CALGARY, Jan. 28 /PRNewswire-FirstCall/ - Canadian Pacific Railway Limited (TSX/NYSE: CP) announced its fourth-quarter and full-year 2009 results today. Net income in the fourth-quarter was $194 million, an increase of three per cent from $188 million in fourth-quarter 2008 and diluted earnings per share were $1.15, down from $1.21 in fourth-quarter 2008. Foreign exchange gain and loss on long-term debt and other specified items, including a charge on the termination of a shortline railway lease, and two favourable income tax items had a net positive impact on earnings per share of $0.21. Excluding these items, adjusted diluted earnings per share were $0.94 down 12 per cent from $1.07 in fourth-quarter 2008.
"We have come through an extraordinary year of economic challenges and we met these with focused productivity initiatives that have delivered sustainable improvements," said Fred Green, President and CEO. "Markets remain uncertain and we will continue to drive efficiency while delivering a reliable service. We are positioned with assets and resources to respond to changes in our customers' demand."
For the fourth-quarter and full year 2009, the results of the Dakota, Minnesota & Eastern Railroad (DM&E) are fully consolidated with CP's results. For the first ten months of 2008, however, DM&E earnings were reported as equity income on one line of the income statement. In order to aid in the evaluation of the underlying earnings trends, 2008 results have also been presented on a pro forma basis, by redistributing DM&E's operating results from an equity income basis of accounting to a line-by-line consolidation of DM&E revenues and expenses. This pro forma financial data presentation is a non-GAAP measure.
FOURTH-QUARTER 2009 COMPARED WITH FOURTH-QUARTER 2008 EXCLUDING FOREIGN EXCHANGE GAIN AND LOSS ON LONG-TERM DEBT AND OTHER SPECIFIED ITEMS ON A PRO FORMA BASIS:
- Total revenues were $1.1 billion, down 16 per cent from $1.3 billion
- Operating expenses were $853 million, down 17 per cent from
$1.0 billion
- Operating income decreased to $269 million from $304 million, or
12 per cent
- Operating ratio improved 120 basis points to 76.0 per cent
- Diluted earnings per share decreased to $0.94 from $1.07, or
12 per cent
For the full year, 2009 net income increased slightly to $612 million from $607 million in 2008 and diluted earnings per share were $3.67, down six per cent from $3.91.
FULL YEAR 2009 COMPARED WITH FULL YEAR 2008 EXCLUDING FOREIGN EXCHANGE GAIN AND LOSS ON LONG-TERM DEBT AND OTHER SPECIFIED ITEMS ON A PRO FORMA BASIS:
- Total revenues were $4.3 billion down 18 per cent from $5.2 billion
- Operating expenses were $3.4 billion a decrease of 17 per cent from
$4.1 billion
- Operating income was $900 million a decrease of 20 per cent from
$1.1 billion
- Operating ratio increased 70 basis points to 79.1 per cent from
78.4 per cent
- Diluted earnings per share were $2.76 down from $3.99, or 31 per cent
2010 ASSUMPTIONS
CP plans to spend in the range of $680 million to $730 million on capital programs in 2010. These planned capital investments include approximately $585 million for the renewal of track infrastructure.
In December of 2009, CP made a voluntary prepayment of approximately $500 million into its defined benefit pension plans to reduce volatility in future pension funding requirements. The 2010 pension contributions are currently estimated to be between $150 and $200 million. Pension expenses in 2010 are expected to increase by approximately $50 million from 2009 primarily due to a decrease in the discount rate used to value the pension benefit obligation and the phasing in of 2008 equity losses.
CP expects its tax rate to be in the 25 per cent to 27 per cent range.
FOREIGN EXCHANGE GAIN AND LOSS ON LONG-TERM DEBT AND OTHER SPECIFIED ITEMS
CP had a net foreign exchange loss after tax of $1.4 million on long-term debt in the fourth quarter of 2009, compared with a gain of $22 million after tax in fourth-quarter 2008.
For the full year 2009, CP had a net foreign exchange loss on long-term debt of $26 million, compared with a net foreign exchange gain of $22 million after tax for the full year 2008.
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 net investment in U.S. 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.
In fourth-quarter 2009, CP recorded a $38 million after tax charge on the early termination of a shortline railway contract. As well, a tax rate change resulted in a $48 million gain, and an income tax settlement related to a prior year resulted in a benefit of $26 million. There were no other specified items recorded in fourth-quarter 2008.
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, a $68 million after tax gain on the sale of Windsor Station in Montreal, Quebec and a land sale in Western Canada. A redemption and adjustment for an improvement in fair market value of long-term floating rate notes was received in replacement of the investment in Asset-Backed Commercial Paper (ABCP) of $5 million after tax, compared to an impairment in ABCP of $35 million after tax, recorded for full year 2008.
Presentation of non-GAAP earnings
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. 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 become non-GAAP measures. Additional non-GAAP measures include Operating income, Capital program and Financial data on a pro forma basis.
These non-GAAP earnings measures exclude foreign currency translation effects on long-term debt and the tax thereon, 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. 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. 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.
Diluted earnings per share, excluding foreign exchange gains and losses on long-term debt and other specified items, is also referred to in this news release as "Adjusted diluted earnings per share". Revenues less operating expenses are referred to as "Operating income" and Additions to property is referred to as "Capital program".
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.
Pro forma data provides comparable measures for periods in 2008 that preceded the Surface Transportation Board's approval of the change of control of the DM&E on October 30, 2008. Following that approval, the DM&E results are fully consolidated with CP's operations.
The non-GAAP earnings measures described in this news release have no standardized meanings and are not defined by Canadian generally accepted accounting principles and, therefore, are unlikely to be comparable to similar measures presented by other companies.
Note on forward-looking information
This news release contains certain forward-looking statements relating but not limited to our operations, pension obligations and tax rates. 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 ABCP; 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 elsewhere in this news release with the particular forward-looking statement in question.
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, 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 1,100 communities where we operate. Come and visit us at www.cpr.ca 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.
CONSOLIDATED STATEMENT OF INCOME
(in millions of Canadian dollars, except per share data)
For the three months For the year
ended December 31 ended December 31
2009 2008 2009 2008
Restated Restated
(see Note 2) (see Note 2)
-------------------------- -------------------------
(unaudited) (unaudited)
Revenues
Freight $ 1,091.0 $ 1,257.8 $ 4,175.2 $ 4,814.8
Other 30.9 41.9 128.0 116.8
-------------------------- -------------------------
1,121.9 1,299.7 4,303.2 4,931.6
Operating expenses
Compensation and
benefits 311.8 350.2 1,275.2 1,306.1
Fuel 157.5 239.5 580.2 1,005.8
Materials 41.1 63.8 215.1 252.3
Equipment rents 45.0 45.8 184.8 182.2
Depreciation and
amortization 121.3 113.7 488.9 442.5
Purchased services
and other 176.2 199.5 658.9 701.0
-------------------------- -------------------------
852.9 1,012.5 3,403.1 3,889.9
-------------------------- -------------------------
Revenues less
operating expenses 269.0 287.2 900.1 1,041.7
Gain on sales of
partnership interest
and significant
properties - - 160.3 -
Equity income in Dakota,
Minnesota & Eastern
Railroad Corporation - 10.4 - 50.9
Less:
Loss on termination
of lease with
shortline railway
(Note 3) 54.5 - 54.5 -
Other income and
charges (Note 4) (0.4) 12.2 18.9 88.4
Net interest expense 62.8 73.8 273.1 261.1
-------------------------- -------------------------
Income before income
tax expense 152.1 211.6 713.9 743.1
Income tax (recovery)
expense (Note 5) (42.0) 23.5 101.5 135.9
-------------------------- -------------------------
Net income $ 194.1 $ 188.1 $ 612.4 $ 607.2
-------------------------- -------------------------
-------------------------- -------------------------
Basic earnings
per share $ 1.15 $ 1.22 $ 3.68 $ 3.95
-------------------------- -------------------------
-------------------------- -------------------------
Diluted earnings
per share $ 1.15 $ 1.21 $ 3.67 $ 3.91
-------------------------- -------------------------
-------------------------- -------------------------
See notes to interim consolidated financial information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions of Canadian dollars)
For the three months For the year
ended December 31 ended December 31
2009 2008 2009 2008
Restated Restated
(see Note 2) (see Note 2)
-------------------------- -------------------------
(unaudited) (unaudited)
Comprehensive income
Net Income $ 194.1 $ 188.1 $ 612.4 $ 607.2
Other comprehensive
income
Unrealized foreign
exchange (loss)
gain on:
Translation of the
net investment in
U.S. subsidiaries (26.7) 208.5 (246.4) 305.1
Translation of the
U.S. dollar-
denominated long-
term debt
designated as a
hedge of the net
investment in U.S.
subsidiaries 28.1 (204.7) 244.5 (297.5)
Change in derivatives
designated as cash
flow hedges:
Realized (gain) loss
on cash flow hedges
recognized in
income (0.1) (0.1) 5.0 (11.0)
Unrealized gain
(loss) on cash flow
hedges 2.1 (12.6) 2.3 (5.1)
-------------------------- -------------------------
Other comprehensive
income (loss) before
income taxes 3.4 (8.9) 5.4 (8.5)
Income tax (expense)
recovery (2.7) 31.9 (33.6) 44.8
-------------------------- -------------------------
Other comprehensive
income (loss) 0.7 23.0 (28.2) 36.3
-------------------------- -------------------------
Comprehensive income $ 194.8 $ 211.1 $ 584.2 $ 643.5
-------------------------- -------------------------
-------------------------- -------------------------
See notes to interim consolidated financial information.
CONSOLIDATED BALANCE SHEET
(in millions of Canadian dollars)
December 31 December 31
2009 2008
Restated
(see Note 2)
-------------------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 679.1 $ 117.6
Accounts receivable 441.0 647.4
Materials and supplies 132.7 215.8
Future income taxes 128.1 76.5
Other 46.5 65.7
-------------------------
1,427.4 1,123.0
Investments 156.7 151.1
Net properties 11,967.8 12,384.6
Assets held for sale - 39.6
Goodwill and intangible assets 202.3 237.2
Prepaid pension costs and other assets (Note 6) 1,777.2 1,221.8
-------------------------
Total assets $ 15,531.4 $ 15,157.3
-------------------------
-------------------------
Liabilities and shareholders' equity
Current liabilities
Short-term borrowing $ - $ 150.1
Accounts payable and accrued liabilities 917.3 1,034.9
Income and other taxes payable 31.9 42.2
Dividends payable 41.7 38.1
Long-term debt maturing within one year 392.1 44.0
-------------------------
1,383.0 1,309.3
Other long-term liabilities 790.2 865.2
Long-term debt (Note 7) 4,102.7 4,685.8
Future income taxes 2,549.5 2,527.6
Shareholders' equity
Share capital 1,746.4 1,220.8
Contributed surplus 33.5 40.2
Accumulated other comprehensive income 49.5 77.7
Retained income 4,876.6 4,430.7
-------------------------
6,706.0 5,769.4
-------------------------
-------------------------
Total liabilities and shareholders' equity $ 15,531.4 $ 15,157.3
-------------------------
-------------------------
See notes to interim consolidated financial information.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions of Canadian dollars)
For the three months For the year
ended December 31 ended December 31
2009 2008 2009 2008
Restated Restated
(see Note 2) (see Note 2)
-------------------------- -------------------------
(unaudited) (unaudited)
Operating activities
Net income $ 194.1 $ 188.1 $ 612.4 $ 607.2
Reconciliation of net
income to cash
provided by operating
activities:
Depreciation and
amortization 121.3 113.7 488.9 442.5
Future income taxes
(Note 5) (27.4) 97.6 153.2 156.3
(Gain) loss in fair
value of long-term
floating rate
notes/asset-backed
commercial paper - - (6.3) 49.4
Foreign exchange
(gain) loss on
long-term debt (3.1) 3.9 (5.8) 16.3
Amortization and
accretion charges 1.5 2.7 9.5 10.1
Equity income, net
of cash received (0.4) (12.3) 0.5 (50.8)
Gain on sales of
partnership interest
and significant
properties - - (160.3) -
Net loss on
repurchase of debt - - 16.6 -
Restructuring and
environmental
remediation payments (15.2) (17.0) (45.1) (53.4)
Pension funding in
excess of expense
(Note 6) (528.7) (10.5) (589.0) (53.2)
Other operating
activities, net (29.2) 25.1 (25.8) 27.5
Change in non-cash
working capital
balances related to
operations 106.2 38.2 102.7 (132.2)
-------------------------- -------------------------
Cash (used in)
provided by
operating
activities (180.9) 429.5 551.5 1,019.7
-------------------------- -------------------------
Investing activities
Additions to
properties (153.6) (257.0) (722.4) (832.9)
Additions to assets
held for sale and
other - (9.5) - (222.5)
Additions to
investment in Dakota,
Minnesota & Eastern
Railroad Corporation - (0.3) - (8.6)
Proceeds from
sale of properties
and other assets 17.4 257.6 243.8 257.6
Other, net 15.1 (4.7) 19.9 9.7
-------------------------- -------------------------
Cash used in
investing activities (121.1) (13.9) (458.7) (796.7)
-------------------------- -------------------------
Financing activities
Dividends paid (41.6) (38.1) (162.9) (148.7)
Issuance of CP
Common Shares 9.0 1.4 513.5 19.7
Net decrease
in short-term
borrowing (57.7) (129.9) (150.1) (79.6)
Issuance of long-term
debt (Note 7) 463.2 - 872.7 1,068.7
Repayment of
long-term debt (4.8) (252.6) (618.6) (1,340.7)
Settlement of treasury
rate lock - - - (30.9)
Settlement of foreign
exchange forward on
long-term debt - - 34.1 -
-------------------------- -------------------------
Cash provided by
(used in) financing
activities 368.1 (419.2) 488.7 (511.5)
-------------------------- -------------------------
Effect of foreign exchange
fluctuations on U.S.
dollar-denominated cash
and cash equivalents (2.9) 23.3 (20.0) 28.0
-------------------------- -------------------------
Cash position
Increase (decrease) in
cash and cash
equivalents 63.2 19.7 561.5 (260.5)
Cash and cash
equivalents at
beginning of period 615.9 97.9 117.6 378.1
-------------------------- -------------------------
Cash and cash
equivalents at end
of period $ 679.1 $ 117.6 $ 679.1 $ 117.6
-------------------------- -------------------------
-------------------------- -------------------------
Certain of the comparative figures have been reclassified in order to be
consistent with the 2009 presentation.
See notes to interim consolidated financial information.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in millions of Canadian dollars)
(in millions of dollars)
-------------------------------------------------
Accumulated
Other Total
compre- Share-
Share Contributed hensive Retained holders
capital surplus income income Equity
-------------------------------------------------
Balance at December 31,
2007, as previously
reported 1,188.6 42.4 39.6 4,187.3 5,457.9
Adjustment for change
in accounting policy
(see Note 2) 1.8 (211.6) (209.8)
-------------------------------------------------
Balance at December 31,
2007, as restated 1,188.6 42.4 41.4 3,975.7 5,248.1
Net Income 607.2 607.2
Other comprehensive
income 36.3 36.3
Dividends (152.2) (152.2)
Stock compensation
expense 7.8 7.8
Shares issued under
stock option plans 32.2 (10.0) 22.2
-------------------------------------------------
Balance at December 31,
2008, as restated 1,220.8 40.2 77.7 4,430.7 5,769.4
Net Income 612.4 612.4
Other comprehensive
loss (28.2) (28.2)
Dividends (166.5) (166.5)
Shares issued 495.2 495.2
Stock compensation
(recovery) expense (1.6) (1.6)
Shares issued under
stock option plans 30.4 (5.1) 25.3
-------------------------------------------------
Balance at
December 31, 2009 1,746.4 33.5 49.5 4,876.6 6,706.0
-------------------------------------------------
-------------------------------------------------
See notes to interim consolidated financial information.
NOTES TO INTERIM CONSOLIDATED FINANCIAL INFORMATION
DECEMBER 31, 2009
(unaudited)
1 Basis of presentation
This unaudited interim consolidated financial information has been
prepared using accounting policies that are consistent with the
policies used in preparing Canadian Pacific Railway Limited's ("CP",
"the Company" or "Canadian Pacific Railway") 2008 annual consolidated
financial statements, except as discussed below and in Note 2 for the
adoption of new accounting standards. They do not include all
disclosures required under Canadian Generally accepted accounting
principles ("GAAP") for interim and annual financial statements and
should be read in conjunction with the annual consolidated financial
statements.
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.
2 Accounting changes
Pension prior service costs
During 2009, CP changed its accounting policy for the treatment of
prior service pension costs for unionized employees. In previous
periods CP had amortized these costs over the expected average
remaining service period for employees. CP now amortizes these
costs over the remaining contract term. The change in policy was made
to provide more relevant information by amortizing the costs based on
the contract term as CP generally renegotiates union contracts on a
routine and consistent basis that is substantially shorter than the
expected average remaining service period. The change has been
accounted for on a retrospective basis. 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 For the
three months year
ended ended As at
December 31 December 31 December 31
2009 2008 2009 2008 2009 2008
------------------------------------------------------
Compensation
and benefits $ 0.2 $ 0.3 $ 0.9 $ 0.1
Income tax
expense 1.1 (0.1) 1.2 0.3
------------------------------------
Net income (1.3) (0.2) (2.1) (0.4)
Basic
earnings
per share $ (0.01) $ - $ (0.01) $ -
Diluted
earnings
per share $ (0.01) $ - $ (0.01) $ -
Prepaid pension
costs and other
assets $(105.1) $(104.2)
Future income
tax liability (27.0) (28.2)
Retained income (78.1) (76.0)
Locomotive overhauls
During 2009, CP changed its accounting policy for the treatment of
locomotive overhaul costs. In prior periods CP had capitalized such
costs and depreciated them over the expected economic life of the
overhaul. These costs are now expensed. Management has judged
that the new policy is preferable because it better represents the
evolving nature of locomotive overhauls. This policy aligns the
treatment of locomotive costs with CP's current operational
practices, which has changed over recent years and gradually shifted
to be more in the nature of a repair. The change has been accounted
for on a retrospective basis. 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 For the
three months year
ended ended As at
December 31 December 31 December 31
2009 2008 2009 2008 2009 2008
------------------------------------------------------
Depreciation
and
amortization
decrease $ (10.9) $ (12.3) $ (43.5) $ (48.8)
Compensation
and benefits 0.1 0.5 0.1 0.5
Materials 4.1 17.9 13.8 35.0
Purchased
services
and other 11.7 10.1 29.3 23.8
------------------------------------
Total increases 15.9 28.5 43.2 59.3
------------------------------------
Total operating
expenses 5.0 16.2 (0.3) 10.5
Equity income in
Dakota, Minnesota
& Eastern
Railroad
Corporation - - - (0.4)
Income tax
expense (0.3) (4.6) 1.3 (2.6)
------------------------------------
Net income $ (4.7) $ (11.6) $ (1.0) $ (8.3)
------------------------------------
Basic earnings
per share $ (0.03) $ (0.08) $ (0.01) $ (0.05)
Diluted
earnings per
share $ (0.03) $ (0.07) $ (0.01) $ (0.05)
Other
comprehensive
income 0.4 (1.8) 2.1 (2.4)
------------------------------------
Comprehensive
income (4.3) (13.4) 1.1 (10.7)
------------------------------------
Cash provided by
operating
activities (15.9) (28.5) (43.2) (59.3)
Cash used in
investing
activities 15.9 28.5 43.2 59.3
Net properties $(187.9) $(191.8)
Future income
taxes liability (51.5) (54.3)
Accumulated other
comprehensive
income 1.5 (0.6)
Retained income (137.9) (136.9)
Goodwill and intangible assets
In February 2008, the Canadian Institute of Chartered Accountants
("CICA") issued accounting standard Section 3064 "Goodwill, and
intangible assets", replacing accounting standard Section 3062
"Goodwill and other intangible assets" and accounting standard
Section 3450 "Research and development costs". Section 3064
establishes standards for the recognition, measurement, presentation
and disclosure of intangible assets and goodwill subsequent to its
initial recognition. The new Section was applicable to financial
statements relating to fiscal years beginning on or after October 1,
2008. Accordingly, the Company adopted the new standards for its
fiscal year beginning January 1, 2009. The provisions of Section 3064
were adopted retrospectively, with restatement of prior periods.
As a result of this adoption, the Company has retroactively expensed
certain expenditures related to pre-operating periods of a facility,
rather than recording them as assets in "Prepaid pension costs and
other assets" and "Net properties". The adoption of Section 3064
resulted in a reduction to opening retained income of $7.4 million at
January 1, 2008 and $10.4 million at January 1, 2009. For the three
months ended December 31, 2008, the adoption of this section resulted
in an increase to "Purchased services and other" expense of
$1.2 million and a decrease to "Income tax expense" of $0.5 million.
This change did not impact previously reported basic and diluted
earnings per share for the fourth quarter of 2008. For the year ended
December 31, 2008, the adoption of this section resulted in an
increase to "Purchased services and other" expense of $5.0 million
and a decrease to "Income tax expense" of $2.0 million. This change
also resulted in a $0.02 decrease to previously reported basic
earnings per share and $0.02 decrease to previously reported diluted
earnings per share for the year ended December 31, 2008.
Credit risk and the fair value of financial assets and financial
liabilities
On January 20, 2009 the Emerging Issues Committee ("EIC") issued a
new abstract EIC 173 "Credit risk and the fair value of financial
assets and financial liabilities". This abstract concludes that an
entity's own credit risk and the credit risk of the counterparty
should be taken into account when determining the fair value of
financial assets and financial liabilities, including derivative
instruments.
This abstract applies to all financial assets and liabilities
measured at fair value in interim and annual financial statements for
periods ending on or after January 20, 2009. The adoption of this
abstract did not impact the Company's financial statements.
3 Loss on termination of lease with shortline railway
During the fourth quarter of 2009 the Company made a payment of
approximately $73 million to terminate a contract with a lessee in
order to cease through-train operations over the CP owned rail
branchline between Smiths Falls and Sudbury. The contract with the
lessee included the operation of a minimum number of CP freight
trains over the leased branchline. The loss on the transaction
recognized in the fourth quarter was $54.5 million ($37.6 million
after tax).
4 Other income and charges
For the For the
three months year
ended ended
December 31 December 31
(in millions of Canadian dollars) 2009 2008 2009 2008
------------------------------------
Accretion charges on accruals
recorded at present value $ 2.1 $ 1.8 $ 8.7 $ 6.4
Accretion income on long-term
floating rate notes (1.5) - (2.9) -
Net loss on repurchase of debt - - 16.6 -
Other exchange losses (gains) 0.7 4.9 (0.4) 6.1
(Gain) loss in fair value of
long-term floating rate notes/
asset-backed commercial paper - - (6.3) 49.4
Foreign exchange (gain) loss on
long-term debt (3.1) 3.9 (5.8) 16.3
Other 1.4 1.6 9.0 10.2
------------------------------------
Total other income and charges $ (0.4) $ 12.2 $ 18.9 $ 88.4
------------------------------------
------------------------------------
5 Income tax expense
In the fourth quarter of 2009, legislation was enacted to reduce
Ontario provincial income tax rates. Income tax expense for the
fourth quarter reflects the impact of a $47.6 million benefit related
to the revaluation of its future income tax balances as at
December 31, 2008, as well as an income tax settlement related to a
prior year.
6 Pensions and other benefits
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.
7 Long-term debt
During the fourth quarter of 2009, the Company issued $400 million of
6.45% Notes due November 17, 2039. Net proceeds from this offering
were $397.8 million. The notes are unsecured.
The Company also issued $67.7 million of 5.57% Secured Notes due
December 24, 2024. Net proceeds from this offering were
$66.7 million. The notes are secured by certain equipment.
Summary of Rail Data
--------------------
(Reconciliation of GAAP earnings to non-GAAP earnings on page 2)
----------------------------------------------------------------
Fourth Quarter(1)
-------------------------------------------
2009 2008(2)(3) Fav/(Unfav) %
-------------------------------------------
Financial (millions, except
---------------------------
per share data)
---------------
Revenues
--------
Freight revenue $ 1,091.0 $ 1,257.8 $ (166.8) (13.3)
Other revenue 30.9 41.9 (11.0) (26.3)
--------------------------------
1,121.9 1,299.7 (177.8) (13.7)
--------------------------------
Operating expenses
------------------
Compensation and benefits 311.8 350.2 38.4 11.0
Fuel 157.5 239.5 82.0 34.2
Materials 41.1 63.8 22.7 35.6
Equipment rents 45.0 45.8 0.8 1.7
Depreciation and
amortization 121.3 113.7 (7.6) (6.7)
Purchased services and other 176.2 199.5 23.3 11.7
--------------------------------
852.9 1,012.5 159.6 15.8
--------------------------------
Revenues less operating
expenses 269.0 287.2 (18.2) (6.3)
Gain on sales of partnership
interest and significant
properties - - - -
Equity income in Dakota,
Minnesota & Eastern Railroad
Corporation (DM&E) - 10.4 (10.4) (100.0)
Less:
Loss on termination of lease
with shortline railway 54.5 - (54.5) -
Other income and charges (0.4) 12.2 12.6 103.3
Net interest expense 62.8 73.8 11.0 14.9
--------------------------------
Income before income tax
expense 152.1 211.6 (59.5) (28.1)
Income tax (recovery)
expense (42.0) 23.5 65.5 278.7
--------------------------------
Net income $ 194.1 $ 188.1 $ 6.0 3.2
--------------------------------
--------------------------------
Basic earnings per share $ 1.15 $ 1.22 $ (0.07) (5.7)
--------------------------------
--------------------------------
Diluted earnings per share $ 1.15 $ 1.21 $ (0.06) (5.0)
--------------------------------
--------------------------------
Year(1)
-------------------------------------------
2009 2008(2)(3) Fav/(Unfav) %
-------------------------------------------
Financial (millions, except
---------------------------
per share data)
---------------
Revenues
--------
Freight revenue $ 4,175.2 $ 4,814.8 $ (639.6) (13.3)
Other revenue 128.0 116.8 11.2 9.6
--------------------------------
4,303.2 4,931.6 (628.4) (12.7)
--------------------------------
Operating expenses
------------------
Compensation and benefits 1,275.2 1,306.1 30.9 2.4
Fuel 580.2 1,005.8 425.6 42.3
Materials 215.1 252.3 37.2 14.7
Equipment rents 184.8 182.2 (2.6) (1.4)
Depreciation and
amortization 488.9 442.5 (46.4) (10.5)
Purchased services and other 658.9 701.0 42.1 6.0
--------------------------------
3,403.1 3,889.9 486.8 12.5
--------------------------------
Revenues less operating
expenses 900.1 1,041.7 (141.6) (13.6)
Gain on sales of partnership
interest and significant
properties 160.3 - 160.3 -
Equity income in Dakota,
Minnesota & Eastern Railroad
Corporation (DM&E) - 50.9 (50.9) (100.0)
Less:
Loss on termination of lease
with shortline railway 54.5 - (54.5) -
Other income and charges 18.9 88.4 69.5 78.6
Net interest expense 273.1 261.1 (12.0) (4.6)
--------------------------------
Income before income tax
expense 713.9 743.1 (29.2) (3.9)
Income tax (recovery)
expense 101.5 135.9 34.4 25.3
--------------------------------
Net income $ 612.4 $ 607.2 $ 5.2 0.9
--------------------------------
--------------------------------
Basic earnings per share $ 3.68 $ 3.95 $ (0.27) (6.8)
--------------------------------
--------------------------------
Diluted earnings per share $ 3.67 $ 3.91 $ (0.24) (6.1)
--------------------------------
--------------------------------
(1) Certain 2008 figures have been restated to conform with the change of
accounting policies for the amortization of prior service pension
costs for unionized employees and expensing of locomotive overhaul
costs as adopted in the fourth quarter of 2009 on a retrospective
basis.
(2) The 2008 figures include the results of the DM&E on an equity
accounting basis through October 29, 2008 and on a fully consolidated
basis after that date including 2009.
(3) Certain 2008 figures have been restated for the adoption of CICA
accounting standard 3064, which requires the expensing of certain
expenditures related to pre-operating periods of a facility rather
than recording them as assets as adopted in the first quarter of 2009
on a retrospective basis.
Summary of Rail Data (Page 2)
-----------------------------
Reconciliation of GAAP earnings to non-GAAP earnings
----------------------------------------------------
Fourth Quarter(1)
-------------------------------------------
2009 2008(2)(3) Fav/(Unfav) %
-------------------------------------------
Financial (millions)
--------------------
Net income $ 194.1 $ 188.1 $ 6.0 3.2
Exclude:
Foreign exchange gain (loss)
----------------------------
on long-term debt (FX on LTD)
-----------------------------
FX on LTD 3.1 (3.9) 7.0 -
Income tax (expense)
recovery on FX on LTD(4) (4.5) 26.2 (30.7) -
--------------------------------
FX on LTD (net of tax) (1.4) 22.3 (23.7) -
Other specified items
---------------------
Loss on termination of lease
with shortline railway (54.5) - (54.5) -
Income tax on termination of
lease with shortline railway 16.9 - 16.9 -
--------------------------------
Loss on termination of lease
with shortline railway
(net of tax) (37.6) - (37.6) -
--------------------------------
Gain on sales of partnership
interest and significant
properties - - - -
Income tax expense on sales
of partnership interest
and significant properties - - - -
--------------------------------
Gain on sales of partnership
interest and significant
properties (net of tax) - - - -
--------------------------------
Gain (loss) in fair value
of long-term floating rate
notes/asset-backed
commercial paper (ABCP) - - - -
Income tax recovery (expense)
on gain (loss) in fair value
of long-term floating rate
notes/ABCP - - - -
--------------------------------
Gain (loss) in fair value
of long-term floating rate
notes/(ABCP) (net of tax) - - - -
--------------------------------
Income tax benefits due to
rate reduction and settlement
related to a prior year 74.2 - 74.2 -
--------------------------------
Income before foreign
exchange gain (loss) on
long-term debt and other
specified items(5) $ 158.9 $ 165.8 $ (6.9) (4.2)
--------------------------------
--------------------------------
Earnings per share (EPS)
------------------------
Diluted EPS, as determined
by GAAP $ 1.15 $ 1.21 $ (0.06) (5.0)
Exclude:
Diluted EPS, related to
FX on LTD, net of tax(5) (0.01) 0.14 (0.15) -
Diluted EPS, related to
other specified items,
net of tax(5) 0.22 - 0.22 -
--------------------------------
Diluted EPS, before FX on LTD
and other specified items(5) $ 0.94 $ 1.07 $ (0.13) (12.1)
--------------------------------
--------------------------------
Operating ratio(5)(6) (%) 76.0 77.9 1.9 -
Shares Outstanding
------------------
Weighted average (avg)
number of shares
outstanding (millions) 168.3 153.8 14.5 9.4
Weighted avg number of
diluted shares outstanding
(millions) 168.9 155.0 13.9 9.0
Foreign Exchange
----------------
Average foreign exchange
rate (US$/Canadian$) 0.935 0.855 0.080 9.4
Average foreign exchange
rate (Canadian$/US$) 1.069 1.169 (0.100) (8.6)
Year(1)
-------------------------------------------
2009 2008(2)(3) Fav/(Unfav) %
-------------------------------------------
Financial (millions)
--------------------
Net income $ 612.4 $ 607.2 $ 5.2 0.9
Exclude:
Foreign exchange gain (loss)
----------------------------
on long-term debt (FX on LTD)
-----------------------------
FX on LTD 5.8 (16.3) 22.1 -
Income tax (expense)
recovery on FX on LTD(4) (31.6) 38.6 (70.2) -
--------------------------------
FX on LTD (net of tax) (25.8) 22.3 (48.1) -
Other specified items
---------------------
Loss on termination of lease
with shortline railway (54.5) - (54.5) -
Income tax on termination of
lease with shortline railway 16.9 - 16.9 -
--------------------------------
Loss on termination of lease
with shortline railway
(net of tax) (37.6) - (37.6) -
--------------------------------
Gain on sales of partnership
interest and significant
properties 160.3 - 160.3 -
Income tax expense on sales
of partnership interest
and significant properties (23.5) - (23.5) -
--------------------------------
Gain on sales of partnership
interest and significant
properties (net of tax) 136.8 - 136.8 -
--------------------------------
Gain (loss) in fair value
of long-term floating rate
notes/asset-backed
commercial paper (ABCP) 6.3 (49.4) 55.7 -
Income tax recovery (expense)
on gain (loss) in fair value
of long-term floating rate
notes/ABCP (1.8) 14.6 (16.4) -
--------------------------------
Gain (loss) in fair value
of long-term floating rate
notes/(ABCP) (net of tax) 4.5 (34.8) 39.3 -
--------------------------------
Income tax benefits due to
rate reduction and settlement
related to a prior year 74.2 - 74.2 -
--------------------------------
Income before foreign
exchange gain (loss) on
long-term debt and other
specified items(5) $ 460.3 $ 619.7 $ (159.4) (25.7)
--------------------------------
--------------------------------
Earnings per share (EPS)
------------------------
Diluted EPS, as determined
by GAAP $ 3.67 $ 3.91 $ (0.24) (6.1)
Exclude:
Diluted EPS, related to
FX on LTD, net of tax(5) (0.15) 0.14 (0.29) -
Diluted EPS, related to
other specified items,
net of tax(5) 1.06 (0.22) 1.28 -
--------------------------------
Diluted EPS, before FX on LTD
and other specified items(5) $ 2.76 $ 3.99 $ (1.23) (30.8)
--------------------------------
--------------------------------
Operating ratio(5)(6) (%) 79.1 78.9 (0.2) -
Shares Outstanding
------------------
Weighted average (avg)
number of shares
outstanding (millions) 166.3 153.7 12.6 8.2
Weighted avg number of
diluted shares outstanding
(millions) 166.8 155.5 11.3 7.3
Foreign Exchange
----------------
Average foreign exchange
rate (US$/Canadian$) 0.869 0.951 (0.082) (8.6)
Average foreign exchange
rate (Canadian$/US$) 1.151 1.052 0.099 9.4
(1) Certain 2008 figures have been restated to conform with the change of
accounting policies for the amortization of prior service pension
costs for unionized employees and expensing of locomotive overhaul
costs as adopted in the fourth quarter of 2009 on a retrospective
basis.
(2) The 2008 figures include the results of the DM&E on an equity
accounting basis through October 29, 2008 and on a fully consolidated
basis after that date.
(3) Certain 2008 figures have been restated for the adoption of CICA
accounting standard 3064, which requires the expensing of certain
expenditures related to pre-operating periods of a facility rather
than recording them as assets as adopted in the first quarter of 2009
on a retrospective basis.
(4) Income tax on FX on LTD is discussed in the press release in the
section "Foreign Exchange Gain and Loss on Long-Term Debt and Other
Specified Items".
(5) 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 included in this
press release.
(6) Operating ratio is the percentage derived by dividing operating
expenses by total revenues.
Summary of Rail Data (Page 3)
-----------------------------
Pro forma Basis Including DM&E in 2008
--------------------------------------
Fourth Quarter(1)
-------------------------------------------
2009 2008(2)(3)(4) Fav/(Unfav) %
Pro forma
-------------------------------------------
Financial (millions, except
---------------------------
per share data)
---------------
Revenues
--------
Freight revenue $ 1,091.0 $ 1,291.9 $ (200.9) (15.6)
Other revenue 30.9 42.2 (11.3) (26.8)
--------------------------------
1,121.9 1,334.1 (212.2) (15.9)
--------------------------------
Operating expenses
------------------
Compensation and benefits 311.8 357.0 45.2 12.7
Fuel 157.5 244.1 86.6 35.5
Materials 41.1 65.2 24.1 37.0
Equipment rents 45.0 47.1 2.1 4.5
Depreciation and
amortization 121.3 117.9 (3.4) (2.9)
Purchased services and other 176.2 198.5 22.3 11.2
--------------------------------
852.9 1,029.8 176.9 17.2
--------------------------------
Operating income(4)(5) 269.0 304.3 (35.3) (11.6)
Other income and charges 2.7 8.3 5.6 67.5
Net interest expense 62.8 73.9 11.1 15.0
Income tax expense before
foreign exchange gain
(loss) on long-term debt
and other specified items(4) 44.6 56.3 11.7 20.8
--------------------------------
Income before foreign exchange
gain (loss) on long-term debt
and other specified items(4) $ 158.9 $ 165.8 $ (6.9) (4.2)
--------------------------------
--------------------------------
Operating ratio(4)(6) (%) 76.0 77.2 1.2 -
Diluted EPS, before FX on LTD
and other specified items(4) $ 0.94 $ 1.07 $ (0.13) (12.1)
Year(1)
-------------------------------------------
2009 2008(2)(3)(4) Fav/(Unfav) %
Pro forma
-------------------------------------------
Financial (millions, except
---------------------------
per share data)
---------------
Revenues
--------
Freight revenue $ 4,175.2 $ 5,108.4 $ (933.2) (18.3)
Other revenue 128.0 118.8 9.2 7.7
--------------------------------
4,303.2 5,227.2 (924.0) (17.7)
--------------------------------
Operating expenses
------------------
Compensation and benefits 1,275.2 1,369.2 94.0 6.9
Fuel 580.2 1,057.3 477.1 45.1
Materials 215.1 267.2 52.1 19.5
Equipment rents 184.8 195.1 10.3 5.3
Depreciation and
amortization 488.9 478.3 (10.6) (2.2)
Purchased services and other 658.9 732.2 73.3 10.0
--------------------------------
3,403.1 4,099.3 696.2 17.0
--------------------------------
Operating income(4)(5) 900.1 1,127.9 (227.8) (20.2)
Other income and charges 30.9 22.3 (8.6) (38.6)
Net interest expense 273.1 263.0 (10.1) (3.8)
Income tax expense before
foreign exchange gain
(loss) on long-term debt
and other specified items(4) 135.8 222.9 87.1 39.1
--------------------------------
Income before foreign exchange
gain (loss) on long-term debt
and other specified items(4) $ 460.3 $ 619.7 $ (159.4) (25.7)
--------------------------------
--------------------------------
Operating ratio(4)(6) (%) 79.1 78.4 (0.7) -
Diluted EPS, before FX on LTD
and other specified items(4) $ 2.76 $ 3.99 $ (1.23) (30.8)
(1) Certain 2008 figures have been restated to conform with the change of
accounting policies for the amortization of prior service pension
costs for unionized employees and expensing of locomotive overhaul
costs as adopted in the fourth quarter of 2009 on a retrospective
basis.
(2) Pro forma basis redistributes DM&E equity income to a line-by-line
consolidation of DM&E results for 2008. See note on non-GAAP earnings
measures included in this press release.
(3) Certain 2008 figures have been restated for the adoption of CICA
accounting standard 3064, which requires the expensing of certain
expenditures related to pre-operating periods of a facility rather
than recording them as assets as adopted in the first quarter of 2009
on a retrospective basis.
(4) 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 included in this
press release.
(5) Operating income is a non-GAAP term, which represents "revenue less
operating expenses".
(6) Operating ratio is the percentage derived by dividing operating
expenses by total revenues.
Summary of Rail Data (Page 4)
-----------------------------
Pro forma Basis for Comparative Purposes only
---------------------------------------------
Fourth Quarter
-------------------------------------------
2009 2008(1)(2) Fav/(Unfav) %
Pro forma
-------------------------------------------
Commodity Data
--------------
Freight Revenues (millions)
- Grain $ 291.9 $ 319.9 $ (28.0) (8.8)
- Coal 112.1 141.3 (29.2) (20.7)
- Sulphur and fertilizers 83.7 119.0 (35.3) (29.7)
- Forest products 42.0 58.0 (16.0) (27.6)
- Industrial and consumer
products 201.3 233.0 (31.7) (13.6)
- Automotive 67.7 81.8 (14.1) (17.2)
- Intermodal 292.3 338.9 (46.6) (13.8)
--------------------------------
Total Freight Revenues $ 1,091.0 $ 1,291.9 $ (200.9) (15.6)
--------------------------------
Millions of Revenue Ton-Miles
(RTM)
- Grain 9,156 8,903 253 2.8
- Coal 4,493 4,625 (132) (2.9)
- Sulphur and fertilizers 2,716 4,077 (1,361) (33.4)
- Forest products 1,098 1,277 (179) (14.0)
- Industrial and consumer
products 4,762 4,816 (54) (1.1)
- Automotive 480 490 (10) (2.0)
- Intermodal 6,169 6,321 (152) (2.4)
--------------------------------
Total RTMs 28,874 30,509 (1,635) (5.4)
--------------------------------
Freight Revenue per RTM (cents)
- Grain 3.19 3.59 (0.40) (11.1)
- Coal 2.49 3.06 (0.57) (18.6)
- Sulphur and fertilizers 3.08 2.92 0.16 5.5
- Forest products 3.83 4.54 (0.71) (15.6)
- Industrial and consumer
products 4.23 4.84 (0.61) (12.6)
- Automotive 14.10 16.69 (2.59) (15.5)
- Intermodal 4.74 5.36 (0.62) (11.6)
Freight Revenue per RTM 3.78 4.23 (0.45) (10.6)
Carloads (thousands)
- Grain 121.1 123.4 (2.3) (1.9)
- Coal 83.9 72.5 11.4 15.7
- Sulphur and fertilizers 31.9 40.7 (8.8) (21.6)
- Forest products 16.4 20.8 (4.4) (21.2)
- Industrial and consumer
products 92.6 97.6 (5.0) (5.1)
- Automotive 32.9 30.5 2.4 7.9
- Intermodal 241.0 279.6 (38.6) (13.8)
--------------------------------
Total Carloads 619.8 665.1 (45.3) (6.8)
--------------------------------
Freight Revenue per Carload
- Grain $ 2,410 $ 2,592 $ (182) (7.0)
- Coal 1,336 1,949 (613) (31.5)
- Sulphur and fertilizers 2,624 2,924 (300) (10.3)
- Forest products 2,561 2,788 (227) (8.1)
- Industrial and consumer
products 2,174 2,387 (213) (8.9)
- Automotive 2,058 2,682 (624) (23.3)
- Intermodal 1,213 1,212 1 0.1
Freight Revenue per Carload $ 1,760 $ 1,942 $ (182) (9.4)
Year
-------------------------------------------
2009 2008(1)(2) Fav/(Unfav) %
Pro forma
-------------------------------------------
Commodity Data
--------------
Freight Revenues (millions)
- Grain $ 1,129.9 $ 1,070.6 $ 59.3 5.5
- Coal 443.3 622.9 (179.6) (28.8)
- Sulphur and fertilizers 303.5 518.9 (215.4) (41.5)
- Forest products 173.2 249.0 (75.8) (30.4)
- Industrial and consumer
products 766.6 919.8 (153.2) (16.7)
- Automotive 228.8 327.4 (98.6) (30.1)
- Intermodal 1,129.9 1,399.8 (269.9) (19.3)
--------------------------------
Total Freight Revenues $ 4,175.2 $ 5,108.4 $ (933.2) (18.3)
--------------------------------
Millions of Revenue Ton-Miles
(RTM)
- Grain 34,838 32,019 2,819 8.8
- Coal 16,997 21,600 (4,603) (21.3)
- Sulphur and fertilizers 9,362 19,956 (10,594) (53.1)
- Forest products 4,470 5,927 (1,457) (24.6)
- Industrial and consumer
products 17,653 21,364 (3,711) (17.4)
- Automotive 1,607 2,221 (614) (27.6)
- Intermodal 23,425 27,966 (4,541) (16.2)
--------------------------------
Total RTMs 108,352 131,053 (22,701) (17.3)
--------------------------------
Freight Revenue per RTM (cents)
- Grain 3.24 3.34 (0.10) (3.0)
- Coal 2.61 2.88 (0.27) (9.4)
- Sulphur and fertilizers 3.24 2.60 0.64 24.6
- Forest products 3.87 4.20 (0.33) (7.9)
- Industrial and consumer
products 4.34 4.31 0.03 0.7
- Automotive 14.24 14.74 (0.50) (3.4)
- Intermodal 4.82 5.01 (0.19) (3.8)
Freight Revenue per RTM 3.85 3.90 (0.05) (1.3)
Carloads (thousands)
- Grain 469.5 460.4 9.1 2.0
- Coal 305.1 317.7 (12.6) (4.0)
- Sulphur and fertilizers 108.8 195.4 (86.6) (44.3)
- Forest products 66.8 97.6 (30.8) (31.6)
- Industrial and consumer
products 345.9 425.5 (79.6) (18.7)
- Automotive 103.7 142.0 (38.3) (27.0)
- Intermodal 962.9 1,216.0 (253.1) (20.8)
--------------------------------
Total Carloads 2,362.7 2,854.6 (491.9) (17.2)
--------------------------------
Freight Revenue per Carload
- Grain $ 2,407 $ 2,325 $ 82 3.5
- Coal 1,453 1,961 (508) (25.9)
- Sulphur and fertilizers 2,790 2,656 134 5.0
- Forest products 2,593 2,551 42 1.6
- Industrial and consumer
products 2,216 2,162 54 2.5
- Automotive 2,206 2,306 (100) (4.3)
- Intermodal 1,173 1,151 22 1.9
Freight Revenue per Carload $ 1,767 $ 1,790 $ (23) (1.3)
(1) Pro forma basis redistributes DM&E equity income to a line-by-line
consolidation of DM&E results for 2008. See note on non-GAAP earnings
measures included in this press release.
(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 included in this
press release.
Summary of Rail Data (Page 5)
-----------------------------
Fourth Quarter(1)
-------------------------------------------
2009 2008(2)(3)(4) Fav/(Unfav) %
-------------------------------------------
Operations Performance
----------------------
Pro forma Consolidated Data
---------------------------
including DM&E(2)
-----------------
Total operating expenses
per GTM (cents)(5) 1.55 1.75 0.20 11.4
Freight gross ton-miles
(GTM) (millions) 55,198 58,774 (3,576) (6.1)
Train miles (000)(7) 8,897 9,978 (1,081) (10.8)
Average number of active
employees - Total 15,073 16,460 1,387 8.4
Average number of active
employees - Expense 13,471 14,877 1,406 9.5
Number of employees at end
of period - Total 14,665 15,783 1,118 7.1
Number of employees at end
of period - Expense 13,614 14,880 1,266 8.5
U.S. gallons of locomotive
fuel per 1,000 GTMs -
freight & yard 1.18 1.26 0.08 6.3
U.S. gallons of locomotive
fuel consumed - total
(millions)(6) 64.7 73.6 8.9 12.1
Average fuel price (U.S.
dollars per U.S. gallon) 2.28 2.84 0.56 19.7
Fluidity Data (excluding DM&E)
------------------------------
Average terminal dwell - AAR
definition (hours) 23.1 22.2 (0.9) (4.1)
Average train speed - AAR
definition (mph) 24.7 24.7 - -
Car miles per car day 139.2 143.9 (4.7) (3.3)
Average daily active cars
on-line (000) 50.3 52.4 2.1 4.0
Average daily active road
locomotives on-line 792 929 137 14.7
Safety
------
FRA personal injuries per
200,000 employee-hours
(CP only) 1.98 1.63 (0.35) (21.5)
FRA train accidents per
million train-miles (CP only) 1.66 2.18 0.52 23.9
FRA personal injuries per
200,000 employee-hours
(DM&E only) 2.07 2.94 0.87 29.6
FRA train accidents per
million train-miles
(DM&E only) 1.46 9.99 8.53 85.4
Year(1)
-------------------------------------------
2009 2008(2)(3)(4) Fav/(Unfav) %
-------------------------------------------
Operations Performance
----------------------
Pro forma Consolidated Data
---------------------------
including DM&E(2)
-----------------
Total operating expenses
per GTM (cents)(5) 1.62 1.63 0.01 0.6
Freight gross ton-miles
(GTM) (millions) 209,475 250,991 (41,516) (16.5)
Train miles (000)(7) 34,757 43,243 (8,486) (19.6)
Average number of active
employees - Total 15,175 16,793 1,618 9.6
Average number of active
employees - Expense 13,619 15,107 1,488 9.8
Number of employees at end
of period - Total 14,665 15,783 1,118 7.1
Number of employees at end
of period - Expense 13,614 14,880 1,266 8.5
U.S. gallons of locomotive
fuel per 1,000 GTMs -
freight & yard 1.19 1.22 0.03 2.5
U.S. gallons of locomotive
fuel consumed - total
(millions)(6) 246.7 305.0 58.3 19.1
Average fuel price (U.S.
dollars per U.S. gallon) 2.04 3.30 1.26 38.2
Fluidity Data (excluding DM&E)
------------------------------
Average terminal dwell - AAR
definition (hours) 21.9 22.3 0.4 1.8
Average train speed - AAR
definition (mph) 25.5 24.0 1.5 6.3
Car miles per car day 142.6 143.6 (1.0) (0.7)
Average daily active cars
on-line (000) 46.6 54.7 8.1 14.8
Average daily active road
locomotives on-line 760 985 225 22.8
Safety
------
FRA personal injuries per
200,000 employee-hours
(CP only) 1.85 1.51 (0.34) (22.5)
FRA train accidents per
million train-miles (CP only) 1.49 1.93 0.44 22.8
FRA personal injuries per
200,000 employee-hours
(DM&E only) 2.17 3.50 1.33 38.0
FRA train accidents per
million train-miles
(DM&E only) 6.78 11.39 4.61 40.5
(1) Certain 2008 figures have been restated to conform with the change of
accounting policies for the amortization of prior service pension
costs for unionized employees and expensing of locomotive overhaul
costs as adopted in the fourth quarter of 2009 on a retrospective
basis.
(2) Pro forma basis redistributes DM&E equity income to a line-by-line
consolidation of DM&E results for 2008. See note on non-GAAP earnings
measures included in this press release.
(3) Certain 2008 figures have been restated for the adoption of CICA
accounting standard 3064, which requires the expensing of certain
expenditures related to pre-operating periods of a facility rather
than recording them as assets as adopted in the first quarter of 2009
on a retrospective basis.
(4) Certain prior period figures have been revised to conform with
current presentation.
(5) The pro forma total operating expenses per GTM for 2008 is a non-GAAP
measure. See note on non-GAAP earnings measures included in this
press release.
(6) Includes gallons of fuel consumed from freight, yard and commuter
service but excludes fuel used in capital projects and other
non-freight activities.
(7) Train miles decreased in response to the reduced volumes. Management
reduced train starts by consolidating trains and running longer
heavier trains which also decreased overall train miles.
SOURCE Canadian Pacific
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