Union Pacific Reports Record Revenue Of $3.3 Billion
OMAHA, Neb., July 24 -- Union Pacific Corporation today reported second quarter net income of $288 million, or $1.10 per diluted share. This compares to net income of $304 million, or $1.15 per diluted share in the second quarter of 2002. Operating income was $605 million, compared to $602 million in 2002. The 2003 results include a one-time expense of $.03 per diluted share for costs associated with the $500 million redemption of the Corporation's convertible preferred securities.
"This was our best quarter ever in terms of revenue. In a weak economic climate with carloadings flat compared to last year, this excellent revenue performance indicates the strength of our business mix," said Dick Davidson, chairman and chief executive officer. "And, although fuel surcharges contributed to our revenue growth, they did not fully mitigate the additional $54 million of Railroad fuel expense incurred due to a $.16 per gallon increase in diesel prices from a year ago."
Second Quarter Highlights
Union Pacific Corporation, excluding Overnite Corporation, reported second quarter operating income of $584 million compared to $583 million for the same period in 2002.
-- Railroad Operating Revenue increased 3 percent
-- Employee Productivity (gross ton-miles/employee) increased 4 percent
to a second quarter record level
-- Operating Margin was 20.2 percent, compared to last year's second
quarter 20.7 percent
Second Quarter Railroad Commodity Revenue Summary versus 2002
-- Agricultural up 6 percent
-- Energy up 6 percent
-- Industrial Products up 5 percent
-- Intermodal was flat
-- Automotive down 2 percent
-- Chemicals down 2 percent
"The key takeaway here is that our franchise diversity is vital to sustained revenue growth," Davidson said. "In a tough economy, our less cyclical businesses -- such as Agriculture and Energy -- can lead us to greater profitability."
Overnite Corporation
Overnite Corporation reported a 15 percent increase in second quarter operating income of $21.0 million, compared to $18.2 million in 2002. Operating revenue was up 10 percent to $372.0 million from $337.1 million last year. Overnite's operating ratio was 94.4 percent compared to 94.6 percent.
Looking Forward
"We are cautiously upbeat about the second half of the year," Davidson said. "One cloud on the horizon, however, continues to be energy prices. Diesel fuel and natural gas prices have remained stubbornly high, affecting our customers' businesses and our cost structure, while creating a drag on the overall economy. We remain focused on running a quality, profitable Company and, with help from a little stronger economy, we're positioned for growth."
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 its less-than-truckload carriers, Overnite Transportation and Motor Cargo.
Additional information is available at our Web site: www.up.com. Our contact for investors is Jennifer Hamann at (402) 271-4227. Our media contact is Kathryn Blackwell at (402) 271-3753.
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 new tax rates and possible enactment of initiatives to re- regulate the rail industry; 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 June 30
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
2003 2002 Pct Chg
Operating Revenues $3,266 $3,159 +3
Operating Expenses 2,661 2,557 +4
Operating Income 605 602 F
Other Income - Net 5 35 -86
Interest Expense (150) (159) -6
Income Before Income Taxes 460 478 -4
Income Tax Expense (172) (174) -1
Net Income $288 $304 -5
Basic Earnings Per Share $1.13 $1.21 -7
Diluted Earnings Per Share $1.10 $1.15 -4
Average Basic Shares Outstanding (MM) 253.9 251.8
Average Diluted Shares Outstanding (MM) 271.7 276.3
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED INCOME
For the Six Months Ended June 30
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
2003 2002 Pct Chg
Operating Revenues $6,343 $6,130 +3
Operating Expenses 5,357 5,029 +7
Operating Income 986 1,101 -10
Other Income - Net 18 56 -68
Interest Expense (301) (322) -7
Income Before Income Taxes 703 835 -16
Income Tax Expense (260) (309) -16
Income Before Cumulative Effect of
Accounting Change 443 526 -16
Cumulative Effect of Accounting
Change a) 274 - F
Net Income $717 $526 +36
Basic Earnings Per Share
Income Before Cumulative Effect of
Accounting Change $1.75 $2.09 -16
Cumulative Effect of Accounting
Change 1.08 - F
Net Income $2.83 $2.09 +35
Diluted Earnings Per Share
Income Before Cumulative Effect of
Accounting Change $1.70 $2.01 -15
Cumulative Effect of Accounting Change 1.01 - F
Net Income $2.71 $2.01 +35
Average Basic Shares Outstanding (MM) 253.6 251.4
Average Diluted Shares Outstanding (MM) 271.2 276.1
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.
UNION PACIFIC RAILROAD
REVENUE DETAIL
Periods Ended June 30
(Unaudited)
Second Quarter Year-to-Date
2003 2002 Pct Chg 2003 2002 Pct Chg
Commodity
Revenue
(000):
Agri-
$373,776 $353,937 +6 cultural $746,783 $722,694 +3
320,066 325,536 -2 Automotive 622,199 608,040 +2
393,211 402,351 -2 Chemicals 787,450 787,519 -
601,490 569,474 +6 Energy 1,162,885 1,151,687 +1
Industrial
560,851 533,240 +5 Products 1,070,405 1,006,957 +6
514,536 514,362 - Intermodal 981,129 969,578 +1
$2,763,930 $2,698,900 +2 Total $5,370,851 $5,246,475 +2
Revenue
Carloads:
Agri-
205,728 210,530 -2 cultural 419,949 427,262 -2
214,232 219,103 -2 Automotive 420,894 412,290 +2
225,618 232,820 -3 Chemicals 445,071 450,269 -1
536,900 519,852 +3 Energy 1,057,929 1,065,082 -1
Industrial
382,539 373,201 +3 Products 722,586 697,430 +4
752,504 770,972 -2 Intermodal 1,445,013 1,452,141 -
2,317,521 2,326,478 - Total 4,511,442 4,504,474 -
Average
Revenue
per Car:
$1,817 $1,681 +8 Agricultural $1,778 $1,691 +5
1,494 1,486 +1 Automotive 1,478 1,475 -
1,743 1,728 +1 Chemicals 1,769 1,749 +1
1,120 1,095 +2 Energy 1,099 1,081 +2
Industrial
1,466 1,429 +3 Products 1,481 1,444 +3
684 667 +3 Intermodal 679 668 +2
$1,193 $1,160 +3 Total $1,190 $1,165 +2
RAIL AND OTHER OPERATIONS - a)
REVIEW OF OPERATIONS
Periods Ended June 30
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
Second Quarter Year-to-Date
2003 2002 Pct Chg 2003 2002 Pct Chg
Operating
$2,894 $2,822 +3 Revenues $5,630 $5,484 +3
Operating
Expenses:
Salaries
and
952 913 +4 Benefits 1,916 1,826 +5
298 308 -3 Rent Expense 608 623 -2
253 286 -12 Depreciation 528 570 -7
Fuel and
323 268 +21 Utilities 675 493 +37
Materials
and
99 125 -21 Supplies 202 246 -18
Purchased
Services
385 339 +14 and Other 749 654 +15
2,310 2,239 +3 Total 4,678 4,412 +6
Operating
$584 $583 - Income $952 $1,072 -11
Operating
Statistics:
Revenue
Carloads
2,317 2,326 - (Thousands) 4,511 4,504 -
Revenue
Ton-Miles
132.3 129.0 +3 (Billions) 258.7 256.0 +1
Gross
Ton-Miles
253.8 248.0 +2 (Billions) 495.1 488.0 +1
Rev/RTM
(Commodity
Revenue
2.09 cents 2.09 cents - Based) 2.08 cents 2.05 cents +1
Average
Commodity
Revenue
$1,193 $1,160 +3 Per Car $1,190 $1,165 +2
Average
46,859 47,774 -2 Employees 46,565 47,505 -2
Average
Fuel
Price Per
88 cents 72 cents +22 Gallon 94 cents 67 cents +40
Fuel
Consumed
in Gallons
332 334 -1 (MM) 651 655 -1
Fuel
Consumption
Rate (Gal/
1.31 1.35 -3 000 GTM) 1.31 1.34 -2
Operating
20.2 20.7 -0.5 pt. Margin (%) 16.9 19.6 -2.7 pt.
Operating
79.8 79.3 +0.5 pt. Ratio (%) 83.1 80.4 +2.7 pt.
a) Excludes Overnite's operations.
OVERNITE CORPORATION
REVIEW OF OPERATIONS
Periods Ended June 30
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
Second Quarter Year-to-Date
2003 2002 Pct Chg 2003 2002 Pct Chg
Operating
$372.0 $337.1 +10 Revenues $713.2 $645.9 +10
Operating
Expenses:
Salaries and
220.9 205.3 +8 Benefits 428.8 397.5 +8
37.8 36.3 +4 Rent Expense 73.4 66.0 +11
14.4 14.3 +1 Depreciation 28.8 29.3 -2
Fuel and
20.5 16.4 +25 Utilities 42.7 31.5 +36
Materials and
15.1 13.3 +14 Supplies 28.5 25.5 +12
42.3 33.3 +27 Other 77.4 67.4 +15
351.0 318.9 +10 Total 679.6 617.2 +10
Operating
$21.0 $18.2 +15 Income $33.6 $28.7 +17
Operating
Statistics:
Millions of
Pounds
2,344 2,222 +5 Hauled - LTL 4,475 4,244 +5
Millions of
Pounds
Hauled
2,534 2,437 +4 - Combined 4,875 4,653 +5
Revenue/CWT
$14.60 $13.94 +5 - LTL $14.62 $13.98 +5
Revenue/CWT
$14.00 $13.27 +6 - Combined $13.94 $13.32 +5
Average
14,287 13,670 +5 Employees 13,959 13,414 +4
Average Fuel
Price Per
91 cents 72 cents +26 Gallon 96 cents 68 cents +41
Fuel
Consumed
in Gallons
16,951 15,767 +8 (000s) 33,301 31,185 +7
Operating
5.6 5.4 +0.2 pt. Margin (%) 4.7 4.4 +0.3 pt.
Operating
94.4 94.6 -0.2 pt. Ratio (%) 95.3 95.6 -0.3 pt.
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
As of June 30, 2003 and December 31, 2002
(Dollars in Millions)
(Unaudited)
June 30, December 31,
2003 2002
Assets:
Cash and Temporary Investments $499 $369
Other Current Assets 1,777 1,783
Investments 718 699
Properties - Net 30,473 29,505
Other Assets 470 408
Total $33,937 $32,764
Liabilities and Shareholders' Equity:
Current Portion of Long Term Debt $170 $276
Other Current Liabilities 2,521 2,425
Long Term Debt 8,101 7,428
Deferred Income Taxes 8,842 8,478
Other Long Term Liabilities 2,008 2,006
Convertible Preferred Securities a) 1,000 1,500
Common Shareholders' Equity 11,295 10,651
Total $33,937 $32,764
a) During the second quarter of 2003, $500 million of the Convertible
Preferred Securities were redeemed.
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Six Months Ended June 30
(Dollars in Millions)
(Unaudited)
2003 2002
Operating Activities:
Net Income $717 $526
Cumulative Effect of Accounting Change a) (274) -
Income Before Cumulative Effect of
Accounting Change 443 526
Depreciation 556 599
Deferred Income Taxes 202 213
Other (114) (234)
Cash Provided by Operating Activities 1,087 1,104
Investing Activities:
Capital Investments (891) (846)
Other 140 56
Cash Used in Investing Activities (751) (790)
Financing Activities:
Dividends Paid (117) (100)
Debt Repaid (858) (697)
Financings and Other - Net 769 751
Cash Used in Financing Activities (206) (46)
Net Change in Cash and Temporary Investments $130 $268
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.
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