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<div><b>Page Content:</b> <p>Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced its fourth-quarter 2012 results today.* CP’s diluted earnings per share, excluding significant items (*see Non-GAAP Measures below) comprised of labour restructuring and asset impairment charges was $1.28.* This compares favourably with fourth quarter of 2011 diluted earnings per share, exclusive of significant items of $1.11, an improvement of 15 per cent.* Reported diluted earnings per share for the fourth-quarter 2012, inclusive of significant items, was $0.08. Reported diluted earnings per share in fourth-quarter 2011, inclusive of significant items, was $1.30.</p>
<p>CP’s operating ratio, excluding significant items (*see Non-GAAP Measures below) was 74.8 per cent for fourth-quarter 2012, which compares favourably to 2011’s operating ratio of 78.5 per cent.* Reported operating ratio for fourth-quarter 2012, inclusive of significant items was 96.0 per cent. </p>
<p>“Canadian Pacific is moving forward on our transformational journey to become the most efficient railroad in North America,” said E. Hunter Harrison, President and Chief Executive Officer.** “This quarter, CP saw strong operating performance as we continued to implement significant changes to how we run the railroad.”</p>
<p>“Management made a number of hard decisions this quarter including booking several significant items.* With these decisions now behind us, we anticipate record-setting financial and operational results starting in 2013,” added Harrison.</p>
<h3>Fourth-Quarter Significant Items</h3>
<p><b></b>Announced items that impacted reported fourth-quarter 2012 and 2011 earnings include:</p>
<li>$53 million labour restructuring charge ($39 million after tax), which unfavourably impacted diluted earnings per share (“EPS”) by 22 cents</li>
<li>$185 million impairment of Powder River Basin and other investment ($111 million after tax), which unfavourably impacted diluted EPS by 64 cents</li>
<li>$80 million asset impairment of certain locomotives ($59 million after tax), which unfavourably impacted diluted EPS by 34 cents</li></ul>
<li>$6 million advisory fees related to shareholder matters, which unfavourably impacted diluted EPS by 3 cents</li>
<li>$37 million income tax benefit, which favourably impacted diluted EPS in 2011 by 22 cents<br><br></li></ul>
<h3>Financial Expectations for Full Year 2013</h3>
<li>Revenue growth to be in the high single digits</li>
<li>Operating ratio to be in the low 70s</li>
<li>Diluted EPS to be up in excess of 40 per cent versus 2012’s diluted EPS, excluding significant items (*see Non-GAAP Measures below) of $4.34 </li></ul>
<p><b>Key Assumptions for Full Year 2013</b></p>
<li>Average fuel cost per gallon of US$3.45 per U.S. gallon </li>
<li>Tax rate in the range of 25 per cent to 27 per cent</li>
<li>Canadian to U.S. exchange rate at par</li></ul>
<h3>Defined Benefit Pension Expense Assumptions</h3>
<li>Defined benefit pension expense in 2013 and 2014 in the range of $50 million to $60 million per year, increasing to be in the range of $90 million to $110 million in 2015 and 2016</li></ul>
<h3>Conference Call Information</h3>
<p>CP will discuss its results with analysts in a conference call beginning at 11:00 a.m. Eastern time (9:00 a.m. Mountain time) on January 29, 2013.</p>
<h3>Conference Call Access</h3>
<p>Toronto participants dial in number: (647) 427-7450* <br>Operator assisted toll free dial in number: 1-888-231-8191**<br>Callers should dial in 10 minutes prior to the call.** </p>
<p>For those with Internet access we encourage you to listen via CP’s website at <a href="/">www.cpr.ca</a>. To access the webcast and the presentation material, click on the <a title="" href="/en/invest-in-cp/earnings-releases">“Invest In CP” tab</a>.*** </p>
<p>A replay of the conference call will be available by phone through February 28, 2013 at </p>
<p>416-849-0833 or toll free 1-855-859-2056, password 85400106. A webcast of the presentation and an audio file will be available at <a href="/">www.cpr.ca</a> under <a title="" href="/en/invest-in-cp/earnings-releases">“Invest In CP” tab</a>.<b></b></p>
<h3>Non-GAAP Measures</h3>
<p>We present non-GAAP measures and cash flow information to provide a basis for evaluating underlying earnings and liquidity trends in our business that can be compared with the results of our operations in prior periods.* These non-GAAP measures exclude significant items that are not among our normal ongoing revenues and operating expenses.* They have no standardized meaning and are not defined by GAAP and, therefore, are unlikely to be comparable to similar measures presented by other companies.* </p>
<p>Diluted earnings per share, excluding significant items provides management with a measure of earnings on a per share basis that can help in a multi-period assessment of long-term profitability and also allows management and other external users of our consolidated financial statements to compare profitability on a long-term basis with that of our peers.* U.S. GAAP reported full year diluted earnings per share in 2012 was $2.79.* Diluted earnings per share, excluding significant items was $4.34, which excludes the fourth quarter significant items discussed above as well as an additional $0.35 related to management transition costs, advisory fees related to shareholder matters and an Ontario statutory tax rate change.* U.S. GAAP reported full year diluted earnings per share in 2011 was $3.34.* Diluted earnings per share, excluding significant items was $3.15, which excludes advisory fees related to shareholder matters and a significant favourable tax item.* Operating ratio, excluding significant items provides a measure of the profitability of the railway on an ongoing basis.* It provides the percentage of revenues used to operate the railway on an ongoing basis as it excludes significant items.</p>
<p>For further information regarding non-GAAP measures see our Management’s Discussion and Analysis for the third quarter of 2012 or the document Non-GAAP Measures on our web site at www.cpr.ca.</p>
<h3>Note on forward-looking information</h3>
<p>This news release contains certain forward-looking statements relating but not limited to our operations, anticipated financial performance, planned capital expenditures, and business prospects.* Undue reliance should not be placed on forward-looking information as actual results may differ materially. To the extent that we have provided guidance that contains non-GAAP financial measures, we may not be able to provide a reconciliation to the GAAP measure due to unknown variables and uncertainty related to future results.</p>
<p>By its nature, CP’s forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes.* Other risks are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States.* Reference should be made to “Management’s Discussion and Analysis” in CP’s annual and interim reports, Annual Information Form and Form 40-F.</p>
<p>Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.</p>
<h3>About Canadian Pacific</h3>
<p>Canadian Pacific (TSX:CP)(NYSE:CP) is a transcontinental railway in Canada and the United States with direct links to eight major ports, including Vancouver and Montreal, providing North American customers a competitive rail service with access to key markets in every corner of the globe. CP is a low-cost provider that is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpr.ca to see the rail advantages of Canadian Pacific.</p>
<p><strong>Media*</strong><em>************************************************</em><strong>Investment Community<br></strong>Ed Greenberg************************************** Janet Weiss <br>Canadian Pacific*********************************** Canadian Pacific<br>Tel.: (612) 849-4717***************************Tel.: (403) 319-3233<br>24/7 Media Pager: 855-242-3674<br>email: <a href="mailto:ed_greenberg@cpr.ca">ed_greenberg@cpr.ca</a>***************** email:* <a href="mailto:investor@cpr.ca">investor@cpr.ca</a></p>
<div><b>News Release Date:</b> 1/29/2013 5:30 AM</div>
<div><b>Location:</b> Calgary, Alberta</div>
<div><b>News Type:</b> Investors</div>
<div><b>Is Featured:</b> Yes</div>


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