Union Pacific Reports First Quarter Results
OMAHA, Neb., April 24 -- Union Pacific Corporation today reported $.60 per diluted share in first quarter 2003 income before the cumulative effect of a change in accounting principle related to the adoption of FAS No. 143, "Accounting for Asset Retirement Obligations." Net income was $1.67 per diluted share, or $429 million, including the $274 million after-tax cumulative effect adjustment. This compares to net income of $.86 per diluted share, or $222 million, in 2002.
"The high cost of fuel was the main driver behind our shortfall in earnings this quarter," said Dick Davidson, chairman and chief executive officer. "Diesel fuel was up more than $.39 a gallon versus year-ago levels, costing us nearly $.30 per share. We also incurred a one-time expense for severance payments and March storms reduced coal revenues. Moving beyond fuel and weather, our operations are running smoothly and we are well positioned for future growth."
First Quarter Highlights
Union Pacific Corporation, excluding Overnite Corporation, reported operating income of $368 million compared to $489 million for the same period in 2002.
-- Operating Revenue was $2.7 billion, a first quarter record
-- Average Commodity Revenue Per Car was at an all-time best of $1,188 per
car
-- Employee Productivity (gross ton-miles/employee) increased 3 percent
for a first quarter record
First Quarter Railroad Commodity Revenue Summary versus 2002
-- Industrial Products revenue was up 8 percent
-- Automotive revenue was up 7 percent
-- Intermodal and Chemicals were both up 2 percent
-- Agricultural was up 1 percent
-- Energy was down 4 percent
"I am encouraged by the revenue performance of our business groups especially in this difficult business environment. We achieved carload growth in four of the six business groups and revenue growth in five of the six. Our Industrial Products, Automotive and Intermodal teams each had record first quarter revenues," Davidson said.
Overnite Corporation Operating Income Up 20 Percent
Overnite Corporation reported a strong performance in the first quarter, with operating income of $12.6 million, compared with $10.5 million in 2002, an increase of 20 percent. Operating revenue increased 10 percent to an all- time best $341.2 million from $308.8 million last year. Overnite's operating ratio decreased 0.3 percentage points to 96.3 percent compared to 2002's ratio of 96.6 percent.
"Overnite certainly had a strong quarter," said Davidson. "As Overnite continues to provide customers with consistent, on-time service, both freight volumes and operating income have grown."
Looking Forward
"Looking ahead, we are focused on our yield strategy, our quality programs and our operational experience to make us a stronger company and position us to take advantage of the opportunities ahead," Davidson said.
Union Pacific Corporation is one of America's leading transportation companies. Its principal operating company, Union Pacific Railroad, is the largest railroad in North America, covering 23 states across the western two- thirds of the United States. A strong focus on quality and a strategically advantageous route structure enable the company to serve customers in critical and fast growing markets. It is a leading carrier of low-sulfur coal used in electrical power generation and has broad coverage of the large chemical- producing areas along the Gulf Coast. With competitive long-haul routes between all major West Coast ports and eastern gateways, and as the only railroad to serve all six gateways to Mexico, Union Pacific has the premier rail franchise in North America. The Corporation's trucking operations include Overnite Corporation, which owns less-than-truckload carriers Overnite Transportation and Motor Cargo.
Supplemental financial information is attached.
Additional information is available at our website: www.up.com. Our contact for investors is Jennifer Hamann at (402) 271-4227. Our media contact is John Bromley at (402) 271-3475.
This press release and related materials may contain statements about the Corporation's future that are not statements of historical fact. These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward- looking statements include, without limitation, statements regarding: expectations as to operational improvements; expectations as to cost savings, revenue growth and earnings; the time by which certain objectives will be achieved; estimates of costs relating to environmental remediation and restoration; proposed new products and services; expectations that claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; and statements concerning projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial and operational results, and future economic performance, statements of management's goals and objectives and other similar expressions concerning matters that are not historical facts.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.
Important factors that could affect the Corporation's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements include, but are not limited to: whether the Corporation and its subsidiaries are fully successful in implementing their financial and operational initiatives; industry competition, conditions, performance and consolidation; legislative and regulatory developments, including possible enactment of initiatives to re-regulate the rail business; natural events such as severe weather, fire, floods and earthquakes; the effects of adverse general economic conditions, both within the United States and globally; any adverse economic or operational repercussions from terrorist activities and any governmental response thereto; war or risk of war; changes in fuel prices; changes in labor costs; labor stoppages; and the outcome of claims and litigation, including those related to environmental contamination, personal injuries, and occupational illnesses arising from hearing loss, repetitive motion and exposure to asbestos and diesel fumes.
Forward-looking statements speak only as of the date the statements were made. The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements.
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED INCOME
For the Three Months Ended March 31
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
2003 2002 Pct Chg
Operating Revenues $3,077 $2,971 + 4
Operating Expenses 2,696 2,472 + 9
Operating Income 381 499 - 24
Other Income - Net 13 21 - 38
Interest Expense (151) (163) - 7
Income Before Income Taxes 243 357 - 32
Income Tax Expense (88) (135) - 35
Income Before Cumulative Effect of
Accounting Change 155 222 - 30
Cumulative Effect of Accounting
Change a) 274 - F
Net Income $429 $222 + 93
Basic Earnings Per Share:
Income Before Cumulative Effect of
Accounting Change $0.61 $0.89 - 31
Cumulative Effect of Accounting
Change 1.08 - F
Net Income $1.69 $0.89 + 90
Diluted Earnings Per Share: b)
Income Before Cumulative Effect of
Accounting Change $0.60 $0.86 - 30
Cumulative Effect of Accounting
Change c) 1.07 - F
Net Income $1.67 $0.86 + 94
Average Basic Shares Outstanding (MM) 253.4 251.0
Average Diluted Shares Outstanding (MM) 256.2 276.2
a) Cumulative effect of accounting change relates to the adoption of
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations", and is presented net of $167
million tax.
b) Excludes the dilutive effect of 21.8 million shares related to the
Convertible Preferred Securities (CPS).
c) Including the CPS, diluted earnings per share for the Cumulative
Effect of Accounting Change would have been $0.99.
UNION PACIFIC RAILROAD
REVENUE DETAIL
For the Three Months Ended March 31
(Unaudited)
2003 2002 Pct Chg
Commodity Revenue (000):
Agricultural $373,007 $368,757 + 1
Automotive 302,133 282,504 + 7
Chemicals 394,239 385,168 + 2
Energy 561,395 582,213 - 4
Industrial Products 509,554 473,717 + 8
Intermodal 466,593 455,216 + 2
Total $2,606,921 $2,547,575 + 2
Revenue Carloads:
Agricultural 214,221 216,732 - 1
Automotive 206,662 193,187 + 7
Chemicals 219,453 217,449 + 1
Energy 521,029 545,230 - 4
Industrial Products 340,047 324,229 + 5
Intermodal 692,509 681,169 + 2
Total 2,193,921 2,177,996 + 1
Average Revenue per Car:
Agricultural $1,741 $1,701 + 2
Automotive 1,462 1,462 -
Chemicals 1,796 1,771 + 1
Energy 1,077 1,068 + 1
Industrial Products 1,498 1,461 + 3
Intermodal 674 668 + 1
Total $1,188 $1,170 + 2
RAIL AND OTHER OPERATIONS - a)
REVIEW OF OPERATIONS
For the Three Months Ended March 31
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
2003 2002 Pct Chg
Operating Revenues $2,736 $2,662 + 3
Operating Expenses
Salaries and Benefits 964 913 + 6
Rent Expense 310 315 - 2
Depreciation 275 284 - 3
Fuel and Utilities 352 225 + 56
Materials and Supplies 103 121 - 15
Purchased Services and Other 364 315 + 16
Total 2,368 2,173 + 9
Operating Income $368 $489 - 25
Operating Statistics:
Revenue Carloads (Thousands) 2,194 2,178 + 1
Revenue Ton-Miles (Billions) 126.4 127.0 - 1
Gross Ton-Miles (Billions) 241.3 240.0 + 1
Rev/RTM (Commodity Revenue Based) 2.063cts 2.005cts + 3
Average Commodity Revenue Per Car $1,188 $1,170 + 2
Average Employees 46,270 47,236 - 2
Average Fuel Price Per Gallon $1.00 $0.61 + 64
Fuel Consumed in Gallons (MM) 319 321 - 1
Fuel Consumption Rate (Gal/000 GTM) 1.32 1.34 - 1
Operating Margin (%) 13.5 18.4 - 4.9 pt.
Operating Ratio (%) 86.5 81.6 + 4.9 pt.
a) Excludes Overnite Corporation's operations.
OVERNITE CORPORATION
REVIEW OF OPERATIONS
For the Three Months Ended March 31
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
2003 2002 Pct Chg
Operating Revenues $341.2 $308.8 + 10
Operating Expenses
Salaries and Benefits 207.9 192.2 + 8
Rent Expense 35.6 29.7 + 20
Depreciation 14.4 15.0 - 4
Fuel and Utilities 22.2 15.1 + 47
Materials and Supplies 13.4 12.2 + 10
Other 35.1 34.1 + 3
Total 328.6 298.3 + 10
Operating Income $12.6 $10.5 + 20
Operating Statistics:
Millions of Pounds Hauled - LTL 2,131 2,022 + 5
Millions of Pounds Hauled - Combined 2,341 2,216 + 6
Revenue/CWT - LTL $14.65 $14.02 + 4
Revenue/CWT - Combined $13.88 $13.38 + 4
Average Employees 13,631 13,158 + 4
Average Fuel Price Per Gallon $1.02 $0.64 + 60
Fuel Consumed in Gallons (000s) 16,350 15,418 + 6
Operating Margin (%) 3.7 3.4 + 0.3 pt.
Operating Ratio (%) 96.3 96.6 - 0.3 pt.
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
As of March 31, 2003 and December 31, 2002
(Dollars in Millions)
(Unaudited)
March 31, December 31,
2003 2002
Assets:
Cash and Temporary Investments $311 $369
Other Current Assets 1,734 1,783
Investments 690 699
Properties - Net 30,099 29,505
Other Assets 653 408
Total $33,487 $32,764
Liabilities and Shareholders'
Equity:
Current Portion of Long Term Debt $268 $276
Other Current Liabilities 2,417 2,425
Long Term Debt 7,556 7,428
Deferred Income Taxes 8,712 8,478
Other Long Term Liabilities 2,012 2,006
Convertible Preferred Securities 1,500 1,500
Common Shareholders' Equity 11,022 10,651
Total $33,487 $32,764
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31
(Dollars in Millions)
(Unaudited)
2003 2002
Operating Activities:
Net Income $429 $222
Cumulative Effect of
Accounting Change a) (274) -
Income Before Cumulative
Effect of Accounting Change 155 222
Depreciation 289 299
Deferred Income Taxes 72 90
Other (181) (266)
Cash Provided by Operating
Activities 335 345
Investing Activities:
Capital Investments (424) (359)
Other (49) (126)
Cash Used in Investing
Activities (473) (485)
Financing Activities:
Dividends Paid (58) (50)
Debt Repaid (207) (301)
Financings and Other - Net 345 488
Cash Provided by Financing
Activities 80 137
Net Change in Cash and Temporary
Investments $(58) $(3)
Free Cash Flow, after Dividends b) $(196) $(190)
a) Cumulative effect of accounting change relates to the adoption of
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations", and is presented net of $167 million
tax.
b) Free cash flow is considered a non-GAAP financial measure by SEC
Regulation G. Free cash flow is defined as cash from operations, less
cash used in investing activities, less dividends paid, less non-cash
financing transactions (if any). We believe free cash flow is
important in evaluating our financial performance and measures our
ability to generate cash without incurring additional external
financings. Free cash flow should be considered in addition to, rather
than a substitute for, net change in cash.
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