(Union Pacific issued the following news release on October 27.)
OMAHA, Neb. — Union Pacific Corporation today reported 2005 third quarter net income of $369 million or $1.38 per diluted share. This quarter’s results include the $118 million after-tax, or $.44 per diluted share, non-cash income tax expense reduction that the company announced on October 7, 2005. Excluding the tax item, net income would have been $251 million or $.94 per diluted share. This compares to net income of $202 million or $.77 per diluted share in the third quarter of 2004.
“Our quarterly earnings of $.94 per share represents a solid 22 percent improvement versus last year,” said Dick Davidson, chairman and chief executive officer. “In addition, operating income and operating margin improved for the second consecutive quarter. Despite two hurricanes and record volumes, our operating team did a tremendous job maintaining and improving network fluidity in the quarter.”
2005 Third Quarter Summary
For the quarter, Union Pacific Corporation reported operating income of $481 million, up 15 percent compared to $418 million for the same period in 2004.
— Operating revenue grew 13 percent to $3.5 billion versus 2004
— Operating margin improved to 13.9 percent in the third quarter of 2005 compared to 13.6 percent in 2004
— Total commodity revenue reached best-ever quarterly levels, reflecting a 1 percent growth in carloads to a record 2.4 million loads, along with yield improvements and fuel cost recovery under the company’s surcharge programs
— The Railroad’s average quarterly fuel price including transportation and taxes was $1.88 per gallon versus $1.25 per gallon a year ago
Two of the Railroad’s three key operating metrics, as reported to the Association of american Railroads, improved in the third quarter of 2005 versus the third quarter of 2004. Higher train speeds, lower terminal dwell times and smaller rail car inventories would all be indicators of better system fluidity. In the face of record demand, average terminal dwell time decreased 7 percent from 30.1 hours to 28.1 hours and rail car inventory decreased 1 percent to 318,626 cars Average third quarter train speed fell slightly from 21.8 mph in 2004 to 21.6 mph in the third quarter of 2005. Average train speeds have increased more than 1 mph during the first three quarters of 2005 from an average of 20.5 mph in the fourth quarter of 2004.
Third Quarter Railroad Business Revenue Summary versus 2004
Overall, commodity revenue was up 12 percent as follows:
— Agricultural up 27 percent
— Industrial Products up 16 percent
— Intermodal up 13 percent
— Chemicals up 9 percent
— Automotive up 4 percent
— Energy up 4 percent
“We saw solid revenue growth in all six of our business segments in the quarter,” Davidson said. “With the exception of autos, demand across the board continues to be remarkably strong.”
Outlook
“Our Company has seen both financial and operational improvement through the year,” Davidson said. “We continue to be challenged as we work to move record volume across a system that has been stressed by hurricanes along the Gulf Coast and major washouts in Kansas. Nevertheless, efforts to improve our operating efficiency are beginning to show results. Our rail network is more resilient today, and we look forward to continued improvements. The progress we are making, in the face of adversity, is a tribute to the tenacity and hard work of the men and women of Union Pacific.”
The third quarter 2005 net income of $251 million and diluted earnings per share of $.94, which excludes the income tax expense reduction, are non-GAAP measures.
Management believes these measures provide an alternative presentation of results that more accurately reflects on-going Company operations, without the distorting effect of the income tax expense reduction. These measures should be considered in addition to, not as a substitute for, net income and diluted earnings per share.
Union Pacific Corporation owns one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country and serves the fastest-growing U.S. population centers. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad offers competitive long-haul routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico, making it North America’s premier rail franchise.