13 December 2004
Arbitrator Rules in
CPR'S Favour on Coal Rate; Railway Maintains Earnings Outlook
A final offer arbitration on
a rate to ship coal from one of Elk Valley Coal Corporation's mines in southeastern British Columbia
to the Port of Vancouver concluded today with a ruling in favour of Canadian Pacific Railway's final
offer. The arbitrated rate, which applies only to coal shipped by CPR from the Elkview mine, is
confidential and is effective for one year, beginning 5 Oct 2004.
CPR said the ruling would not alter its previously expressed financial outlook, pending legal
proceedings it has taken against Elk Valley Coal Corporation and its concurrent challenge of the
validity of the final offer arbitration proceeding.
CPR asked the Canadian Transportation Agency (CTA) to deny access by Elk Valley Coal Corporation to
final offer arbitration because there is a confidential transportation contract between the parties.
A favourable ruling, which would be delivered by early February 2005, would nullify the final offer
arbitration ruling issued today. It would also confirm the confidential contract between CPR and Elk
Valley Coal Corporation applies to the Elkview mine.
CPR filed a statement of claim in Alberta Court of Queen's Bench on 21 Jul 2004,
against Elk Valley Coal Corporation in respect of the defendant's alleged failure to pay the full
amount of rail freight charges applicable pursuant to a confidential transportation contract with
CPR covering all five of Elk Valley Coal Corporation's mines in southeastern B.C., including the
Elkview mine. Resolution of the legal process is not expected until late 2005 or 2006.
CPR has said it expects earnings per share of approximately $2.60 in 2005, based on assumptions of
oil prices averaging US$48 per barrel and an average exchange rate of $1.25 per U.S. dollar. This
outlook reflects a conservative revenue recognition in 2005 on coal contracts, given the legal and
regulatory proceedings.
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