Canadian Pacific responds to grain hopper car maintenance adjustment

    CALGARY, Feb. 20 /CNW/ - Canadian Pacific (TSX/NYSE:   CP) responded today
to the recent announcement by the Canadian Transportation Agency (CTA)
regarding the adjustment to the revenue entitlement under the Canada
Transportation Act. The CTA announced a volume-related adjustment that
translates to a $2.59 per tonne impact on the railway revenue entitlement. The
decision is retroactive to August 1, 2007.
    "We disagree, among other things, with the retroactive component of the
CTA's adjustment, and we will vigorously challenge it," said Fred Green,
President and Chief Executive Officer. "We believe the decision to make the
adjustment retroactive is not supportable, based on the legal advice we have
received. We are confident we can successfully appeal the CTA's decision in
the Federal Court."
    "Although we expected this announcement, the amount of the adjustment is
higher than the assumptions we made for our 2008 outlook, confirmed on
January 29, 2008," said Mike Lambert, Chief Financial Officer. "The
prospective application of the CTA's adjustment will affect our EPS guidance
by reducing it approximately $0.05 per share, and therefore we are adjusting
the range of our EPS outlook for 2008 downward to $4.65 to $4.80. The
retroactive component of the CTA's adjustment could affect our guidance by as
much as an additional $0.08 per share, however we feel confident that we will
succeed in challenging the decision and therefore are not adjusting our
guidance for the full amount of the potential impact."

    2008 OUTLOOK

    The outlook for 2008 for diluted earnings per share before foreign
exchange gains and losses on long-term debt and other specified items is
expected to be in the range of $4.65 to $4.80.
    The 2008 estimate assumes an average currency exchange rate of the
U.S. dollar at par with the Canadian dollar, and crude oil prices averaging
US $87 per barrel.
    Despite an uncertain economic environment and the impact of the CTA's
adjustment, the Company is not changing its revenue and expense outlook any
further at this time. CP expects to grow total revenue by four to six per cent
while total operating expenses are expected to increase by three to five per
    Capital investment is expected to be in the range of $885 to $895 million
in 2008, essentially flat when compared with 2007.
    CP expects free cash to be in excess of $250 million in 2008.
    The 2008 outlook includes the projected earnings of the Dakota Minnesota
& Eastern Railroad (DM&E) on an equity accounting basis for the full year.

    Note on forward-looking information

    This news release contains certain forward-looking statements relating
but not limited to our operations, anticipated financial performance and
business prospects. Undue reliance should not be placed on forward-looking
information as actual results may differ materially.
    By its nature, CP's forward-looking information involves numerous
assumptions, inherent risks and uncertainties, including but not limited to
the following factors: changes in business strategies; general North American
and global economic 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; timing of
completion of capital and maintenance projects; currency and interest rate
fluctuations; effects of changes in market conditions on the financial
position of pension plans and investments; and various events that could
disrupt operations, including severe weather conditions, security threats and
governmental response to them, and technological changes.
    There are 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.
    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 except as required by law.

    About Canadian Pacific

    Canadian Pacific, through the ingenuity of its employees located across
Canada and in the United States, remains committed to being the safest, most
fluid railway in North America. Our people are the key to delivering
innovative transportation solutions to our customers and to ensuring the safe
operation of our trains through the more than 900 communities where we
operate. Our combined ingenuity makes CPR a better place to work, rail a
better way to ship, and North America a better place to live. Come and visit
us at to see how we can put our ingenuity to work for you. Canadian
Pacific is proud to be the official rail freight services provider for the
Vancouver 2010 Olympic and Paralympic Winter Games.

For further information:

For further information: Media, Breanne Feigel, Tel.: (403) 319-3932,
e-mail:; Investment Community, Janet Weiss, Assistant
Vice-President, Investor Relations, Tel.: (403) 319-3591, e-mail:

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