Good morning, my name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific First Quarter 2011 Conference Call. [Operator Instructions] Thank you. Janet Weiss, you may begin your conference.

Thank you, Stephanie. Good morning, and thanks for joining us. The presenters today will be Fred Green, our President and CEO; Ed Harris, who will be reporting on operations; Jane O’Hagan, our Executive Vice President and Chief Marketing Officer; and Kathryn McQuade, our Executive Vice President and Chief Financial Officer. Also joining us on the call today are Brian Grassby, our Senior VP Finance and Controller; and Mike Franczak, our Senior VP of Operations. 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 2 and 3 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 4. Finally, when we do go to Q&A in the interest of time and in fairness to your peers, I'd ask you to limit your questions to two. If you have any additional questions, you can re-queue and time permitting, we'll circle back. Here then is our President and CEO, Fred Green.

Good morning. Today CP reported first quarter EPS of $0.20, reflecting the impact of a very difficult operating environment. Our network capacity, service performance and operating costs were all severely impacted by winter. We obviously had a brutal quarter, and we are now working through the collateral impacts of Q1, snow melt and flooding. As you can see on Slide 6, after the tough start in January, we improved in February, March and again in April. We took a step back in mid-April with flood-related diversions and washouts but the current performance points to continued recovery. We're not through the flood season yet so our metrics could stay choppy in the short run. However, I'm confident that we're regaining our stride. Second half of 2011 has a potential to be very strong and we'll have the resources ramped up with 16 new locomotives arriving in August -- starting in August and 10% net increase in Running Trades employees. We'll position to execute and to deliver on anticipated demand. I'm going to turn it over to the team, and have Ed outline our operational performance. Jane provide some market insights and highlight the sources of our optimism and Kathryn break out the numbers and implications of winter. Before I turn it over to the team, I'd like to make a few comments about our change in leadership and operations. As you know, Ed has retired from the role of COO and Mike Franczak who's with us today will be leading our operations as Executive Vice President. Ed was instrumental in setting the foundations of discipline and accountability for the reorganization of our operations. In addition, his work in our yards and terminals and the rollout of our, "first mile, last mile" projects, will ensure its fluidity in our yards. Better service reliability and lower dwell. I want to thank Ed for his focused commitment over the past year. He has helped elevate our game and I'm pleased, very pleased that he's staying on an advisory capacity to Mike for the remainder of the year. He'll be in the field with Mike visiting areas and terminals to ensure that the changes he's made not only stick but deliver continuous improvements. I'll now turn it over to Ed to walk you through the quarter.

Thanks, Fred. Well, in all my years of railroading I have to say this was the toughest winters I've ever experienced. We always plan for winter but we were hard hit by weather on a rolling basis across the network. And as a result, we weren't able to get our full facility out of resources. Let's get started on Slide 8. Let me give you a few examples of the types of issues we faced. We had a once in 30-year avalanche cycle in our Western corridor. This caused us to be down about 5x more than a normal winter. And it wasn't just us that was shut down but also the highway system, affecting our ability to shuttle crews to trains. We even had to rail in food and supplies to our bunkhouses. We had record snowfall in the Midwest U.S. As a result, we had to plow our St. Paul Yards, something we haven't needed to do in over 40 years. As you can imagine, when you need to plow a yard, it is a big deal. You have to pull all the cars from the tracks, plow it, dig out the switches and you certainly lose a lot of productivity and capacity while doing so. We also saw a lot of snow and blowing snow right across the entire network. There is nothing more frustrating than plowing at noon, having the snow blow back in by the end of the day and having to dig out those same switches all over again. And finally, we had instances of running long distances at single track because we couldn't keep the passing sightings clean, clear and open for our train mates. That really eats at your capacity and increases your fuel burn as you have a lot of trains…

Thank you, Jane, and good morning, everyone. In January, we told you we were ramping up resources to meet strong demand. However, the severe winter conditions in the quarter reduced our capacity, created very inefficient operations, which both increased our costs and left service demands unmet. The financial impact of these conditions can be seen in every line item of our income statement. We have attempted to quantify this impact in comparison to 2010, and I will provide that information as I review each line item. Now let's turn to the numbers by turning to Slide 22. The winter conditions affected both revenue and expenses. Looking to the FX adjusted column on the right side, total revenues were up 2% with price and fuel surcharge revenues offsetting lower volumes. Operating expenses were up 12% and operating income was down 46%. Below the line, interest expense and other income were lower. Income tax expense at a 26% effective tax rate was 73% lower due to decreased earnings. Net income was down 67% to $34 million and diluted earnings per share were down 67% to $0.20. The operating ratio deteriorated to 90.6%. This quarter, the Canadian dollars strengthened above par to USD $0.99 and the headwind that created reduced EPS by $0.01. To update you on our sensitivity, for every $0.01 the Canadian dollar strengthened, annual EPS is reduced by $0.01 to $0.02. Let's begin with compensation and benefits on Slide 23. In total, including an FX gain of $5 million, compensation and benefits was up $11 million or 3%. We estimate excessive winter cost of $13 million with higher-than-expected re-crews and overtime of field employees. Productivity lagged as our GTMs per expense employee declined 5% and comps and benefits expense per employee increased to $26,019. Without the winter cost, we see…

Thanks, Kathryn. Clearly, we've had a tough start to the year, but I see this as an anomaly and in no way indicative of our future performance. I'm confident that as the flooding subsides, we'll recover quickly and fully. The next couple of months in the quarter look good, and it certainly looks like a robust second half. What's important and what drives my confidence is that the demand remains very strong, much stronger than I had anticipated even nine months ago. Resources we began hiring in August of 2010 are now coming online. The network is resetting, which is improving our service; our efficiency and productivity initiatives are progressing. Structural cost changes remain on target and our capital program will support the sustainability of our efficiencies as business levels increase. While first quarter was a setback for 2011, it does not impact the longer-term target of a low 70's operating ratios in the next two to four years. I'd encourage you to join us in person or by webcast on June 13 when we plan to share more details on the actions underway. With that, I'll now turn it over to our operator, Stephanie, for questions.

[Operator Instructions] Your first question comes from Scott Malat with Goldman Sachs.

I think you've shown you've already been hit by some flooding, can you help us think through the impact on 2Q already, and help us think through how that comparison to $0.12 hit we saw last year from flooding?

I think, Scott, the chart that I used, I think was Slide 6. It gives you a pretty good illustration of the impact that we experienced in the kind of the mid-April period. The consequence of that was basically taking out our St. Paul yard, which normally has 3,000 cars in it. We are down to virtually none and have to reposition that level of activity to subordinate yards in the general vicinity. And also have call upon other yards to do switching and blocking to avoid that yard. It was also our primary U.S. mechanical shop, and we had to disperse that work and take it to other shops throughout Canada basically to get locomotives repaired. So that was a very difficult kind of 14 days but the Mississippi has come and gone in the St. Paul area. And as you can tell, from, I think Ed's comments, we're now out in Davenport. So from the other significant issue we faced was just last week when you saw our car loadings dropped pretty significantly. We had a 48-hour outage as the water levels in Manitoba elevated very rapidly and washed out our mainline. That has, of course, been repaired and we have overcome that. In the current situation, what we've got is the Emerson line for us, which runs south of Winnipeg has been taken our service, as of I think 24, 36 hours ago, we would anticipate that would be out for two or three weeks. It is not -- I'll call it a primary line, but it's an important line that runs through the South. That will mean that we will have to detour and incur incremental train miles whether it's around the top of the Great Lakes or whether it's back through Saskatchewan or down to…

That's very helpful. The other thing was on same-store sales. Help us think through the 2%, the puts and takes there. And then time -- how that's going to look through the year and how do we get the point we're converging between what same-store sales look like versus what renewals look like Jane O’Hagan: Well, Scott, I'd start off by saying that basically I have been really explicit of other price strategy and our price strategy is targeted at above inflation pricing and we have delivered positive price over the last number of quarters. The one thing I'll say about same-store price is that it's a mathematical calculation that really takes into effect a timing and takes into account mix and we've had several mix changes, and the mix changes in Q1 has certainly been an impact. So it's dry but we feel that our pricing in the marketplace is strong. But what's most important to me at this point is, and while I'm not going to predict where price is going to end up, is that we're consistently delivering to the 3% to 4%, and so our renewals are in line, and we're price positive and this demonstrates the discipline that we need to have in the market. And so getting price in the market is never easy but we have a good product, we're focused on recovery and we expect that our price plan, we feel confident in that as well as our pricing strategies. Jane O’Hagan: Okay, thank so much.

Your next question comes from Turan Quettawala with Scotia Capital

I just have one question of Kathryn. Just looking at the cash flows for the quarter, I guess, always some weakness here. Just wondering, I know you said that you plan to keep the CapEx online. Does that really impact your balance sheet plans at all?

No, it does not. We are still committed to continuing to strengthen the balance sheet by targeting our debt as well as expecting free cash flow for the year to be positive. So in that regard, the first quarter is always a little challenge as our capital programs ramp up in the quarter and with of course earnings low this year. But overall, our plans have not changed in any way.

Great, thank you very much. And I guess Jane on the grain side, is there any sense of how much product is still in inventory in Canada? Because I guess it's been pretty strong overall. Jane O’Hagan: Yes, I think -- Thank you very for that question. I would say that at this point, we've had, certainly the weather has impacted our ability on those portions of our network where we move grain. We have really great origination in the country and in fact there is a lot of grain to move, there's still a lot of grain to move to export positions and grain prices are high. And again with more resources coming online, we're going to see our volumes recover. So we're very optimistic, as I said in my remarks, about Q2 being a strong quarter for us.

That's great. Thank you very much.

Your next question comes from Tom Wadewitz with JPMorgan. Thomas Wadewitz - JP Morgan Chase & Co: I wanted to ask you, Ed, this. Since, I guess, this is maybe the last chance we get to ask you something in this venue, what's your view of the, I guess the CP network versus CN where we tend to see this greater weather sensitivity? I know it's not something which shows up very often, fortunately, in terms of the magnitude of the snowstorms and certainly difficult conditions. But I guess, if we look at the CN's expected first quarter results, have you seen the weather has had a very different impact on CP versus CN. Do you think it's a function of where they go through the Rockies or capacity or condition? And is it something that can be changed over time, given capacity investment? Just some thoughts on how you'd view the two different networks that way?

Well, Tom, I really don't want to get into making one-on-one comparison against CN. I will tell you, I've railroaded a long time. And in all 40 plus of plus my years of railroading, I have never gone through a winter like we have just gone through. I think in line with Fred's comment as far as this quarter being an anomaly, that's exactly what it is. As indicated in the slides in the last four weeks, you can see productivity improvement, GTMs, car miles per car day, everything you want focused in the right direction is heading in the right direction, and albeit January and February, as I said, were certainly challenging to run a one-off comparison against another carrier, I just don't want to get into that. We have certainly, as I said, Tom, done everything we could in line with the snow clearing, the extreme cold, the work through our mountainous territory but you have to imagine, it's just not trying to fight avalanches, it's predicting avalanches and working with Parks Canada, and taking your railroad out of service to disperse snow and knock down potential avalanches, so they don't get in the middle of your traffic line. I mean, we only had one train incident caused by an avalanche where an avalanche went through one of our intermodal trains. To me, that was an exceptional move as far as showing the diligence of our team, Mike's team, Parks Canada working in line with them. And again, I've never gone through anything like this in my career. And I think I'm a pretty decent railroader, and I don't want to extend the comment other than just saying, there's nothing wrong with this railroad. It can handle winter. This winter was a bit more than what any of us can even bargained for. So don't be concerned, we'll be fine. Thomas Wadewitz - JP Morgan Chase & Co: Okay, and then a second question for you as well and I don't think there's any doubt that you are a very good railroader. But why -- I guess the decision to leave was surprising when it came out, and I would have expected that you'd be at the railroad for a couple of years or so. The kind of sense that I've had from it is basically there's a lot of travel, a lot of demands on you and perhaps, a bit more so than you'd expected and maybe that's the reason why. Is there any perspective you can add in terms of your decision to leave after what seems like a fairly short period of time at CP?

Well, I think your perspective is right on. Indeed, my decision to leave was more personal than anything else. It certainly has to do with my immediate family. And the travel demands and being able to do my job the way I need to do my job was just too much of a strain with the personal issues I have going back home. That being said, Fred and the board were more than gracious to ask for my continued support in line with going through this next year, and I'd certainly welcome that opportunity. Please don't look into anything more than just that. My focus, my work with Mike and I have continued to work with Mike and will continue to work with Mike and his team on a regular basis is certainly the plan in my contract as a continuing adviser to CP. I hope it goes longer than just into the next year but we'll just see how this thing works out. But again, I will stay close, I will keep an objective eye. Mike and I have already started scheduling some field trips in line with the work we started in the first quarter and last quarter of last year as part of our yard performance plan and our, "first mile, last mile" focus. So business as usual. New leader on board, but certainly a very capable leader. Thomas Wadewitz - JP Morgan Chase & Co: Okay, great. Well, I appreciate the perspective and wish you the best going forward. Thanks for the time.

Thanks, Tommy.

Your next question comes from Ed Wolfe with Wolfe Trahan. Edward Wolfe - Wolfe Trahan & Co.: When I think about how successful you've been over the years in cutting costs, Fred, and then you see what's going on right now, and also the relatively less pricing power it feels like that you guys are feeling relative to at least the U.S. guys right now. Is it possible that you cut too much too far and you've got to bring assets on? I mean is there something here beyond weather as you think about allocating assets coming back going forward?

I think probably the best way to look at that, is if you look at the data, you'll see that we actually had, I think, in the first quarter about 8% more locomotives. And I think than we had on the prior Q1. And I think if you look at people, it was 2%, 3% I don't know the exact number but it was higher than the prior period. Did we go deep? Absolutely. We went deep in 2008 and 2009 because the nature of our commodity base, if you will, was the greatest volatility. And in 2010, you saw a pretty rapid recovery of 17% RTM growth, and we were able to handle that, albeit not perfectly from a customer service perspective. And then unfortunately what happened was even with the incremental resources we brought on for Q1, the extraordinary weather that Ed described, contracted our capacity. So I'm sure that in some aspects, somewhere, Ed, we could find an example where we cut too deep. But when you think of the core fundamentals, the same track is there that used to be there, the same yards that used to be there, 6% more locomotives or 8% more locomotives and more crude. So it's not evident to me that the problem was there's an underlying problem. What's evident to me is that we dealt with a succession of extraordinary weather events that never allowed to get us our rhythm back. And the contingent resources that one had -- we had already been built in were consumed and then some, leaving us actually with an inability to take on the opportunities that presented themselves. So we're pretty frustrated, we're pretty disappointed that we didn't deliver for the shareholder and for the customer candidly. But when you look at the train…

Ed, it's Fred. Just for a little bit of clarity on that. As Jane says, it's seasonal pricing. These are choices we are permitted to make in the marketplace where we would choose to incent or dis-incent certain activities at certain time of the year. All in, they must come under the total 7% revenue entitlement. And as you know, it's pretty complex formula with length of haul, et cetera. Quarter-to-quarter, those are type of choices that we will make working in the marketplace and nobody should read one quarter's worth of grain pricing as anything other than part of our broader strategy to participate in the market. Edward Wolfe - Wolfe Trahan & Co.: Last question as a clarification and I'll let it go. But can you talk, Fred, just as clarification, are you able to incent international shipment of grain relative to domestic based on that or is it a separate structure?

The movement, they're really quite separate issues. The CWB and all of the activities under the grain cap are largely -- are entirely to do with export markets. And that as you know, is the vast majority of the business that we participate in. So that's a separate issue. We have commercial rates for commercial movement of domestic grain and obviously, we've done well in those markets. Edward Wolfe - Wolfe Trahan & Co.: Okay, I appreciate all the time. Thank you.

Thank you.

Your next question comes from Matt Troy with Susquehanna Financial.

I wanted to ask about the Canpotex agreement. You mentioned some -- we'll call it, assisted diversions to your competitor in light of some tough operating conditions. Just curious how long does that exclusive agreement with Canpotex last? And what do you see in terms of the roadmaps in terms of expanding production capacity for that key commodity over the next several years?

Matt, it's Fred. The contract is in place and it's a long-term contract that as I recall expires in about mid-year of 2012. We obviously, at some point, in the process when our customer's interested will spend some more time negotiating or talking about what they would like to see in the long run. The decisions that we made in Q1, which was to enable their success, granted a little bit at our own expense. I think were pretty wise decisions and I think that will be taken into account as they consider the quality of partner that we are going forward. How fast they grow? Now it's not just them, there are multiple other parties interested in the potash business, as we all saw last summer, but how fast the underlying parties, and therefore, Canpotex grow with regard to export volumes, what ports they choose to go through. I can assure you that in our dialogue, as we enter into it into the future, for discussion purposes, we will make whatever appropriate investments are appropriate, are justified based on return on capital employed. So on the basis that the contact is appealing to our shareholders, we would never let capacity be a barrier to us participating as much as they want to move over time. You've seen some very large numbers come out of the underlying parties in Canpotex with regard to their aspiration, 15 million, 20 million tons over time. And then in addition to that, you got another two or three substantial global players that are talking. So will it all be built, who knows. In what timeframe will it be built, who knows. But I can assure you that we will be active in any dialogue, as long as there is a return for our shareholders, we'd be interested in ensuring the capacity exists to participate and enable their success.

And that was the heart of my question, was not actually Canpotex, the other people potentially coming on line. It's safe to assume you are in as active negotiations and discussions with them as you could be at this point?

Absolutely. Jane, you might want to comment on... Jane O’Hagan: I think that, Tom, certainly we have great relationships with Canpotex and our focus is improving that each and every day. But again, we have substantial know-how. We have a great origin, destination network and we have a great supply chain that obviously, with the new players, BHP, Vale, Potash One, et cetera, we're focused on basically syndicating that know-how and knowledge to grow with those customers as those market segments, Tom, expand.

My second question is more of just a longer term in nature, you were kind enough to give again the Canadian dollar sensitivity but it seems here -- given the deficit levels and the fiscal issues we face here in the U.S., the dollar maybe somewhat argued susceptible to a long-term period of weakness. Do you see that as having any material impact on your business? Are customers talking about it either through the viability of certain transport or trade flows or relocating manufacturing facilities? Or are we still too early days for that to be anything more than a conceptual thought? Jane O’Hagan: I think you're on to it. But I would say that in discussion with our customers, I mean, we lived with volatility in the Canadian dollar now for the last number of years and the producers that we work with are strong in their market segments. Their products are in demand and so at this point, they just said they don't see an impact from that.

I might just jump in. It's Fred. To complement Jane's statements, which is probably more related to the manufacturing side of things. In the work that we do on a more national level, if you will, working with our associates. What causes people to be efficient is whenever a crisis comes along, and I would argue the Canadian -- the strength of the Canadian dollar will simply force the manufacturing community to get smarter, get better, get more efficient, get more productive. So will there be some changes in flows and production locations? I think probably, it's inevitable. But I mean it's not like everybody's just going to shut up plants in Canada because our dollar is strong. What it causes is people to become more efficient. I might also note that 45% of everything we do is bulk. And the commodity prices are at an extraordinary levels and even if they are retract it by 50%, they'd still be at extraordinary levels whether it's met coal at $330 or potash at whatever it is these days, $400 to $450 range, and the Canadian dollar is insignificant on a global basis if you think about the factors that it's moved 4 or 5, 10 points when you're selling things what is literally 3x and 4x the price of which you sold it for 5 years ago. So given that 45% of our book of business is bulk and those commodity prices are so strong, and likely to stay strong. I don't think it's going to have any impact whatsoever on their desire to continue to grow and our desire to participate in it.

All right. Thank you for the thoughtful answers.

Thank you.

Your next question comes from Walter Spracklin with RBC Capital Markets

My question is pretty much on a go-forward basis in terms of what you might have learned from the first quarter winter weather that in forward quarters, if we do get hit with winter weather again to this kind of extent, what assurances can we get that the volatility that we saw in this quarter won't be repeated in forward quarters? I guess, the reason I'm asking this is if I look back through my notes on Q1, I guess, fourth quarter Q1 and prior years, '07 and '08 seem to be both those impacted by inclement and 1-in-5 year weather and I'm just curious if we do have weather as a consistent and expected item here in terms of volatility. What did you learn in this quarter that helps soften that blow in forward quarters?

I think, Ed Harris, Walter and then I'm going to pass it on to Mike. But I think one of the things you have to remember is all railroads are going to have an extremely tough first quarter, especially the northern railroads and I don't need to tell you that, I know. Indeed the level of the perfect storm, so to speak, and the level of disruption that we had to deal with this first quarter, we just never had -- we never really got a chance in January and February to try to recover from the intermittent outages that we had even, albeit some of them were partial portions of days, it's just when you stop this network at any location in the network it is tough to recover. We, again, reminded ourselves how important it is to achieve a balance across the network and running trains. What did we learn? As far as weather, I can't predict the weather. I explained how we try to protect against avalanches what will we do in the future Mike and I have discussed this. I'm going to talk -- I'm going to pass it over to Mike for a little further highlight on that.

Yes, Walter. I mean, we've -- as Ed said, this was an extraordinary event for us. We do extensive winter planning every year right down to crew sizing, locomotives, snow clearing. We undertook some extraordinary actions this year, including reroutes on other railroads where we had an available route to us and using other parts of our network that we haven't done before in terms of getting around some of the bottlenecks. As Ed noted, I'm actually quite -- I'm not happy with the performance, but given the extraordinary nature of what we were up against, the team performed very well. There are always a few lessons learned in every event but I would tell you our avalanche process remains very robust. There are plenty of resources in the west corridor to deal with that. Again, as noted, but you still have an inordinate number of events you have to go after but each one of those is handled very quickly. So there are a few things you pick up every winter. But I would say largely going forward, we will remain committed to appropriate resourcing for those contingencies, making sure that we've backstopped ourselves in terms of snow clearing, reroutes and appropriate resources to handle the winter.

Okay, thanks very much. Second question here relates to your long-term target of low 70's operating ratio, your 2 to 4 year target. Now that we have some more color in Q2 what are pretty significant events, the impact that weather can have on your earnings, as well as the higher WTI prices obviously, having a negative effect on your operating ratio even if your profitability remains constant. How are those two items going to be offset? Or how are you dealing with those two items in continuing to focus on that low 70's operating ratio? In other words, do they impact your ability to get to that low 70s?

Walter, this is Kathryn. We always know there's a winter and in those targets that we put out there, we always have said several times that it doesn't mean you'll be in the low 70s for every quarter, but that will mean that some quarters, we'll have to be even lower. So we do take that into account and we do have normal seasonality that we know are first quarter operating ratio will be. Not to the extent that we saw this quarter. This is an anomaly but to normal seasonality, that is anticipated in that ratio. In terms of -- what we have is a sensitivity of about 30 basis points for every $10 rise in WTI. And when you look at that now, we're talking about big huge prices. It may impact our ability but what we have not been modeling in that is rapid runups way past -- to higher levels of fuel prices. I ultimately believe fuel prices would cause the economy to suffer and there's a balancing mechanism. We are anticipating in that target, higher fuel prices, but not astronomical fuel prices, so that shouldn't be something that would get in the way of us meeting our targets

Okay, thank you very that's both of my questions.

Thank you.

Your next question comes from Chris Ceraso with Crédit Suisse. Christopher Ceraso - Crédit Suisse AG: Maybe if we can talk about it in the context of the $0.40 that you outlined in terms of the impact from weather, how much of that do you think you recover in Q2 taking into account that you're going to have some recovery and you've also got the issues with flooding that you outlined but how much of the $0.40 do you expect to get back as we walk to Q2? Jane O’Hagan: This is Jane. It's really difficult for us to specify an exact number. But as I indicated before, what we're expecting is a sequential growth coming over the next several quarters as resources come online and as our service reliability continues to recover and improve. So a portion of the growth that we're going to see will be carryover. But at this point, it's really hard to isolate the amount because that would really be a guess. But if you look at the market today and you think about what's moving, you'd see carryover basically in all of our commodities that use the west corridors that have been impacted by the severity of weather this winter. Christopher Ceraso - Crédit Suisse AG: And when you say carryover, you mean you're still trying to recover? Jane O’Hagan: Right. Christopher Ceraso - Crédit Suisse AG: Right. Okay, and the second question I know we've talked about this a couple of times but maybe we can just dig into it a little bit more, the difference between the 4% renewal rate and the 2% same-store sales. It seems that each quarter, there's a difference where your renewals are better and you mentioned mix. Is there something else in there that we're missing? Or ultimately should the same-store sale number start to approximate your renewal number?

Chris, this is Kathryn and Jane will probably want to add to this but it truly is mix and if you start thinking about '09, '10 and actually the first quarter of '11, we have had tremendous changes in our mix. We have huge and that means our O-D point pairs are changing out as different businesses come back and forth through the recession. So it's not unusual to see these types of diversion at this time, and we need to get kind of a more steady state in terms of normalized growth within each one of the commodity groups before you would see that those two coming in line. Jane O’Hagan: I'd just add to Kathryn again, we're showing discipline in the market, which I think in the pricing side is key. As Kathryn also indicated, with the opportunity that we've had where we've had new business come online with the volatility that we've had to deal with in terms of volumes and changes within commodities. But again, just to reassure you, we feel that we're on track and we are very confident in our pricing strategy. Christopher Ceraso - Crédit Suisse AG: Okay, thank you.

Thank you.

Your next question comes from Jason Seidl with Dahlman Rose. Jason Seidl - Dahlman Rose & Company, LLC: Two quick questions here. I don't mean to beat the dead horse, but on the pricing side, if we can remove mix and go to sort of what some of your competitors call a same-store look on the O-D pairs, what would pricing have looked like in 1Q?

Just to clarify, I mean, we did give color on the same-store price, and our same-store price was positive and it's 2% and that is... Jason Seidl - Dahlman Rose & Company, LLC: So that excludes mix in the number then?

That is mix. Jason Seidl - Dahlman Rose & Company, LLC: So that includes mix then, the 2% that's why -- if I am hearing you guys correctly, you're saying that the difference between the renewals at 4% or better and the 2% has to do with mix and you're changing O-D pairs, correct?

Yes. Jason Seidl - Dahlman Rose & Company, LLC: If you excluded the changes in OD pairs in the first quarter, what would be pricing have looked like?

I mean, it's very hard for me to speculate at this point on what that would look like. I mean, mix is something that we have had to deal with in Q1 and I've got to come back to the same point. Is that again, we're out there, we're pricing for value, we're looking at each and every contract, we're focused on getting our renewals within our price strategy at above inflation pricing. And as we continue to do that, we should see our same-store price improve. Jason Seidl - Dahlman Rose & Company, LLC: Okay, fair enough. And looking forward here in 2Q so we can get a better sense on how to model out, there's going to be, obviously, as you pointed out some lingering impacts from the weather. Are there any specific commodities that are going to be more impacted than other in 2Q?

I think, Jason, probably the significant thing that I hope you'll see and believe you'll see, based on where we're going already on in April is that the amount of grain activity is going to increase pretty substantially. And we're really disappointed that we haven't been able to meet the needs of all of our clients in that regard. And as an example, it's anecdotal. But I would think, this week, we'll probably put somewhere around 4,700 cars under the spout and that will be higher than what one would normally expect at this time of the year, and we have not been meeting that level by quite a margin until the last week or 2. So you're probably going to see a pretty substantial increase in grain car loadings relative to what you saw in the first quarter and that -- obviously, it will meet an unfulfilled demand, which is good for our clients and good for us as well. Jason Seidl - Dahlman Rose & Company, LLC: Okay, that's great color. Guys, thanks for the time as always. I appreciate it.

Thank you.

Your next question comes from Chris Wetherbee from Citigroup.

I guess, just thinking about -- to the last point, as you see some of the business come back, I mean, is there anything you think you might need to do in advance of playing a little bit of catch up here, whether it be on the western corridor with coal demand being relatively robust, and also seeing that on the grain side and potash side? Is there anything you need to do from a capital perspective to maintain that maintenance service levels coming out of the problems in the first quarter?

Chris, it's Fred. I would just suggest that we are returning to levels that we have performed very well in the past with the existing infrastructure. What we have in the program that Mike introduced to you in June and that we will reinforced when we come back together in New York in June is the opportunity to be more productive with those volumes, one. And second, to capture incremental growth opportunities be it in coal or fertilizer or potash, grain, et cetera. So my view would be that we have the existing capabilities and we have opportunities over and above that, which was Kathryn's reference to $1 billion capital program about a couple hundred million bucks is probably oriented to ensuring that we are both more efficient and that we have the ability to continue to grow and speed the utilization of our assets and deliver an improving quality of product to our clients. So there's nothing that's a prerequisite to doing what we're talking about for the balance of 2011, but there is clearly things that we want to do, some of which will be complete and we'll enjoy the benefits of in the fourth quarter of 2011 post the construction season.

Okay, that's very helpful. And I guess, just one final technical point when you think about the cost per employee you gave a helpful figure that was x the impact you have in the first quarter. When you think about run rates going forward, is there anything to think that would be a different relative to that kind of x winter number that you gave us?

Well, I would certainly hope our incentive compensation and stock-based compensation would go up. But other than that, no, nothing significant.

Okay, so that's the main Delta to keep an eye going forward?

Yes.

Okay, fair enough. Thanks for your time guys.

Thank you

The next question comes from David Newman with Cormark Securities

Just two questions one on the operational side, Fred, I know a few years ago, you have the Western corridor expansion and certainly as your customers in the coal and potash, et cetera. Are you pushing against the wall at some point here, especially given the operational issues that you face in the winter or do you anticipate at some point you might have to revisit that? I know you put in avalanche shelters, et cetera, anything in the future that you might have to do?

It's a little bit of build on the last question and I would just characterize it differently. We have the current capacity to do what we need to do and somewhat more. What we're excited by is the growth opportunity, I'll just use an example, if you look at what Tech's long-term plans are with regard to moving from the number they're at to substantially greater numbers. We've got the opportunity to move a lot more coal, and we've got a customer who wants to move a lot more coal and we've got the -- I'll call it a coordinated approach between ourselves and a very, very arguably strategic relationship at this point, which we're delighted with. Where we're going to work -- we are very actively working together and it's imminent that we will begin a series of construction opportunities, both at the mine site and on the whole supply chain, including the port that will enable us to move that coal. Do we have the capacity? Yes. But can we move it more efficiently, which is good for everybody with some strategic capital investments? I would argue that's probably the way we will want to go and that it's imminent amongst the capital spending, Kathryn referred to earlier, we will find a portion of that attributed to a certain supply chain, including the coal supply chain as an example in the west corridor. But those assets can also be used by the commodities if done properly and that's what we plan to do.

Okay. You had a couple of derailments in the quarter, was any of it related to the long-train initiatives? And what's your take on the review that is sort of ongoing on the long trains?

Let me just say this, David, the couple of derailments had nothing to do with a long-train initiatives. Weather-related, different story, a broken wheel in one incident and some ice buildup in another incident that took major brunt of Kathryn's comment as far as how that impacted financially. So no, nothing regarding long trains.

Okay, and last one for Jane. Obviously flooding in Manitoba, you're catchment areas, how are you being impacted, I guess, as far as seeding intentions and I guess, the ultimate impact on the grain and ethanol within Western Canada. I understand that the Midwest is also impacted? Jane O’Hagan: I'll just keep it short. I mean, at this point, with the flooding and with the weather conditions, I mean, this is something we're going to have to stay on top of but it's really too early to predict what's going to happen with upcoming crop year at this point.

Obviously, it is hitting Manitoba pretty hard. But I flew across the prairies last week and it looks like a bit of a swamp. But is there other areas like a Saskatchewan, Alberta are they in fairly good shape as far as the soil conditions and things like that?

I think, David, as Jane is saying, a snapshot on April 20, the ground is saturated inevitably that would have some impact. I believe, I may be mistaken, but I believe the Wheat Board and/or other agencies have issued in the last couple of weeks the expectation that there would be a delay of 7 to 10 days in planting. And then that happens every year, it moves back and forth within, say, a 3-week window. So I would say 7 to 10 days, if that's all they are predicting, is actually a pretty good news story

Yes, let's hope it warms up. Thanks a lot.

Not too fast though, David.

Your next question comes from Cherilyn Radbourne from TD Newcrest.

I guess my first question would be, what's the best metric that you would suggest for us to measure the recovery of your network here on a progressive basis in Q2? Is it your weekly carloads getting over the 50,000 mark? Is it train speed? Where would you point us?

I think Cherilyn, the amount of activity or RTMs or car loading as a proxy for that is probably a pretty good indicator. I'd like to see us contract the numbers of cars that we have online because over the course of time as the winter affected not only us, but others in the supply chain, particularly the clients, the uncertainty or the lack of confidence causes everybody to beef up their fleets. So those fleets need to be contracted whether they're our own fleets that need to go to storage or whether it's us working with the clients to now start to contract the fleets and get them out because that just leads to congestion and not a healthy environment. So number of cars on line and number of loads will be a good indicator. I would caution you a little bit on train speed because, as Kathryn mentioned, we have a $1 billion work program, given the size of it, we have had to start earlier and although I think we've got a pretty thoughtful program that will have a minimal impact on the service performance across the continent. There's clearly an awful lot of work that's going to go on this year relative to the previous couple of years. Train speed may look like that they're not coming back but it's all quite planned and calculated to accommodate a much bigger work program on the mainline than we have had in past years.

Thank you, that's helpful. Second question just for Jane, you mentioned that you have spent a lot of time with customers in recent weeks, could you just comment on the degree to which they've been sympathetic to the weather issues that you've experienced or has there been some damage to relationships done here that needs to be repaired? Jane O’Hagan: Well as I said, we've been in constant communication in working with our customers to keep them advised of the -- certainly, the severe weather impacts that we've had. In some cases, customers have had to make alternative arrangements with their supply chains but we don't see those as permanent shifts in market share. Again, our customers are very focused on number one, and we are as well, looking at the positive dialogue and relationships that we have with them and building on that. But again, they're really focused to what Fred discussed, which is restoring their confidence through service reliability and consistent performance.

It's true. And I'd jump in there just a little bit and add that when you build deep relationships over arguably decades. But certainly in the last five years, we've done a great job with our client base. You build some credibility. We have clearly eaten into it through Q1, we want to a acknowledge that, we're not very happy or proud of that. But our clients have stuck with us for the most part and are giving us a chance to recover, but they clearly need to see the evidence, too, because it's their supply chain and we owe it to them. And obviously Jane is spending a lot of time listening and making sure we hear clearly what their specific issues are. And Mike and his team are doing everything they can to quickly get back to the fluidity that they became accustomed to, and we fully expect that they will see that pretty quickly.

Okay. Thank you, that's my two.

Thank you.

Your next question comes from Bill Greene from Morgan Stanley.

This is John filling in for Bill. It's great to see that you guys reiterated the, 2 to 4 year low 70s OR target. But I just wanted to dig a little bit deeper. Can you help me understand how you get there in 2 years? Is that a booming economy, moderate oil, no more weather events or is there something CP specific that gets you there?

John, I'll tell you what, I would really rather not get into a lot of the details. We've been pretty clear. We do have a pension headwind that really keeps with us until 2013 particularly. That is one of the things that we are fighting as we put our tailwinds in on all of our initiatives. So I think that the Investor Day in June, we'll give a little more color on some of the items and interdependencies of some of our capital programs, et cetera, in order for us to meet the productivity initiatives. But if we had a booming economy and a lower fuel price and all those things, certainly it would help us, but predicting it now is still contingent on a lot of things and I think, we're just going to give that color on investor day.

Okay, fair enough and just a quick nit. I noticed that period end expense headcount was lower than the average for the quarter. Can you just help us understand how to think about headcount as we enter the second quarter. Is there sort of a range that's reasonable given some of the disruptions in the first?

Well, I did give that. We are expecting toward the end of the second quarter to be at 14,200. And again, the net for the end of the year, I mean, at end of the quarter really happens about when people are coming out of training, particularly our roads and engine crews, they don't come into our account. And so we had a bunch of people in training that are not in that count that will be coming in, in the second quarter.

Okay, perfect. Thanks

Your next question comes from Ken Hoexter with Bank of America Merrill Lynch.

This is Steve Sherowski, I'm in for Ken today. My first question is just more of a clarification. Did I hear you correctly earlier, when you said that you get to a low 70s operating ratio, you model WTI higher than current market prices, did I hear you correctly?

No, what we've said was that should not get in the way tremendously unless it was extremely high WTI prices. So we are expecting WTI in that model to remain high with some moderate increases year-over-year, but nothing that would show a spike that would end up creating a headwind.

But it does take into account moderate increases year-over-year from current levels?

Yes, more back to traditional type increases, yes, and in a responsive fuel program.

Okay, thank you. And just sort of on that same note, I was hoping that you could just talk about the Bakken opportunity. I know there is obviously a lot of producer interest in that base and -- I mean what exactly is the opportunity? Is it mostly crude movements or is it frac sand transportation? And to any degree that you're willing to quantify that opportunity would appreciated.

Well, I think at this point just to clarify, our opportunity with the Bakken is both an inbound and an outbound. So we are moving unit trains of crude from the North Dakota to the Gulf. In addition, we are working opportunities and we are moving inbound, steel and frac sand into those areas. We've also indicated that -- and you'll hear more about this at investor day about some investments that we're doing up in the North Dakota area. Specifically, on the line, we call it, the New Town sub, that allows us to access that so that we can continue to build that. So at this point, I mean, in terms of modeling -- that volume we'll give you certainly more color at investor day what the upside is on the volumes. But I can tell you that GDP plus would be a good way for you to look at that.

Okay, thank you. Great.

Your next question comes from Gary Chase with Barclays Capital.

This is actually Brandon Oglenski and I know it's been a long call. So just 1 question here and may be following up from what Cherilyn was asking earlier about measures that we can look at to see when the operations are getting back on track. As I look at your weekly carloadings in March and early April, it looks like you're running about 51,000 to 52,000 cars a week about flat with last year. And I know you guys are definitely staffing up for some growth expectations, so could you just quantify the level of carloads that you'd like to see the network at where we start to move beyond some of these productivity impacts from having maybe a little bit too heavy in the asset side or the personnel side?

Brandon, I can't do that at the top of my head because we don't tend to think about carloads. We think more in the sense of gross ton miles or other metrics and carloadings, of course, have the risk as you see with the U.S. coal situation where you can lose 40,000, but you don't really impact your RTMs in any substantial way. So I wouldn't use carloading as an example. I think that the activity levels that you can expect are April of last year was a very big month and the data right now would indicate that we are within a point or two of doing the same thing. As we move into May, it was fairly busy last year and then, of course, June and July back off a little bit and we had a tougher June. So I would just encourage you to -- I mean keep your eye on carloadings but you've got to be aware of the mix of traffic and you'll need to discount those things. So I'm not going to attempt to put an exact number on it. I'll let you guys do that.

All right. Well, thank you very much.

Thank you.

Your next question comes from Benoit Poirier with Desjardins Securities.

My first question is related to the intermodal when we look at the RTM at the carload measure was down 2%, which clearly reversal versus the good performance last year, and also clearly below peers. You mentioned some operational challenges. So if you could provide maybe more color and what is the weather issues or the weather problems in that quarter, the impact?

Benoit, in very simple terms, the fluidity of the railway was severely impacted the consistent arrival and movement of trains and you have to think about the inbound arrival of trains affects the outbound capacity for imports so the exports cars arriving at the port affects import abilities. So if you've got 5x the impact of avalanches this year versus last year, which is what we experienced, there were many, many days, sadly, that there was no inbound train because it was held up for 24 or 36 or 48 or 72 hours back on the other side of the avalanches. You found circumstances arising where the trains would not arrive and then of course they'd arrive 3 in a day, and you can't possibly load that amount of capacity onto a train because you have to switch them in and out of the terminals. So the impact on intermodal was a sporadic and inconsistent service offering relative to what we have always provided and relative to what our customers expect of us and it was driven by these unique weather events that were causing us to be not arriving on a consistent basis. So that led to people either trucking for instance from the Port of Vancouver into Alberta or it could have led to some bleeding to other parties if they had the capabilities or in some cases, people just grew concerned and started to divert greater percentages to different ports as in Seattle or Tacoma rather than run the risk of being held up. We clearly impacted the supply chain on the container side and that's reflected in our volumes. As we have become very consistent of late, clearly there's a much more higher comfort level with our performance, and we're starting to see the return of those volumes.

Okay, thanks. And with respect to the fuel components, Kathryn, could you maybe provide an update on your hedging policy what caused the impact in the first quarter and what's the hedging policy going forward?

Our hedging policy is unchanged. We will continue to hedge about 10% to 12% of our fuel consumption, which is closely aligned to the Canadian regulated grain, which has a 12-month lag in its fuel index. And I believe, I'm doing this off the top of my head, but I believe we had a positive impact from the fuel hedge of $3 million. And that, it will all be disclosed, of course, in our financial statements when they are posted.

Okay, thank you very much for the time.

Thank you.

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

Well, Very good. Thank you, everybody. Sorry for the long call but I appreciate everybody's interest and we look forward to seeing you in June, those who can make it and join us for a more robust discussion on our low 70s operating targets. Thank you.

Thank you, this concludes today's conference call. You may now disconnect.