CANADIAN PACIFIC RAILWAY LTD
     CANADIAN PACIFIC RAILWAY LTD ("CP-TN")
- (4/4) Second-quarter ResultsCredit risk-----------Credit risk refers to the possibility that a customer or counterpartywill fail to fulfil its obligations under a contract and as a result,create a financial loss for the Company. The Company's credit riskregarding its investment in ABCP are discussed in more detail inNote 10.Credit risk managementThe railway industry services predominantly financially establishedcustomers and the Company has experienced limited financial loss withrespect to credit risk. The credit worthiness of customers isassessed using credit scores supplied by a third party, and throughdirect monitoring of their financial well-being on a continual basis.The Company establishes guidelines for customer credit limits andshould thresholds in these areas be reached, appropriate precautionsare taken to improve collectibility. Pursuant to their respectiveterms, accounts receivable are aged as follows at June 30, 2008:(in millions)
Up to date $ 463.7
Under 30 days past due 81.0
30-60 days past due 22.3
61-90 days past due 8.6
Over 91 days past due 27.9
------------
$ 603.5
------------
------------Counterparties to financial instruments expose the Company to creditlosses in the event of non-performance. Counterparties for derivativeand cash transactions are limited to high credit quality financialinstitutions, which are monitored on an ongoing basis. Counterpartycredit assessments are based on the financial health of theinstitutions and their credit ratings from external agencies. Withexception of ABCP, the Company does not anticipate non-performancethat would materially impact the Company's financial statements.With the exception of ABCP, the Company believes there are nosignificant concentrations of credit risk. The maximum exposure tocredit risk can be taken from our financial assets values reported inthe table reconciling the carrying value positions of the Company'sfinancial instruments with Consolidated Balance Sheet categories andas discussed in Note 19 under guarantees.Liquidity risk--------------The Company monitors and manages its liquidity risk to ensure accessto sufficient funds to meet operational and investing requirements.Liquidity risk managementThe Company has long-term debt ratings of Baa3, BBB, and BBB fromMoody's Investors Service, Inc. ("Moody's"), Standard and Poor'sCorporation ("S&P"), and DBRS respectively. The S&P rating has anegative outlook, while the ratings of Moody's and DBRS have a stableoutlook. The Company intends to manage its capital structure andliquidity at levels that sustain an investment grade rating.The Company has a five year revolving credit facility of$945 million, with an accordion feature to $1.15 billion, of which$351 million was available on June 30, 2008.This facility is arranged with a core group of highly ratedinternational financial institutions and they incorporate pre-agreedpricing. The revolving credit facility is available on next dayterms.The Company plans to access both Canadian and U.S. capital markets tosecure long term financing for the temporary credit facility. Marketconditions allowing, the Company will access debt capital markets invarious maturities periodically prior to the expiry of the temporarycredit facility in order to minimize risk and optimize pricing. It isthe Company's intention to manage its long term financing structureto maintain its investment grade rating. The Company may decide toenter certain derivative instruments to reduce interest rate andforeign exchange exposure in advance of these issuances.Surplus cash is invested into a range of short dated money marketinstruments meeting or exceeding the parameters of the Company'sinvestment policy.The table below reflects the contractual maturity of the Company'sundiscounted cash flows for its financial liabilities andderivatives:(in millions) As at June 30, 2008
-------------------------------------------
2009-
2008 2011 2012+ Total
-------------------------------------------
Financial liabilities
Short-term borrowings $ 255.0 $ - $ - $ 255.0
Accounts payable and
accrued liabilities 782.9 42.6 - 825.5
Foreign exchange
contracts on fuel 0.7 1.3 - 2.0
Currency forward - 13.0 - 13.0
Long-term debt 32.5 1,193.9 3,642.4 4,868.8
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-------------------------------------------15 Additions to investments and other assetsAdditions to investment and other assets includes the acquisition oflocomotives and freight car assets of $57.4 million and$192.1 million for the three and six months ended June 30, 2008,respectively, (three and six months ended June 30, 2007 -$12.0 million). These assets were purchased in anticipation of a saleand lease back arrangement with a financial institution.16 Stock-based compensationIn 2008, under CP's stock option plans, the Company issued 1,360,400options to purchase Common Shares at the weighted average price of$71.59 per share, based on the closing price on the grant date. Intandem with these options, 425,650 stock appreciation rights wereissued at the weighted average exercise price of $71.54.Pursuant to the employee plan, options may be exercised upon vesting,which is between 24 months and 36 months after the grant date, andwill expire after 10 years. Some options vest after 48 months, unlesscertain performance targets are achieved, in which case vesting isaccelerated. These options expire five years after the grant date.Other options only vest if certain performance targets are achievedand expire approximately five years after the grant date.The following is a summary of the Company's fixed stock option plansas of June 30 (including options granted under the Directors' StockOption Plan, which was suspended in 2003):2008 2007
-------------------------- --------------------------
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
-------------------------- --------------------------
Outstanding,
January 1 6,981,108 43.97 6,815,494 $ 38.50
New options
granted 1,360,400 71.59 1,302,700 62.59
Exercised (493,460) 34.40 (811,856) 31.78
Forfeited/
cancelled (85,050) 47.09 (111,725) 39.38
------------ ------------
Outstanding,
June 30 7,762,998 49.39 7,194,613 $ 43.61
-------------------------- --------------------------
-------------------------- --------------------------
Options
exercisable
at June 30 4,637,348 38.33 4,239,713 $ 34.01
-------------------------- --------------------------
-------------------------- --------------------------Compensation expense is recognized over the vesting period for stockoptions issued since January 1, 2003, based on their estimated fairvalues on the date of grants, as determined by the Black-Scholesoption pricing model.Under the fair value method, the fair value of options at the grantdate was $14.1 million for options issued in the first six months of2008 (first six months of 2007 - $11.3 million). The weighted averagefair value assumptions were approximately:For the six months
ended June 30
2008 2007
-------------------------
Expected option life (years) 4.39 4.00
Risk-free interest rate 3.54% 3.90%
Expected stock price volatility 22% 22%
Expected annual dividends per share $ 0.99 $ 0.90
Weighted average fair value of options
granted during the year $ 15.12 $ 12.96
-------------------------
-------------------------17 Pensions and other benefitsThe total benefit cost for the Company's defined benefit pensionplans and post-retirement benefits for the three months endedJune 30, 2008, was $19.9 million (three months ended June 30, 2007 -$27.1 million) and for the six months ended June 30, 2008, was$39.0 million (six months ended June 30, 2007 - $54.5 million).
18 Significant customersDuring the first six months of 2008, one customer comprised 12.3% oftotal revenue (first six months of 2007 - 11.7%). At June 30, 2008,that same customer represented 5.4% of total accounts receivable(June 30, 2007 - 5.2%).
19 Commitments and contingenciesIn the normal course of its operations, the Company becomes involvedin various legal actions, including claims relating to injuries anddamages to property. The Company maintains provisions it considers tobe adequate for such actions. While the final outcome with respect toactions outstanding or pending at June 30, 2008, cannot be predictedwith certainty, it is the opinion of management that their resolutionwill not have a material adverse effect on the Company's financialposition or results of operations.During the quarter ended March 31, 2008, the Canadian TransportationAgency announced a Decision directing a downward adjustment of therailway maximum revenue entitlement for movement of regulated grainunder the Canada Transportation Act, for the period from August 1,2007 to July 31, 2008. The Company has applied to the Federal Courtof Appeal for leave to appeal the decision. A provision consideredadequate by management is maintained for the prospective adjustment.The retroactive component of the adjustment, which is estimated to be$23 million, is not considered to be legally supportable and as sucha provision has not been made.Capital commitmentsAt June 30, 2008, the Company had multi-year capital commitments of$566.5 million, mainly for locomotive overhaul agreements, in theform of signed contracts. Payments for these commitments are due in2008 through 2022.Operating lease commitmentsAt June 30, 2008, minimum payments under operating leases wereestimated at $707.7 million in aggregate, with annual payments ineach of the next five years of: 2008 - $71.1 million; 2009 -$114.5 million; 2010 - $92.6 million; 2011 - $81.9 million; 2012 -$76.8 million.GuaranteesAt June 30, 2008, the Company had residual value guarantees onoperating lease commitments of $246.9 million and certain guaranteesrelated to the Company's investment in the DM&E, which includeminimum lease payments of $58.5 million, residual value guarantees of$11.6 million, and a line of credit of US$25 million. The maximumamount that could be payable under these and all of the Company'sother guarantees cannot be reasonably estimated due to the nature ofcertain of the guarantees. All or a portion of amounts paid undercertain guarantees could be recoverable from other parties or throughinsurance. The Company has accrued for all guarantees that it expectsto pay. At June 30, 2008, these accruals amounted to $6.0 million.
20 Capital disclosuresThe Company's objectives when managing its capital are:- to maintain a flexible capital structure which optimizes the costof capital at acceptable risk while providing an appropriate
     return to its shareholders;- to manage capital in a manner which balances the interests ofequity and debt holders;- to manage capital in a manner that will maintain compliance withits financial covenants;- to manage its long term financing structure to maintain itsinvestment grade rating; and- to maintain a strong capital base so as to maintain investor,creditor and market confidence and to sustain future development
     of the business.The Company defines its capital as follows:- shareholders' equity;- long-term debt, including the current portion; and- short-term borrowing.The Company manages its capital structure and makes adjustments to itin accordance with the aforementioned objectives, as well as in thelight of changes in economic conditions and the risk characteristicsof the underlying assets. In order to maintain or adjust its capitalstructure, the Company may adjust the amount of dividends paid toshareholders, purchase shares for cancellation pursuant to normalcourse issuer bids, issue new shares, issue new debt, and/or issuenew debt to replace existing debt with different characteristics.The Company monitors capital using a number of key financial metrics,including:- net-debt to net-debt-plus-equity; and- interest coverage ratio: earnings before interest and taxes("EBIT") to interest expense.Both of these metrics have no standardized meanings prescribed byGAAP and, therefore, are unlikely to be comparable to similarmeasures of other companies.The calculations for the aforementioned key financial metrics are asfollows:Net-debt to net-debt-plus-equity--------------------------------Net debt, which is a non-GAAP measure, is the sum of long-term debt,long-term debt maturing within one year and short-term borrowing,less cash and short-term investments. This sum is divided by totalnet debt plus total shareholders' equity as presented on ourConsolidated Balance Sheet.Interest coverage ratio-----------------------EBIT, which is a non-GAAP measure that is calculated, on a twelvemonth rolling basis, as revenues less operating expenses, less changein estimated fair value of ABCP, other income and charges, and equityincome in DM&E, divided by interest expense.The following table illustrates the financial metrics and theircorresponding guidelines currently in place:---------------------------------------------------------------------
June 30, June 30,
(in millions) Guidelines 2008 2007
---------------------------------------------------------------------
Long-term debt $ 4,016.8 $ 3,046.6
Long-term debt maturing
within one year 238.4 30.6
Short-term borrowing 255.0 -
Less:
Cash and cash equivalents (80.9) (392.1)
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Net Debt(1) $ 4,429.3 $ 2,685.1
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Shareholders' equity $ 5,666.0 $ 4,978.5
Net debt 4,429.3 2,685.1
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Net Debt plus Equity(1) $ 10,095.3 $ 7,663.6
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Revenues less operating expenses $ 1,076.5 $ 1,156.2
Less:
ABCP (42.8) -
Other income and charges (28.2) (26.3)
Equity income in DM&E 36.7 -
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EBIT(1)(2) $ 1,042.2 $ 1,129.9
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---------------------------------------------------------------------
Net debt $ 4,429.3 $ 2,685.1
Net debt plus equity $ 10,095.3 $ 7,663.6
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Net-debt to Net-debt-
plus-equity(1) No more than 50.0% 43.9% 35.0%
---------------------------------------------------------------------
---------------------------------------------------------------------
EBIT $ 1,042.2 $ 1,129.9
Interest expense $ 231.1 $ 194.6
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Interest Coverage
Ratio(1)(2) No less than 4.0 4.5 5.8
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---------------------------------------------------------------------
(1) These earnings measures have no standardized meanings prescribed
by GAAP and, therefore, are unlikely to be comparable to similar
measures of other companies.
(2) The balance is calculated on a rolling twelve month basis.The Company's financial objectives and strategy as described abovehave remained substantially unchanged over the last two fiscal years.The objectives are reviewed on an annual basis and financial metricsand their guidelines are monitored on a quarterly basis. The Companybelieves that adherence to these guidelines increases its ability toaccess to capital at a reasonable cost and maintain credit ratings ofan investment grade. The Company believes that these ratios arewithin reasonable limits, in light of the relative size of theCompany and its capital management objectives.The Company is also subject to financial covenants in the bridgefinancing agreement obtained for the acquisition of DM&E and revolverloan agreements. Net-debt to net-debt-plus-equity and interestcoverage ratio are two financial metrics that provide indicators asto whether the Company will be in compliance with its financialcovenants. The Company is in compliance with all financial covenants.Summary of Rail Data
--------------------
Second Quarter
-------------------------------------------
2008 2007 Variance %
---------- ---------- ---------- ----------
Financial (millions, except
---------------------------
per share data and ratios)
--------------------------
Revenues
--------
Freight revenue $1,193.1 $1,174.1 $ 19.0 1.6
Other revenue 27.2 41.4 (14.2) (34.3)
---------- ---------- ----------
1,220.3 1,215.5 4.8 0.4
---------- ---------- ----------
Operating expenses
------------------
Compensation and benefits 315.5 329.8 (14.3) (4.3)
Fuel 260.3 193.7 66.6 34.4
Materials 56.5 55.6 0.9 1.6
Equipment rents 46.1 57.3 (11.2) (19.5)
Depreciation and amortization 124.7 119.1 5.6 4.7
Purchased services and other 166.1 152.3 13.8 9.1
---------- ---------- ----------
969.2 907.8 61.4 6.8
---------- ---------- ----------
Operating income 251.1 307.7 (56.6) (18.4)
Equity income (net of tax)
in Dakota, Minnesota &
Eastern Railroad
Corporation (DM&E) (13.4) - (13.4) -
Other charges 4.9 8.2 (3.3) (40.2)
Interest expense 62.9 49.2 13.7 27.8
Income tax expense before
foreign exchange (gains)
losses on long-term debt
and other specified items(1) 46.3 75.5 (29.2) (38.7)
---------- ---------- ----------
Income before foreign
exchange (gains) losses
on long-term debt and
other specified items(1) 150.4 174.8 (24.4) (14.0)
---------- ---------- ----------
Foreign exchange (gains) losses
-------------------------------
on long-term debt (FX on LTD)
-----------------------------
FX on LTD (6.8) (88.6) 81.8 -
Income tax on FX on LTD(2) 2.3 23.8 (21.5) -
---------- ---------- ----------
FX on LTD (net of tax) (4.5) (64.8) 60.3 -
Other specified items
---------------------
Change in estimated fair
value of Canadian third
party asset-backed
commercial paper (ABCP) - - - -
Income tax on special charges - - - -
---------- ---------- ----------
Change in estimated fair
value of ABCP (net of tax) - - - -
Income tax benefits due to
rate reductions on opening
future income tax balances - (17.1) 17.1 -
---------- ---------- ----------
Net income $ 154.9 $ 256.7 $ (101.8) (39.7)
---------- ---------- ----------
---------- ---------- ----------
Earnings per share (EPS)
------------------------
Basic earnings per share $ 1.01 $ 1.66 $ (0.65) (39.2)
Diluted earnings per share $ 1.00 $ 1.64 $ (0.64) (39.0)
EPS before FX on LTD and
------------------------
other specified items(1)
------------------------
Basic earnings per share $ 0.98 $ 1.13 $ (0.15) (13.3)
Diluted earnings per share $ 0.97 $ 1.12 $ (0.15) (13.4)
Weighted average (avg) number
of shares outstanding
(millions) 153.7 154.3 (0.6) (0.4)
Weighted avg number of
diluted shares outstanding
(millions) 155.1 156.1 (1.0) (0.6)
Operating ratio(1)(3)(%) 79.4 74.7 4.7 -
ROCE before FX on LTD and
other specified items
(after tax)(1)(3)(%) 9.2 10.3 (1.1) -
Net debt to net debt plus
equity (%) 43.9 35.0 8.9 -
EBIT before FX on LTD and
other specified items(1)(3)
(millions) $ 259.6 $ 299.5 $ (39.9) (13.3)
EBITDA before FX on LTD and
other specified items(1)(3)
(millions) $ 384.3 $ 418.6 $ (34.3) (8.2)

Year-to-date
-------------------------------------------
2008 2007 Variance %
---------- ---------- ---------- ----------
Financial (millions, except
---------------------------
per share data and ratios)
--------------------------
Revenues
--------
Freight revenue $2,317.5 $2,265.0 $ 52.5 2.3
Other revenue 49.7 66.4 (16.7) (25.2)
---------- ---------- ----------
2,367.2 2,331.4 35.8 1.5
---------- ---------- ----------
Operating expenses
------------------
Compensation and benefits 643.8 662.3 (18.5) (2.8)
Fuel 490.5 364.9 125.6 34.4
Materials 122.0 118.0 4.0 3.4
Equipment rents 92.0 112.8 (20.8) (18.4)
Depreciation and amortization 244.6 237.7 6.9 2.9
Purchased services and other 325.0 298.7 26.3 8.8
---------- ---------- ----------
1,917.9 1,794.4 123.5 6.9
---------- ---------- ----------
Operating income 449.3 537.0 (87.7) (16.3)
Equity income (net of tax)
in Dakota, Minnesota &
Eastern Railroad
Corporation (DM&E) (24.4) - (24.4) -
Other charges 11.6 13.0 (1.4) (10.8)
Interest expense 122.8 96.0 26.8 27.9
Income tax expense before
foreign exchange (gains)
losses on long-term debt
and other specified items(1) 72.5 130.6 (58.1) (44.5)
---------- ---------- ----------
Income before foreign
exchange (gains) losses
on long-term debt and
other specified items(1) 266.8 297.4 (30.6) (10.3)
---------- ---------- ----------
Foreign exchange (gains) losses
-------------------------------
on long-term debt (FX on LTD)
-----------------------------
FX on LTD 9.5 (97.2) 106.7 -
Income tax on FX on LTD(2) (3.4) 26.4 (29.8) -
---------- ---------- ----------
FX on LTD (net of tax) 6.1 (70.8) 76.9 -
Other specified items
---------------------
Change in estimated fair
value of Canadian third
party asset-backed
commercial paper (ABCP) 21.3 - 21.3 -
Income tax on special charges (6.3) - (6.3) -
---------- ---------- ----------
Change in estimated fair
value of ABCP (net of tax) 15.0 - 15.0 -
Income tax benefits due to
rate reductions on opening
future income tax balances - (17.1) 17.1 -
---------- ---------- ----------
Net income $ 245.7 $ 385.3 $ (139.6) (36.2)
---------- ---------- ----------
---------- ---------- ----------
Earnings per share (EPS)
------------------------
Basic earnings per share $ 1.60 $ 2.49 $ (0.89) (35.7)
Diluted earnings per share $ 1.59 $ 2.46 $ (0.87) (35.4)
EPS before FX on LTD and
------------------------
other specified items(1)
------------------------
Basic earnings per share $ 1.74 $ 1.92 $ (0.18) (9.4)
Diluted earnings per share $ 1.72 $ 1.90 $ (0.18) (9.5)
Weighted average (avg) number
of shares outstanding
(millions) 153.6 154.9 (1.3) (0.8)
Weighted avg number of
diluted shares outstanding
(millions) 155.0 156.4 (1.4) (0.9)
Operating ratio(1)(3)(%) 81.0 77.0 4.0 -
ROCE before FX on LTD and
other specified items
(after tax)(1)(3)(%) 9.2 10.3 (1.1) -
Net debt to net debt plus
equity (%) 43.9 35.0 8.9 -
EBIT before FX on LTD and
other specified items(1)(3)
(millions) $ 462.1 $ 524.0 $ (61.9) (11.8)
EBITDA before FX on LTD and
other specified items(1)(3)
(millions) $ 706.7 $ 761.7 $ (55.0) (7.2)
(1) 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 attached to commentary.
(2) Income tax on FX on LTD is discussed in the MD&A in the "Other Income
Statement Items" section - "Income Taxes".
(3) EBIT: Earnings before interest and taxes.
EBITDA: Earnings before interest, taxes, and depreciation
and amortization.
ROCE (after tax): Return on capital employed (after tax)
= earnings before after-tax interest
expense (last 12 months) divided by average net
debt plus equity.
Operating ratio: Operating expenses divided by revenues.

Second Quarter
-------------------------------------------
2008 2007 Variance %
---------- ---------- ---------- ----------
Commodity Data
--------------
Freight Revenues (millions)
- Grain $ 203.0 $ 224.0 $ (21.0) (9.4)
- Coal 172.4 162.4 10.0 6.2
- Sulphur and fertilizers 137.9 144.5 (6.6) (4.6)
- Forest products 58.4 74.3 (15.9) (21.4)
- Industrial and consumer
products 185.3 158.8 26.5 16.7
- Automotive 86.7 88.5 (1.8) (2.0)
- Intermodal 349.4 321.6 27.8 8.6
---------- ---------- ----------
Total Freight Revenues $1,193.1 $1,174.1 $ 19.0 1.6
---------- ---------- ----------
Millions of Revenue
Ton-Miles (RTM)
- Grain 6,775 7,309 (534) (7.3)
- Coal 6,118 5,834 284 4.9
- Sulphur and fertilizers 5,552 6,106 (554) (9.1)
- Forest products 1,438 2,019 (581) (28.8)
- Industrial and consumer
products 4,655 4,177 478 11.4
- Automotive 645 659 (14) (2.1)
- Intermodal 7,296 7,424 (128) (1.7)
---------- ---------- ----------
Total RTMs 32,479 33,528 (1,049) (3.1)
---------- ---------- ----------
Freight Revenue per RTM
(cents)
- Grain 3.00 3.06 (0.06) (2.0)
- Coal 2.82 2.78 0.04 1.4
- Sulphur and fertilizers 2.48 2.37 0.11 4.6
- Forest products 4.06 3.68 0.38 10.3
- Industrial and consumer
products 3.98 3.80 0.18 4.7
- Automotive 13.44 13.43 0.01 0.1
- Intermodal 4.79 4.33 0.46 10.6
Freight Revenue per RTM 3.67 3.50 0.17 4.9
Carloads (thousands)
- Grain 87.7 91.2 (3.5) (3.8)
- Coal 77.2 75.0 2.2 2.9
- Sulphur and fertilizers 53.4 61.3 (7.9) (12.9)
- Forest products 23.1 29.9 (6.8) (22.7)
- Industrial and consumer
products 86.4 79.2 7.2 9.1
- Automotive 40.1 45.7 (5.6) (12.3)
- Intermodal 315.1 311.9 3.2 1.0
---------- ---------- ----------
Total Carloads 683.0 694.2 (11.2) (1.6)
---------- ---------- ----------
Freight Revenue per Carload
- Grain $ 2,315 $ 2,456 $ (141) (5.7)
- Coal 2,233 2,165 68 3.1
- Sulphur and fertilizers 2,582 2,357 225 9.5
- Forest products 2,528 2,485 43 1.7
- Industrial and consumer
products 2,145 2,005 140 7.0
- Automotive 2,162 1,937 225 11.6
- Intermodal 1,109 1,031 78 7.6
Freight Revenue per Carload $ 1,747 $ 1,691 $ 56 3.3

Year-to-date
-------------------------------------------
2008 2007 Variance %
---------- ---------- ---------- ----------
Commodity Data
--------------
Freight Revenues (millions)
- Grain $ 435.4 $ 443.6 $ (8.2) (1.8)
- Coal 312.5 293.7 18.8 6.4
- Sulphur and fertilizers 268.6 266.9 1.7 0.6
- Forest products 116.4 146.3 (29.9) (20.4)
- Industrial and consumer
products 352.7 310.7 42.0 13.5
- Automotive 158.8 170.6 (11.8) (6.9)
- Intermodal 673.1 633.2 39.9 6.3
---------- ---------- ----------
Total Freight Revenues $2,317.5 $2,265.0 $ 52.5 2.3
---------- ---------- ----------
Millions of Revenue
Ton-Miles (RTM)
- Grain 14,273 14,793 (520) (3.5)
- Coal 11,204 10,417 787 7.6
- Sulphur and fertilizers 10,982 11,090 (108) (1.0)
- Forest products 2,963 4,019 (1,056) (26.3)
- Industrial and consumer
products 9,142 8,310 832 10.0
- Automotive 1,193 1,284 (91) (7.1)
- Intermodal 14,264 14,350 (86) (0.6)
---------- ---------- ----------
Total RTMs 64,021 64,263 (242) (0.4)
---------- ---------- ----------
Freight Revenue per RTM
(cents)
- Grain 3.05 3.00 0.05 1.7
- Coal 2.79 2.82 (0.03) (1.1)
- Sulphur and fertilizers 2.45 2.41 0.04 1.7
- Forest products 3.93 3.64 0.29 8.0
- Industrial and consumer
products 3.86 3.74 0.12 3.2
- Automotive 13.31 13.29 0.02 0.2
- Intermodal 4.72 4.41 0.31 7.0
Freight Revenue per RTM 3.62 3.52 0.10 2.8
Carloads (thousands)
- Grain 180.0 180.5 (0.5) (0.3)
- Coal 142.0 133.5 8.5 6.4
- Sulphur and fertilizers 105.7 111.5 (5.8) (5.2)
- Forest products 47.6 60.0 (12.4) (20.7)
- Industrial and consumer
products 167.3 154.9 12.4 8.0
- Automotive 76.4 88.1 (11.7) (13.3)
- Intermodal 611.8 599.5 12.3 2.1
---------- ---------- ----------
Total Carloads 1,330.8 1,328.0 2.8 0.2
---------- ---------- ----------
Freight Revenue per Carload
- Grain $ 2,419 $ 2,458 $ (39) (1.6)
- Coal 2,201 2,200 1 -
- Sulphur and fertilizers 2,541 2,394 147 6.1
- Forest products 2,445 2,438 7 0.3
- Industrial and consumer
products 2,108 2,006 102 5.1
- Automotive 2,079 1,936 143 7.4
- Intermodal 1,100 1,056 44 4.2
Freight Revenue per Carload $ 1,741 $ 1,706 $ 35 2.1

Second Quarter
-------------------------------------------
2008 2007 Variance %
---------- ---------- ---------- ----------
Operations and Productivity
---------------------------
Freight gross ton-miles
(GTM) (millions) 62,397 64,481 (2,084) (3.2)
Revenue ton-miles (RTM)
(millions) 32,479 33,528 (1,049) (3.1)
Average number of active
employees 16,223 15,878 345 2.2
Number of employees at end
of period 16,407 15,720 687 4.4


FRA personal injuries per
200,000 employee-hours(1) 1.11 2.09 (0.98) (46.9)
FRA train accidents per
million train-miles(1) 1.11 2.11 (1.00) (47.4)


Total operating expenses
per RTM (cents) 2.98 2.71 0.27 10.0
Total operating expenses
per GTM (cents) 1.55 1.41 0.14 9.9
Compensation and benefits
expense per GTM (cents) 0.51 0.51 - -
GTMs per average active
employee (000) 3,846 4,061 (215) (5.3)
Miles of road operated at
end of period(2) 13,199 13,260 (61) (0.5)
Average train speed - AAR
definition (mph) 24.1 23.5 0.6 2.6
Terminal dwell time - AAR
definition (hours) 21.6 21.7 (0.1) (0.5)
Car miles per car day 147.3 147.5 (0.2) (0.1)
Average daily total cars
on-line - AAR definition (000) 83.7 81.5 2.2 2.7
Average daily active cars
on-line (000) 55.7 59.0 (3.3) (5.6)
U.S. gallons of locomotive
fuel per 1,000 GTMs -
freight & yard 1.19 1.19 - -
U.S. gallons of locomotive
fuel consumed - total
(millions)(3) 73.6 76.8 (3.2) (4.2)
Average foreign exchange
rate (US$/Canadian$) 0.991 0.901 0.090 10.0
Average foreign exchange
rate (Canadian$/US$) 1.009 1.111 (0.102) (9.2)

Year-to-date
-------------------------------------------
2008 2007 Variance %
---------- ---------- ---------- ----------
Operations and Productivity
---------------------------
Freight gross ton-miles
(GTM) (millions) 122,258 122,041 217 0.2
Revenue ton-miles (RTM)
(millions) 64,021 64,263 (242) (0.4)
Average number of active
employees 15,648 15,381 267 1.7
Number of employees at end
of period 16,407 15,720 687 4.4


FRA personal injuries per
200,000 employee-hours(1) 1.25 1.95 (0.70) (35.9)
FRA train accidents per
million train-miles(1) 1.65 2.06 (0.41) (19.9)


Total operating expenses
per RTM (cents) 3.00 2.79 0.21 7.5
Total operating expenses
per GTM (cents) 1.57 1.47 0.10 6.8
Compensation and benefits
expense per GTM (cents) 0.53 0.54 (0.01) (1.9)
GTMs per average active
employee (000) 7,813 7,935 (122) (1.5)
Miles of road operated at
end of period(2) 13,199 13,260 (61) (0.5)
Average train speed - AAR
definition (mph) 23.7 23.3 0.4 1.7
Terminal dwell time - AAR
definition (hours) 22.8 22.8 - -
Car miles per car day 142.7 141.0 1.7 1.2
Average daily total cars
on-line - AAR definition (000) 83.2 81.4 1.8 2.2
Average daily active cars
on-line (000) 56.4 59.0 (2.6) (4.4)
U.S. gallons of locomotive
fuel per 1,000 GTMs -
freight & yard 1.24 1.22 0.02 1.6
U.S. gallons of locomotive
fuel consumed - total
(millions)(3) 149.9 149.1 0.8 0.5
Average foreign exchange
rate (US$/Canadian$) 0.999 0.877 0.122 13.9
Average foreign exchange
rate (Canadian$/US$) 1.001 1.141 (0.140) (12.3)
(1) Certain prior period figures have been revised to conform with
current presentation or have been updated to reflect new information.
(2) Excludes track on which CP has haulage rights.
(3) Includes gallons of fuel consumed from freight, yard and commuter
service but excludes fuel used in capital projects and other non-
freight activities.TSX closing price for CP
Date: 2008/07/21
Closing Price: 66.630____________________________________________________________
(c)2008 Market News Publishing Inc. All rights reserved.
Toronto:(416)366-8881 Vancouver:(604)689-1101 Fax:(604)689-1106


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