(Union Pacific issued the following news release on April 29.)
OMAHA, Neb. — Union Pacific Corporation (NYSE: UNP – News) today reported $.63 per diluted share, or $165 million in income from continuing operations in the first quarter of 2004 compared to $.57 per diluted share for continuing operations in the first quarter of 2003. Including the effects of income from discontinued operations and an accounting change, first quarter 2003 net income was $1.67 per diluted share or $429 million.
Included in the 2004 first quarter expenses was a charge for the Arkansas Supreme Court decision upholding a $35.8 million jury verdict, including interest, against the Railroad for a 1998 grade-crossing accident. In addition, the Company also recorded a $38.6 million one-time reduction in state tax liabilities.
“The first quarter of 2004 challenged us both operationally and financially,” said Dick Davidson, chairman and chief executive officer. “We saw exceptionally strong demand for our services, setting records for both first quarter carloads and operating revenue. Unfortunately, several factors, including our service challenges and the impact of truly adverse weather conditions, eroded the strong revenue gain.”
First Quarter Overview
Union Pacific Corporation reported a first quarter record $2.9 billion in 2004 operating revenue compared to last year’s $2.7 billion. Operating income in the first quarter of 2004 was $314 million compared to $369 million for the same period in 2003.
* Commodity revenue in the first quarter of 2004 was up 7 percent to $2.8 billion, compared to $2.6 billion in 2003.
* First quarter 2004 average revenue per car was at an all-time best of $1,214 per car, versus $1,188 last year.
* The operating margin decreased to 10.9 percent in the first quarter of 2004 from 13.5 percent in 2003 due to increased service costs and the Arkansas Supreme Court decision.
2004 First Quarter Commodity Revenue Summary versus 2003
— Agricultural and Industrial Products were both up 10 percent
— Intermodal was up 9 percent
— Chemicals and Energy were both up 4 percent
— Automotive was down 2 percent
“The strong demand for our service is further evidence that the U.S. economy continues to pick up steam,” Davidson said. “All of our business groups, except automotive, posted gains both in revenue and carloads.”
Looking Forward
“Looking ahead, I am confident we are taking the right steps to address our current service issues,” Davidson said. “We are continuing to hire and train new train crew personnel, acquiring additional locomotives and refocusing our quality processes. The pace of our service improvement is uncertain and there is still a great deal of progress that must be made, particularly in terms of crews on the West Coast. Demand for our service is very strong and we will work diligently to develop the resources necessary to take advantage of the opportunities ahead.”
Union Pacific Corporation owns 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.