(Union Pacific issued the following press release on January 22.)
OMAHA, Neb. — Union Pacific Corporation (NYSE: UNP) today reported a fourth quarter record net income of $378 million, or $1.41 per diluted share. This is a 37 percent increase over the 2001 level of $275 million, or $1.06 per diluted share. The 2002 quarterly results include one-time gains of $0.16 per diluted share from the sale of land and track to the Santa Clara Valley Transportation Authority as well as $0.15 per diluted share for tax adjustments. Without these transactions, the Corporation earned $1.10 per diluted share in the fourth quarter of 2002.
For the year, net income increased by 39 percent to a record $1.341 billion, or $5.05 per diluted share, compared to $966 million, or $3.77 per diluted share in 2001. Excluding one-time items totaling $0.75 per diluted share that Union Pacific reported in the third and fourth quarters of 2002, full year earnings were $4.30 per diluted share, a 14 percent increase over 2001 earnings.
“This was a remarkable year for Union Pacific,” Dick Davidson, chairman and chief executive officer, said. “While it was a very difficult economic environment, and the West Coast port disruption temporarily slowed our momentum, the men and women of Union Pacific answered every challenge.
“Our 2002 earnings performance accelerated our ability to strengthen the balance sheet and position ourselves for continued long-term growth.”
Fourth Quarter Highlights
In the fourth quarter of 2002, Union Pacific Corporation, excluding Overnite, reported an increase in operating income to $562 million, compared to $554 million for the same period in 2001.
— The Railroad’s commodity revenue was up 3 percent to a fourth quarter record $2.69 billion with all commodities up except Energy and Intermodal
— Gross ton-miles were up 2 percent over 2001 to a fourth quarter record level of 252.4 billion
— Employee productivity increased 5 percent to 5.5 million gross-ton miles moved per employee, an all-time quarterly best level, despite volume reductions associated with the West Coast port disruption
Fourth Quarter Commodity Revenue Summary versus 2001:
— Automotive up 10 percent
— Agricultural up 8 percent
— Industrial Products up 7 percent
— Chemicals up 3 percent
— Intermodal down 2 percent
— Energy down 3 percent
2002 Full Year Highlights
— Excluding Overnite, Union Pacific Corporation’s operating margin improved 1.6 points to 20.2 percent – the first time the Company has reached a full-year operating margin above 20 percent since its merger with the Southern Pacific railroad
— Railroad Employee Productivity increased 6.7 percent to an all-time record level of 21.0 million gross-ton miles moved per employee
— Total Operating Revenues increased 4 percent to $12.5 billion
— Commodity revenue at the Railroad increased 3 percent, driven largely by volume increases in Automotive, Intermodal, and Chemicals as well as increases in average revenue per car in Agricultural and Industrial Products
— Record cash from Operating Activities of $2.25 billion and free cash flow (cash from Operating and Investing Activities less dividends paid) of $528 million
Overnite Corporation Overnite Corporation earned $16.8 million in operating income in the fourth quarter of 2002, compared to $14.0 million in 2001 on a pro forma basis. (Pro forma results for 2001 include $2.2 million of operating income from Motor Cargo, which was acquired on November 30, 2001.)
For the year, Overnite reported operating income of $71.2 million, compared to $63.9 million in 2001 — an improvement of 11 percent. (Pro forma results for 2001 include $9.7 million of operating income from Motor Cargo.) The operating ratio was 94.7 percent in 2002, compared to 95.0 in 2001.
2003 Outlook
“The outlook for our core business remains strong,” said Davidson. “We would expect moderately improved revenue growth throughout the year, but we’re concerned about the potential impact of an uncertain economy and high energy prices.”
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.