Canadian Pacific Railway Brings IBM on Board to Manage Computing Infrastructure.

Business Editors

CALGARY, AB--(BUSINESS WIRE)--Dec. 2, 2003

7-year $200-million (Canadian dollars) agreement to deliver

innovation and cost savings

Canadian Pacific Railway and IBM Canada Ltd. today announced a seven-year agreement valued at approximately $200 million (Canadian dollars) under which IBM will operate and enhance the railway's computing infrastructure. The companies said the arrangement is also intended to increase innovation in the railway's computing environment, generating cost savings, higher productivity and enhanced services for rail customers.

IBM will provide a cost-competitive, secure computing infrastructure that includes servers, storage and emergency recovery planning. The contract also enables CPR to benefit from innovative technology and business processes and applications developed at IBM's Center for Transportation Innovation in Boulder, Colorado.

Rob Ritchie, President and Chief Executive Officer of CPR, said: "IBM's successful track record with major outsourcing relationships was a key factor in our decision to select the world's largest technology company as CPR's outsourcing partner."

"This contract gives CPR the benefit of a strategic partner whose core competencies include building, maintaining and enhancing the computing infrastructure needed to make smart, cost-effective and customer-focused decisions," Mr. Ritchie said. "This supports our efforts to continue developing an industry-leading scheduled railway operation that creates sustainable value for our customers and for our shareholders."

CPR's mainframe and data facilities in Calgary and Toronto will migrate to IBM facilities in the two cities. Approximately 100 CPR employees, who perform work covered by the new agreement, will become IBM employees.

"With this agreement, IBM will use technology innovation to deliver cost savings and new business opportunities to CPR to enhance services for their customers," said IBM Canada President Ed Kilroy. "We will draw upon our vast industry expertise at our Center for Transportation Innovation to find new solutions that make it easier for CPR to do business and that strengthen its competitive advantage."

The IBM Center for Transportation Innovation leverages the expertise of experienced architects, developers, programmers and testers who have access to IBM's technical knowledge, deep industry expertise and skills worldwide. Initially, IBM will look at developing innovative solutions to make it even easier to transport goods via rail.

As a 24-hour-a-day, 7-day-a-week business, CPR relies heavily on its computing infrastructure to schedule all components of its operations. Computer applications map out complex interconnections of freight cars, locomotives, facilities, track and train crews to meet more than 10,000 individual customer service commitments every day. CPR uses intricate automated traffic forecasting systems, determines car routings and yard workloads using bypass and circuitry analysis software, and generates time-distance diagrams to examine track capacity.

In total, about 2.5 trillion bytes of data move across CPR's information systems every day - equivalent to about 2,500 copies of the 40-volume Encyclopedia Britannica.

About Canadian Pacific Railway

Canadian Pacific Railway, recognized internationally for its scheduled railway operations, is a transcontinental carrier operating in Canada and the U.S. Its 14,000-mile rail network serves the principal centers of Canada, from Montreal to Vancouver, and the U.S. Northeast and Midwest regions. CPR feeds directly into America's heartland from the East and West coasts. Alliances with other carriers extend its market reach throughout the U.S. and into Mexico.

About IBM Global Services

IBM Global Services is the world's largest information technology services and consulting provider, generating over US$36 billion in 2002. Approximately 180,000 professionals serve customers in more than 160 countries, providing the entire spectrum of customers' e-business needs -- from the business transformation and industry expertise of IBM Business Consulting Services to hosting, infrastructure, technology design and training services. IBM Global Services delivers integrated, flexible and resilient processes -- across companies and through business partners -- that enable customers to maximize the opportunities of an on-demand business environment.

Please note -- a media conference call to discuss this announcement with Ed Kilroy, President, IBM Canada, and Allen Borak, Vice-President, Information Services, CPR, will take place at 11:00-11:30 a.m. Mountain time/1:00-1:30 p.m. Eastern time.

                    Media Conference Call Details:
                        Calgary: 1-403-705-1240
              Toll Free in North America: 1-877-313-3383

A Photo of Ed Kilroy, President, IBM Canada, and Robert J. Ritchie, President and Chief Executive Officer, CPR, will also be available at approximately 4:00 p.m. Mountain time/6:00 p.m. Eastern time via Canada Newswire.