Canadian Pacific Announces Strong Operating Performance and Fourth-Quarter Results

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Jan 26, 2012, 07:30 ET

CALGARY, Jan. 26, 2012 /PRNewswire/ - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced its fourth-quarter and full year 2011 results today. Fourth-quarter CP reported net income of $221 million and diluted earnings per share of $1.30, inclusive of $0.22 per share income tax benefit. For the full year, the company reported net income of $570 million and diluted earnings per share of $3.34.

"We exited 2011 having made meaningful progress on the three pillars of our Multi-Year Plan: driving growth, expanding network capacity to safely and efficiently support higher volumes and controlling costs. During the fourth quarter we delivered record asset velocity, a direct link to better service, positioning us for a lower operating ratio," said Fred Green, President and Chief Executive Officer. "We begin 2012 with operating momentum, excellent service levels and a stronger, more resilient rail network. We are aggressively executing on our Multi-Year Plan, which is instrumental in creating long-term value for shareholders."

RECORD OPERATING PERFORMANCE

Car miles per car day and terminal dwell both improved 20 per cent during the quarter
Active cars online improved 14 per cent while handling five per cent more gross ton miles (GTMs) during the quarter
Fuel efficiency of 1.17 gallons per 1,000 GTMs, matching best ever fourth-quarter performance
Train weights set new full year record

FOURTH-QUARTER 2011 RESULTS COMPARED WITH FOURTH-QUARTER 2010

Total revenues were $1.4 billion, an increase of $114 million
Operating expenses were $1.1 billion, an increase of $109 million
Average fuel price increased 29 per cent to $3.45 U.S. dollars per U.S. gallon
Operating income was $303 million, an increase of $5 million
Net income was $221 million, an increase of $35 million
Diluted earnings per share were $1.30 per share, an increase of $0.21 per share

FULL YEAR 2011 RESULTS COMPARED WITH FULL YEAR 2010

Total revenues were $5.2 billion, an increase of $196 million
Operating expenses were $4.2 billion, an increase of $345 million
Average fuel price increased 35 per cent to $3.38 U.S. dollars per U.S. gallon
Operating income was $967 million, a decrease of $149 million
Net income was $570 million, a decrease of $81 million
Diluted earnings per share were $3.34 per share, a decrease of $0.51 per share
Made a pension prepayment of $600 million in 2011 and $650 million in 2010
Increased dividends to shareholders by 11 per cent to $1.1700 per share

MULTI-YEAR PLAN

"Our operational metrics are a leading indicator of both customer satisfaction and financial results. The operational improvements we have already achieved will now begin to drive enhanced financial results in the first quarter of 2012 and, as we continue to execute on our Multi-Year Plan, further operational improvements will deliver financial benefits," added Fred Green. "Given our recent market successes and operating trends, we can now with confidence, narrow our target operating ratio range to 70 to 72 per cent in three years and we have no intention of stopping there."

2012 ASSUMPTIONS

Defined benefit pension contributions are currently estimated to be between $100 million and $125 million in each of the next few years, a decrease from previous estimates of $125 million to $150 million. These contribution levels reflect the Company's intentions with respect to application of voluntary prepayments. Defined benefit pension expense for 2012 is expected to be $41 million. For 2013, defined benefit pension expense is expected to be approximately $125 million, assuming normal equity market returns and modest increases in bond yields in 2012.

CP plans to spend in the range of $1.1 billion to $1.2 billion on capital programs in 2012, as announced on January 17, 2012.

CP expects its tax rate to be in the 25 per cent to 27 per cent range in 2012.

CONFERENCE CALL INFORMATION

CP will discuss its results with analysts in a conference call beginning at 11:00 a.m. Eastern time (9:00 a.m. Mountain time) on January 26, 2012.

Toronto/International participants dial in number: (647) 427-7450
Operator assisted toll free dial in number: 1-888-231-8191
Callers should dial in 10 minutes prior to the call.

WEBCAST

For those with Internet access we encourage you to listen via CP's website at www.cpr.ca. To access the webcast and the presentation material, click on "Invest In CP" tab.

A replay of the conference call will be available by phone through February 29, 2012 at (416) 849-0833 or toll free 1-855-859-2056, passcode 36730106. A webcast of the presentation and an audio file will be available at www.cpr.ca under "Invest In CP" tab.

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, 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; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and 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, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. Other risks are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CP's annual and interim reports, Annual Information Form and Form 40-F.

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:CP) operates a North American transcontinental railway 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.

CONSOLIDATED STATEMENTS 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
			2011		2010		2011		2010
Revenues
	Freight	$	1,375	$	1,262	$	5,052	$	4,853
	Other		33		32		125		128
Total revenue			1,408		1,294		5,177		4,981
Operating expenses
	Compensation and benefits		389		362		1,426		1,431
	Fuel		267		202		968		728
	Materials		58		56		243		214
	Equipment rents		51		48		209		206
	Depreciation and amortization		123		121		490		489
	Purchased services and other		217		207		874		797
Total operating expenses			1,105		996		4,210		3,865
Operating income			303		298		967		1,116
Less:
	Other (income) and charges (Note 3)		10		(5)		18		(12)
	Net interest expense		61		65		252		257

Income before income tax expense			232		238		697		871

	Income tax expense (Note 2)		11		52		127		220
Net income		$	221	$	186	$	570	$	651


Earnings per share
	Basic	$	1.31	$	1.10	$	3.37	$	3.86
	Diluted	$	1.30	$	1.09	$	3.34	$	3.85

Weighted average number of shares (millions)
	Basic		169.8		169.1		169.5		168.8
	Diluted		170.8		169.7		170.6		169.2

Dividends declared per share		$	0.3000	$	0.2700	$	1.1700	$	1.0575


See notes to interim consolidated financial information.

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

		December 31		December 31
		2011		2010
*Assets*
Current assets
	Cash and cash equivalents	$	47	$	361
	Accounts receivable, net		518		459
	Materials and supplies		138		114
	Deferred income taxes		101		222
	Other current assets		52		48
			856		1,204

Investments			167		145
Net properties			12,752		11,997
Goodwill and intangible assets			192		190
Other assets			143		140
*Total assets*		$	14,110	$	13,676

*Liabilities and shareholders' equity*
Current liabilities
	Short-term borrowing	$	27	$	-
	Accounts payable and accrued liabilities		1,133		1,008
	Long-term debt maturing within one year		50		282
			1,210		1,290

Pension and other benefit liabilities (Note 4)			1,372		1,116
Other long-term liabilities			365		468
Long-term debt (Note 3)			4,695		4,033
Deferred income taxes			1,819		1,945
*Total liabilities*			9,461		8,852

Shareholders' equity
	Share capital		1,854		1,813
	Additional paid-in capital		86		24
	Accumulated other comprehensive loss		(2,736)		(2,086)
	Retained earnings		5,445		5,073
			4,649		4,824
*Total liabilities and shareholders' equity*		$	14,110	$	13,676


See notes to interim consolidated financial information.

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

				For the three months				For the year
				ended December 31				ended December 31
					2011		2010		2011		2010
Operating activities
	Net income			$	221	$	186	$	570	$	651
		Reconciliation of net income to cash provided by (used in)
		operating activities:
			Depreciation and amortization		123		121		490		489
			Deferred income taxes (Note 2)		68		51		187		211
			Pension funding (in excess of) less than expense (Note 4)		(607)		5		(647)		(801)
			Other operating activities, net		(65)		(38)		(112)		(32)
			Change in non-cash working capital balances related to
			operations		99		56		24		(16)
Cash (used in) provided by operating activities					(161)		381		512		502

Investing activities
	Additions to properties				(400)		(282)		(1,104)		(726)
	Proceeds from the sale of properties and other assets				30		43		71		89
	Other				(4)		1		(11)		2
Cash used in investing activities					(374)		(238)		(1,044)		(635)

Financing activities
	Dividends paid				(51)		(46)		(193)		(174)
	Issuance of common shares				16		6		29		32
	Collection of receivable from financial institution				-		-		-		220
	Issuance of long-term debt (Note 3)				757		-		757		355
	Repayment of long-term debt (Note 3)				(257)		(8)		(401)		(613)
	Net increase in short-term borrowing				28		9		28		9
	Other				(3)		-		(3)		3
Cash provided by (used in) financing activities					490		(39)		217		(168)

Effect of foreign currency fluctuations on U.S. dollar-
denominated cash and cash equivalents					(5)		(11)		1		(17)
Cash position
	(Decrease) increase in cash and cash equivalents				(50)		93		(314)		(318)
	Cash and cash equivalents at beginning of period				97		268		361		679
Cash and cash equivalents at end of period				$	47	$	361	$	47	$	361

Supplemental disclosures of cash flow information:
	Income taxes paid			$	1	$	2	$	4	$	8
	Interest paid			$	91	$	95	$	271	$	347


See notes to interim consolidated financial information.

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


	Common					Accumulated
	shares			Additional		other				Total
	(in	Share		paid-in		comprehensive		Retained		shareholders'
	millions)	capital		capital		loss		earnings		equity
Balance at December 31, 2010	169.2	$	1,813	$	24	$	(2,086)	$	5,073	$	4,824
Net income	-		-		-		-		570		570
Other comprehensive loss	-		-		-		(650)		-		(650)
Dividends declared	-		-		-		-		(198)		(198)
Effect of stock-based compensation expense	-		-		16		-		-		16
Changes to stock compensation awards	-		-		57		-		-		57
Shares issued under stock option plans	0.8		41		(11)		-		-		30
Balance at December 31, 2011	170.0	$	1,854	$	86	$	(2,736)	$	5,445	$	4,649

						Other
						comprehensive		Net		Comprehensive
						loss		income		loss
Comprehensive loss - three months ended December 31, 2011						$	(743)	$	221	$	(522)
Comprehensive loss - year ended December 31, 2011						$	(650)	$	570	$	(80)

	Common					Accumulated
	shares			Additional		other				Total
	(in	Share		paid-in		comprehensive		Retained		shareholders'
	millions)	capital		capital		loss		earnings		equity
Balance at December 31, 2009	168.5	$	1,771	$	31	$	(1,745)	$	4,601	$	4,658
Net income	-		-		-		-		651		651
Other comprehensive loss	-		-		-		(341)		-		(341)
Dividends declared	-		-		-		-		(179)		(179)
Effect of stock-based compensation expense	-		-		1		-		-		1
Shares issued under stock option plans	0.7		42		(8)		-		-		34
Balance at December 31, 2010	169.2	$	1,813	$	24	$	(2,086)	$	5,073	$	4,824

						Other
						comprehensive		Net		Comprehensive
						loss		income		income (loss)
Comprehensive loss - three months ended December 31, 2010						$	(393)	$	186	$	(207)
Comprehensive income - year ended December 31, 2010						$	(341)	$	651	$	310


See notes to interim consolidated financial information.

NOTES TO INTERIM CONSOLIDATED FINANCIAL INFORMATION
December 31, 2011
(unaudited)

1 Basis of presentation

This unaudited interim consolidated financial information of Canadian Pacific Railway Limited ("CP", or "the Company") reflects management's estimates and assumptions that are necessary for its fair presentation in conformity with accounting principles generally accepted in the United States of America ("GAAP"). This information does not include all disclosures required under GAAP for annual and interim financial statements and should be read in conjunction with the 2010 consolidated financial statements and 2011 consolidated interim financial statements. The policies used are consistent with the policies used in preparing the 2010 consolidated financial statements. 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.

In management's opinion, the unaudited interim consolidated financial information includes all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly such information.

2 Income taxes

Income tax expense for the fourth quarter of 2011 reflects a tax recovery of $37 million resulting from the resolution of certain income tax matters and adjustments related to previous year's tax filings and estimates.

3 Long-term debt

On September 13, 2011, the Company announced a cash tender offer and consent solicitation for any or all its outstanding US$246 million 6.25% Notes due October 15, 2011. Notes tendered with a principal value of US$204 million were redeemed on October 12, 2011, and the remaining US$42 million Notes not tendered were redeemed on October 17, 2011. Upon redemption of the Notes a net loss of $1 million was recognized to "Other income and charges" in the fourth quarter of 2011.

During December 2011, the Company issued $125 million 5.10% 10-year Notes, US$250 million 4.50% 10-year Notes and US$250 million 5.75% 30-year Notes. Net proceeds from these offerings were $618 million and were largely used to make a $600 million voluntary prepayment to the Company's main Canadian defined benefit pension plan (see Note 4).

During the fourth quarter of 2011, the Company issued US$139 million 3.88% Series A and B Senior Secured Notes due in 2026 for net proceeds of $139 million. These Notes are secured by locomotives previously acquired by the Company with a carrying value of $139 million at December 31, 2011. The Company pays equal blended semi-annual payments of principal and interest up to and including December 2026. Final repayment of the remaining principal of US$69 million is due in the fourth quarter of 2026.

4 Pensions and other benefits

During the fourth quarter of 2011, the Company made a $600 million voluntary prepayment to the Company's main Canadian defined benefit pension plan. The Company made a voluntary prepayment of $650 million to the Company's main Canadian defined benefit plan in September 2010.

As a result of lower discount rates at December 31, 2011, compared with December 31, 2010, as well as unfavourable 2011 equity returns, pension and post-retirement benefit liabilities increased by $1,040 million, other comprehensive loss was increased by $768 million and the Company's deferred tax liability was reduced by $272 million. The Company used a discount rate of 4.55% at December 31, 2011, (2010 - 5.20%) to determine the pension and other post-retirement benefit obligation.


Summary of Rail Data

Fourth Quarter										Year
	2011		2010	Fav/(Unfav)		%		Financial (millions, except per share data)			2011		2010	Fav/(Unfav)		%

								Revenues
$	1,375	$	1,262	$	113	9			Freight revenue	$	5,052	$	4,853	$	199	4
	33		32		1	3			Other revenue		125		128		(3)	(2)
	1,408		1,294		114	9					5,177		4,981		196	4


								Operating expenses
	389		362		(27)	(7)			Compensation and benefits		1,426		1,431		5	-
	267		202		(65)	(32)			Fuel		968		728		(240)	(33)
	58		56		(2)	(4)			Materials		243		214		(29)	(14)
	51		48		(3)	(6)			Equipment rents		209		206		(3)	(1)
	123		121		(2)	(2)			Depreciation and amortization		490		489		(1)	-
	217		207		(10)	(5)			Purchased services and other		874		797		(77)	(10)
	1,105		996		(109)	(11)					4,210		3,865		(345)	(9)


	303		298		5	2		Operating income			967		1,116		(149)	(13)

								Less:

	10		(5)		(15)	-			Other (income) and charges		18		(12)		(30)	-
	61		65		4	6			Net interest expense		252		257		5	2


	232		238		(6)	(3)		Income before income tax expense			697		871		(174)	(20)

	11		52		41	79			Income tax expense		127		220		93	42


$	221	$	186	$	35	19		Net income		$	570	$	651	$	(81)	(12)


	78.5		77.0		(1.5)	(150)	bps	Operating ratio (%)			81.3		77.6		(3.7)	(370)	bps


$	1.31	$	1.10	$	0.21	19			Basic earnings per share	$	3.37	$	3.86	$	(0.49)	(13)


$	1.30	$	1.09	$	0.21	19			Diluted earnings per share	$	3.34	$	3.85	$	(0.51)	(13)



								Shares Outstanding

									Weighted average number of shares
	169.8		169.1		0.7	-			outstanding (millions)		169.5		168.8		0.7	-

									Weighted average number of diluted shares
	170.8		169.7		1.1	1			outstanding (millions)		170.6		169.2		1.4	1


								Foreign Exchange

									Average foreign exchange rate
	0.98		0.98		-	-			(US$/Canadian$)		1.01		0.97		(0.04)	(4)

									Average foreign exchange rate
	1.02		1.02		-	-			(Canadian$/US$)		0.99		1.03		(0.04)	(4)


Summary of Rail Data (Page 2)

Fourth Quarter											Year
	2011		2010	Fav/(Unfav)		%						2011		2010	Fav/(Unfav)		%

								Commodity Data

									Freight Revenues (millions)
$	323	$	299	$	24		8			- Grain	$	1,100	$	1,135	$	(35)		(3)
	158		126		32		25			- Coal		556		491		65		13
	133		132		1		1			- Sulphur and fertilizers		549		475		74		16
	47		50		(3)		(6)			- Forest products		189		185		4		2
	288		240		48		20			- Industrial and consumer products		1,017		903		114		13
	94		75		19		25			- Automotive		338		316		22		7
	332		340		(8)		(2)			- Intermodal		1,303		1,348		(45)		(3)

$	1,375	$	1,262	$	113		9		Total Freight Revenues		$	5,052	$	4,853	$	199		4

									Millions of Revenue Ton-Miles (RTM)
	9,111		8,775		336		4			- Grain		32,481		34,556		(2,075)		(6)
	5,860		4,814		1,046		22			- Coal		21,041		19,021		2,020		11
	4,899		4,963		(64)		(1)			- Sulphur and fertilizers		20,468		17,687		2,781		16
	1,176		1,344		(168)		(13)			- Forest products⁽¹⁾		4,960		5,091		(131)		(3)
	6,478		6,046		432		7			- Industrial and consumer products⁽¹⁾		24,122		22,143		1,979		9
	535		501		34		7			- Automotive		2,080		2,067		13		1
	6,025		6,440		(415)		(6)			- Intermodal		23,907		25,863		(1,956)		(8)

	34,084		32,883		1,201		4		Total RTMs			129,059		126,428		2,631		2

									Freight Revenue per RTM (cents)
	3.55		3.41		0.14		4			- Grain		3.39		3.28		0.11		3
	2.70		2.62		0.08		3			- Coal		2.64		2.58		0.06		2
	2.71		2.66		0.05		2			- Sulphur and fertilizers		2.68		2.69		(0.01)		-
	4.00		3.72		0.28		8			- Forest products⁽¹⁾		3.81		3.63		0.18		5
	4.45		3.97		0.48		12			- Industrial and consumer products⁽¹⁾		4.22		4.08		0.14		3
	17.57		14.97		2.60		17			- Automotive		16.25		15.29		0.96		6
	5.51		5.28		0.23		4			- Intermodal		5.45		5.21		0.24		5

	4.03		3.84		0.19		5		Total Freight Revenue per RTM			3.91		3.84		0.07		2

									Carloads (thousands)
	121		118		3		3			- Grain		450		467		(17)		(4)
	87		87		-		-			- Coal		313		341		(28)		(8)
	48		48		-		-			- Sulphur and fertilizers		199		177		22		12
	17		19		(2)		(11)			- Forest products		72		72		-		-
	114		102		12		12			- Industrial and consumer products		421		397		24		6
	39		34		5		15			- Automotive		145		137		8		6
	250		266		(16)		(6)			- Intermodal		997		1,070		(73)		(7)

	676		674		2		-		Total Carloads			2,597		2,661		(64)		(2)

									Freight Revenue per Carload
$	2,669	$	2,534	$	135		5			- Grain	$	2,444	$	2,430	$	14		1
	1,816		1,448		368		25			- Coal		1,776		1,440		336		23
	2,771		2,750		21		1			- Sulphur and fertilizers		2,759		2,684		75		3
	2,765		2,632		133		5			- Forest products		2,625		2,569		56		2
	2,526		2,353		173		7			- Industrial and consumer products		2,416		2,275		141		6
	2,410		2,206		204		9			- Automotive		2,331		2,307		24		1
	1,328		1,278		50		4			- Intermodal		1,307		1,260		47		4

$	2,034	$	1,872	$	162		9		Total Freight Revenue per Carload		$	1,945	$	1,824	$	121		7

(1) Certain prior period figures have been updated to reflect new information.


Summary of Rail Data (Page 3)

Fourth Quarter					Year
2011	2010 ⁽¹⁾	Fav/(Unfav)	%		2011	2010 ⁽¹⁾	Fav/(Unfav)	%

				Operations Performance

65,472	62,498	2,974	5	Freight gross ton-miles (millions)⁽²⁾	247,955	242,757	5,198	2
10,611	10,132	479	5	Train miles (thousands)	40,145	39,576	569	1
16,616	15,637	(979)	(6)	Average number of active employees - Total	16,097	15,460	(637)	(4)
14,459	13,918	(541)	(4)	Average number of active employees - Expense	14,169	13,879	(290)	(2)
16,428	15,250	(1,178)	(8)	Number of employees at end of period - Total	16,428	15,250	(1,178)	(8)
14,764	14,048	(716)	(5)	Number of employees at end of period - Expense	14,764	14,048	(716)	(5)
46.7	54.1	7.4	14	Average daily active cars on-line (thousands)	51.4	50.9	(0.5)	(1)
1,085	1,048	(37)	(4)	Average daily active road locomotives on-line	1,085	1,016	(69)	(7)
76.0	74.3	(1.7)	(2)	U.S. gallons of locomotive fuel consumed (millions)⁽³⁾	290.8	282.0	(8.8)	(3)
3.45	2.68	(0.77)	(29)	Average fuel price (U.S. dollars per U.S. gallon)	3.38	2.50	(0.88)	(35)

23.4	21.7	1.7	8	Average train speed - AAR definition (mph)	21.3	22.7	(1.4)	(6)
17.7	22.2	4.5	20	Average terminal dwell - AAR definition (hours)	19.9	21.4	1.5	7
183.5	152.7	30.8	20	Car miles per car day	160.1	159.4	0.7	-
1.17	1.20	0.03	3	Fuel efficiency⁽⁴⁾	1.18	1.17	(0.01)	(1)

6,587	6,559	28	-	Average train weight - excluding local traffic (tons)	6,593	6,519	74	1
5,654	5,652	2	-	Average train length - excluding local traffic (feet)	5,665	5,660	5	-
175.1	175.2	(0.1)	-	Locomotive productivity (daily average GTMs/active HP)	166.7	176.6	(9.9)	(6)
4.5	4.5	-	-	Employee productivity (million GTMs/expense employee)	17.5	17.5	-	-

1.75	1.80	0.05	3	FRA personal injuries per 200,000 employee-hours	1.86	1.67	(0.19)	(11)
1.38	1.27	(0.11)	(9)	FRA train accidents per million train-miles	1.85	1.65	(0.20)	(12)

1.69	1.59	(0.10)	(6)	Total operating expenses per GTM (cents)	1.70	1.59	(0.11)	(7)
				Operating expenses, less land sales and
1.63	1.63	-	-	the impact of fuel price, per GTM (cents)⁽⁵⁾	1.61	1.60	(0.01)	(1)

(1)	Certain prior period figures have been revised to conform with current presentation or have been updated to reflect new information.
(2)	Gross Ton-Miles (GTM) is the movement of the combined tons (freight car tare, inactive locomotive tare, and contents) a distance of one mile.
(3)	Includes gallons of fuel consumed from freight, yard and commuter service but excludes fuel used in capital projects and other non-freight activities.
(4)	Fuel efficiency is defined as U.S. gallons of locomotive fuel consumed per 1,000 GTMs - freight and yard.
(5)	Operating expenses, less land sales and the impact of fuel price, per GTM is calculated consistently with total operating expenses per GTM except for the exclusion of net gains on land sales and the fuel price impact, the latter to remove the volatility of fuel prices and to provide comparative fuel expenses at the 2010 fuel price. Net gains on land sales were $20 million and $22 million for the three months ended December 31, 2011 and 2010, respectively, and $25 million and $28 million for the year ended December 31, 2011 and 2010, respectively. The impact in fuel price was $58 million for the three months ended December 31, 2011 and $247 million for the year ended December 31, 2011.