Consolidated Statement of Cash Flows

      Cash provided by
       operating activities
       (decrease)                 $ (5.6)  $ (7.0)  $(16.9)  $(20.6)  $(19.9)
      Cash used in investing
       activities (decrease)      $ (5.6)  $ (7.0)  $(16.9)  $(20.6)  $(19.9)



        Changes to Consolidated Balance Sheet

                                            As at       As at       As at
                                         December 31 December 31 December 31
                                             2010        2009        2008
                                        -------------------------------------
          Net properties                   $   (88.6)  $   (89.0)  $   (86.2)
          Deferred income tax liability        (26.3)      (26.3)      (26.5)
          Accumulated other
           comprehensive loss (income)           2.5         1.6        (0.8)
          Retained earnings                    (64.8)      (64.3)      (58.9)


        Future accounting changes

        There have been no new accounting pronouncements issued that are
        expected to have a significant impact to the Company's financial
        statements.

    3   Pensions and other benefits

        In the third quarter of 2010, at the Company's option, a $650 million
        prepayment to the Company's main Canadian defined benefit pension
        plan was made.

        During the fourth quarter of 2009, the Company chose to accelerate
        funding of future pension obligations through a voluntary prepayment
        of approximately $500 million to the Company's defined benefit
        pension plans.

        The Company's annual actuarial valuation of its pension and
        post-retirement benefit plan assets and obligations was completed at
        December 31, 2010. As a result of lower discount rates at
        December 31, 2010, pension and post-retirement benefit liabilities
        increased by $547.8 million, other comprehensive income was reduced
        by $407.6 million and the Company's deferred tax liability was
        reduced by $140.2 million.

    4   Reclassification of comparative figures

        Certain comparative figures have been reclassified in order to be
        consistent with the 2010 presentation.



                            Summary of Rail Data
                            --------------------
    (Reconciliation of GAAP earnings to non-GAAP earnings on pages 2 and 3)
    -----------------------------------------------------------------------


                                               Fourth Quarter
                                  -------------------------------------------
                                     2010    2009(1)     Fav/(Unfav)     %
                                  -------------------------------------------
    Financial (millions, except
    ----------------------------
     per share data)
     ---------------

    Revenues
    --------
      Freight revenue             $ 1,262.1  $ 1,115.8    $ 146.3       13.1
      Other revenue                    32.2       27.4        4.8       17.5
                                 ---------------------------------
                                    1,294.3    1,143.2      151.1       13.2
                                 ---------------------------------
    Operating expenses
    ------------------
      Compensation and benefits       362.3      316.7      (45.6)     (14.4)
      Fuel                            202.4      157.6      (44.8)     (28.4)
      Materials                        56.0       42.1      (13.9)     (33.0)
      Equipment rents                  48.5       53.0        4.5        8.5
      Depreciation and amortization   121.2      122.2        1.0        0.8
      Purchased services and other    206.2      229.6       23.4       10.2
      Gain on sale of significant
       properties                         -          -          -          -
      Loss on termination of
       lease with shortline railway       -       54.5       54.5      100.0
                                 ---------------------------------

                                      996.6      975.7      (20.9)      (2.1)
                                 ---------------------------------
    Operating income                  297.7      167.5      130.2       77.7

    Gain on sale of
     partnership interest                 -          -          -          -

    Less:

      Other (income) and charges       (4.7)      (7.0)      (2.3)     (32.9)
      Interest expense                 65.2       68.4        3.2        4.7
                                 ---------------------------------

    Income before income
     tax expense                      237.2      106.1      131.1      123.6
      Income tax expense (recovery)    51.4      (40.1)     (91.5)    (228.2)
                                 ---------------------------------
    Net income                    $   185.8  $   146.2  $    39.6       27.1
                                 ---------------------------------
                                 ---------------------------------


    Basic earnings per share      $    1.10  $    0.87  $    0.23       26.4
                                 ---------------------------------
                                 ---------------------------------

    Diluted earnings per share    $    1.09  $    0.87  $    0.22       25.3
                                 ---------------------------------
                                 ---------------------------------

    Shares Outstanding
    ------------------
    Weighted average (avg)
     number of shares outstanding
     (millions)                       169.1      168.3        0.8        0.5
    Weighted avg number of diluted
     shares outstanding
     (millions)                       169.7      168.9        0.8        0.5

    Foreign Exchange
    ----------------
    Average foreign exchange rate
     (US$/Canadian$)                   0.98       0.94      (0.04)      (4.3)
    Average foreign exchange rate
     (Canadian$/US$)                   1.02       1.07      (0.05)      (4.7)


                                                    Year
                                  -------------------------------------------
                                     2010    2009(1)     Fav/(Unfav)     %
                                  -------------------------------------------
    Financial (millions, except
    ----------------------------
     per share data)
     ---------------

    Revenues
    --------
      Freight revenue             $ 4,853.3  $ 4,279.8  $   573.5       13.4
      Other revenue                   128.2      122.4        5.8        4.7
                                 ---------------------------------
                                    4,981.5    4,402.2      579.3       13.2
                                 ---------------------------------
    Operating expenses
    ------------------
      Compensation and benefits     1,431.0    1,306.6     (124.4)      (9.5)
      Fuel                            728.1      580.3     (147.8)     (25.5)
      Materials                       214.2      217.6        3.4        1.6
      Equipment rents                 206.0      226.0       20.0        8.8
      Depreciation and amortization   489.6      483.2       (6.4)      (1.3)
      Purchased services and other    796.5      783.0      (13.5)      (1.7)
      Gain on sale of significant
       properties                         -      (79.1)     (79.1)    (100.0)
      Loss on termination of
       lease with shortline railway       -       54.5       54.5      100.0
                                 ---------------------------------

                                    3,865.4    3,572.1     (293.3)      (8.2)
                                 ---------------------------------
    Operating income                1,116.1      830.1      286.0       34.5

    Gain on sale of
     partnership interest                 -       81.2      (81.2)    (100.0)

    Less:

      Other (income) and charges      (12.0)      12.4       24.4      196.8
      Interest expense                257.3      267.6       10.3        3.8
                                 ---------------------------------

    Income before income
     tax expense                      870.8      631.3      239.5       37.9
      Income tax expense (recovery)   220.1       81.3     (138.8)    (170.7)
                                 ---------------------------------
    Net income                    $   650.7  $   550.0  $   100.7       18.3
                                 ---------------------------------
                                 ---------------------------------


    Basic earnings per share      $    3.86  $    3.31  $    0.55       16.6
                                 ---------------------------------
                                 ---------------------------------

    Diluted earnings per share    $    3.85  $    3.30  $    0.55       16.7
                                 ---------------------------------
                                 ---------------------------------

    Shares Outstanding
    ------------------
    Weighted average (avg)
     number of shares outstanding
     (millions)                       168.8      166.3        2.5        1.5
    Weighted avg number of diluted
     shares outstanding
     (millions)                       169.2      166.8        2.4        1.4

    Foreign Exchange
    ----------------
    Average foreign exchange rate
     (US$/Canadian$)                   0.97       0.87      (0.10)     (11.5)
    Average foreign exchange rate
     (Canadian$/US$)                   1.03       1.15      (0.12)     (10.4)


    (1) Restated for the Company's change in accounting policy in relation
        to the accounting for rail grinding.



                        Summary of Rail Data (Page 2)
                        -----------------------------

                   Adjusted Earnings Performance - Quarter
                   ---------------------------------------
                              Non-GAAP Measures
                              -----------------


                                        Fourth Quarter 2010
                              -----------------------------------
    In millions, except                                 Adjusted
     operating ratio and        Reported  Adjustments  (Non-GAAP)
     per share data              (GAAP)   Fav/(Unfav)      (2)
    ------------------------- -----------------------------------

    Revenues                   $ 1,294.3   $       -    $ 1,294.3

    Expenses                       996.6           -        996.6
    ------------------------- -----------------------------------

    Operating income               297.7           -        297.7

    Less:
    Other (income) and charges      (4.7)        0.6(3)      (5.3)

    Interest expense                65.2           -         65.2
    ------------------------- -----------------------------------

    Income before income
     tax expense                   237.2         0.6        237.8

    Income tax expense
     (recovery)                     51.4         3.7(4)      47.7
                              -----------------------------------
    Net income                 $   185.8   $     4.3    $   190.1(5)
    ------------------------- -----------------------------------
    ------------------------- -----------------------------------

    Operating ratio (%)             77.0           -         77.0

    Basic earnings per share   $    1.10   $    0.02    $    1.12

    Diluted earnings per share $    1.09   $    0.03    $    1.12



                                         Fourth Quarter  2009(1)       %
                               ------------------------------------ Adjusted
    In millions, except                                 Adjusted   (Non-GAAP)
     operating ratio and        Reported  Adjustments  (Non-GAAP)     (2)
     per share data              (GAAP)   Fav/(Unfav)      (2)    Fav/(Unfav)
    -------------------------------------------------------------------------

    Revenues                   $ 1,143.2   $       -    $ 1,143.2       13.2

    Expenses                       975.7        54.5(6)     921.2       (8.2)
    ------------------------- -----------------------------------

    Operating income               167.5        54.5        222.0       34.1

    Less:
    Other (income) and charges      (7.0)       (7.6)(7)      0.6          -

    Interest expense                68.4           -         68.4        4.7
    ------------------------- -----------------------------------

    Income before income
     tax expense                   106.1        46.9        153.0       55.4

    Income tax expense
     (recovery)                    (40.1)      (67.5)(8)     27.4      (74.1)
                              -----------------------------------
    Net income                 $   146.2   $   (20.6)   $   125.6(5)    51.4
    ------------------------- -----------------------------------
    ------------------------- -----------------------------------

    Operating ratio (%)             85.3         4.7         80.6    360 bps

    Basic earnings per share   $    0.87   $   (0.12)    $   0.75       49.3

    Diluted earnings per share $    0.87   $   (0.13)    $   0.74       51.4


    (1) Restated for the Company's change in accounting policy in relation to
        the accounting for rail grinding.
    (2) These earnings measures have no standardized meanings prescribed by
        GAAP and are unlikely to be comparable to similar measures of other
        companies.
    (3) To exclude the gain in fair value of long-term floating rate notes of
        $0.3 million due to short-term market changes and a loss in foreign
        exchange on long-term debt (FX on LTD) of $0.9 million in order to
        eliminate the impact of volatile short-term exchange rate
        fluctuations.
    (4) To exclude the tax expense associated with the gain in fair value of
        long-term floating rate notes of $0.1 million and the tax expense
        associated with the loss on FX on LTD of $3.6 million.
    (5) These adjusted figures are also referred to as "Income, before FX on
        LTD and other specified items".
    (6) To exclude the loss of $54.5 million before tax which arose from the
        termination of lease with a shortline railway.
    (7) To exclude the gain in FX on LTD of $7.6 million in order to
        eliminate the impact of volatile short-term exchange rate
        fluctuations.
    (8) To exclude the tax recovery associated with the loss on termination
        of lease with a shortline railway of $16.9 million, the tax recovery
        due to a rate reduction and settlement related to a prior year of
        $55.7 million, and the tax expense associated with the gain on FX on
        LTD of $5.1 million.



                        Summary of Rail Data (Page 3)
                        -----------------------------

                    Adjusted Earnings Performance - Year
                    ------------------------------------
                              Non-GAAP Measures
                              -----------------


                                            Year 2010
                              -----------------------------------
    In millions, except                                 Adjusted
     operating ratio and        Reported  Adjustments  (Non-GAAP)
     per share data              (GAAP)   Fav/(Unfav)      (2)
    ------------------------- -----------------------------------

    Revenues                   $ 4,981.5   $       -    $ 4,981.5

    Expenses                     3,865.4           -      3,865.4
    ------------------------- -----------------------------------
    Operating income             1,116.1           -      1,116.1

    Gain on sale of partnership
     interest                          -           -            -

    Less:
    Other (income) and charges     (12.0)       (5.7)(3)     (6.3)

    Interest expense               257.3           -        257.3
    ------------------------- -----------------------------------

    Income before income
     tax expense                   870.8        (5.7)       865.1

    Income tax expense             220.1         9.2(4)     210.9
                              -----------------------------------
    Net income                 $   650.7   $     3.5    $   654.2(5)
    ------------------------- -----------------------------------
    ------------------------- -----------------------------------

    Operating ratio (%)             77.6           -         77.6

    Basic earnings per share   $    3.86   $    0.02    $    3.88

    Diluted earnings per share $    3.85   $    0.02    $    3.87


                                             Year 2009(1)              %
                               ------------------------------------ Adjusted
    In millions, except                                 Adjusted   (Non-GAAP)
     operating ratio and        Reported  Adjustments  (Non-GAAP)     (2)
     per share data              (GAAP)   Fav/(Unfav)      (2)    Fav/(Unfav)
    -------------------------------------------------------------------------

    Revenues                   $ 4,402.2   $       -    $ 4,402.2       13.2

    Expenses                     3,572.1       (24.6)(6)  3,596.7       (7.5)
    ------------------------- -----------------------------------
    Operating income               830.1       (24.6)       805.5       38.6

    Gain on sale of partnership
     interest                       81.2       (81.2)(7)        -          -

    Less:
    Other (income) and charges      12.4        (9.9)(8)     22.3      128.3

    Interest expense               267.6           -        267.6        3.8
    ------------------------- -----------------------------------

    Income before income
     tax expense                   631.3      (115.7)       515.6       67.8

    Income tax expense              81.3       (16.0)(9)     97.3     (116.8)
                              -----------------------------------
    Net income                 $   550.0   $  (131.7)   $   418.3(5)    56.4
    ------------------------- -----------------------------------
    ------------------------- -----------------------------------

    Operating ratio (%)             81.1        (0.6)        81.7    410 bps

    Basic earnings per share   $    3.31   $   (0.79)   $    2.52       54.0

    Diluted earnings per share $    3.30   $   (0.79)   $    2.51       54.2


    (1) Restated for the Company's change in accounting policy in relation to
        the accounting for rail grinding.
    (2) These earnings measures have no standardized meanings prescribed by
        GAAP and are unlikely to be comparable to similar measures of other
        companies.
    (3) To exclude the gain in fair value of long-term floating rate notes of
        $3.4 million due to short-term market changes and a gain in foreign
        exchange on long-term debt (FX on LTD) of $2.3 million in order to
        eliminate the impact of volatile short-term exchange rate
        fluctuations.
    (4) To exclude the tax expense associated with the gain in fair value of
        long-term floating rate notes of $1.0 million and the tax expense
        associated with the gain on FX on LTD of $8.2 million.
    (5) These adjusted figures are also referred to as "Income, before FX on
        LTD and other specified items".
    (6) To exclude the gain of $79.1 million before tax which arose from the
        sale of significant properties and the loss of $54.5 million before
        tax which arose from the termination of lease with a shortline
        railway.
    (7) To exclude the gain of $81.2 million before tax which arose from the
        partial sale of the investment in the Detroit River Tunnel
        Partnership ("DRTP").
    (8) To exclude the gain in fair value of long-term floating rate notes of
        $6.3 million due to short-term market changes and a gain in FX on LTD
        of $3.6 million in order to eliminate the impact of volatile
        short-term exchange rate fluctuations.
    (9) To exclude the tax expense associated with the partial sale of the
        investment in DRTP of $12.5 million, the tax expense associated with
        the sale of significant properties of $11.0 million, the tax expense
        associated with the gain in fair value of long-term floating rate
        notes of $1.8 million, the tax expense associated with the gain on FX
        on LTD of $31.3 million, the tax recovery associated with the loss on
        termination of lease with a shortline railway of $16.9 million, and
        the tax recovery due to a rate reduction and settlement related to a
        prior year of $55.7 million.



                        Summary of Rail Data (Page 4)
                        -----------------------------


                                                 Fourth  Quarter
                                  -------------------------------------------
                                     2010         2009   Fav/(Unfav)      %
                                  -------------------------------------------
    Commodity Data
    --------------

    Freight Revenues (millions)
    - Grain                       $   299.8  $   293.6  $     6.2        2.1
    - Coal                            125.2      112.3       12.9       11.5
    - Sulphur and fertilizers         132.0       85.1       46.9       55.1
    - Forest products                  50.2       42.8        7.4       17.3
    - Industrial and consumer
       products                       240.0      205.2       34.8       17.0
    - Automotive                       75.3       67.9        7.4       10.9
    - Intermodal                      339.6      308.9       30.7        9.9
                                 ---------------------------------
    Total Freight Revenues        $ 1,262.1  $ 1,115.8  $   146.3       13.1
                                 ---------------------------------

    Millions of Revenue Ton-Miles (RTM)
    - Grain                           8,775      9,156       (381)      (4.2)
    - Coal                            4,814      4,493        321        7.1
    - Sulphur and fertilizers         4,963      2,716      2,247       82.7
    - Forest products                 1,344      1,098        246       22.4
    - Industrial and consumer
       products                       6,046      4,762      1,284       27.0
    - Automotive                        501        480         21        4.4
    - Intermodal                      6,440      6,169        271        4.4
                                 ---------------------------------
    Total RTMs                       32,883     28,874      4,009       13.9
                                 ---------------------------------

    Freight Revenue per RTM (cents)
    - Grain                            3.42       3.21       0.21        6.5
    - Coal                             2.60       2.50       0.10        4.0
    - Sulphur and fertilizers          2.66       3.13      (0.47)     (15.0)
    - Forest products                  3.74       3.90      (0.16)      (4.1)
    - Industrial and consumer
       products                        3.97       4.31      (0.34)      (7.9)
    - Automotive                      15.03      14.15       0.88        6.2
    - Intermodal                       5.27       5.01       0.26        5.2

    Total Freight Revenue per RTM      3.84       3.86      (0.02)      (0.5)

    Carloads (thousands)
    - Grain                           117.4      121.1       (3.7)      (3.1)
    - Coal                             87.3       83.9        3.4        4.1
    - Sulphur and fertilizers          47.9       31.9       16.0       50.2
    - Forest products                  18.6       16.4        2.2       13.4
    - Industrial and consumer
       products                       102.1       92.6        9.5       10.3
    - Automotive                       34.0       32.9        1.1        3.3
    - Intermodal                      266.2      241.0       25.2       10.5
                                 ---------------------------------
    Total Carloads                    673.5      619.8       53.7        8.7
                                 ---------------------------------

    Freight Revenue per Carload
    - Grain                       $   2,554  $   2,424  $     130        5.4
    - Coal                            1,434      1,338         96        7.2
    - Sulphur and fertilizers         2,756      2,668         88        3.3
    - Forest products                 2,699      2,610         89        3.4
    - Industrial and consumer
       products                       2,351      2,216        135        6.1
    - Automotive                      2,215      2,064        151        7.3
    - Intermodal                      1,276      1,282         (6)      (0.5)

    Total Freight Revenue per
     Carload                      $   1,874  $   1,800  $      74        4.1



                                                      Year
                                  -------------------------------------------
                                     2010         2009   Fav/(Unfav)      %
                                  -------------------------------------------
    Commodity Data
    --------------

    Freight Revenues (millions)
    - Grain                       $ 1,135.7  $ 1,137.1  $    (1.4)      (0.1)
    - Coal                            490.8      443.8       47.0       10.6
    - Sulphur and fertilizers         474.8      309.3      165.5       53.5
    - Forest products                 184.9      176.1        8.8        5.0
    - Industrial and consumer
       products                       902.8      786.1      116.7       14.8
    - Automotive                      316.4      229.3       87.1       38.0
    - Intermodal                    1,347.9    1,198.1      149.8       12.5
                                 ---------------------------------
    Total Freight Revenues        $ 4,853.3  $ 4,279.8  $   573.5       13.4
                                 ---------------------------------

    Millions of Revenue Ton-Miles (RTM)
    - Grain                          34,556     34,838       (282)      (0.8)
    - Coal                           19,021     16,997      2,024       11.9
    - Sulphur and fertilizers        17,687      9,362      8,325       88.9
    - Forest products                 5,238      4,470        768       17.2
    - Industrial and consumer
       products                      21,996     17,653      4,343       24.6
    - Automotive                      2,067      1,607        460       28.6
    - Intermodal                     25,863     23,425      2,438       10.4
                                 ---------------------------------
    Total RTMs                      126,428    108,352     18,076       16.7
                                 ---------------------------------

    Freight Revenue per RTM (cents)
    - Grain                            3.29       3.26       0.03        0.9
    - Coal                             2.58       2.61      (0.03)      (1.1)
    - Sulphur and fertilizers          2.68       3.30      (0.62)     (18.8)
    - Forest products                  3.53       3.94      (0.41)     (10.4)
    - Industrial and consumer
       products                        4.10       4.45      (0.35)      (7.9)
    - Automotive                      15.31      14.27       1.04        7.3
    - Intermodal                       5.21       5.11       0.10        2.0

    Total Freight Revenue per RTM      3.84       3.95      (0.11)      (2.8)

    Carloads (thousands)
    - Grain                           466.4      469.5       (3.1)      (0.7)
    - Coal                            341.1      305.1       36.0       11.8
    - Sulphur and fertilizers         177.2      108.8       68.4       62.9
    - Forest products                  71.6       66.8        4.8        7.2
    - Industrial and consumer
       products                       396.9      345.9       51.0       14.7
    - Automotive                      137.3      103.7       33.6       32.4
    - Intermodal                    1,070.1      962.9      107.2       11.1
                                 ---------------------------------
    Total Carloads                  2,660.6    2,362.7      297.9       12.6
                                 ---------------------------------

    Freight Revenue per Carload
    - Grain                       $   2,435  $   2,422  $      13        0.5
    - Coal                            1,439      1,455        (16)      (1.1)
    - Sulphur and fertilizers         2,679      2,843       (164)      (5.8)
    - Forest products                 2,582      2,636        (54)      (2.0)
    - Industrial and consumer
       products                       2,275      2,273          2        0.1
    - Automotive                      2,304      2,211         93        4.2
    - Intermodal                      1,260      1,244         16        1.3

    Total Freight Revenue per
     Carload                      $   1,824  $   1,811  $      13        0.7



                        Summary of Rail Data (Page 5)
                        -----------------------------


                                               Fourth  Quarter
                                  -------------------------------------------
                                     2010      2009(1)   Fav/(Unfav)      %
                                  -------------------------------------------
    Operations Performance
    ----------------------

    Total operating expenses
     per gross ton-miles (GTM)
     (cents)(2)                        1.59       1.77       0.18       10.2
    Adjusted operating expenses
     exclusive of land sales per
     GTM (cents)(2)(3)                 1.63       1.69       0.06        3.6

    Freight gross ton-miles
     (millions)                      62,498     55,198      7,300       13.2
    Train miles (000)                10,132      8,897      1,235       13.9

    Average number of active
     employees - Total               15,637     15,073       (564)      (3.7)
    Average number of active
     employees - Expense             13,918     13,471       (447)      (3.3)

    Number of employees at
     end of period - Total           15,250     14,665       (585)      (4.0)
    Number of employees at
     end of period - Expense         14,048     13,614       (434)      (3.2)

    U.S. gallons of locomotive
     fuel per 1,000 GTMs -
     freight & yard                    1.20       1.18      (0.02)      (1.7)
    U.S. gallons of locomotive
     fuel consumed -
     total (millions)(4)               74.3       64.7       (9.6)     (14.8)
    Average fuel price (U.S.
     dollars per U.S. gallon)          2.68       2.28      (0.40)     (17.5)

    Fluidity Data (including DM&E)
    ------------------------------

    Average terminal dwell -
     AAR definition (hours)            22.2        n/a          -          -
    Average train speed -
     AAR definition (mph)              21.7        n/a          -          -
    Car miles per car day             135.0        n/a          -          -
    Average daily active cars
     on-line (000)                     61.2        n/a          -          -
    Average daily active road
     locomotives on-line              1,048        n/a          -          -

    Fluidity Data (excluding DM&E)
    ------------------------------

    Average terminal dwell -
     AAR definition (hours)            22.2       23.1        0.9        3.9
    Average train speed -
     AAR definition (mph)              22.6       24.7       (2.1)      (8.5)
    Car miles per car day             143.7      139.2        4.5        3.2
    Average daily active cars
     on-line (000)                     54.7       50.3       (4.4)      (8.7)
    Average daily active road
     locomotives on-line                935        792       (143)     (18.1)

    Safety
    ------

    FRA personal injuries per
     200,000 employee-hours            1.86       2.15       0.29       13.5
    FRA train accidents per
     million train-miles               1.27       1.55       0.28       18.1



                                                      Year
                                  -------------------------------------------
                                     2010      2009(1)   Fav/(Unfav)      %
                                  -------------------------------------------
    Operations Performance
    ----------------------

    Total operating expenses
     per gross ton-miles (GTM)
     (cents)(2)                        1.59       1.71       0.12        7.0
    Adjusted operating expenses
     exclusive of land sales per
     GTM (cents)(2)(3)                 1.60       1.74       0.14        8.0

    Freight gross ton-miles
     (millions)                     242,757    209,475     33,282       15.9
    Train miles (000)                39,576     34,757      4,819       13.9

    Average number of active
     employees - Total               15,460     15,175       (285)      (1.9)
    Average number of active
     employees - Expense             13,879     13,619       (260)      (1.9)

    Number of employees at
     end of period - Total           15,250     14,665       (585)      (4.0)
    Number of employees at
     end of period - Expense         14,048     13,614       (434)      (3.2)

    U.S. gallons of locomotive
     fuel per 1,000 GTMs -
     freight & yard                    1.17       1.19       0.02        1.7
    U.S. gallons of locomotive
     fuel consumed -
     total (millions)(4)              282.0      246.7      (35.3)     (14.3)
    Average fuel price (U.S.
     dollars per U.S. gallon)          2.50       2.04      (0.46)     (22.5)

    Fluidity Data (including DM&E)
    ------------------------------

    Average terminal dwell -
     AAR definition (hours)            21.4        n/a          -          -
    Average train speed -
     AAR definition (mph)              22.7        n/a          -          -
    Car miles per car day             139.9        n/a          -          -
    Average daily active cars
     on-line (000)                     58.0        n/a          -          -
    Average daily active road
     locomotives on-line              1,015        n/a          -          -

    Fluidity Data (excluding DM&E)
    ------------------------------

    Average terminal dwell -
     AAR definition (hours)            21.4       21.9        0.5        2.3
    Average train speed -
     AAR definition (mph)              23.8       25.5       (1.7)      (6.7)
    Car miles per car day             151.5      142.6        8.9        6.2
    Average daily active cars
     on-line (000)                     50.9       46.6       (4.3)      (9.2)
    Average daily active road
     locomotives on-line                898        760       (138)     (18.2)

    Safety
    ------

    FRA personal injuries per
     200,000 employee-hours            1.61       1.92       0.31       16.1
    FRA train accidents per
     million train-miles               1.63       1.81       0.18        9.9


    (1) Certain prior period figures have been revised to conform with
        current presentation or have been updated to reflect new information.
    (2) Restated for the Company's change in accounting policy in relation to
        the accounting for rail grinding.
    (3) These earnings measures have no standardized meanings prescribed by
        GAAP and are unlikely to be comparable to similar measures of other
        companies. Adjusted operating expenses exclusive of land sales per
        GTM is calculated consistently with total operating expenses per GTM
        except for the exclusion of the loss on termination of lease with
        shortline railway for the three months, and year ended December 31,
        2009 of $54.5 million, a gain on sale of significant properties for
        the year ended December 31, 2009 of $79.1 million and the exclusion
        of net gains on land sales of $21.9 million and $11.6 million for the
        three months ended December 31, 2010 and 2009, respectively, and
        $27.9 million and $39.4 million for the year ended December 31, 2010
        and 2009, respectively. Please refer to pages 2 and 3, Adjusted
        Earnings Performance, Quarter and Year, Non-GAAP measures.
    (4) Includes gallons of fuel consumed from freight, yard and commuter
        service but excludes fuel used in capital projects and other
        non-freight activities.

    n/a - not available
    >>

SOURCE Canadian Pacific

For further information: Media: Mike LoVecchio, Canadian Pacific, Tel.: (778) 772-9636, 24/7 Media Pager: (416) 814-0948, e-mail: mike_lovecchio@cpr.ca; Investment Community: Janet Weiss, Canadian Pacific, Tel.: (403) 319-3591, e-mail: investor@cpr.ca


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