Good morning, my name is (Sarah), and I will be your conference operator today. At this time I would like to welcome everyone to the Canadian Pacific's First Quarter 2010 conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. (Operator Instructions). Thank you. Ms Weiss, you may begin your conference.

Thank you, (Sarah). Good morning and thank you for joining us for our first quarter conference call. The presenters today will be Fred Green, our President and Chief Executive Officer; Kathryn McQuade, our Executive Vice President and Chief Financial Officer; Ray Foot, our Group VP of Sales; and Brock Winter, our Senior VP of Engineering and Mechanical. Also joining us on the call today is Ed Harris, EVP and Chief Operations Officer, Jane O'Hagan, Senior VP, Marketing & Sales and Chief Marketing Officer and Brian Grassby, our VP and Controller. The slides accompanying today’s teleconference are available on our website. Before we get started, let me remind you that this presentation contains forward-looking information. Actual results may differ materially. The risks, uncertainties and other factors that could influence actual results are described on slide one in the press release and in the MD&A filed with Canadian and U.S. Securities regulators. Please read carefully as these assumptions could change throughout the year. All dollars quoted in the presentation are Canadian, unless otherwise stated. This presentation also contains non-GAAP measures. Please read slide two. Finally, when we do go to Q&A, in the interest of time and in fairness to your peers we will be asking you to limit your questions to two. If you have additional questions, you can re-queue and time permitting we’ll circle back. Here then is our President and CEO, Fred Green.

Good morning everyone. As you’ve seen we’ve kicked off 2010 on a positive note and delivered adjusted EPS of $0.60 or 88% over Q1 2009. As we suggested in our January call, our goal was to be agile and nimble to respond to the uncertain and volatile market and I’m very pleased with our performance in this regard. But I’m not satisfied as we have more to improve by. Looking at the quarter, we sustained our improvements in train productivity, we calibrated our resources perfectly to meet our commitment to service reliability and our productivity objectives and we posted another strong quarter in train safety performance. Additionally, we strengthened our bench with the addition of Ed Harris, Chief Operations Officer, and the promotion of Jane O'Hagan as Chief Marketing Officer. You’ll hear more about our future plans from both Ed and Jane at our June 2nd Investor Day, but for our Q1 results I’ll turn it over to Kathryn McQuade to report on our performance and the current market. Over to you Kathryn.

Thank you Fred and good morning everyone. Through Q1, we have continued to do an excellent job of managing cost and driving productivity. The hard work we did through 2009, set us up well to respond to market demand while realizing operating leverage as volumes recover. As you know, we transitioned to US GAAP in January 1, and many of you attended our March call, which outlined the major differences. So today I will be speaking to earnings in US GAAP compared to 2009 US GAAP numbers. Let me start on slide six, with a reconciliation of the GAAP, non-GAAP earnings we refer to as adjusted earnings. Our reported net income with a $100 million or $0.59 per share. When we take out FX on long term debt and other specified items, our adjusted earnings increased to $102 million or $0.60 per share. On the quarter, the adjustments from GAAP to non-GAAP had no impact on our operating income. Turning now to slide seven. We sustained the cost efficiencies reported in previous quarters and our operating ratio improved to 82.4% an impressive improvement of 570 basis points over first quarter 2009. Expense per GTM excluding fuel and the impact of FX improved by 11%. Cost management continues to be a priority as we bring resources back to meet demand level changes. The Canadian dollar was stronger this year versus last year and reduced EPS $0.03 to $0.04 in the quarter. We should expect to see a continued FX headwind as the Canadian dollar is expected to remain strong. Our rules some remains $0.01 strengthening of the Canadian dollar decreases EPS for the year by a penny. Looking at the top of slide seven, I will focus my comments on the percent experiences of FX adjusted performance. Total revenue were up…

Thank you Kathryn and good morning. Starting on slide 16, in the first quarter volumes were up 1% over Q4 2009. This represents the third consecutive quarter of increases as demand continues to improve. On a year-over-year basis total car loads were up 8% with each business group registering an increase over 2009. Revenue ton miles or RTMs were up strong 17% compared to Q1 2009 with fertilizers, industrial products and force products accounting for most of the car load as RTM differential. Our reported revenue is up 6% versus Q1 of last year. On a currency adjusted basis the increase was 15%. On top of volumes of 8% fuel surcharge revenues generated approximately 3% of the gain and price and mix were 4%. I’ll now walk through the markets, give you comments on the quarter and provide some inside on the remainder of the year. For clarity, I’ll speak to currency adjusted revenues from here on. Train revenues were up 4% and volumes were up 2% on the quarter. Our US franchise saw a strong demand and increased volumes year-over-year which was partially offset by a lower volumes in Canada resulting from weaker cross border and winter rail movements. Moving to coal, volumes were up 7%. Strong Chinese steel production fuelled demand and export volumes increased by more than 30% over last year. In the US thermal coal was down to the outages that US receivers and winter impacts on parts of our franchise. Overall coal revenues were down 1% on the quarter due to lower revenue per unit from shorter Canadian length of hall and carryover of the 2009 final offer arbitration export rate changes. Turning to sulfur and fertilizers on slide 19, volumes were up 78% on the quarter while RTMs were up 107%. We saw the…

Thank you, Ray, and good morning. Q1 was another in a series of very strong quarters, quarters for us on operating performance. We have proven that we are nimble to size up or down in line with the volumes. The productivity improvements we have achieved over the past 15 months are sustainable, and we see further opportunities for gains in both efficiency and service reliability. Looking more specifically at our results, let's start with safety on slide 25. Our FRA train incident frequency improved by 31%. We continue to be the industry leader in train operation safety. This is driving significant benefits in reduced casualty costs. Our FRA personal injury frequency was up by 15% and we will continue to be focused on improving for the remainder of 2010. It’s Railway Safety Week in Canada and a good reminder of the importance of working with our employees and the communities we operate in to continuously improve the safety of our operation. Turning to slide 26, we saw a significant recovery in volumes in Q1, particularly in March, and we are pleased with our ability to handle it cost effectively. We have proven over the past several quarters, we can effectively deal with volatility. With respect to our performance, train speed was off by 3%. This was due to the mix of more bulk trains, supply chain issues at Port Metro Vancouver and heavy snow conditions in the Midwest United States. Despite that, our productivity metrics show the good operating leverage we are achieving from the consistent execution of our integrated operating plant, continued implementation of our long train strategy, and intense focus on asset utilization. GTMs increased 15%, but our train starts only increased by 6%, and our cars and locomotives on line were up only 8% and 3% respectively.…

Thanks Brock. Well let me wrap up by saying that, last year, we demonstrated our ability to react to the declining market. This quarter we demonstrated our ability to react to our market rebound. As Ray highlighted, we still have very limited visibility into demand beyond Q2 and are fully cognizant that markets are likely to recover in fits and starts. You can expect us to continue to quickly adjust resources up or down in response of demand. We are proving CP can be nimble and we are well positioned to realize operating leverages volumes recover. We have made good strides on productivity and our next opportunity is fluidity and asset utilization. I will close by saying that I am looking forward to having a more fulsome discussion with you at our June 2nd Investor Day, when we will discuss how we will deliver additional fluidity, service reliability, growth, and of course value to our shareholders. With that I will turn it over the Sarah to address any questions you may have on our Q1 update.

(Operator Instructions). Your first question comes from the line of Walter Spracklin from RBC Capital Markets, your line is open. Walter Spracklin – RBC Capital Markets: Thanks very much. Good morning guys.

Good morning Walter. Walter Spracklin – RBC Capital Markets: Just wondering Fred, you in the past sounded somewhat more bearish or cautious about your expectations for rebounding economy. I got the sense you sounded not quite as cautious anymore, is that a good read? And perhaps give us some color about what you are hearing from your customers in terms of their expectations for the rest of the year?

Well, Walter, I think the key thing is that we are not a homogenous market, right? So the things that we have been apprehensive about and I think it's important to understand the big rebound on volumes has largely been in the bulk commodities that Ray described I think pretty effectively. If one looks at the things like housing starts, I think they actually declined in March. If you look at the auto numbers that 11.5 million, 12 million units, that's versus 15 million, 16 million, 17 million in the past. So I mean we are pleased with the recovery, but the vast majority of the big volume recoveries have been in the bulk markets. And as Ray said, both merchandising and intermodal, we expect growth, but modest growth kind of GDP, GDP plus a bit, unless it's supplemented by our initiatives. So am I delighted with speed of the bulk recovery? You bet. We have no way to predict that. The issue that we all face is simply the sustainability of the demand. Will it be volatile? I would guess it probably will be a bit more volatile than history says. So we are delighted. But Walter the reality is we don't really know what's going to happen beyond the second quarter and I don't think our customers do. Walter Spracklin – RBC Capital Markets: Okay. Second question here, just on the tech one-year push forward here, lot of different opinion out there as to whether this is a good thing or a bad thing. I mean there is two ways to look at it, one is that are you getting close to a multiyear deal and then you just had some things to clue up and wanted to give yourself some more time or is this a function of – you still can come up with agreement and you are going to lock in or continue on what has been a fairly onerous term, terms from the prior FOA and you are going to extend it for another year. How do we look at this one-year extension?

Well, in a word, because you gave me a choice, it’s a good thing. Walter, I think what we feel comfortable with is that the quality of the dialog, the constructive nature of the dialogue was very encouraging between the parties. And that lead us to collectively believe that we ought to get something done so that we could sit in a room together and try and find a good long-term solution for both entities. So I think that's the summary position and everything else is just color that everybody can have opinions on. But the proof will be in the pudding. We will see what we can collectively come up with. And I am an optimistic, we will find a good solution for both companies.

Your next question comes from the line of Matt Troy from Citigroup, your line is open. Matt Troy – Citigroup: Yes, thank you. I was just wondering if you could help me in terms of the incremental operating leverage going forward. You have obviously had a very nice recovery on the bulk side of the business, but obviously with intermodal lagging a bit, you could see some better leverage in the back half of the year. How should we think about just – obviously the very strong margins you posted this quarter. But potentially what the incremental contribution of further volume recovery might look like in the back half of the year, would it come at a higher rate?

Well, Matt, it's Brock. I will just comment from an operational perspective. As we have talked about it in the past, our intermodal frames, frankly, we have still a considerable amount of capacity that remains on those existing trains. So at this point, we could see adding more volume to those train starts without having to increase our overall train starts. So from a pure operational perspective, we are in good shape to take that incremental volumes on without adding a lot of extra train starts or crew starts.

I think – Matt, it’s Fred. Just to complement that, we see three different businesses, right? So with the work that Brock and his team have done with regard to creating the ability to handle 8,000; 10,000; 12,000; and even 14,000 for the intermodal trains, that's the surplus surge capacity that we have to take those things on without the train starts. On the merchandise side, we clearly have capability across the breadth of the merchandise business to fill our trains and I think we will see increasing opportunities as we go forward to perhaps even consolidate trains as we move into our fluidity and asset utilization aspirations. But remember on the bulk side, for the most part, we have maxed out most of those trains. And every one of the incremental tons that comes our way on the bulk side generally will trigger a new train start. So that's probably the breadth of the portfolio for you. Matt Troy – Citigroup: Thanks. And Brock what would be the incremental length you could add. I mean I know it's dangerous to work in the law of averages across the network based business. But on the intermodal side, is it 5%, 10% in terms of train length that you could expand without having to change the schedule or is there directional guidance you could help us there in terms of this?

Yes, at least a certain amount. Matt Troy – Citigroup: Okay. And last question would be just on PTC, we are hearing obviously from a lot of carriers updated numbers with respect to anticipated PTC investment, any update to your outlook in terms of expected total spend and what might be deployed in 2010? Thank you.

We commented in the past and it hasn't changed around $250 million still early, but around $250,000 and about $15 million dollars in 2010 that we have appropriated for this year. Matt Troy – Citigroup : Alright thank you.

Thank you.

Your next question comes from the line of David Newman from National Bank Financial, your line is open. David Newman – National Bank Financial: Good morning folks.

Good morning, David. David Newman – National Bank Financial: Impressive results.

Thank you. David Newman – National Bank Financial: I would like to ask a couple of questions about culture change and the refocus CP has on cost. First of all, in terms of cost reductions, do you have any sense of how much was attributable to the weather and better conditions versus initiatives you may have undertaken to improve the operations? In other words, how much of the OR improvement is sustainable in your view? I know it's a hard question to answer, but just to kind of get a sense of it.

Well, I think the vast majority is due to the initiatives that Brock and his team put in place on productivity. And yes, there was some kind of decent winter. But I think if you recall last winter, we didn't hide behind that of Q4. So – David Newman – National Bank Financial: Okay. And then Fred, how low do you – I mean in the past – you quoted numbers in the past. But given the focus on cost reduction, how low do you think you can go or once you get some volume recovery, but when you get there.

Really what we – when we get to our June 2nd Investor Day and we start to talk about what we think we can do over a longer time horizon, I think that will be an appropriate place for us to try and give some better direction in that regard. At this point in time, we are going to kind of stay focused on the shorter term. David Newman – National Bank Financial: Okay. Second one, maybe Kathryn, you had a $100 million cost reduction program, which I know was partly volume related. But do you have a sense on how much was achieved in the quarter through facility consolidation, mechanic shops, and the centralization of functions or other initiatives, and what your headcount plans might be as you look in the second half of the year?

Okay. I did mention that we are expecting our expense employee counts to remain around 14,000. David Newman – National Bank Financial: Okay.

So that we don't see any major changes there. In terms of our structural cost initiatives, I am going to kind of repeat what Fred said just a while ago. I really think you have to put everything in context from a structural cost perspective and that will be some of the focus of our June Investor Day. So stay tuned for that, because I think it will provide a little bit more color for you. David Newman – National Bank Financial: Excellent, very good results.

Thank you.

Thank you.

Your next question comes from the line of Edward Wolfe from Wolfe Trahan, your line is open.

Just before you jump in, just want to remind everyone we are going to try to limit it to two questions a person in order to give everyone a shot at asking questions. Scott Group – Wolfe Trahan: Sure. Thanks. It's Scott Group in for Ed, good morning everyone.

Good morning Scott. Scott Group – Wolfe Trahan: Just real quick first, Ray, I heard you talk about a plus 4% price in mix. Can you break that up between price and mix?

What I said further Scott was I said that if you looked at price on a same-store basis on the quarter, we were basically flat. So the mix is the 4% component. Scott Group – Wolfe Trahan: Okay. And within that flat, can you break out kind of what was the regulated grain and what was the tax? So what's a good kind of core run rate once we get passed those issues?

Well, what we have said in the past is that the regulated grain number is about a negative 7.5% adjustment. We have given you numbers in the past in terms of what tech has been. Try to stay away from predicting what the future is going to be in terms of numbers. What I can tell you is that we lapped the tech impact in Q2, so we expect to go positive in that quarter. We lapped the regulated grain on August the 1st, and then the indices that we have talked about we lapped going into 2011. So while I am not going to be specific and predict the number, I would expect that our change will sequentially improve as we move forward. Scott Group – Wolfe Trahan: Okay, great. And then I understand the message that the such comparisons going forward, can you just give a little bit more color. Is it just that the year-over-year comparison is tough or are there cost reductions from last year that are reversing and coming back? And then maybe with that, Kathryn, you talked about how cost come back and step functions, where are we in that process, how much capacity is left before volume related expenses really start ramping up again?

Well, there’s a lot in that question, but I think Brock answered that in terms of a lot of the step function. It will depend on the mix of the traffic that comes back, so you add train starts as the bulk comes back. But we have plenty of capacity on our merchandising intermodal trains. So when you are looking at those types of cost I think we have given a lot of clarity there. In terms of anything reversing from last year, we really don't have any knowledge of that. So the sustainment of our cost initiatives are only going to get better as volumes improve. That's on the volume variable ones and then we will provide more detail on our structural cost initiatives in the June meeting. Scott Group – Wolfe Trahan: Okay, great. I will get back in queue, thanks for the time.

Thank you.

Your next question comes from the line of Chris Ceraso from Credit Suisse. Your line is open. Allison Landry – Credit Suisse: Good morning. This is Allison Landry in for Chris today. Could you guys remind us how much of your business is subject to the fuel indices that you were just talking about?

Fuel coverage overall?

No I think Allison's question – Allison Landry – Credit Suisse: No, so I think –

RCAF. Allison Landry – Credit Suisse: Exactly, exactly.

Well we have about – what we stated in the past about 10% of legacy fuel contracts in place that would be subject to those fuel related indices. Now, we have fuel increases on almost every contract we have in place. Allison Landry – Credit Suisse: Okay.

So Allison, just to make sure we are all talking the same language. What Ray's reference is that there is a 12-month time lag on a handful of contracts, because the RCAF is a retro looking inflationary vehicle whereas others are on a 30 and 90-day or shorter terms adjustment.

So just to give you clarity the gain as an example is a retroactive adjustment. That's why saw that 7.4% negative last year was almost all fuel and that would be the same on the indices that we were referring to.

And lastly Allison, sorry just to make sure everybody is clear and that's why Kathryn has put in place approximately a 10% hedge for vehicles to ensure that we don't get caught with this intra-year movement of prices. Allison Landry – Credit Suisse: Just in terms of you guys posting really good cash flow numbers this quarter, can you talk about what you see in terms of future share purchases and evaluating your dividends? I know some of the other rails have talked about – keeping a closer look at that throughout 2010.

Well yes, having strong cash is a nice problem to have. And so as Fred and I look at how we best return to our shareholders, we will look at all opportunities including high return capital projects that could potentially provide some very quick paybacks as well. So we still are focused on our balance sheet and continuing to improve that as well as looking at however we can best return to the shareholders. Allison Landry – Credit Suisse: Okay. Thank you so much for the time.

Thank you.

Your next question comes from the line of Ken Hoexter from Merrill Lynch. Your line is open. Ken Hoexter – Merrill Lynch: Great, I just actually want to follow-up on the leverage question a little bit earlier and kind of the amount of capacity left. I don't think you mentioned how many locomotives cars you still have in storage. And then if you think about length of trains what length do you think you can continue to add cars onto the back of those, maybe you could start with what is still in storage and furloughs and employees?

Okay. Ken, it's Brock. On the furlough side, we are sitting at about 500 people currently in furlough right now mostly in Canada. In fact, we are doing some hiring in the United States as we speak. In terms of rail cars, we are sitting at about 8,400 rail cars in storage. And we have approximately a 130 locomotives in storage and that's a combination of yard four axle units and six axle units. So again, we are in good shape. And with regards to surplus if you will or available capacity in that regard, we have no issues with regards to corridor capacity or yard capacity. And as Fred mentioned with regards to asset utilization and spinning our current assets in place, we feel we are in good shape to handle any growth in volume. And you saw the chart that Ray put up in terms of comparing volumes in '08 to '09 and '10, and we are nowhere near the types of volumes we saw in '07 and '08. So I have got great confidence that we have got the capacity available Ken to meet any of our customers’ growing volumes.

I think – Ken, it's Fred, I will just jump in and reinforce a key point that Brock said is that the fleet is what it is, I would love to leave them all in storage and utilize the fleet that we have, be it locomotive or cars more effectively than we have been able to in the past. So not only do we have that surge capacity still in storage, but my expectation is that we will move our assets more quickly going forward creating capacity. Ken Hoexter – Merrill Lynch: Quick one for Ray, I guess the move to quarterly pricing, is that going to impact do you think the flow of potash at all?

Well, as I – it’s hard to say. I think Ken, what we have said is we have got pretty good visibility through the second quarter. We expect the run rate to be consistent beyond that, but we really don't have any visibility on volumes or how that might change going forward, so I can't give you anymore color than that at this point. Ken Hoexter – Merrill Lynch: Alright, great thanks for the time.

Your next question comes from the line of Randy Cousins from BMO Capital Markets. Your line is open. Randy Cousins – BMO Capital Markets: Good morning.

Good morning, Randy. Randy Cousins – BMO Capital Markets: Ray, I wonder if you could comment on exactly what's going on in Montreal. And are you being – is your intermodal business into Montreal, particularly the cross border stuff being impacted by the high dollar or some of the corridor initiatives of the Eastern US railroads?

Well, first of all, if you look at the numbers, Randy there is no question that the Port of Vancouver strengthened more than the Port of Montreal. So when you look at the European situation versus the Asian situation and there is definitely a change there. If you look at our numbers, I think it's important to look at – there is really two components to our quarter. So January and February of 2009 were actually our strongest intermodal months. So when you look at the month of January and February the strongest. When you look at the month of March, we were up 13% on intermodal volumes and we have continued to see that into April running at 10% or so. So I think that – we think that the volumes have started to stabilize at Montreal and we are actually seeing some positive changes there, so that should spell some improvement going forward. I should also comment that we have let some short haul business go through the Eastern ports as I mentioned in my remarks. So that's impacting our number there as well. Randy Cousins – BMO Capital Markets: And my second question has to do with the productivity. You guys had an extraordinary improvement in labor productivity year-over-year, but you talked about sort of tough comps. Sequentially from Q4 to Q1, if I have done the numbers right based on expensed employees, it's about a 2% productivity improvement. And if I look at Kathryn's guidance for sort of Q2, I am looking at sort of a 3% productivity improvement. Sequentially, can you guys continue to sustain sort of 1% to 2% productivity improvements in terms of GTMs per employee? When do you sort of run into the limit?

Randy, it's Fred. I am reluctant to get into that at this point in time. I think we are in a pretty important transitionary period with kind of massive volume swings more than anybody else 25% and 30% changes by month and obviously an aspiration is to do exactly what you're describing. I think by strengthening the bench and bring some of Ed's experience onto us with regard to asset utilization and yard productivity, things that nor Brock or I have that kind of background. I anticipate we will be able to move in that direction, but I am a little reluctant to start putting numbers on it just yet.

And Randy I will just add, as I usually do, it really depends and it depends on the mix of the traffic. Because just as we spoke earlier, you have different leverage, if it's merchandise and intermodal traffic coming back versus if it's bulk. So the amount of productivity are always going to depend on how the business and where the business comes back. Randy Cousins – BMO Capital Markets: Okay, thank you.

Thank you.

Your next question comes from the line of Scott Malat from Goldman Sachs, your line is opened. Scott Malat – Goldman Sachs: Thanks. I just wanted to ask another kind of capacity question, but maybe more specific with meth coal, we saw the demand really picking up. Just wanted to understand the ability to keep up with the rise in production levels there and how much capacity we have for meth coal?

Scott, it's Brock. As I think both Fred and Ray commented, we would love to handle more coal. So we have got no issues with regards to increasing our capacity. Again, in the supply chain, there is many partners. So – but from our perspective, we are well positioned to handle as much coal as our client would like us to ship. Scott Malat – Goldman Sachs: Is there some lag time there? Does it take like a month to ramp up to capacity or is it just real time?

Well, I think depending on the volumes obviously we do have some coal sets that are available to us today. We have the locomotives and we have the people. I guess, if we got to a point where we need to go out and acquire more coal sets, that might take a little longer, but we don't anticipate that as an issue right now. But I would say that the assets that we have available to use we can get in place very quickly.

And Scott, this is Kathryn. I remind you also the chart that Ray put up, we are still not close to the volume levels of 2008 and 2007 and also during that time, we had our West Cap project going and have completed that. So we have lot of track capacity in place and we are just anxious to use that capacity. Scott Malat – Goldman Sachs: All right, that's really helpful. And then the other thing I was just – just hearing some talk about potential for thermal coal shipments out of Canada for test burns in Asia, just any thoughts on that or insight to potential there?

We are not familiar with that. I am they will pursue any market they can get and obviously we service the vast majority of the coal. So if it’s going to be involved – if we are going to be involved, we will find out about when the customer is ready to tell us about it.

Your next question comes from the line of Tom Wadewitz from JPMorgan. Your line is open. Tom Wadewitz – JPMorgan: Wanted to ask you again – to start with I guess a granular question on the yields, it’s been somewhat difficult forecast sulfur and fertilizer and cold yields. Sequential do you think that will be reasonably stable or do you think you are going to see a significant move up in coal and sulfur and fertilizer yield second quarter versus first?

Well, if we look at the distribution of the volume, Tom, what we have said going forward is that you will start to see coal should be at the run rates that you saw in Q1. The thermal business in the U.S. will come back. Those you will see from the shortfall movement start there. On the potash side, as we said, Q2 looks like a lot like Q1. Beyond that we have no visibility. So, it’s – I think we have probably given you as much color as we could in the remarks we have provided.

Okay. And then the second question, I am sure you want to save a lot of the details for analyst meeting, but are there any initial comments you can provide whether it’s Fred or – I believe you said Ed’s on the call as well, in terms of the initial focus that Ed Harris is going to have whether that’s on car productivity, locomotive productivity, scheduled network. Just need kind of high level comments on Ed’s initial focus.

Well, I think I made brief to it, Tom in my last comments is that Ed brings a background that I don’t have, Brock doesn't have and we think that the next great opportunity for a railway that frankly 70% of what we do is intermodal in bulk. So we don’t practice merchandise as much as we – some others do. And Ed’s got a deep background in yard productivity, yard asset utilization, merchandise strengths. Our expectation is that will be first and foremost done on Ed’s target list but knowing Ed that he will include that in much more and the collateral benefits of doing that, we anticipate will help us on asset utilization in intermodal and bulk trains. So I am going to let Ed get his feet on the ground, get familiar with it, transfer lot of knowledge and when we get to June 2nd, you will have lots of time to spend with both Jane and Ed.

Your next question comes from the line of Bill Greene from Morgan Stanley. Your line is open. Bill Greene – Morgan Stanley: Hi there. I just had a quick question, if you had many conversations with your shippers about their levels of inventory, do you feel confident that there is a lot of more to go in their ability to rebuild those inventories. Are we kind of far along in what you look at in terms of the inventories as the restocking traits sort of over from your perspective?

Bill, it’s Ray. So, as we are talking about it with our customers, their rebuilding has been in line with both the increased sales and increased industrial production in the first half. Really as they look forward, they see that replenishment continuing through till the end of the second quarter. Beyond that quite honestly in the discussions we have had, they really don’t have visibility into the second half and what that might be. So they are not able to give us a lot of detail. Obviously, the second half is going to be very much driven on what goes on with sales. If you look at automotive as an example, huge amount of inventory replenishment, if those numbers at the 11.5 million and 12 million continue, then we will continue to see good volumes and shipments going forward but a lot of uncertainty out there still. Bill Greene – Morgan Stanley: Do you sense that your comments would change given the level of the Canadian dollar if that moves significantly up or down, would you change your perspective?

Not really, no. If you look at our segments, there has been a lot of movements in the Canadian dollar. Obviously, you get into the housing situation and situations like that. But we haven’t really seen an impact from that perspective.

Remember, Bill, it’s Fred, just remember that the Asian economy drives a big part of our bulk commodities and the Canadian dollar moving a couple of pennies is not making a big difference given the very high commodity prices by historic standards and we have had the good fortune to be associated with the number of, for instance in the auto business vehicle models that are strong and robust. And again, we are not seeing any of it in whatsoever that those lines are going to be impacted by the high Canadian dollar.

Your next question comes from the line Jeff Coffman from Sterne Agee. Your line is open.

Thank you very much. Well, in the interest of time, my two questions were actually answered already and I hold up on the strategic questions to the June Analyst Day. So congratulations on the quarter and thank you.

Thank you, Jeff. (Sarah), are we all done?

Your next question comes from the line of Jacob Bout from CIBC. Your line is open. Jacob Bout – CIBC: Your full year data here. You commented on that the – the carloads per day, you have seen some improvement there, but when you take a look at Terminal Dwell to Train Speed and year-over-year comp, are they actually moving in the wrong direction? Maybe just comment a bit on that.

Sure, Jacob, it’s Brock White. Let me just go through the three metrics we published publicly that you mentioned there. So on the train speed, I think I did address that situation again, that was the mix – obviously, bulk trains – move a little slower than our merchandise run intermodal trains. The DM&E, this past winter, as some of our U.S. friends know, that to Midwest, particularly the South Dakota area was a record winter in terms of snow fall and that did have a big impact on the fluidity of that particularly network but it is a network. And what happened on that part of the network did impact our terminals in the St. Paul area and Chicago area. And those are the two terminals frankly where our processing times were driven up quite high and caused our overall terminal processing times to be higher than we would have liked them to be. So we knew we are centered. And on the cars on line side, as I mentioned, car on line were up 8%, the volumes were up 15% and really we saw good productivity and fluidity there. And where we saw the – let me say not the type of productivity on cars we would have liked to have seen, again was on the DM&E where we had more cars than we would have expected to have given the winter conditions that they faced on that particular opinion and I am pleased to report that the property has now its fluidity back and we are seeing a significant reduction in their car inventories on that property. So very isolated instances affecting each of three particular metrics, Jacob and I would expect to see improvement in the coming quarters.

Jacob, one thing I will add, the public metrics that you are looking at the 2009 numbers for train speed do not include the DM&E as well. So they did join our train speed numbers, January 1 and as they are heavily bulk network, that does also change the mix and did lower the speed. So I am not sure which train speeds you are looking at. But if you are looking at the public numbers, do note that you do see a DM&E January 1 impact. Jacob Bout – CIBC: Thank you for that. And my second question just on the potash volumes, maybe you can talk a little bit about what you are seeing in the domestic market versus in the export market?

Well, as I said in my remarks, Jacob, the domestics have been pretty strong. In the first half we saw a lot of replenishments down into North American market. Going forward we really don't have visibility into what the fall will look like. When you look at planting intentions, there is more soybean and corn in our territory, that usually means more fertilizer application. So but we will just have to wait and see in terms of what’s happening in that segment. Jacob Bout – CIBC: So the majority of the improvement we are seeing has basically been driven by the North America volumes?

No, we have seen big growth in the export marketplace. So when we look at our business, potash on the export piece makes up the majority of our volumes and we have seen large growth there. We have also seen growth in the North America market through the first quarter. We expect that to continue into the second quarter. It’s really the second half where we don’t have a lot of visibility into either of those marketplaces.

Your next question comes from the line of Benoit Poirier from Desjardins Securities. Your line is open.

Thank you very much, good morning. First question on the intermodal, when we look at pricing, I recall you mention a couple of quarters ago that pricing was a little bit more difficult. But when we look the metrics of Q1 in terms of yield, it seems that the yield has bettered in a couple of other commodities. Does it mean that pricing is slightly recovering for intermodal? And maybe could you also break down the performance between domestic and intermodal?

Okay, so it’s Ray. First off in terms of the differential that you are seeing there, a good portion of it is – I had mentioned that we have seen some shortfall traffic reductions in our mix. So you are seeing some longer haul intermodal traffics, that's going to change your breakdown between your RTM gain and your carload gain. On the pricing side, I think we have been pretty consistent in saying that over the last several quarters on renewals, we have been coming in on average in that 3% to 4% range. That's what we continued to see through the first quarter across our intermodal and other business and it’s what our target will be going forward. So I think that’s the component there. And your second question again was?

The breakdown between domestic and international.

Domestic and international. So we have seen sequentially better growth on the domestic side. We have been constant improvement from January to February to March. The international side, as I mentioned in my remarks, we saw good growth off the Port of Vancouver but relatively flat at the Port of Montreal. Looking forward we think that Vancouver will continue to be stronger than it has been and domestic continues to see the sequential improvement through to and into April. So we are feeling pretty good about where those numbers are right now.

Okay. And on my second question, when we look at the – in terms of differential between the RTMs and the carloads, you mentioned that the gap should reduce going forward but what kind of numbers we should expect for the year and going into the following quarters?

Well, obviously, that's going to depend on what happens to the breakdown between the commodities, etcetera. So it’s pretty hard to pinpoint exactly where it’s going to be when we don’t have a lot of visibility about the second. What we have seen is that we are returning to a more normal spilt in volumes and origin, destination between our bulk, intermodal and merchandise business. So as that bulk comes back, just as we saw a reduction last year, we are seeing the increase this year. So it should return to the more normal pattern, and we should see that continue. What we are trying to highlight is that in the second half of 2009, we have seen some good bulk recovery. So that's spread between them, we will start to minimize as we get into the second half of the year.

Your next question comes from the line of Steve Hansen from Raymond James. Steve Hansen – Raymond James: Just a quick one from me. One of your competitors recently talked about accelerating their CapEx budget in light of better inspected fundamentals. Can you just remind us what your intent in spending level will be for 2010 and whether or not you might be inclined to increase it at this point?

Yes, I think our guidance is $680 to $730 million. And just as I mentioned, as Fred and I are looking at our strong cash flow position, we will look opportunistically if there is any good projects that have a very rapid payback. So it is what it is right now but we will continue to look at what the needs of the organization are.

And your last question comes from the line of Edward Wolfe from Wolfe Trahan. Your line is open. Edward Wolfe – Wolfe Trahan: Just real two quick follow-ups if I can. Kathryn, you talked about – I think I heard something like $4 million for the quarter pension expense headwind. I think I remember that being closer like $12.5 million last quarter. Can you talk about the changes in the assumptions there please?

There is really no changes in the assumptions. It really has to do with the U.S. GAAP restatement and it’s very consistent with what Brock – what Brian gave in the U.S. GAAP to go back to that presentation and you will see that we are right on target with what we gave in that. So under Canadian GAAP, the differential would have been greater. Under U.S. GGAP, it’s smaller. Edward Wolfe – Wolfe Trahan: That makes a lot of sense, tanks. And then last one maybe for Fred or Ray, back to the new tech contract, I understand that the rates are flat. Can you talk about – you didn't give any color on what the volume threshold is and then if there are – if there is a fuel surcharge in that contract, or fuel recovery? And then lastly if there was any change in the mix in terms of the percentage of traffic you are passing off at Camelots?

I think we go back to what we quoted in the press release as it relates to the prices, which is that there is a target level and if the volumes on an export basis fall short of that, then a higher rate would be realized. In terms of the mix of traffic, if you looked at the first quarter, that's the expectation that we would have, that same kind of mix that we saw in the first quarter will continue through the remainder of the year. Now I would just highlight for you that if you look at coal in total in the first quarter, those thermal short-haul movements in the U.S. were down by about 8000 carloads, but you have to factor that into that equation. And yes, there is the standard fuel in the contract.

I think the last part of your question was simply how much over Camelot, and I think again, Q1 is kind of representative of what one would expect on split.

Mr. Green, there are no further questions at this time. Please continue.

Well, very good. Thank you all for taking time to spend with us and we look forward to spending time on June 2nd with all the interested parties and we will see you all then.

This concludes today’s conference call. You may now disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!