CP Ships Limited today announced unaudited fourth quarter 2002 operating income before exceptional items of US $34 million, unchanged from the third quarter and slightly down from $35 million in fourth quarter 2001. Basic earnings per share before exceptional items was $0.23 compared with last year's $0.30 and third quarter's $0.27. Volume at 550,000 teu was a quarterly record, up 17% from fourth quarter 2001, reflecting both strong growth and the first full quarter of Italia Line. Average freight rates increased 1% from third quarter 2002 but were 4% lower than fourth quarter 2001. Cash from operations before exceptional payments was $29 million or $0.32 per share. Net income available to common shareholders was $23 million, compared to $25 million in fourth quarter 2001. For the full year, container carryings at 2.0 million teu were 9% higher than 2001, while the average freight rate was down 10%. Operating income before exceptional items was $83 million compared with $139 million in 2001. Basic earnings per share before exceptional items and goodwill was $0.59 compared with $1.58. Cash from operations before exceptional payments was $86 million or $1.02 per share compared with $210 million or $2.65 per share in 2001. Return on average capital employed at 6% was down from 13% in 2001. Net income available to common shareholders was $52 million compared to $66 million in 2001. In December, the withdrawal from the slot charter agreement with CMA CGM in the Asia-Europe trade was announced, effective early March 2003. Despite recent improvement in freight rates, the service remains unprofitable and CP Ships will therefore exit the Asia-Europe trade at the end of this slot charter. Seasonal weakness in the first quarter will partly offset the expected positive impact of withdrawal on full year 2003 results. In the fourth quarter, CP Ships provided additional sailings in the Asia-Americas trade in response to strong growth in demand. Building on this, a new fixed day weekly service between North East Asia including China and Vancouver BC is now being implemented with five ships. This third Asia- Americas route will strengthen market presence and create further operating efficiencies by using existing organizations in Asia and North America. In October, an extensive restructuring of the Australasian trade lanes was announced. From January 2003, two separate weekly fixed day round-the- world routes linking Australia, New Zealand and the Pacific Islands with Northern and Mediterranean Europe and the US East Coast operate with 22 ships in place of the previous 34 ships deployed by CP Ships and its partners. The new service structure is expected to improve frequencies and transit times and be more cost efficient. During the quarter, Canada Maritime agreed to charter a fixed number of slots to members of the Canex consortium in the Montreal Gateway trade. Together with the consortium's planned move of its existing service from its current marine terminal to Montreal Gateway Terminals in March, there are expected to be overall improvements in trade lane operating efficiency. Operations on the US West Coast have mostly returned to normal following the settlement of the labour dispute in December. The estimated negative net impact on fourth quarter results was about $2 million. During the quarter, CP Ships began the process of adapting its cargo acceptance and documentation procedures to comply with US Customs 24-Hour Advance Notification Rule and expects to meet the compliance deadline of 2nd February. All our brands are members of the US Customs Trade Partnership Against Terrorism (C-TPAT) and Canadian Partners in Protection (PIP). CP Ships took delivery of a further four new containerships being built under the company's $800 million 23 ship replacement program during the fourth quarter. The remaining four new, one used and six long-term chartered ships are expected to be delivered on schedule by the end of the third quarter 2003. Annualized 2002 cost reductions were about $125 million, of which $100 million contributed to the 2002 result. Cost per teu for the year fell by just over 5% from 2001. The ship fleet decreased from 92 on 30th September to 89 ships on 31st December mainly due to Australasia services restructuring.