2008 corporate profile + fact book

2008 corporate profile + fact book

table of contents

4 Financial summary 44 Integrated Operating Plan (IOP) 6 Key metrics 45 Interline management 10 System map (density) 46 Co-production 11 Corporate history 48 Information technology 12 Recent acquisition: DM&E 49 Safety 13 Company overview 51 Environment 14 Network 55 Community relations 17 Markets 57 Human resources i. Bulk 58 Labour relations ii. Merchandise iii. Intermodal 61 Governance 36 Canadian Pacific Logistics Solutions (CPLS) 63 Executive profiles 37 Motive power 65 Board of Directors 38 Freight car fleet 66 Financial data 40 Rail yards and intermodal terminals 70 Glossary 42 Repair facilities

TSX / NYSE | CP forward-looking information

This Corporate Profile and Fact Book contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (United States) and other relevant securities legislation relating but not limited to Canadian Pacific’s (CP) operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes.

Readers are cautioned to not place undue reliance on forward-looking information because it is possible that we will not achieve predictions, forecasts, projections and other forms of forward-looking information. In addition, except as required by law, we undertake no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.

By its nature, our forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general global economic and business conditions; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demands; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of litigation; labour disputes; risks and liabilities arising from derailments; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions on the financial position of pension plans and liquidity of investments; various events that could disrupt operations, including severe weather conditions and security threats and governmental response to them and technological changes.

The performance of the North American and global economies remains uncertain. Factors over which CP has no control, such as weather conditions and insect populations, affect crop production and yield in CP’s grain collection areas. Fuel prices also remain uncertain, as they are influenced by many factors, including worldwide oil demand, international politics and the ability of major oil-producing countries to comply with agreed-upon production quotas.

2 | 2008 corporate profile & fact book The sustainability of recent increases in the value of the Canadian dollar relative to the U.S. dollar is unpredictable, as the value of the Canadian dollar is affected by a number of domestic and international factors, including, among other things, economic performance and government monetary policy.

There is also uncertainty with respect to security issues involving the movement of goods in populous areas of the U.S. and Canada and the protection of North America’s rail infrastructure, including the movement of goods across the Canada-U.S. border.

The commercial aspects of CP’s railway operations in the U.S. are subject to regulation by the Surface Transportation Board (“STB”). The STB has published new rules for the imposition of fuel surcharges and has promulgated proposed new rules for the handling of disputes by small and medium shippers. It is too early to assess the possible impact on CP of such new rules and any rules or regulation that might be forthcoming as a result of current STB reviews.

In Canada, legislation amending the Canada Transportation Act (“CTA”) was passed and is now in effect as law in Bill C-11 and Bill C-8. These amendments include, but are not limited to, amendments concerning the grain revenue cap, commuter and passenger access, final offer arbitration, charges for ancillary services, and railway noise. The grain revenue cap is a cap imposed by Canadian federal law on the amount of revenue we may earn for the transportation of certain grain from western Canada to Vancouver for export or to Thunder Bay. No assurance can be given as to the effect on CP of the provisions of Bill C-11 or C-8 ro as to the content, timing or effect on CP of any anticipated additional legislation.

Other factors relevant to forward-looking statements are contained in CP’s annual and interim Management’s Discussion and Analysis and other documents and press releases filed with or provided by CP to securities regulatory authorities in Canada and the U.S. from time to time.

2008 corporate profile & fact book | 3 financial - five-year summary

2003 2004 2005 2006 2007 ($ millions) Total revenues 3,660.7 3,902.9 4,391.6 4,583.2 4,707.6 Total operating expenses 2,933.6 3,116.3 3,390.1 3,454.6 3,543.4 Operating income (excl other specified items) (1) 727.1 786.6 1,001.5 1,128.6 1,164.2 Adjusted income (excl FX on LTD and other specified 327.9 359.5 528.4 627.5 672.8 items) (1) Net income 399.1 411.1 543.0 796.3 946.2

(dollars) EPS (excl FX on LTD and other specified items) (1) Basic 2.07 2.27 3.34 3.99 4.37 Diluted 2.06 2.26 3.30 3.95 4.32

EPS Basic 2.52 2.59 3.43 5.06 6.14 Diluted 2.51 2.58 3.39 5.02 6.08

Weighted average number of diluted shares 159.0 159.3 160.1 158.8 155.6 (millions)

Operating ratio (percentage) 80.1 79.8 77.2 75.4 75.3 ROCE (after tax) (percentage) 7.2 7.3 9.4 10.2 9.5 Net debt to net debt + equity ratio (percentage) 46.9 43.0 39.6 37.2 42.5 EBIT ($ millions) 693.6 750.5 983.4 1,100.8 1,146.9 EBITDA ($ millions) 1,065.9 1,157.6 1,428.5 1,564.9 1,618.9 Average foreign exchange rate (Canadian$/US$) 1.413 1.304 1.212 1.130 1.081 Average foreign exchange rate (US$/Canadian$) 0.708 0.767 0.825 0.885 0.925

(1) These earnings measures have no standardized meanings prescribed by GAAP and may not be comparable to similar measures of other companies.

4 | 2008 corporate profile & fact book key graphs

FREE CASH FLOW ($ millions)

303.4 244.9

92.0 38.2 -475.4 2003 2004 2005 2006 2007

CAPITAL EXPENDITURES ($ millions)

884.4 893.2 793.7 686.6 673.8

2003 2004 2005 2006 2007

DIVIDENDS / SHARE (dollars) 0.90 0.75

0.58 0.51 0.52

2003 2004 2005 2006 2007

2008 corporate profile & fact book | 5 key metrics - five-year summary

2003 2004 2005 2006 2007

Gross ton-miles (GTM) (millions) 221,884 236,451 242,100 236,405 246,322 Revenue ton-miles (RTM) (millions) 114,599 123,627 125,303 122,874 129,352 Freight revenue per RTM (cents) 3.08 3.06 3.40 3.60 3.52 Number of active employees at end of year 15,645 15,637 16,295 15,327 15,382 Average number of active employees 16,126 16,056 16,448 15,947 15,675 Miles of road operated at end of year (1) 13,848 13,817 13,693 13,260 13,199 GTMs per average active employee (thousands) 13,759 14,727 14,719 14,824 15,714 GTMs per mile of road operated (1) (thousands) 16,023 17,113 17,681 17,828 18,662 U.S. gallons of locomotive fuel per 1,000 GTMs 1.24 1.20 1.18 1.20 1.21 Average fuel price (U.S.$ per U.S. gallon) 1.01 1.20 1.70 2.03 2.32 WTI (U.S. $/bbl - average lagged 1 month, unhedged) 30.81 40.48 55.21 66.00 69.87 U.S. gallons of locomotive fuel consumed - total (2) 275.4 282.8 285.4 283.4 296.7

(1) Excludes track on which CP has haulage rights. (2) Includes gallons of fuel from freight, yard and commuter service but excludes fuel used in capital projects and other non-freight activities.

6 | 2008 corporate profile & fact book key graphs

AVERAGE TRAIN SPEED (mph) - AAR(1) definintion 24.8 23.2 22.7 22.7 22.0

2003 2004 2005 2006 2007

AVERAGE TERMINAL DWELL (hours) - AAR definition

24.9 25.8 22.2 20.8

N/A

2003 2004 2005 2006 2007

CAR MILES / CAR DAY

142.3 137.3 119.0 124.0

N/A

2003 2004 2005 2006 2007

(1) AAR = Association of American Railroads 2008 corporate profile & fact book | 7 8 | 2008 corporate profile & fact book our vision is to be the safest, most fluid railway in north america

our company

Canadian Pacific Railway Limited, through its subsidiaries, operates a transcontinental railway in Canada and the United States and provides logistics and supply chain expertise. CP provides rail and intermodal transportation services over a network of approximately 13,200 miles, serving the principal business centres of Canada from Montreal, Quebec to Vancouver, British Columbia and the U.S. Northeast and Midwest regions. CP’s railway feeds directly into the U.S. heartland from the east and west coasts. Agreements with other carriers extend CP’s market reach east of Montreal in Canada, throughout the U.S. and into Mexico. CP transports bulk commodities, merchandise freight and intermodal traffic. Bulk commodities include grain, coal, sulphur and fertilizers. Merchandise freight consists of finished vehicles and automotive parts, as well as forest and industrial and consumer products. Intermodal traffic consists largely of high-value, time-sensitive retail goods in overseas containers that can be transported by train, ship and truck, and in domestic containers and trailers that can be moved by train and truck.

CP earned $4.6 billion in freight revenues in 2007. corporate strategy

Through the ingenuity of our people, it is our objective to create long-term value for customers, shareholders and employees by profitably expanding the reach of our rail franchise. We seek to accomplish this objective through the following three-part strategy:

· generating quality revenue growth by realizing the benefits of demand growth in our bulk, intermodal and merchandise business lines with targeted infrastructure capacity investments linked to global trade opportunities; · improving productivity by leveraging strategic marketing and operating partnerships, executing a scheduled railway through our Integrated Operating Plan (“IOP”) and driving more value from existing assets and resources by improving “fluidity”; and · continuing to develop a dedicated, professional and knowledgeable workforce that is committed to safety and sustainable financial performance through steady improvement in profitability, increased free cash flow and a competitive return on investment.

2008 corporate profile & fact book | 9 core network map

Edmonton

Saskatoon Calgary Winnipeg Vancouver Regina Thunder Bay Sudbury Duluth Montreal Minneapolis/St. Paul Toronto Albany Rapid City Detroit

Chicago New York Philadelphia Kansas City

Canadian Pacific main line

Principal haulage or trackage rights Dakota, Minnesota & Eastern Railroad (DM&E) Iowa, Chicago & Eastern Railroad (IC&E)

10 | 2008 corporate profile & fact book corporate history

The Canadian Pacific Railway Company was incorporated on February 16, 1881, with George Stephen as its first president. On November 7, 1885, construction gangs from the east and west met at Craigellachie, B.C., where Canadian Pacific’s senior director, Donald A. Smith, drove the last spike to forever link the country together as a nation.

Throughout the remainder of the 19th century and through the first half of the 20th century, the company expanded into a wide range of businesses that included land settlement and land sales, trucking, forest products, mining, Great Lakes and ocean shipping, hotels and airlines.

In 1971, Canadian Pacific Railway became Canadian Pacific Limited and operated in Canada and internationally both directly and through subsidiaries in two main business sectors – transportation and energy. By 1986, Canadian Pacific Limited, of which Canadian Pacific Railway was one of five subsidiaries, was Canada’s second largest company.

CP expanded its rail network in 1990, taking full control of the Soo Line Corporation in the U.S. Midwest – a company in which CP had had a majority interest since the 1890s. In 1991, CP bought the historic Delaware and Hudson Railway thus giving CP access to ports in the U.S. Northeast.

On September 26, 2001, Canadian Pacific Railway, through the spin-off of the five Canadian Pacific Limited subsidiary companies once again became a fully independent, public company with shares trading on the major stock exchanges in Toronto and New York. recent acquisitions

On October 4, 2007, Canadian Pacific purchased the Dakota Minnesota & Eastern Railroad (“DM&E”), Iowa Chicago & Eastern Railroad (“IC&E”) and Cedar American Rail Holdings (“Cedar American”) for US$1.48 billion. The DM&E and IC&E are high- quality, growing U.S. regional railroads that complement CP’s existing franchise. The acquisition provides a strategic end-to-end network fit that will extend CP’s network reach and increase operational efficiency, while also keeping safety at the forefront of operations. This investment presents opportunities for future growth through further expansion of CP’s network and is accretive to CP’s EPS in 2008.

The DM&E, along with the IC&E, is the largest regional railroad in the U.S. and the only Class II railroad that connects and interchanges traffic with all seven Class I railroads, connecting with Canadian Pacific at Minneapolis and Winona, Minnesota, and Chicago, Illinois. DM&E and IC&E had 2007 freight revenues of approximately US$300 million, and is expected to see double-digit growth in 2008. The DM&E and IC&E are headquartered in Sioux Falls, South Dakota, and have approximately 1,000 employees, 2,500 miles of track, and rolling stock that includes 7,200 rail cars and 150 locomotives.

This acquisition provides CP a tremendous opportunity to collaborate with a high-quality and rapidly-growing regional railroad. In turn, DM&E and IC&E have the opportunity to partner with an industry safety leader. By combining an entrepreneurial spirit with a reputable safety record, CP, DM&E and IC&E can create long-term value for customers and shareholders by profitably growing a safety-focused rail company.

12 | 2008 corporate profile & fact book overview

Canadian Pacific is one of Canada’s oldest corporations and was North America’s first coast-to-coast transcontinental railway. From its inception over 125 years ago, CP has developed into a technologically-advanced Class I railway, providing rail and intermodal freight transportation services over a network serving the principal business centres of Canada, the U.S. Midwest and the U.S. Northeast.

CP’s rail assets consist of the Canadian railway division, CP, and its U.S. rail assets operated by two wholly-owned indirect subsidiaries, Soo Line Railroad Company (“Soo Line”, a Class I railway operating in the U.S. Midwest) and Delaware and Hudson Railway Company, Inc. (“D&H”, which operates via owned track and haulage and trackage rights agreements between eastern Canada and major U.S. Northeast markets in New York, Pennsylvania, and Washington, D.C.).

Canadian Pacific’s business is based on funneling traffic from strategic network feeders and connectors onto its high-density, high-quality mainline network. CP has further extended its network reach by establishing alliances and connections with other major Class I railroads in North America. This allows CP to provide competitive product offerings and access to markets across North America including Mexico and, via the Port of Montreal in Quebec and the Port of Vancouver in British Columbia, to markets in Europe and the Pacific Rim, respectively.

In the east, CP provides a key link between the Port of Montreal and the U.S. Midwest.

In conjunction with international container shipping lines, CP is an integral part of one of the shortest routes for transporting container traffic between Europe and the U.S. Midwest.

CP holds a significant market position in the transportation of western Canadian bulk commodities, which account for a large portion of the Company’s revenues. In recent years, the Company has also significantly grown its non-bulk freight revenues as a result of strategic partnering and new product offerings.

The Company’s freight traffic is organized into three lines of business: bulk; merchandise; and intermodal. Through these three lines, the Company serves a wide range of customers.

CP’s registered office, executive offices and principal place of business are located at: Suite 500, 401 – 9th Avenue S.W., Calgary, Alberta, Canada T2P 4Z4

Percentage of voting securities Incorporated under held directly or indirectly Principal subsidiary The laws of by the company

Canadian Pacific Railway Company Canada 100 % Soo Line Corporation (1) Minnesota 100 % Soo Line Railroad Company (2) Minnesota 100 % Delaware and Hudson Railway Company, Inc. (2) Delaware 100 %

(1) Indirect wholly-owned subsidiary of Canadian Pacific Railway Company. (2) Wholly-owned subsidiary of Soo Line Corporation.

2008 corporate profile & fact book | 13 network map

Our network extends from the Port of Vancouver on Canada’s Pacific Coast to the Port of Montreal in eastern Canada, and to the U.S. industrial centres of Chicago, Illinois; Newark, New Jersey; Philadelphia, Pennsylvania; and New York City and Buffalo, New York.

Our network is composed of four primary corridors: Western, Southern, Central, and Eastern. These corridors are comprised of main lines, totaling approximately 4,750 miles, supported by secondary and branch rail lines (“feeder lines”) that carry traffic to and from the main lines.

WESTERN Edmonton Lloydminster Saskatoon Calgary Kamloops CENTRAL Regina Winnipeg Vancouver Moose Jaw Kingsgate Emerson New Westminster Coutts Minot Thunder Bay Sudbury Duluth Montreal Glenwood SOUTHERN Minneapolis/St.Paul Albany Toronto Detroit Milwaukee Buffalo Binghamton Chicago Harrisburg New York Philadelphia EASTERN

Canadian Pacific main line Principal connections

Principal haulage or trackage rights

* DM&E / IC&E to be included in future versions of this map.

14 | 2008 corporate profile & fact book the western corridor: vancouver-moose jaw the southern corridor: moose jaw-chicago Our Western Corridor links Vancouver, British Columbia with Our Southern Corridor connects with the Western Corridor Moose Jaw, Saskatchewan, which is the western Canadian at Moose Jaw. By running south to Chicago, Illinois through terminus of our Southern and Central corridors. With service the twin cities of Minneapolis and St. Paul in Minnesota and through Calgary, Alberta, the Western Corridor is an important through Milwaukee, Wisconsin, we provide a direct, single- part of our routes between Vancouver and the U.S. Midwest, carrier route between western Canada and the U.S. Midwest. and between Vancouver and central and eastern Canada. Primary traffic categories transported on the Southern The Western Corridor is our primary route for bulk and resource Corridor include intermodal containers from the Port of products traffic from western Canada to the Port of Vancouver Vancouver, fertilizers, chemicals, grain, coal, and automotive for export. We also handle significant volumes of international and other agricultural products. intermodal containers and domestic general merchandise traffic.

In 2005, we completed a series of capacity expansion projects in the Western Corridor, increasing capacity in this corridor by approximately four trains per day. the central corridor: moose jaw-toronto the eastern corridor Our Central Corridor extends from Moose Jaw, Saskatchewan Our Eastern Corridor provides an important link between the through Winnipeg, Manitoba to its eastern terminus at major population centres of eastern Canada, the U.S. Midwest Toronto, Ontario. We complement our Central Corridor with and the U.S. Northeast. The corridor supports our market a secondary route in Ontario that is leased and operated by position at the Port of Montreal by providing one of the Ottawa Valley Railway. This secondary route connects Sudbury shortest rail routes for European cargo destined to the U.S. Mid- and Smiths Falls, Ontario and expedites the movement of west. The Eastern Corridor consists of a route that we own and our traffic between Montreal, Quebec and western Canada. maintain between Montreal, Quebec and Detroit, Michigan, Our Central Corridor provides shippers direct rail service coupled with a trackage rights arrangement on Norfolk from Toronto and Montreal to Calgary and Vancouver via our Southern (“NS”) track between Detroit and Chicago and a Western Corridor. This is a key element of our transcontinental long-term rail car haulage contract with CSX that links Detroit intermodal and other services. The Central Corridor also with our lines in Chicago. provides access to the Port of Thunder Bay, Ontario Canada’s primary Great Lakes bulk terminal. Major traffic categories transported in the Eastern Corridor include intermodal containers and automotive, forest, and Major traffic categories transported in the Central Corridor industrial and consumer products, as well as truck trailers include Canadian grain, coal, forest and industrial and moving in drive-on/drive-off Expressway service between consumer products, intermodal containers, automotive Montreal and Toronto. products and general merchandise.

2008 corporate profile & fact book | 15 density map

Edmonton

Calgary Saskatoon Golden Moose Jaw Regina Winnipeg Vancouver Lethbridge Portage New Westminister La Prairie Emerson Kingsgate Coutts Minot Thunder Bay Sudbury Duluth Montreal Smiths Falls

Minneapolis/St.Paul Guelph Jct Toronto Albany Detroit Buffalo Binghamton Windsor Chicago Harrisburg New York Philadelphia

Density (millions of gross tons per mile)

45 and greater 15 to less than 30 30 to less than 45 Less than 15

* DM&E / IC&E to be included in future versions of this map.

16 | 2008 corporate profile & fact book markets(1)

CP organizes its freight traffic into three business groups based on the service and equipment requirements of its customers – bulk; merchandise; and intermodal. In 2007, bulk represented approximately 44% of our revenues, intermodal made up 29% and merchandise represented 27%.

freight revenue bulk group (bulk percentage of 2007 revenues) CP’s bulk business is comprised of grains, coal, sulphur and fertilizers. Because these commodities are carried in large volumes over long distances, the utilization of rail is essential to their marketing and consequently it is beneficial for CP to Grain 21% offer single-commodity train service to our bulk customers. Coal 13% Fertilizers 9% Sulphur 2%

Total Bulk 44% merchandise group CP’s growing merchandise business is comprised primarily of automotive, forest and industrial and consumer products. Automotive freight has two components – finished vehicles and parts. Forest products traffic includes commodities such as lumber, newsprint, wood pulp and paper, wood panel freight revenue board and fibreboard. CP’s industrial and consumer products (merchandise percentage of 2007 revenues) business includes the transport of chemicals, plastics, steel, aggregates and mine and energy-related products (other than coal). Merchandise traffic is non-homogeneous, complex and modally-competitive. Merchandise movements utilize mixed trains comprised of a variety of car types and involve the Industrial Products 13% delivery of products to many different customers at a variety of Automotive 7% destinations. Forest Products 6% Food & Consumer 1% CP moves considerable merchandise volumes through a Total network of truck-rail transload facilities managed by Canadian Merchandise 27% Pacific Logistics Solutions (“CPLS”). Through CPLS, simplified logistics solutions are tailored to resolve complex customer supply chain issues.

freight revenue intermodal (intermodal percentage of 2007 revenues) CP’s domestic intermodal freight business is comprised primarily of manufactured consumer products moving in containers. In Canada, the majority of domestic intermodal service is delivered on a direct-to-retailer basis with CP providing door-to-door delivery. In the U.S., CP’s domestic Import / Export 17% intermodal service is delivered mainly through wholesalers. Domestic Intermodal 12% International intermodal freight involves the movement of Total marine containers to and from ports and North American inland Intermodal 29% markets. CP is a major carrier of rail containers moving via the ports of Montreal and Vancouver.

(1) Numbers may not add due to rounding 2008 corporate profile & fact book | 17 grain cp’s market

The grain moved by CP consists of both whole grains, including wheat, corn, soybeans and canola, and processed products such as canola meal, vegetable oil and flour.

Our grain-originated business is centered in two key agricultural areas: the Canadian Prairies (Alberta, Saskatchewan and Manitoba) and the Northern Plains states of North Dakota and Minnesota.

Western Canadian grain is primarily shipped west to the Port of Vancouver and east to Thunder Bay for export. Grain is also shipped to the U.S. Midwest and to eastern Canada for export and domestic consumption.

CP ships U.S. originated grain traffic to export ports via Duluth, Minnesota, and Superior, Wisconsin. Through our partnership with other railways, CP also moves grain to export terminals in the U.S. Pacific Northwest and the Gulf of Mexico. Grain destined for domestic consumption moves east over the Chicago gateway to the U.S. Northeast or is interchanged with various carriers to the U.S. Southeast, Pacific Northwest and California markets.

MaxTrax, CP’s order-fulfillment system for Canadian grain, has improved the planning and efficiency of grain movements in the majority of CP’s corridors. Notably, over 80% of the grain moved by CP is shipped in multi-car blocks. Our suite of MaxTrax products has resulted in more efficient operations by improving asset utilization and planning. grain legislation in canada

Since 1897, railway rates for the movement of grain in western Canada have been subject to special legislative provisions. These provisions apply to defined commodities and origin/destination pairings set out in the Canada Transportation Act. The revenue formula included in the Act is indexed annually by the Canadian Transportation Agency. outlook

In Canada, grain production for the 2007/2008 crop year (ending July 31, 2008) was 6% lower than the 2006/2007 crop year, or 43 million metric tons. Exports are forecast to decrease by 8%, mainly because of reduced wheat production and lower grain carry-in stocks.

On the U.S. side, in the 2007/2008 crop year, production of the five major crops in North Dakota was 35% higher than production the previous year, led by a 75% increase in corn production. For the 2008/2009 crop year, wheat and soybean acreage is expected to increase at the expense of corn acreage. In Canada and the U.S., CP is planning for the 2008/2009 crop production to be within normal levels. However, high commodity prices are expected to drive strong demand for new-crop grain.

Supply for grain is affected by a number of factors, including weather and related production levels, prices, and regulatory dynamics. Demand for Canadian and U.S. grain is impacted by the trade credit situation in specific countries, the relative currency fluctuations of producer countries, and vessel rates. The major factors expected to impact 2008 are the import demands from China and India, growing conditions in major wheat producing countries, expanding alternative fuels markets, and the European Union grain export policy.

18 | 2008 corporate profile & fact book 2007 revenues

Grain - Canada 68% Regulated - Canada 65% Grain - U.S. 32% Non-Regulated - Canada 35% carloads (thousands)

400 383 385 339 321 300

200

100

0 2004 2005 2006 2007

revenue per carload

$2,439 2500 $2,363 $2,228 $2,080 2000

1500

1000

500

0 2004 2005 2006 2007 2008 corporate profile & fact book | 19 coal cp’s market

Most of the coal handled by CP is metallurgical coal destined for export through the Port of Vancouver for use in the steelmaking process in the Pacific Rim, Europe and South America.

Our Canadian coal traffic originates mainly from southeastern British Columbia coal mines, which are considered to be among the most productive, highest-quality metallurgical coal mines in the world. We move coal west from these mines to port terminals for export to world markets and east for consumption by steel mills along the Great Lakes.

In early 2003, the Elk Valley Coal Partnership (“EVC”) was formed, combining the five metallurgical coal mines served by CP in het Elk Valley, previously owned by Teck Cominco, Fording and Luscar, creating a strong global competitor capable of supplying in excess of 24 million tonnes annually to the international steel industry. The company is the world’s second largest producer of high-quality metallurgical coal for export.

CP’s U.S. coal traffic is primarily thermal coal from the Powder River Basins and petroleum coke, both of which are used in power generating facilities. outlook

The outlook for the Canadian coal industry remains favourable, with tight markets due to increasing global demand. Growth in the steel industry, fueled primarily by China and India, has led to strong market fundamentals for metallurgical coal.

cp in motion – improving capacity through innovation

CP is continuously focused on improving its Integrated Operating Plan (“IOP”). The success of these efforts can readily be seen in asset velocity and fluidity metrics, with the ultimate goal being to improve productivity and dock-to-dock service for customers. For example, we recently began pilot work to apply additional locomotive power to selected bulk train operations in our Western Corridor to move more volume with less car assets, create additional corridor capacity and reduce track infrastructure maintenance requirements through better matching of trains design to track structure.

We continue to refine our IOP with the goal of further improving productivity and fluidity on our network and improving dock-to-dock service for our customers.

20 | 2008 corporate profile & fact book 2007 revenues

Coal - Canada 93% Coal - U.S. 7%

carloads (thousands)

400 395 352

300 282 269

200

100

0 2004 2005 2006 2007

revenue per carload

2500 $2,069 $2,102 $2,132 2000

1500 $1,342

1000

500

0 2004 2005 2006 2007 2008 corporate profile & fact book | 21 sulphur and fertilizers sulphur market

Most sulphur produced in Alberta is a bi-product of processing sour natural gas, refining of crude oil and upgrading bitumen produced in the Alberta oil sands. Sulphur is a raw material primarily used in the manufacturing of sulphuric acid, the most common industrial chemical in the world. Sulphuric acid is most extensively used in the production of phosphate fertilizers and as the world demand for fertilizers increases, the demand for elemental sulphur follows. Sulphuric acid is also a key ingredient in industrial processes ranging from smelting and nickel leaching to paper production.

Alberta’s oil and gas industries produce over six million tonnes of sulphur annually. CP is a major player in the transportation to international markets. The two largest shipping points in southern Alberta are Shantz and Waterton and both are located on CP rail lines. Currently, our export traffic is mainly destined to China, Brazil and Australia. In addition, we transport liquid sulphur out of Scotford, which is one of the largest oil sands projects in the Edmonton, Alberta area, and from other points of origin to the southeastern and northwestern U.S. for use in the fertilizer industry.

All of CP’s export sulphur traffic moves in highly-efficient, single-commodity unit trains. outlook

Following a drop in commodity prices at the end of 2006, sulphur prices rebounded in the second quarter of 2007 to historically high levels, driven by strong demand and a world supply shortage. Tight supply is expected to remain a reality in the near term. fertilizer market

CP’s fertilizer traffic consists of potash and chemical fertilizers. Our potash traffic moves mainly from Saskatchewan to marketsn i the U.S. and to offshore markets through the ports of Vancouver, British Columbia, Portland, Oregon and Thunder Bay, Ontario. We transport chemical fertilizers to markets in Canada and the northern half of the U.S. western region from key production areas in the Canadian prairie provinces. We also transport phosphate fertilizer from U.S. and Canadian producers to markets in Canada and the northern U.S.

CP provides transportation services from all major potash and nitrogen production facilities in western Canada and has the most efficient routes and connections with U.S. railways from Canadian production areas to major U.S. markets. CP also has direct service to key fertilizer terminals such as the barge facilities on the Mississippi River system at Minneapolis-St. Paul as well as access to Great Lakes vessels at Thunder Bay. outlook

A number of factors affect demand for fertilizers, including farm income, government subsidy programs, area of crops planted, fertilizer prices and weather at time of planting. For North American fertilizer demand, an influential factor is the area of U.S. corn acreage planted since corn is a crop that utilizes relatively large amounts of all the fertilizer nutrients. The emergence of the ethanol market has introduced a new variable as record amounts of corn are expected to be required to drive the development of several new ethanol plants in both Canada and the U.S. This will cause an increase in demand for domestic fertilizer.

Export potash volumes are influenced by similar factors but are also influenced by improving diets in developing nations. Growth in this market sector is supported by Chinese, Brazilian and Indian GDP growth, which is largely influenced by better diets and increased farm input. Biofuels usage is also driving global potash demand from such crops as palm oil and sugar cane.

Nitrogen fertilizer production costs are strongly related to the price of natural gas feedstock, which in North America has had a large element of volatility. This has put pressure on North American producers, causing some shutdowns. However, plants located on CP lines in western Canada remain some of the most efficient and competitive production facilities on the continent.

22 | 2008 corporate profile & fact book 2007 revenues

Potash 63% Fertilizers 21% Sulphur 16%

carloads (thousands)

250 212 202 210 178

150

50

0 2004 2005 2006 2007

revenue per carload

$2,464 2500 $2,393 $2,172 $2,216

2000

1500

1000

500

0 2004 2005 2006 2007 2008 corporate profile & fact book | 23 forest products cp’s market

CP connects customers to their markets across a variety of forest industry products – including wood pulp, paper, paperboard, newsprint, lumber, panel and oriented strand board (“OSB”) – from key producing areas in British Columbia, northern Alberta, northern Saskatchewan, Ontario and Quebec to domestic destinations and export gateways throughout North America.

Through the use of Canadian Pacific Logistics Solutions transload facilities and short line connections, we have extended our franchise into large-scale lumber producing areas, positioning Canadian Pacific as a strong service option in both origin and destination forest products traffic.

A major CP advantage is the extensive modernization and expansion of our pulp, paper, OSB boxcar and centre beam fleets. Heavier payloads and fewer cars have generated productivity improvements and reduced damage. CP is a leader in partnering with industry, developing and delivering safe loading and unloading practices for rolled paper products. outlook

In general, global forest products demand is a function of population growth and increased standards of living. A new factor coming into play for demand is the use of biofuels. These factors are expected to drive up world consumption significantly.

Housing construction is a critical demand driver. In 2008, U.S. housing starts were at the lowest levels since the Second World War. While demographics, credit stability and consumer confidence will support a return to normalized housing starts, 2009 projections are for demand to remain below industry averages. The repair and remodel sector is also suffering from the U.S. economic downturn and it too will take time to rebound.

Government regulation, environmental climate change policies, and tariff actions and trade policy can have a marked impact on demand and costs for Canadian forest products, as evidenced by the Canada-U.S. softwood lumber dispute and the newly implemented British Columbia Carbon Tax.

Pulp and paper demand is affected by print advertising and circulation levels, as well as consumption rates for packaging and new value-added products. While some of this market has softness, CP delivers inherent strength through its products and in the diverse markets it serves. Western Canadian pulp is in strong demand in international markets due to its quality and fiber strength, while the majority of eastern Canadian pulp serves North American markets. With a fairly even split of our pulp business originating from mills served by CP in western and eastern Canada, combined with direct port access at key facilities across North America, CP is well positioned to serve both the domestic and export markets.

24 | 2008 corporate profile & fact book 2007 revenues

Pulp and Paper 56% Lumber and Panel 38% Other Forest 6%

carloads (thousands)

200

160 154 150 135 114 100

50

0 2004 2005 2006 2007

revenue per carload

$2,417 2500 $2,344 $2,172 $2,009 2000

1500

1000

500

0 2004 2005 2006 2007 2008 corporate profile & fact book | 25 industrial and consumer products cp’s market

CP’s industrial and consumer products traffic includes an array of commodities grouped as chemicals, plastics, metals (including steel), aggregates and mine and energy-related products (other than coal).

We provide transportation services to a wide range of chemical customers, linking chemical plants to feedstock sources with chemical consumers. CP ships a wide array of refined energy products – including gas, fuel oil, diesel, diluents, lube oil and asphalt – and connects major refineries, other production facilities and gas plants with terminals and energy consumers throughout North America. CP also works closely with plastic manufacturers, primarily low-cost Alberta producers, handling a variety of resins to markets throughout Canada and the U.S.

CP’s industrial products traffic is widely dispersed throughout North America, with large bases in Alberta, Ontario, Quebec and the U.S. Midwest. The location of mines, steel mills and aggregate facilities adjacent to CP rail lines provides for the convenient shipment of a diverse group of industrial products for a wide range of customers. We transport the products to destinations throughout North America and to ports for export.

In conjunction with Class I connections, CP offers the shortest route connecting the U.S. Gulf Coast and the Alberta petrochemical markets. In addition, our large number of cross-border gateways in western Canada provides our customer with the most direct rail access to markets in the western U.S. and the Chicago hub.

We also work with Canadian Pacific Logistics Solutions, utilizing their strength in transloading, supply chain management and industry-leading tracking and tracing programs to expand our industrial products service offering. outlook

CP’s industrial products business is driven by the Alberta petrochemical and energy industry. Oil and gas prices are expected to remain strong in 2008. Alberta drilling activity is forecast to remain slightly below 2007 levels due to high inventory levels of natural gas in 2007, low demand and low price. There is still strong demand for steel and aggregate. Steel used to manufacture pipe for pipeline projects is expected to remain strong through 2008. Aggregate demand will also be strong due to the number of upgraders being built in Alberta’s industrial heartland near Edmonton and the resulting infrastructure development due to oil sands activity.

Chemicals cover a diverse group of commodities with various demand drivers, but all share a reliance on growth in the industrial production and construction sectors. CP’s chemicals business is mature and stable. CP is aligned with the larger chemicals producers and serves the major chemical complexes in western Canada.

As new petroleum and energy markets emerge, CP is working closely with customers to develop market opportunities. CP has a growing role in meeting demands for renewable fuels throughout the U.S. Midwest and Northern Plains, leveraging our market knowledge to increase rail shipments and extend our global reach. The northern Alberta oil sands development also holds substantial inbound and outbound opportunities. CP has an array of reload operations and serves the main refineries and storage compounds, increasing growth prospects. CP’s energy sector is strong and we expect to leverage our network advantage and customer partnerships into volume and revenue growth in 2008.

26 | 2008 corporate profile & fact book 2007 revenues

Mines, Metals & Aggregates 49% Chemical & Energy 43% Food & Consumer 8%

carloads (thousands)

350 319 322 316 313

250

150

50

2004 2005 2006 2007

revenue per carload

2500

$2,004 2000 $1,911 $1,685 $1,509 1500

1000

500

0 2004 2005 2006 2007 2008 corporate profile & fact book | 27 the oil sands

development

ALBERTA Canada boasts one of the world’s largest bodies of oil with proven reserves (including oil sands reserves) of 179 billion barrels, second only to Saudi Arabia (as of Athabasca January 2008 and according to the Energy Information Administration (“EIA”)).

Fort McMurray Peace River Canada’s commercial oil sands deposits are located in three main regions within Alberta: Athabasca, Cold Lake and Peace River. A fourth deposit in Saskatchewan is under exploration.

Cold Lake Alberta Ind. Heartland In 2007, annual oil sands production reached 1.255 million barrels per day (“bbl/d”). The EIA’s International Energy Outlook 2006 estimates that Canadian oil

Edmonton SASKATCHEWAN Lloydminster sands operators will produce 3.6 million bbl/d by 2030 or 187% more than 2007.

To make the oil sands bitumen acceptable to conventional refineries, it must be Calgary upgraded. This intermediate process produces higher value synthetic crude oil and related byproducts.

Upgrading creates a significant rail market for products that are not compatible with traditional product pipelines, including petroleum coke, sulphur, asphaltene and various hydrocarbon liquids and gasses.

simplified oil sands production chain

Tertiary Recovery methods processing

In situ

Synthetic Crude Refining and Bitumen Upgrading Oil (SCO) marketing Mining

Petroleum coke Refined petroleum t
Diluent t
t
products (diesel, t
Sulphur jet fuel, gasoline, t
Asphaltene etc.) t
Liquids and gases

Rail opportunities

28 | 2008 corporate profile & fact book Redwater – Hwy 63 Fort McMurray

38

Township Road 570 38 38 45 Sturgeon Yard Victoria Trail Synenco Logistics Centre Opal Road NORTHWEST 643 45 Agrium EXTENSION

Astotin Yard

North West 830 Upgrading Shell Arc Suncor Fort Hills Resources 643 Evonik Access Kinder Morgan Degussa Imperial BA Energy Star Pipeline Enbridge Strathcona Scotford Stonefell Logistics Centre Provident- Bruderheim Williams Sunwest King Energy Tech Altalink CN 825 Shell ERCO Shell StatoilHydro Alberta ATCO 830 Canexus Sulphur 831 Suncor 45 Energy Inc. Triton Gulf Elk Island Scotford Transfer Contura Chemicals TCPL 15 830 15 637 Aux Sable CN Lamont 15 Total BP Petro Canada Gas 831 830 SASKATOON Dow Keyera Chemicals Gemini

15 Alberta’s Industrial Heartland

Agrium Strathcona Canadian Pacific Airport Sherritt Praxair New Routes 37 Industrial Heartland Expansion September 2008 Land Assembled Josephburg CN N 15 15 0 5 km EDMONTON 830 0 3 miles Fort Saskatchewan EDMONTON

cp and the oil sands (alberta’s industrial heartland)

Alberta’s Industrial Heartland northeast of Edmonton is an association of four municipalities specifically dedicated to promoting heavy industrial development, including upgrading. The region is already home to Shell’s Scotford complex, which boasts a world-class refinery, upgrader and chemical processing facility. CP is the only rail carrier with direct access to Shell’s entire facility and an expansion is already under way at their existing upgrader. Four additional upgraders are planned for the region.

In light of all this heavy industrial development, CP has commenced an environmental assessment to build additional track and logistics centres to provide direct CP access to these new facilities. Pending regulatory approval and a strong rate of return, CP’s first line is expected to be in service by 2012 – consistent with the start-up of the first new upgrader. construction market

With all this activity in Alberta, demand has surged for a wide variety of construction materials. In 2007, CP opened the Scotford Transfer Facility in the heart of the Industrial Heartland. This facility can handle aggregates, pipe, dimensional loads and some liquids in conjunction with CP’s third-party partners, and provides easy access to all major highways. CP’s land ownership in the region provides the flexibility to expand as the market grows, including developing two new logistics centres.

2008 corporate profile & fact book | 29 automotive cp’s market

CP’s automotive business encompasses the damage-free transport of domestic, import and pre-owned vehicles and automotive parts.

We transport finished vehicles from U.S. and Canadian assembly plants to the Canadian marketplace, and throughout North America via major interchanges at Detroit, Chicago and Buffalo. We utilize a comprehensive network of automotive facilities to facilitate final delivery of vehicles to dealers throughout Canada and the U.S. upper Midwest and Northeast.

The Port of Vancouver handles more imported finished vehicles than any other Canadian port. CP is the leading carrier transporting import finished vehicles to markets throughout Canada.

CP is the principal rail carrier serving the Honda and Toyota plants near Toronto and the Ford plant in St. Paul. CP handles all of Chrysler’s Canadian finished vehicle distribution and participates in North American destined vehicles produced at General Motors’ Oshawa and Ingersoll, Ontario, plants.

We also have an expanding business in the transport of personal and pre-owned vehicles. In addition to finished vehicles, CP is the principal rail carrier for inbound auto parts destined to GM’s Oshawa plant and Ford’s St. Paul plant.

CP has long-standing relationships with automotive industry leaders. Our key performance focus is: reliable, on-time delivery; damage free transport; after-sales customer service; and auto facility operations. Our utilization of advanced loading and unloading equipment and techniques has led to a reduction in costs, transit times and product damage. outlook

It is estimated that North American automotive production will decline by 3-4% year-over-year in 2007. CP is well positioned with its mix of clients to ride this production decline. Toyota will open a new plant in Woodstock, Ontario, in the fourth quarter of 2008, and CP will be the exclusive railway serving the new plant.

Auto compounds (1) Automotive bays

Montreal, Quebec (St. Luc) 7,076 Toronto, Ontario (Agincourt) 7,420 Cottage Grove, Minnesota 4,631 Calgary, Alberta 2,900 Windsor, Ontario (EC Row) 1,900 Winnipeg, Manitoba 1,500 Windsor, Ontario (Chrysler) 1,400 Saint John, New Brunswick 820 Quebec City, Quebec 877 Regina, Saskatchewan 548

(1) CP has access to other auto compounds in Vancouver, Edmonton and Saskatoon.

30 | 2008 corporate profile & fact book automotive compounds

Edmonton Saskatoon Calgary

Winnipeg Vancouver

Quebec Saint John

Regina Thunder Bay Agincourt St. Luc

Montreal

Minneapolis/St. Paul EC Row

Rapid City Chrysler Toronto

Cottage Grove Windsor Chicago New York Philadelphia

Kansas City

Canadian Pacific main line Automotive compounds

Haulage, trackage or marketing rights Dakota, Minnesota & Eastern Railroad (DM & E) Iowa, Chicago & Eastern Railroad (IC & E)

2008 corporate profile & fact book | 31 2008 Canadian plant sourcing Plant served Models produced General Motors Oshawa – “#2” Ontario Chevrolet Impala and Buick LaCrosse (Allure) Oshawa Truck Ontario Chevrolet Silverado, GMC Sierra Ford Oakville (1) Ontario Edge, MKX, Flex St. Thomas (1) Ontario Crown Victoria, Grand Marquis, Town Car Twin Cities Minnesota Ranger, B-series (Mazda) Chrysler Brampton(2) Ontario Challenger, Charger 300 Series Windsor Assembly(2) Ontario Grand Caravan, Town & Country CAMI Ingersoll Ontario Suzuki XL7, Pontiac Torrent, Chevrolet Equinox Honda Alliston –“#1” Ontario Civic 4-door Si, Civic 2-door, Acura CSX Alliston –“#2” Ontario Civic 4-door, Acura MDX, Ridgeline Toyota Cambridge Ontario Corolla, Matrix, Lexus RX Woodstock Ontario RAV4

(1) Plants accessed via joint section or interswitching agreement. (2) Plant is not direct-rail served, although CP carries 100% of Canadian traffic to Canadian rail-served points.

cp in motion – continuing to grow with toyota

After 18 years of serving Toyota, CP will now also serve the new Toyota Woodstock plant which will open in late 2008. When completed, the plant will have the capacity to build 150,000 units annually of Toyota’s RAV4 sport utility vehicle. CP will be the primary rail carrier providing transportation for finished vehicles manufactured at the plant to markets throughout North America.

32 | 2008 corporate profile & fact book 2007 revenues

Cars 57% Trucks 35% Parts 8%

carloads (thousands)

200 172 168 165 168

150

100

50

0 2004 2005 2006 2007

revenue per carload

2000 $1,902 $1,893 $1,773 $1,680

1500

1000

500

0 2004 2005 2006 2007 2008 corporate profile & fact book | 33 intermodal cp’s international market

CP’s international intermodal traffic is represented primarily by containerized traffic moving via the ports of Vancouver, Montreal, New York and Philadelphia to and from inland points across Canada and the U.S.

The import traffic that CP carries from the Port of Vancouver is mainly long-haul business destined for eastern Canada and the U.S. Midwest and Northeast. Our recent terminal investments and initiatives have enhanced our strategic position for future growth. CP’s Trans-Pacific service offers the shortest route between the Port of Vancouver and Chicago. The Port of Montreal is a major year-round east-coast gateway with which CP works in close coordination, primarily to serve Canadian and U.S. Midwest markets. Our U.S. Northeast service connects eastern Canada with the ports of Philadelphia and New York as a competitive alternative to trucks.

In 2008, as a result of its competitive service, CP is experiencing significant growth in container volumes handled between Vancouver and inland points in both Canada and the U.S. Midwest. It remained the leading provider of rail service to the container shipping lines that serve the Port of Montreal. cp’s domestic market

CP’s domestic intermodal segment primarily consists of long-haul intra-Canada and cross-border business. Key service factors in domestic intermodal include on-time service reliability, ability to deliver door-to-door and the provision of value- added services.

The majority of CP’s domestic intermodal business originates in Canada. We market our services directly to retailers, providing complete door-to-door service and maintaining direct relationships with our customers. This has enabled CP to successfully develop significant partnerships with key retail customers, and has led to a number of these customers constructing major distribution warehouse facilities adjacent to CP’s primary intermodal terminals. This co-location extends CP’s role beyond that of a traditional railway by making CP part of our customers’ supply and logistics chains. In the U.S., we market most of our domestic intermodal services via intermodal marketing companies.

CP has a modern network of 14 intermodal terminals and continues to invest in its terminal infrastructure. outlook

Containerized trade of consumer products on a global scale is expected to continue to rise. CP expects to see trans-Pacific growth from Asia continue as more companies source their merchandise from the Pacific Rim, particularly China. CP is strategically well positioned to leverage this growth through our expanded Western Corridor and strong terminal network.

Domestic intermodal traffic is expected to continue to grow, at a more moderate pace with an anticipated softer North American economy over the next year. Rising fuel costs continue to put pressure on the trucking industry, pushing more freight to intermodal and the growth into Alberta both from within Canada and trans-border is expected to continue. expressway

CP’s Expressway is an innovative intermodal transportation system operating in the Montreal-Toronto corridor. It works in partnership with the trucking industry as a supplier to motor carriers and private fleet operators. The system uses a flexible drive-on, drive-off ramp system capable of handling a wide variety of trailers, including vans, flats, tankers and reefers, on specialized flatcars in dedicated trains. The resulting combination provides the trailers and their contents with a ride quality similar or superior to over-the-road transport.

34 | 2008 corporate profile & fact book 2007 revenues

Import / Export 59% Domestic Intermodal 41%

units (thousands)

1500 1,238 1200 1,120 1,139 1,159

900

600

300

0 2004 2005 2006 2007

revenue per carload

1200 $1,084 $1,019 $1,065 1000 $924

800

600

400

200

0 2004 2005 2006 2007 2008 corporate profile & fact book | 35 canadian pacific logistics solutions

Canadian Pacific Logistics Solutions (“CPLS”) delivers high-value solutions to customers in the area of logistics and transportation management. CPLS work with carriers, facility operators and other vendors to deliver integrated shipment management services to its customers.

CPLS client base covers a range of industry segments, including: food and beverage; retail and manufacturing; mining, steel and aggregates; building materials; oversized and dimensional freight and bulk commodities.

Building on our expertise, and supported by operational technologies, CPLS works with customers and service partners to: r
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managing your business. integrated logistics and transportation management

Inefficient logistics and transportation operations can drain a company’s resources and impede its ability to compete. CPLS brings the right people, the right process and the right technology together to manage both simple and complex operations on behalf of its clients.

Management services include transportation planning, logistics solutions design, execution management, shipment visibility and exception reporting, financial controls and settlement, and performance measurement systems.

CP designs and manages end-to-end solutions that balance customer delivery commitment, mode selection and overall lowest total cost and can facilitate the flow of goods across modes, facilities, borders and agencies, including: intervention, problem resolution and vendor management.

CPLS provides visibility of shipment statuses and exceptions throughout the end-to-end process. This enables CPLS to evaluate and manage overall operational performance of the customized solutions.

36 | 2008 corporate profile & fact book motive power

Diesel locomotives at December 31, 2007 Owned and long-term leased units Road freight (>=3,000 HP) 1,107 Road switcher 269 Yard switcher 256 Short-term leased 68

Total 1,700

Road freight locomotive fleet profile (at December 31, 2007) Class Builder HP Units Avg. age

GP40 GM 3,000 14 41.0 GP40 – 2 GM 3,000 16 35.5 SD40 – 2 GM 3,000 338 28.4 SD60 GM 3,800 42 18.5 SD90MAC GM 4,300 61 8.8 SD90MAC GM 6,000 4 7.8 AC4400 GE 4,400 472 7.9 ES44AC GE 4,360 160 1.5 Total 1,107 14.5

Through an investment program to upgrade our locomotive fleet, CP has acquired high-adhesion alternating current (“AC”) locomotives, including the new ES44 Tier II low-emission-compliant locomotives. AC locomotives are more fuel efficient and reliable and have superior haulage capacity compared with standard direct current (“DC”) locomotives.

As of December 31, 2007, our fleet included 697 AC traction locomotives. This represents approximately 63% of our road freight locomotive fleet. The AC locomotives, which now handle about 82% of CP’s workload, have improved reliability and service levels. This has resulted in cost savings in fuel, equipment rents and maintenance, while also providing opportunities to rationalize repair and maintenance facilities.

In the fourth quarter of 2007 our Warranty Service Agreements (“WSA”) with both General Electric (“GE”) and Electro-Motive Diesel (“EMD”), formerly General Motors (“GM”), now cover approximately 85% of our active road fleet. Under these service agreements, the original equipment manufacturers (“OEM”) own and manage the parts inventory and manage the ongoing maintenance of their respective locomotives in the CP fleet using CP employees. These service agreements guarantee fleet availability and reliability and allow CP to accurately predict operating and capital locomotive expenses.

Road freight Road Yard Age in years AC DC switcher switcher Total 0-5 311 - - - 311 6-10 303 - - - 303 11-15 83 - - - 83 16-20 - 67 - - 67 Over 20 - 343 269 256 868 Total 697 410 269 256 1,632

2008 corporate profile & fact book | 37 freight car fleet

CP has a diversified fleet of approximately 50,000 railcars, designed to meet the shipping needs of its customer base.

Freight revenue rail car fleet owned and leased at December 31 Car type 2007 2006 Covered hoppers (1) 25,400 24,900 Open tops 7,000 5,100 Boxcars (2) 4,800 4,800 Gondolas 3,300 3,800 Flats (2) 3,800 2,700 Intermodal (2) 7,624 7,596 Automotive 3,500 3,600 Total 55,424 52,496

(1) Includes 9,000 government cars (2) Includes TTX cars

CP’s focus has been to develop a modern, high-capacity freight car fleet designed to fully leverage its track network and locomotive fleet. Specific objectives include: increasing the productivity of each car fleet; reducing CP’s reliance on short-term leasing; and improving customer satisfaction through the introduction of better- designed and higher-capacity cars. As a result, CP has a productive and standardized fleet that facilitates heavier car loading, fewer car handlings, and improved load protection. Some examples include:

38 | 2008 corporate profile & fact book coal car 1,900 high-capacity aluminum coal cars. 17% increase in capacity per train over conventional steel coal train.

aluminum vehicle carriers 375 light-weight aluminum multi-level cars. Improved product integrity and reduced tare weight resulting in fuel savings.

stand-alone double-stack well car 1,000 CP-owned and 5,000 TTX-supplied cars. 25% increase in train hauling capacity over the former fleet capacity.

covered hopper 11,760 high-capacity covered hoppers (grain/fertilizer). 9% increase in capacity over conventional covered hoppers.

gondola 430 high-capacity steel gondolas (steel and concentrate). 33% increase in capacity over conventional gondolas.

box car 600 62’, 100-ton high-capacity boxcars (pulp and paper). Specifically designed to minimize product damage and maximize paper loading.

coil cars 175 high-capacity transverse coil cars (steel). New coil steel cars do not require transload facilities and reduce product damage.

2008 corporate profile & fact book | 39 rail yards and intermodal terminals

CP has improved cost, quality and capacity in its rail yards by speeding shipment flows. CP has applied the principles of lean management and supporting technologies to balance production resources, reduce dwell time and streamline workflow.

At December 31, 2007, CP operated a network of 14 intermodal terminals and 14 major classification yards. CP accesses three additional terminals operated by other Class I railroads.

Annual lift Intermodal terminals capacity Pitt Meadows (Vancouver), British Columbia 264,000 Calgary, Alberta 220,000 Edmonton, Alberta 115,000 Saskatoon, Saskatchewan 25,000 Regina, Saskatchewan 45,000 Winnipeg, Manitoba 115,000 Minneapolis, Minnesota 100,000 Milwaukee, Wisconsin 18,000 Bensenville (Chicago), Illinois 135,000 Schiller Park (Chicago), Illinois 145,000 Detroit, Michigan 98,000 Obico (Toronto), Ontario 170,000 Vaughan (Toronto), Ontario 664,000 Lachine (Montreal), Quebec 275,000 Philadelphia, Pennsylvania (CSX) 40,000 Taylor, Pennsylvania (Norfolk Southern) 10,000 Albany, New York (Norfolk Southern) 20,000

Canadian Pacific main line Intermodal Terminals Principal haulage or trackage rights Rail yard Dakota, Minnesota & Eastern Railroad (DM & E) Iowa, Chicago & Eastern Railroad (IC & E)

40 | 2008 corporate profile & fact book intermodal terminals

Edmonton Saskatoon

Pitt Meadows Winnipeg

Vancouver

Calgary Regina Vaughan Lachine

Montreal Minneapolis

Milwaukee Detroit Toronto Albany Rapid City

Obico Chicago New York Taylor Bensenville Schiller Park Philadelphia

Kansas City

rail yards

Edmonton Saskatoon

Vancouver Winnipeg Thunder Bay Regina

Calgary Moose Jaw Toronto Montreal

St. Paul Glenwood Milwaukee Rapid City

Detroit Binghamton New York Philadelphia Chicago

Kansas City

2008 corporate profile & fact book | 41 repair facilities

CP has reduced costs by enhancing the efficiency of its repair facilities. We have also improved the reliability of our locomotive fleet by entering into warranty-service agreements that cover all new locomotives and a large percentage of our existing fleet, in which suppliers own parts inventories and are required to meet strict performance commitments. Our locomotive renewal program has led to rationalization of our repair and maintenance facilities.

CP has eight locomotive repair and servicing facilities located at Port Coquitlam, British Columbia; Calgary; Moose Jaw; Winnipeg; St. Paul; Toronto; Montreal and Binghamton, New York. These facilities perform minor repairs. We perform overhauls and other major work at Ogden Shops in Calgary, which is operated by Alstom Canada, Inc. (“Alstom”). We also have 10 major freight-car repair facilities located in Vancouver; Golden, British Columbia; Calgary; Moose Jaw; Winnipeg; St. Paul; Thunder Bay; Chicago; Toronto; and Montreal. We have smaller facilities across the system to service freight cars for specific customer needs. key agreements r

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operation of CP’s Weston manufacturing and repair facility in Winnipeg. This agreement has increased productivity and capacity utilization while allowing Progress Rail to provide services to third parties. Under the agreement, Progress Rail is leasing and operating the metal fabrication, track work and wheel shops, along with associated material handling and warehousing. r

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facility in Calgary. Under the agreement, Alstom acquired the inventory and equipment at Ogden and has a long-term lease on the facility’s buildings. Alstom is providing CP with equipment overhaul and repair services that the railway had previously performed on its own at Ogden.

42 | 2008 corporate profile & fact book repair facilities

Edmonton Golden

Saskatoon Vancouver Winnipeg

Regina Thunder Bay

Toronto Montreal Calgary Moose Jaw

St. Paul

Rapid City

Detroit New York Binghamton Philadelphia Chicago

Kansas City

Canadian Pacific main line Locomotive Repair Facilities

Principal haulage or trackage rights Car Repair Facilities Dakota, Minnesota & Eastern Railroad (DM&E) Iowa, Chicago & Eastern Railroad (IC&E)

2008 corporate profile & fact book | 43 operations: integrated operating plan overview CP plans and manages its scheduled operations through its Integrated Operating Plan (“IOP”). At the core of the IOP are the strategic design principles of: r

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and efficiency. This is accomplished by concentrating more volumes into key hubs to generate enough shipment density for more frequent departures and less handlings en route; and thinking beyond just CP’s boundaries by engaging in co-production initiatives with all carriers to create more capacity and velocity.

By doing all of the above, we are able to generate more destination-type trains, with limited work en route and increased frequency.

CP establishes a plan for each rail car from point of origin to final destination. We consolidate cars with similar destinations into blocks. This reduces delays at intermediate locations by simplifying processes for employees, eliminating the duplication of work and helping to ensure fluid rail yards and terminals.

The new capabilities of our network, the upgraded locomotive fleet, and the IOP provide CP with the ability to operate longer and heavier trains with reduced transit times. This reduces associated expenses, simplifies the departure of shipments from points of origin, and provides lower-cost capacity for growth.

CP has implemented state-of-the-art railway operating systems, which provide management with superior information about near-term demand and the availability of resources to meet that demand, as well as detailed shipment trip plans to ensure that we consistently meet customer service expectations.

Through these initiatives, CP has become a scheduled railway that strives to deliver high service quality to its customers and achieve high levels of efficiency through improved asset utilization. We are committed to further improving our scheduled railway operations as a catalyst for continued growth without the need to incur significant future capital expenditures. plan design and execution

Key to CP’s success has been the innovative and industry-leading use of a service design software tool called MultiRail(1). The Institute for Operations Research and the Management Sciences selected CP, in partnership with Multimodal Applied Systems Inc., as the winner of the prestigious 2003 Franz Edelman Award. CP was selected for its work on “Perfecting the Scheduled Railway: Model Driven Operating Plan Development”.

CP has modeled the IOP within the MultiRail application using forward-looking traffic data and takes considerable care in analyzing traffic movements in order to optimize routing, minimize handling, balance train workloads and yard capacities, and meet customer commitments.

The full integration of the design process with its operation control systems allows CP to move from the planning phase into the execution phase quickly and efficiently. This capability allows CP to react quickly to changing business conditions and opportunities.

(1) MultiRail is a fully-integrated application that allows CP to refine and evaluate the operating plan strategy. In conjunction with CP’s Marketing and Operations teams, Multirail creates and communicates a balanced plan to accommodate shippers’ needs, operational considerations and asset utilization.

44 | 2008 corporate profile & fact book interline management

CP’s agreements and commercial arrangements with other rail carriers – short line, regional and Class I railroads – extend its market reach to virtually all of North America. This extension of its network reach builds value for CP customers, partners and shareholders well into the future.

Through these agreements and commercial arrangements, CP is providing its customers more services and improved access across Canada, the U.S. and Mexico. CP is also offering shippers truck-competitive access, customer service and reliability.

By continuously improving operating efficiencies between rail carriers, alliances foster the development of new business by extending rail services into markets that previously were beyond the reach of individual railways. As a result, rail carriers are shipping goods to new markets and moving goods that had traditionally been carried by trucks. Approximately half of CP’s business is either received from or handed off to other railways.

CP’s Interline Management group is dedicated to building our relations with other rail carriers and strives to make CP their preferred business partner. The group is a cross-functional team that works with both the operational and marketing parts of the CP organization. The group is responsible for strategic and ongoing interline matters that cut across commodity lines and train services, as well as for managing the Company’s many inter-railway agreements.

We have working partnerships with all the major Class I railroads as well as various short-line and regional railways in Canada and the U.S., as well as Transportacion Ferroviaria Mexicana and Ferrocarril Mexicano in Mexico. can-am alliance

One of our successful alliances, with Union Pacific (“UP”), operates under the “Can-Am” name. CP and UP jointly design, market and operate the Can-Am corridors as a seamless service to customers. These services dramatically reduce transit times through integrated operations and corridor-specific initiatives. Born in 1999, the Pacific Can-Am service provides rail transit for customers shipping between western Canada and North Dakota and the Pacific Northwest, California, the U.S. Southwest and Mexico. We further extended the Can-Am model in 2001 when CP and UP launched the Midwest Can-Am service. This corridor transports goods and materials between western Canada, central and south-central U.S., and Mexico. In late 2001, CP and UP introduced the Eastern Can-Am service for moving goods and materials between eastern Canada, the U.S. Northeast and western and southern regions, and Mexico. Dedicated locomotives are custom equipped to operate in Canada and the U.S. Co-production facilities and joint marketing and processes improve flow-through operations and allow for car-fleet optimization.

2008 corporate profile & fact book | 45 co-production

CP has entered into several co-production agreements with other carriers as part of its ongoing strategy to increase capacity utilization. The participating railways achieve significant value by sharing selected routes and trackage. Some key examples of these agreements are as follows:

u.s. northeast operations

In 2004, CP and Norfolk Southern Corporation (“NS”) announced they would be exchanging trackage rights, freight haulage and yard services to increase operational efficiency and enhance rail service to customers.

Under the arrangement, CP and NS agreed to consolidate freight marshalling at yards in Buffalo and Binghamton, whereby CP ceased yard operations in Buffalo, shifting all freight marshalling to the NS yard; similarly, NS shifted its yard operations in Binghamton to CP’s East Binghamton yard.

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Also in 2004, CP, NS and Canadian National (“CN”) announced an agreement to significantly improve freight service between eastern Canada and the eastern U.S.

The three-party arrangement gives CN and NS a seamless, direct north-south routing over CP’s lines south of Montreal that slices as much as two days’ transit time off some 20,000 annual shipments. It also increases freight traffic density and revenues on the D&H, CP’s wholly-owned subsidiary.

CN-NS traffic destined for the eastern U.S. moves in CP trains on CP’s line between Rouses Point and Saratoga Springs under a freight haulage arrangement between CP and NS. This CN-NS traffic then moves on NS trains over CP’s line between Saratoga Springs and the NS connection near Harrisburg, Pennsylvania under a trackage rights agreement between CP and NS.

The new agreement cuts 330 miles off the old routing, which saw freight traffic handled more circuitously through the Buffalo gateway.

This initiative takes costs out of the rail industry by placing freight traffic on the most efficient routing without regard to ownership. It also creates a significant source of new earnings for our D&H subsidiary and is another major milestone in improving the profitability and value of this part of CP’s network.

46 | 2008 corporate profile & fact book ontario operations

In late 2004, CP and CN announced additional network initiatives that improve railway transit times and asset utilization in Ontario.

These provide for:

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junction with CN at Franz using CP’s route north of Lake Superior.

port of vancouver operations

In 2004, CN and CP also announced a series of agreements to make rail operations more efficient for Port of Vancouver freight traffic.

The agreements jointly increase capacity on key sections of track in the Vancouver area to improve the fluidity of rail operations over existing infrastructure, thereby improving service to shippers using Canada’s largest, busiest and most diversified port.

The agreements provide:

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Further, in 2006 these arrangements were enhanced to optimize railway infrastructure in the lower mainland of British Columbia. Under the arrangement, CP operates the trains of both railways using CP crews from Boston Bar to the terminals on the south shore of the Burrard Inlet in Vancouver, and return to North Bend. CN operates trains of both railways using CN crews from Boston Bar to the terminals on the north shore of the Burrard Inlet and return to North Bend. CP provides all switching on the south shore of Burrard Inlet, with the exception of the Burlington Northern Santa Fe Railway (“BNSF”) barge slip, and CN provides all switching on the north shore of Burrard Inlet. In addition, CP operates some CN trains to or from the Roberts Bank port at Delta.

These agreements demonstrate CP’s commitment to provide the level of service and efficiency that will help shippers take advantage of the significant growth in trade with Pacific Rim nations, strengthen Canada’s vital import-export economy and bolster the competitiveness of its key British Columbia port. By working cooperatively to make rail service more efficient, CP soal improves network and equipment utilization and increases productivity on existing infrastructure.

joint routing agreements

In 2007, CP entered into a Joint Routing Agreements with CN, complementing similar agreements already in place with UP and BNSF. These agreements demonstrate CP’s commitment to provide the most fluid and dependable service for its shippers and allow them to take advantage of new growth opportunities via the North American rail network. These agreements allow CP to work more effectively with its connecting carriers and generate increased rail capacity. In doing so, CP is better positioned to grow its overall share of transportation services on the continent.

2008 corporate profile & fact book | 47 information technology

As a 24-hour-a-day, 7-day-a-week business, CP relies heavily on computer systems to schedule and manage all operations components safely and efficiently. Computer applications map out complex interconnections of freight cars, locomotives, facilities, track and train crews to meet more than 10,000 individual customer service commitments every day. Across the network, CP’s Service Excellence suite of operating systems manage the overall movement of customers’ shipments and provide railway employees with reliable data on shipment performance, transit times, connections with other trains, train and yard capacities, and locomotive requirements. Within the yards, individual shipments are matched to freight car blocks, which in turn are matched to trains that are scheduled according to CP’s IOP.

triex In 2008, CP is scheduled to complete implementation of the Truck Rail Intermodal Excellence (TRIEX) system at all intermodal facilities. The system will further improve intermodal service by providing customer self-service, proof of delivery and full shipment tracking. TRIEX will also provide more sophisticated pricing options and simplify billing processes.

mycpr.ca A multi-year program to revamp e-business applications is underway to provide customers with an industry leading electronic commerce capability. The initial phase will see the launch of a new version of CP’s customer website, myCPR.ca. This new tool will allow customers to manage all aspects of their shipments from initial price inquiries, car ordering, shipment tracking, invoice viewing and payment.

engineering excellence As part of our Engineering Excellence program, CP is making significant technology investments to ensure continued network safety and reliability. A new bridge inspection system allows employees to capture inspection results electronically in the field. This investment reduces the amount of time spent by field personnel documenting inspection results and increases the quality of information gathered about the condition of each asset to ensure timely maintenance, improved infrastructure renewal planning and assured compliance to regulatory requirements.

safety The Equipment Health Management System (“EHMS”) project is a multi-year project that supports the railway industry’s Advanced Technology Safety Initiative to reduce stress on railway infrastructure. The system allows freight car equipment owners to monitor and maintain their fleet proactively. In 2008, we will add Truck Hunting detectors and Hot Box detector information and alerting to our EHMS system.

CP’s purchase in October 2007 of the DM&E and IC&E is curently under review by the U.S. Surface Transportation Board. If the purchase is approved, the DM&E and IC&E with have access to CP’s safety-supporting information technology systems. During the approval period, CP is developing detailed systems plans to be implemented upon approval by the STB of the change in control.

‘railway of the future’ initiative Looking forward, CP will continue to leverage wireless communications and advanced technologies to implement business solutions that benefit the Company and all stakeholders. Our bold new initiative, called “Railway of the Future”, will put in place advanced train control capabilities, new train handling systems and sophisticated network optimization tools. These investments will combine real-time information and control with CP’s existing business applications to further improve our railway’s safety and reliability.

48 | 2008 corporate profile & fact book safety

Safety is a key priority for CP’s management and Board of Directors. CP believes safety is good business and its corporate safety policy emphasizes that no job is so important that time cannot be taken to do it safely.

CP’s Health, Safety, Security and Environment Committee, originally established in 1996, provides ongoing focus, leadership, commitment and support for efforts to improve the safety of CP’s operations, the safety and health of all employees, and the safety of communities through which CP operates. A bottom-up safety action process, called the Safety Framework, actively involves over 1,000 employees in local health and safety committees.

CP produces a comprehensive corporate safety plan each year that is supported by safety plans produced by each department in Operations. Additionally, senior union and operating personnel meet regularly to discuss systemic safety issues. There are four functional Policy Committees and one cross-functional committee in Canada, and three Safety Advisory Boards in the U.S. This integrated approach to safety management covers all operating functions, ensures a consistent approach, promotes the sharing of best practices and has sustained CP’s good safety performance over the past several years.

CP has consistently sustained low U.S. Federal Railroad Administration (“FRA”) reportable train accident rates. In 2007, CP achieved a rate of 2.05 train accidents per million train miles.

In the area of personal injuries, CP has seen continued improvement since we introduced our comprehensive safety program at the end of 1995. For 2007, CP achieved a rate of 2.06 injuries per 200,000 employee hours, a significant improvement over our historic average.

2008 corporate profile & fact book | 49 CP is also committed to the safety and health of the public, working in cooperation with Operation Lifesaver® and Direction 2006® to educate the public about the potential hazards of railway crossings at grade and the dangers of trespassing on railway property. CP’s business practices include consultations with its neighbours and other key stakeholders. CP also conducts regular emergency response exercises with communities.

Safety of our customers is also a key concern. CP has distributed over 15,000 copies of a Customer Safety Handbook. This provides key contacts and critical safety information concerning handling and securing rail cars, loading, facility safety and personal safety. We regularly conduct facility safety audits and provide feedback to our customers.

Our commitment to railway and public safety is reflected in our participation the chemical industry’s Responsible Care® initiative. As a Responsible Care® partner, we work with other companies to continuously improve standards in handling and transporting chemical products. The Responsible Care® ethic is reflected in CP’s corporate values, policies, business plans and management systems.

FRA personal injuries per 200,000 employee-hours

3.5 3.15 3.0 2.75 2.38 2.5 2.00 2.06 2.0

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50 | 2008 corporate profile & fact book environment

CP is committed to delivering transportation solutions in a safe and environmentally responsible way. We want to earn and keep our preferred status as both a dependable and efficient freight carrier and as an employer and trustworthy partner in all the communities in which we operate.

To help us achieve our goal, we have implemented a comprehensive environmental management system (“EMS”), which uses the ISO 14001 standard five elements – policy; planning; implementation and operation; checking and corrective action; and management review – and is based on the principle of continuous improvement and adaptation. policy

In 1990, CP adopted its Environmental Protection Policy. CP’s executive team recommits to the policy regularly and most recently in January 2008. The Policy states:

“Canadian Pacific is committed to conducting its operations and activities in a manner that: r

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In addition, we develop and implement policies and procedures to address specific issues and facilitate the reduction of environmental risk. We roll out every policy with targeted communications for employees and a clear identification of roles and responsibilities.

In the early 1990s, we successfully trained more than 2,000 supervisors and 10,000 employees in General Environmental Awareness workshops. Today, we use a modular approach to deliver training. We prepare a training module for each new policy or program that is approved and use a variety of mechanisms to deliver training, including electronic learning modules, presentations, job aids, signage and on-the-job assistance.

2008 corporate profile & fact book | 51 planning

CP prepares an annual Corporate Environmental Plan that details the Company’s work plan for the coming year. The plan clearly states our environmental goals and objectives, as well as high-level strategies and tactics. Various departments throughout the Company use the environmental plan to integrate key corporate environmental strategies into their own business plans.

We conduct environmental assessments on proposed capital, emergent and routine maintenance projects to ensure we use appropriate location, design and construction methodologies to minimize environmental impacts. We compensate for unavoidable negative impacts in accordance with regulatory approvals.

We prepare, test and implement emergency preparedness and response plans. Transportation Community Awareness and Emergency Response (“TransCAER”) is a national information training program for communities through which dangerous goods are transported. As an active supporter of TransCAER, we participate with the chemical industry in holding information and training sessions for community leaders and emergency responders on emergency resources and procedures to be taken in the event of an accident involving dangerous goods. In 2007, we held three full-scale emergency response exercises, 10 emergency response awareness sessions, nine table-top sessions and 13 information meetings with communities and shippers.

In addition, we have established a network of specially trained and equipped emergency response contractors across our system. This network of responders and strategically located spill equipment kits ensure a rapid and efficient response in the event of an environmental incident. We investigate incidents to learn what went wrong and what we can do to reduce the risk of future incidents implementation and operation

CP has developed specific environmental programs to address areas such as air emissions, remediation of historically impacted sites, storm and waste water, waste and recycling, wildlife protection, vegetation management, etc. CP environmental specialists and/or consultants lead these programs. Resources are allocated to these programs to facilitate the achievement of corporate targets of environmental performance.

climate change While transportation accounts for over one quarter of the total national greenhouse gas emissions in Canada and the U.S., the railway sector only represents 3% of those transportation emissions. Railway transportation is not considered to be a large final emitter of greenhouse gas emissions and as a result is not currently regulated for greenhouse gas emissions in Canada or the U.S. CP participates in two voluntary federal programs pertaining to greenhouse gas emissions.

In Canada, CP participates in a voluntary Memorandum of Understanding between the Railway Association of Canada, Environment Canada and Transport Canada that covers the period of January 1, 2006 – December 31, 2010. The agreement sets out specific targets for greenhouse gas emissions and requires annual reporting of greenhouse gas and smog-producing pollutant emissions.

In the U.S., CP is a member of the U.S. Environmental Protection Agency’s (“EPA”) SmartWay program, which is an innovative collaboration between the EPA and the freight industry to increase energy efficiency while significantly reducing greenhouse gases and air pollution.

As approximately 90% of CP’s greenhouse gas emissions are from locomotive fuel consumption, the majority of our actions with respect to climate change involve our locomotive fleet. Locomotive fleet renewal, testing of new locomotive designs, automatic start/stop systems to reduce idling and train handling technology are a few examples of these ongoing initiatives.

CP’s total greenhouse gas emissions in 2007 were 3,506 kilotonnes (2,863 kilotonnes in Canada and 643 tonnes in the U.S.), which is only 10.5% above 1990 levels with a 45.6% increase in total revenue ton-miles (“RTM”) over the same period. CP’s greenhouse gas emissions per RTM have decreased by 24.1% since 1990.

52 | 2008 corporate profile & fact book remediation CP has taken a proactive position on the remediation of historically impacted sites. Over the years, CP has recorded additional provisions, before tax, to cover anticipated expenditures on environmental remediation programs. The Company re-evaluated its environmental liability, and as a result, through 2007, it increased expected remediation costs to $279 million, before tax, and extended the program to 2017.

We use a balanced scorecard approach to track our annual progress related to the management of environmental liability at each of the accrual properties. CP realized a liability reduction of 11.5% over the 2007 calendar year.

In 2007, the accrual program was audited by CP’s internal Sarbanes-Oxley (“SOX”) Compliance team as well as external auditors PricewaterhouseCoopers. The audits indicated a high level of compliance with accepted standards of financial controls.

remediation - program targets (Environmental Liability Normalized to 100%)

Actual Projected 100

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0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (10% Environmental Liability Reduction per year)

checking and corrective action

CP’s environmental, health and safety audit program comprehensively, systematically and regularly assesses facility compliance with legal requirements and conformance to accepted industry standards and CP policies. CP determines audit scheduling through risk assessment of each facility. Each rail yard is audited a minimum of once every four years.

A team of CP’s environmental professionals, field personnel and recognized third-party environmental audit specialists conduct the audits. CP’s Safety & Environmental Services department coordinates the program.

Upon completing an audit at a facility, the Facility Team – made up of management, Safety & Environmental Services and site representatives – implements a comprehensive CP-developed Corrective Action Plan and determines appropriate completion timelines based on audit findings ranked according to risk. The Facility Team addresses each audit finding and plans the completion of action items based on CP’s established completion targets. Meetings are held every six weeks to determine the status of each corrective action plan, while senior management and executives review progress reports of these actions quarterly.

2008 corporate profile & fact book | 53 management review

CP’s Board of Directors has established a Health, Safety, Security and Environmental Committee that semi-annually conducts a comprehensive review of environmental issues. An Environmental Lead Team, which is comprised of senior leaders of Operations, Strategy and External Affairs, Risk Management, Real Estate, Finance, Internal Audit, Supply Services and Safety & Environmental Services, meets quarterly to review environmental matters. financials

CP spent approximately $39 million in 2007 for environmental management, including salaries and expenses of the Safety & Environmental Services staff. Of this amount, $21 million was expensed on ongoing operations, $2.9 million on capital program upgrades and $14.7 million on the remediation program. responsible care®

CP became a Responsible Care® partner of the Canadian Chemical Producers Association (“CCPA”) in 1998 and of the American Chemistry Council (“ACC”) in 1999.

Responsible Care® is a chemical industry initiative that involves a public commitment by chemical manufacturers and their partners to: r
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As a CCPA partner, CP is required to undergo mandatory verifications every three years for its commitment to continuously improve its environmental, health and safety performance and community outreach efforts. CP successfully completed its first verification in June 2002 and has been granted “Responsible Care® practice-in-place” status. The verification report states that verifiers were “impressed with CP’s excellent grasp of Responsible Care® and the commitment of the extensive list of people interviewed”. CP was successfully re-verified by the CCPA in 2005.

The ACC has recently made Responsible Care® verification mandatory for all member and partner companies. CP held a joint CCPA/ACC verification in June 2008. social responsibility

In 2006, CP published its fourth Social Responsibility Report, which reported on environmental, health, safety and community performance during 2005. CP has made a commitment to publicly report on performance annually. The report is available in the “General Public” section of our website at www.cpr.ca.

CP was awarded the 2005 Globe Award for Excellence in Brownfield Redevelopment for the redevelopment of the former Angus Shops in Montreal. The 230-acre site had previously housed a large railway industrial complex. With the closing of Angus Shops in 1992, CP changed gears and embarked upon a project to remediate the site and work with local and provincial governments, citizen groups, architects and builders to develop a new, vibrant community with parks, residential housing and commercial enterprises. This project was recognized with the Globe Award for its creativity in both meeting local needs and realizing the tremendous economic potential of well-planned redevelopment of brownfields in an urban setting.

CP also won the 2005 Railway Association of Canada Award for Environmental Excellence for its state-of-the-art, automated coal re-spray facility near Salmon Arm, British Columbia halfway between the British Columbia coal mines and the Roberts Bank deep-sea port near Vancouver. This one-of-a-kind facility has resulted in a noticeable reduction of fugitive dust along the rail route. Chemical reclaim and reuse at the site has proven to be both an environmental and cost-reduction success.

54 | 2008 corporate profile & fact book community relations

CP understands the importance of communities. Across its network, CP is a part of more than 900 communities through which its trains operate.

Our community relations program encourages consultation and regular dialogue with these communities. This open dialogue approach has helped build understanding and trust between the railway and these communities, and has paved the way for commercial development and necessary operating changes while, at the same time, reducing the need for costly and time-consuming intervention by courts and regulators.

At the heart of the program is CP’s network-wide Community Connect Line. The service identifies and responds to emerging community issues before they begin to affect operations, infrastructure, or planned commercial projects. The toll-free phone line (1-800-766-7912), combined with Internet-based access, gives the public a fast, effective, centralized means of reaching CP on issues ranging from operating procedures to noise and adjacent-property concerns.

Both CP and the communities through which it operates benefit when disagreements are resolved without expensive and often divisive intervention by regulatory bodies or the courts. The Community Connect Line enables CP to monitor issues through to resolution and to collect valuable data on how railway operations affect communities.

As well as the Community Connect Line, we are using problem-solving tools to address issues that might otherwise be escalated to third parties. These tools include our local dispute-resolution model that emphasizes early and ongoing dialogue with community-based stakeholders with the objective of finding mutually agreeable solutions. As a result of its ongoing success, the model has been accept- ed as a best practice by the Canadian rail industry and the Federation of Canadian Municipalities.

2008 corporate profile & fact book | 55 To further build CP’s reputation as a responsible and constructive neighbour, Community Advisory Panels (“CAPs”) have been established in more than 14 key communities where the railway plays a significant role in local life. CAPs, with representatives from municipal government, local CP managers, local members of the community and, occasionally, adjacent customer operations, serve as a forum for addressing rail-related issues such as safety, new facility construction, traffic and noise concerns, and incident recovery. CP has used CAPs and other forms of community consultation in facilitating major projects such as our Western Corridor capacity expansion program in 2005, expansion of our Vancouver intermodal facility and re-construction of our Lachine Terminal and annex near Montreal.

We also invest in our communities through our community investment program, called Community Connect, which is focused on three primary areas: community; safety; and the environment. We have established long-term partnerships with selected charitable organizations on both sides of the Canada-U.S. border. We strive to ensure that projects funded through the Community Connect program are meaningful to, and include the participation of, employees, customers and community stakeholders. Community Connect, which also includes safety and environmental projects, will continue to evolve to reflect the goals and priorities of CP and the development needs of communities along our network.

As well, CP runs special trains with the key objective of engaging and supporting employees and communities. Our Holiday Trains, which cross Canada and the U.S. every December, raise funds and food for local food banks. The Empress Steam Train visits communities each season and provides a focal point for CP to deliver safety messages, highlight community investment and recognize local employees.

In 2007, CP became proud supporters of the Vancouver 2010 Olympic and Paralympic Winter Games. In 2008, CP announced the launch of Canadian Pacific’s Spirit Train. In the months leading up to the Games, CP will bring the Olympic spirit to communities across the country, while celebrating Canadian athletes, Canada’s Olympic heritage and our Canadian pride. The Spirit Train will unite Canadian communities under its maple leaf banner and will give Canadians a chance to share in the excitement of the 2010 Winter Olympic Games firsthand.

CP believes in developing strong and lasting ties with its communities. Our employees and customers live there and it is our goal to move our trains safely through those communities every day.

56 | 2008 corporate profile & fact book human resources the cp workforce

The number of CP employees at December 31, 2007, was 15,382. About 80% of CP’s workforce is located in Canada. Approximately 78% of the workforce is unionized and there are in total 34 bargaining units: seven representing CP employees in Canada and the remaining 27 representing employees at our U.S. operations.

We have various policies and programs in place that assist employees in achieving objectives, developing their skills, operating in an ethical manner, recognizing their contributions and creating a fair and equitable workplace while managing costs. valuing diversity

Federally regulated employers falling under the Canadian Employment Equity Act are monitored and assessed on an annual basis by Human Resources and Skills Development Canada (HRSDC) based on six indicators that reflect the situation of each designated group in a company’s workforce at the end of the reporting year. In 2006, HRSDC rated CP’s performance as average to less than average for women, good for persons with disabilities, good for visible minorities and superior for Aboriginal peoples. At CP (Canada) as of December 31, 2007: r


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Of the senior leadership, there are three women among the 12 directors and three women among the nine executive committee members.

2008 corporate profile & fact book | 57 performance management and pay for performance

CP’s compensation approach ensures employees are fully aligned with the Company’s vision and business goals. All employees are aware of what needs to be done at the individual level to assist in the accomplishment of corporate objectives.

For non-unionized employees, performance planning cascades overall corporate targets into departmental goals and individual objectives. The Performance Incentive Plan ties both corporate and individual objectives to employee bonus payments.

For unionized employees, incentive compensation programs provide bonuses to teams of employees who create and accomplish objectives that realize savings or efficiency in operations. These programs also promote management-union cooperation and create a more positive work environment by encouraging ideas, innovation and teamwork. In 2007, CP had incentive compensation programs in place with six of seven Canadian bargaining units.

Since 1998, through the realization of objectives, these programs have collectively paid out an estimated $76 million to unionized employees and produced over $100 million in total net cost savings for CP. a stake in the business – ownership by employees

Senior managers are motivated to meet shareholder objectives through the Management Stock Option Program and share ownership requirements. A portion of senior managers’ options are performance based, requiring the attainment of specific financial targets in order for vesting to occur. Depending on the position, the ownership requirements range from one times the senior officer’s annual salary to four times, in the case of the President and Chief Executive Officer.

CP’s Employee Share Purchase Plan increases employee ownership in the Company. The Plan allows employees to contribute up to 10% of their base salary or wages towards the purchase of Company shares. CP matches $0.33 for every dollar of the employee’s contribution up to 6% of their base salaries or wages. Since introduction, the plan has enjoyed a participation rate in excess of 61%, with employee holdings exceeding $153 million as of December 2007.

labour relations canada

Agreements are in place with seven of seven bargaining agents in Canada.

On February 15, 2008, CP and the Canadian Auto Workers (“CAW”) ratified a three-year agreement extending through to December 31, 2010. The CAW represents approximately 2,100 shop craft employees.

On February 13, 2008, CP and the Teamsters Canada Rail Conference (“TCRC-RTE”) ratified a five-year agreement extending through to the end of 2011. The TCRC-RTE represents approximately 4,100 employees who operate trains.

On July 18, 2007, CP and the Teamsters Canada Rail Conference (“TCRCMWED”) ratified a three-year agreement extending through to December 31, 2009. The TCRCMWED represents employees who maintain track infrastructure.

58 | 2008 corporate profile & fact book Unit Description Contract expiry date TCRC-RTE Train/Engine Crews December 31, 2011

Canadian Auto Workers, Rail Division, Local 101 (CAW) Car & Locomotive Repair December 31, 2010 Employees TCRCMWED Track Maintainers, December 31, 2009 Buildings/Structures United Steel Workers of America Transportation Communications Clerical Employees December 31, 2009 Local 1976 (TC-USWA) International Brotherhood of Electrical Workers System Signal Maintainers December 31, 2009 Council # 11 (IBEW) Rail Canada Traffic Controllers (RCTC) Rail Traffic Controllers December 31, 2008

Canadian Pacific Police Association (CPPA) Police December 31, 2009 soo line (u.s.)

Of the approximately 2,500 employees on the Soo Line, over 85% are unionized.

Agreements are currently in force with 13 of the 14 bargaining units. The agreements with yard supervisors, locomotive engineers, train dispatchers, clerks, mechanical foremen, machinist, and boilermaker/blacksmiths are closed until the end of 2009.

Negotiations / mediation continues with the other unions whose contracts are open in the round that commenced November 2004. These include: the United Transportation Union (“UTU”), which represents conductors; the Sheet Metal Workers International Association (“SMWIA”), which represents sheet metal workers; and the Brotherhood of Maintenance of Way Employees Division (“BMWED”), which represents track maintainers.

Unit Description Contract expiry date

United Transportation Union (UTU) Train Service Employees December 31, 2009 Teamsters Track Maintainers December 31, 2004 Teamsters Locomotive Engineers December 31, 2009 Transportation Communications International Union (TCU) Clerical Employees December 31, 2009 Brotherhood of Railway Carmen – Division of Transportation Car Repair Employees December 31, 2009 Communications International Union (TCU-BRC) International Association of Machinists & Aerospace Workers Machinists December 31, 2009 (IAM) Brotherhood of Railway Signalmen (BRS) Signal Maintainers December 31, 2009 International Brotherhood of Electrical Workers (IBEW) Electricians December 31, 2009 American Train Dispatchers Department Train Dispatchers December 31, 2009 – Division of Brotherhood of Locomotive Engineers (ATDA) United Transportation Union - Yardmasters (UTU-Y) Yardmasters December 31, 2009 National Conference of Firemen and Oilers (NCF&O) Mechanical Laborers December 31, 2009 Soo Line Locomotive and Car Foremen Association (SLL&CFA) Locomotive/ Car Foremen December 31, 2009 International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths and Boilermakers December 31, 2009 Blacksmiths, Forgers and Helpers. (IBBB) Sheet Metal Workers International Association (SMWIA) Sheet Metal Workers December 31, 2009

2008 corporate profile & fact book | 59 delaware and hudson railway (u.s.)

The D&H has over 550 employees, of which approximately 90% are unionized. Agreements are currently in place with seven of the 13 bargaining units.

Unit Description Contract expiry date Teamsters Track Maintainers December 31, 2004

United Transportation Union (UTU) Conductors & Trainpersons December 31, 2009

Teamsters Locomotive Engineers December 31, 2009

Brotherhood of Railway Carmen (BRC) Car Repair Employees December 31, 2007

Brotherhood of Railway Signalmen (BRS) Signal Maintainers December 31, 2007

American Railway and Airway Supervisors Association Engineering Supervisors December 31, 2007 - Engineering (ARASA - ENG) United Transportation Union - Yardmasters (UTU – Y) Yardmasters December 31, 2008

International Association of Machinists & Aerospace Workers Machinists December 31, 2008 (IAMAW) International Brotherhood of Electrical Workers (IBEW) Electricians December 31, 2006

National Conference of Firemen and Oilers (NCF&O) Laborers December 31, 2008

Allied Services Division/Transportation Communications Police December 31, 2008 International Union (ASD - POLICE) Transportation Communications International Union (TCU) Clerical Employees December 31, 2007

American Railway and Airway Supervisors Association Mechanical Supervisors December 31, 2008 - Mechanical (ARASA - MECH)

60 | 2008 corporate profile & fact book governance

CP has a culture of strong corporate governance and follows leading policies and practices. As a U.S.- and Canadian-listed company, we regularly review these policies and practices to ensure all corporate governance obligations have been met or exceeded and to make changes and improvements where appropriate. Following are some highlights:

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2008 corporate profile & fact book | 61 financial reporting, internal controls and disclosure controls and procedures r

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and Insider Trading/Reporting Policy and appointed a Disclosure Policy Committee, which reports directly to the Board, to oversee all matters relating to disclosure. The policy is reviewed and updated, as necessary, by the Board. The Committee is comprised of senior legal, financial, business operations, accounting and communications officers. In 2004, the Disclosure Policy Committee appointed a Communications Sub-Committee whose mandate is to review all significant internal and external corporate communications prior to release for consistency with corporate messaging and compliance with disclosure requirements. codes of ethics r

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specifically addresses, among other things, conflicts of interest, protection and proper use of corporate assets and opportunities, confidentiality of corporate information, and reporting of illegal or unethical behaviour. In 2006, CP introduced mandatory on-line ethics training for all officers and non-union employees. As part of the on-line ethics training, officers and non-union employees are annually required to acknowledge that they have read, understood and agree to comply with the Code. r

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those set forth in the New York Stock Exchange Standards, the TSX Corporate Governance Guidelines and the Canadian Securities Administrators’ National Policy 58-201 titled “Corporate Governance Guidelines”.

Standards and guidelines concerning corporate governance will continue to evolve in both Canada and the U.S. CP is monitoring developments on an ongoing basis. At CP, we take our corporate governance obligations very seriously.

62 | 2008 corporate profile & fact book executive profiles

John E. Cleghorn, O.C., F.C.A. Chairman of the Board Mr. Cleghorn is Chairman of the Board and a director of Molson Coors Brewing Company. He is the retired Chairman and Chief Executive Officer of Royal Bank of Canada and is a member of the Desautels Faculty of Management Advisory Board and Governor Emeritus of McGill University, Immediate Past Chairman and a director of Historical Foundation of Canada, Chancellor Emeritus of Wilfrid Laurier University and a director of the Atlantic Salmon Federation. Mr. Cleghorn graduated from McGill University with a B. Com. and is a chartered accountant.

Fred Green President and Chief Executive Officer Fred is leading Canadian Pacific Railway in its drive to be the safest and most fluid railway in North America. He is spearheading improved productivity at CP through a relentless focus on execution excellence. This includes such innovations as the Integrated Operat- ing Plan, which increases efficiency, improves network fluidity and results inan improved operating ratio. His career with CP has taken him across Canada from the Maritimes to the Pacific Coast and to senior management positions in railway operations, marketing, and yield and asset performance. In 1996, he led the reorganization and relocation of CP’s Head Office from Montreal to Calgary, Canada’s largest head-office move. He subsequently led several of CP’s key business groups before becoming Executive Vice-president, Operations and Marketing in 2004. He was appointed President of CP in November 2005 and CEO in May of 2006. He is the 16th president since 1881, when private investors set out to build North America’s first transcontinental railway. Fred holds a B.Comm from Concordia University, Montreal. He is Chairman of the Railway Association of Canada and serves on the board of directors of TTX Company.

Kathryn McQuade Executive Vice-President and Chief Financial Officer Kathryn McQuade is responsible for the financial leadership of Canadian Pacific and also heads up Business Information Technology and Strategic Sourcing. Kathryn joined Canadian Pacific in June 2007. Prior to her move to CP, she spent 26 years with Norfolk Southern in key leadership positions. She has proven leadership in information technology, strategic planning and extensive background in all areas of finance. She has worked closely on operational issues and network opportunities with all the major and regional railroads and shortlines. She was Executive Vice President Planning and Chief Information Officer immediately before she joined CP. Kathryn is a CPA and holds a BBA in Accounting with a minor in Mathematics from the College of William and Mary, Williamsburg, Virginia

2008 corporate profile & fact book | 63 Marcella Szel Senior Vice-President Marketing and Sales Marcella Szel leads CP’s Marketing team that includes bulk sales - coal, grain, fertilizers and sulphur, merchandise - automotive, industrial products and forest products and international and domestic intermodal. She is also responsible for car management, logistics and post-sales customer service Marcella has held a variety of senior positions in her more than 30 years with CP. Prior to joining the marketing and sales group, she was Vice President, Strategy, Law and Corporate Secretary providing leadership in the development of future strategies for the company. Marcella led the legal team at the time of the company’s spin-out from Canadian Pacific Limited and has also held executive roles in Government Affairs and in Quality. Marcella holds a Bachelor of Arts and Law degrees from the University of Alberta.

Brock Winter Senior Vice-President Operations Brock Winter is responsible for all aspects of the day-to-day operations of the railway including field operations, transportation, engineering and mechanical services. Brock has more than 30 years with Canadian Pacific in a variety of positions including marketing and sales, quality support, customer service, field operations and transportation. This experience gives him a broad understanding of the major influences on our operations performance. Brock holds a Bachelor of Commerce degree from the University of Manitoba.

Jane O’Hagan Senior Vice President, Strategy and Yield Jane is responsible for Canadian Pacific’s corporate strategy and strategic projects, acquisition, network restructuring, communications and public affairs, product design and yield. Jane was appointed Senior Vice President Strategy and Yield in November 2008. Jane rejoined Canadian Pacific in August 2002 as Assistant Vice-President, Strategy and Research and was appointed Vice President of Strategy and Research in November 2005. In March 2005, she took on responsibility for CP’s new market development in China and Mexico as well as, the company’s logistics services. In 2006 she was appointed Vice President Strategy and External affairs where she added communications and public affairs along with government affairs to her role. From 1987-1995, Jane held various positions in Transportation, Quality and Marketing and Sales with Canadian Pacific Railway.

64 | 2008 corporate profile & fact book directors Name and municipality of residence Position held and principal occupation within the Year of annual meeting preceding five years(1) at which term of office expires (Director since) S.E. Bachand (3)(5)(6) Retired President and Chief Executive Officer, Canadian 2008 Ponte Vedra Beach, Florida, U.S.A Tire Corporation, Limited (hard goods retailer specializing (2001) in automotive, sports and leisure and home products)

J.E. Cleghorn, O.C., F.C.A. (3) Chairman, Canadian Pacific Railway Limited and Canadian 2009 Toronto, Ontario, Canada Pacific Railway Company (2001)

T.W. Faithfull (4)(5) Retired President and Chief Executive Officer, 2009 Oxford, Oxfordshire, England Shell Canada Limited (oil and gas company) (2003)

F.J. Green (4) President and Chief Executive Officer, Canadian Pacific 2009 Calgary, Alberta, Canada Railway Company and Canadian Pacific Railway Limited (2006)

K.T. Hoeg, C.A. (2)(6) Former President and Chief Executive Officer of Corby 2009 Toronto, Ontario, Canada Distilleries Limited (spirits and wine) (2007)

R.C. Kelly (2)(4)(8) Chairman, President and Chief Executive Officer, Xcel 2009 Minneapolis, Minnesota, U.S.A. Energy Inc. (utility company) (2008)

The Hon. J.P. Manley (2)(3)(6) Senior Counsel, McCarthy Tétrault LLP (law firm) 2009 Ottawa, Ontario, Canada (2006)

L.J. Morgan (4)(5) Partner, Covington & Burling LLP (law firm) 2009 Bethesda, Maryland, U.S.A. (2006) M. Paquin (4)(5) President and Chief Executive Officer, 2009 Montreal, Quebec, Canada Logistec Corporation (2001) (international cargo-handling company)

M.E.J. Phelps, O.C. (3)(5)(6) Chairman, Dornoch Capital Inc. 2009 West Vancouver, B.C., Canada (private investment company) (2001)

R. Phillips, O.C.,S.O.M., F.Inst.P. (2)(3)(6) Retired President and Chief Executive Officer, IPSCO Inc. 2009 Regina, Saskatchewan, Canada (steel manufacturing company) (2001)

H.T. Richardson, O.C. (5)(6) President and Chief Executive Officer, James Richardson & 2009 Winnipeg, Manitoba, Canada Sons, Limited (privately owned corporation) (2006)

M.W. Wright (2)(3)(4) Retired Chairman of the Board and Chief Executive Officer, 2009 Longboat Key, Florida, U.S.A. SUPERVALU INC. (food distributor and grocery retailer) (2001)

Notes: (1) T.W. Faithfull was President and Chief Executive Officer of Shell Canada Limited from April 1999 until July 2003. F.J. Green swa President and Chief Operating Officer, Canadian Pacific Railway Company and Canadian Pacific Railway Limited from November 2005 until May 2006, Executive Vice-President and Chief Operating Officer, Canadian Pacific Railway Company and Canadian Pacific Railway Limited from October 2004 until November 2005; Executive Vice-President, Operations and Marketing, Canadian Pacific Railway Company from January 2004 until October 2004 and Senior Vice-President, Marketing and Sales, Canadian Pacific Railway Company from April 2002 until January 2004. K. T. Hoeg was President and Chief Executive Officer of Corby Distilleries Limited from October 1996 to February 2007. R.C. Kelly was President and Chief Executive Officer of Excel Energy from June to December 2005. From October 2003 to June 2005 he was President and Chief Operating Officer of Excel Energy. The Hon. J.P. Manley was the Member of rliamentPa for Ottawa South from November 1988 until June 2004 and Chairman of the Ontario Power Generation Review Committee from December 2003 until March 2004. (2) Member of the Audit, Finance and Risk Management Committee (3) Member of the Corporate Governance and Nominating Committee (4) Member of the Health, Safety, Security and Environment Committee (5) Member of the Management Resources and Compensation Committee (6) Member of the Pension Committee (7) S.E. Blanchard retired as a director effective May 9, 2008 (8) R.C. Kelly was appointed a director effective August 7, 2008

2008 corporate profile & fact book | 65 financial data statement of consolidated income (in millions of Canadian dollars, except per share data) Year ended December 31 2007 2006 2005 Revenues Freight $ 4,555.2 $ 4,427.3 $ 4,266.3 Other 152.4 155.9 125.3

4,707.6 4,583.2 4,391.6

Operating expenses Compensation and benefits 1,284.2 1,327.6 1,322.1 Fuel 746.8 650.5 588.0 Materials 215.5 212.9 203.3 Equipment rents 207.5 181.2 210.0 Depreciation and amortization 472.0 464.1 445.1 Purchased services and other 617.4 618.3 621.6

3,543.4 3,454.6 3,390.1

Operating income, before the following: 1,164.2 1,128.6 1,001.5

Special credit for environmental remediation - - (33.9)

Special charge for labour restructuring - - 44.2 1,164.2 1,128.6 991.2

Operating income Other income and charges 17.3 27.8 18.1 Change in fair value of Canadian third party asset-backed commercial paper 21.5 - - Foreign exchange (gain) loss on long-term debt (169.8) 0.1 (44.7) Net interest expense 204.3 194.5 204.2 Income tax expense 144.7 109.9 270.6

Net income $ 946.2 $ 796.3 $ 543.0

Basic earnings per share $ 6.14 $ 5.06 $ 3.43

Diluted earnings per share $ 6.08 $ 5.02 $ 3.39

66 | 2008 corporate profile & fact book consolidated statement of comprehensive income (in millions of Canadian dollars)

Year ended December 31 2007 2006 2005 Comprehensive income

Net income $ 946.2 $ 796.3 $ 543.0 Net change in foreign currency translation adjustments, net of hedging activities (7.4) (1.6) (7.4) Net change in losses on derivatives designated as cash flow hedges (36.8) -

Other comprehensive loss before income taxes (44.2) (1.6) (7.4)

Income tax recovery (expense) 3.4 0.5 (2.1)

Other comprehensive loss (40.8) (1.1) (9.5)

Comprehensive income $ 905.4 $ 795.2 $ 533.5

2008 corporate profile & fact book | 67 consolidated balance sheet (in millions of Canadian dollars)

As at December 31 2007 2006 Assets Current assets Cash and cash equivalents $ 378.1 $ 124.3 Accounts receivable and other current assets 542.8 615.7 Materials and supplies 179.5 158.6 Future income taxes 67.3 106.3 1,167.7 1,004.9

Investments 1,668.6 64.9 Net properties 9,293.1 9,122.9 Other assets and deferred charges 1,235.6 1,223.2

Total assets $ 13,365.0 $ 11,415.9

Liabilities and shareholders’ equity Current liabilities Short-term borrowing $ 229.7 $ - Accounts payable and accrued liabilities 980.8 1,002.6 Income and other taxes payable 68.8 16.0 Dividends payable 34.5 29.1 Long-term debt maturing within one year 31.0 191.3 1,344.8 1,239.0

Deferred liabilities 714.6 725.7 Long-term debt 4,146.2 2,813.5 Future income taxes 1,701.5 1,781.2

Shareholders’ equity Share capital 1,188.6 1,175.7 Contributed surplus 42.4 32.3 Accumulated other comprehensive income 39.6 66.4 Retained income 4,187.3 3,582.1

5,457.9 4,856.5

Total liabilities and shareholders’ equity $ 13,365.0 $ 11,415.9

68 | 2008 corporate profile & fact book statement of consolidated cash flows (in millions of Canadian dollars) Year ended December 31 2007 2006 2005 Operating activities Net income $ 946.2 $ 796.3 $ 543.0 Add (deduct) items not affecting cash Depreciation and amortization 472.0 464.1 445.1 Future income taxes 38.7 75.3 258.0 Change in fair value of Canadian third party asset-backed commercial paper 21.5 - - Environmental remediation charge - - (30.9)

Restructuring and impairment charge - - 44.2 Foreign exchange (gain) loss on long-term debt (169.8) 0.1 (44.7) Amortization of deferred charges 12.1 16.5 19.5 Restructuring and environmental payments (61.0) (96.3) (69.0) Other operating activities, net 4.6 (103.4) (91.2) Change in non-cash working capital balances related to operations 50.3 (101.6) (23.3) Cash provided by operating activities 1,314.6 1,051.0 1,050.7

Investing activities Additions to properties (893.2) (793.7) (884.4) Reduction in investments and other assets 0.2 2.2 2.0 Net proceeds from disposal of transportation properties 14.9 97.8 13.2 Acquisition of Dakota, Minnesota & Eastern Railroad Corpora- tion (1,492.6) - - Investment in Canadian third party asset-backed commercial paper (143.6) - - Cash used in investing activities (2,514.3) (693.7) (869.2)

Financing activities Dividends paid (133.1) (112.4) (89.5) Issuance of CP Common Shares 30.4 66.6 31.8 Purchase of CP Common Shares (231.1) (286.4) (80.6) Increase in short-term borrowing 229.7 - - Issuance of long-term debt 1,745.3 2.8 - Repayment of long-term debt (187.7) (25.4) (274.4) Cash provided by (used in) financing activities 1,453.5 (354.8) (412.7) Cash position Increase (decrease) in cash and cash equivalents 253.8 2.5 (231.2) Cash and cash equivalents at beginning of year 124.3 121.8 353.0 Cash and cash equivalents at end of year $ 378.1 $ 124.3 $ 121.8

2008 corporate profile & fact book | 69 glossary

active employee Employees actively employed by the railway. Excludes employees who are not working for reasons other than normal vacation or short-term leaves, and individuals who have a continued employment relationship with CP but are not currently working.

average train weight The average total weight (freight car tare plus content) of all trains operated in the period over CP’s track and track on which CP has running rights.

class I railroad A railroad having operating revenues of more than US$258.5 million annually.

classification yard A rail facility where cars are grouped together according to their destination and marshaled into a train.

container A large, weatherproof box designed for shipping and/or transferring freight between rail, truck or marine modes.

gross ton-miles (GTM) The movement of the combined tons (freight car tare, inactive locomotive tare, and contents) a distance of one mile.

haulage The right of one railway to have another railway transport freight over that railway’s tracks, using the other’s crews and usually its locomotives.

intermodal service Freight moving via two or more modes of transport. Import/export containers generally move via marine and rail, while domestic intermodal typically utilizes truck and rail.

mainline route The primary rail line over which trains operate from terminal to terminal.

metric ton A metric ton is 2,204.6 pounds.

70 | 2008 corporate profile & fact book miles of road operated The route mileage of all rail lines over which the Company operates, excluding track on which CP has haulage rights. operating plan The operating plan describes in detail all of the activities needed to provide the required level of dock-to-dock service. These include train scheduling, train design, locomotive cycling plans, major yard car processing plans and contingency plans. operating ratio The percentage of revenues expended in operating the railway. It is calculated by dividing operating expenses by operating revenues. revenue ton-mile (RTM) The movement of one revenue-producing ton of freight one mile. short line A railway that cannot be classified as a Class I or regional railway. track capacity The maximum number of trains that can operate safely over a given segment of track during a specified time period (e.g., one day). Factors such as signal systems, siding lengths, number of tracks and geography all have an impact on track capacity. trackage rights The right of one railway to operate and transport freight over another railways’ tracks. transload facility A transfer facility enabling the railway to expand market reach through truck-to-rail service. warranty service agreement A contracted service whereby a locomotive manufacturer undertakes management of locomotive repair and servicing functions using the facilities and employees of Canadian Pacific.

2008 corporate profile & fact book | 71 TSX / NYSE | CP www.cpr.ca investor relations

Financial information, including CP’s Corporate Profile and Fact Book, is available on CP’s website www.cpr.ca, or by e-mail at [email protected], or 403-319-3591, or by writing to:

Janet Weiss, Assistant Vice-President, Investor Relations, Canadian Pacific, Suite 500, Gulf Canada Square, 401 - 9th Avenue S.W., Calgary, Alberta Canada T2P 4Z4 communications and public affairs

Mark Seland, General Manager Communications and Public Affairs, Canadian Pacific, Suite 500, Gulf Canada Square, 401 - 9th Avenue S.W., Calgary, Alberta Canada T2P 4Z4 shareholder services

Shareholders who have inquiries or wish to obtain copies of the Company’s Annual Information Form may contact Shareholder Services at 1-866-861-4289 or 403-319-7538, or by e-mail at [email protected], or by writing to:

Shareholder Services, Office of the Corporate Secretary, Canadian Pacific, Suite 920, Gulf Canada Square, 401 - 9th Avenue S.W., Calgary, Alberta Canada T2P 4Z4