Event Brief of Q3 2003 Canadian Pacific Railway Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Robert Ritchie, Canadian Pacific Railway Limited, President & CEO

. Michael Waites, Canadian Pacific Railway Limited, EVP & CFO . Edwin Dodge, Canadian Pacific Railway Limited, EVP & COO . Fred Green, Canadian Pacific Railway Limited, SVP, Marketing & Sales

OVERVIEW

CP had record setting workloads for 3Q03 while carrying out an increased track maintenance work program. CP grew its business over 5%. CP is making excellent progress in train productivity. The co. is undertaking heavy preparation work to get ready for the expected tonnages in 4Q03. Q&A Focus: Intermodal, Vancouver, headcount.

FINANCIAL DATA

A. Key Data From Call 1. 3Q03 total revenue = $904m. 2. 3Q03 adjusted net income = $99m.

PRESENTATION SUMMARY

S1. Opening Comments (R.R) 1. Call Details: 1. CP is using Canadian dollars and Canadian GAAP. 2. There are some non-GAAP EPS references.

2. 3Q03 Highlights: 1. CP grew its business over 5%. 2. The growth was driven by: 1. The strength in Canadian and US grain movement. 2. Continued strength in export products to China.

3. Strong demand for Sulphur globally. 4. Continued strength in the co.'s intermodal business driven the new competitor service from Vancouver to Chicago and the US Midwest. 3. CP established employee productivity gain of almost 5%. 1. The co. is undertaking heavy preparation work to get ready for the expected tonnages in 4Q03. 2. The co. had a heavier than usual engineering program.

3. The co. has hired and trained over 200 new train-operating

employees. 4. The co. successfully managed a seven-week strike by its traffic controllers. 1. The strike lasted to July until a satisfactory agreement was reached in August. 3. 3Q03 Challenges:

1. 13% appreciation in the Canadian dollar. 1. The impact on operating income was $17m. 2. The impact on operating ratio was 40 BP. 2. Fuel prices remained high averaging $31 WTI, over $4 higher than 3Q02. 3. Forest fires in the West. 4. Electrical blackouts in the East. 4. 3Q03 Financial Highlights:

1. Reported EPS was up $0.18. 2. After a foreign exchange (FX) losses on long-term debt, the co. came in at $0.62 per share down, down $0.06 vs. 3Q02. 1. Almost all of the decline was due to FX. 3. CP's business grew 5%, which would have been $0.20 net of FX. 4. The co. incurred additional cost to handle the new volume

offsetting the gain by $0.06 per share. 1. Inflation and higher operating expenses because of the aggressive program. 5. Additional training of the new crews cost the co. $0.04. 6. CP brought increased revenues down to the operating income line.

7. Other revenues were up by $7m or $0.02 per share. 8. Depreciation as predicted has been $0.04 higher interest and others off $0.02 as CP took advantage of the lower interest rates and increased its US debts to provide more of a hedge on a rising Canadian dollar. 9. At this point, EPS was roughly equivalent to the prior year. 10. Fuel prices and FX as the major remaining cost of decline.

1. Increases in fuel price cost the co. $0.03. 2. FX cost the co. the remaining $0.05.

S2. Marketing & Sales (F.G.) 1. 3Q03 Revenue Side: 1. Freight volumes in revenue adjusted for FX were up 5% vs. 3Q02. 2. Total FX impact on 3Q03 freight revenues was negative $51m. 2. 3Q03 Major Developments: 1. The recovery, which the co. predicted in its 2Q03 outlook has begun. 2. Grain was up 15%, reflecting a stronger Canadian crop and good demand for grain from the co.'s US origin. 3. Sulphur and fertilizers were up 10% due to strong offshore market. 4. Coal was flat through 3Q03, but it ramped up at the quarter end. 5. Merchandise as a group, including forest, industrial products, and automotive, was down vs. 2002 mainly due to automotive. 1. Summer shutdowns due to power outage at Kansas City. 2. QoverQ impact of the closure of (Indiscernible) contributed to the decrease. 3. Forest products, despite the fires in DC and the strong Canadian dollar held their own. 4. Industrial products group was up almost 2%, the strength

coming in energy, chemicals, and plastic sectors. 6. Intermodal contributed solid growth. 1. Domestic side grew on good retail, food, and consumer demand. 2. International was a West Coast story, the co. has successfully established its Vancouver to Chicago service and it continues to grow this line. 7. Intermodal sector posted 7% increase, 11th consecutive QoverQ growth. 3. Yield Management: 1. FX of $51m was the primary drag on the co.'s revenue per revenue ton-miles (RTM) results. 2. Same-store price was on plan, 1.2% for 3Q03. 3. Fuel surcharges generated an additional $7m for 3Q03. 4. In terms of mix, over 12% volume increase in lower revenue per RTM bulk market. 5. The dip in higher-rated automotive had dampening affect on the co.'s overall unit rates.

6. Overall, the co.'s yield program is on track to exceed its

goal of 1% for the year. 4. YTD Revenues: 1. Overall, freight revenues had been impacted by FX to the tune of $108m. 2. Grain, fertilizers, industrial products, and intermodal are up

over last year. 3. The others are flat or down only slightly.

4. The overall growth in freight business YTD was 4%, which was

in line with the co.'s annualized expectation. 5. 4Q03 Outlook:

1. Update on grain model: 1. In Canada, estimates from the industry have the crop coming in around 88% of the normal crop, just short of the 90% the co. anticipated at the 2Q03 call. 2. Export outlook of about 22m metric tonnes is supported by a consistent quality crop. 3. Production for the US wheat and corn areas is likely to past last year's levels. 4. Soybeans appeared to be at similar levels. 5. The co.'s model suggests, the Canadian and the US originated volumes combined will be up sharply in 4Q03 exceeding 30%. 6. 1Q04 and 2Q04 also look robust. 2. 4Q03 outlook model:

1. CP anticipates something in the range of 15-20% QoverQ improvement.

2. Expects continued strong market potash and sulphur, anticipates growing greater than 5%. 3. On merchandize side, CP sees mixed signals. 1. Industrial products activity has been improving through

2H. 2. Forest products model looks positive in 4Q03. 4. Automotive consistent with the co.'s previous guidance, CP expects to be under its extraordinary 4Q02. 1. Sales continue to soften. 2. Production shutdowns are occurring. 5. Intermodal, CP expects to see import slowdown somewhat. 1. Continued strength on the domestic side should assist total intermodal to deliver high single-digit growth for 4Q03. 6. The co. anticipates getting its 4% growth target before FX impacts.

S3. 3Q03 Operations (E. D.) 1. Review: 1. CP had record setting workloads for 3Q03 while carrying out an increased track maintenance work program. 2. With the work programs complete, CP expects an even stronger 4Q03. 2. Safety: 1. Safety …