(Union Pacific issued the following news release on January 21.)
OMAHA, Neb.– Union Pacific Corporation today reported a fourth quarter record net income of $551 million, or $2.12 per diluted share. This is a 46 percent increase over the 2002 net income of $378 million, or $1.41 per diluted share. The 2003 quarterly results include $0.84 per diluted share, reflecting the recorded gain from the Company’s sale of its Overnite subsidiary, as well as earnings from Overnite’s October operations. From continuing operations, the Corporation earned $1.28 per diluted share in the fourth quarter of 2003 compared with $1.38 per diluted share in the fourth quarter of 2002.
For the full year, net income increased by 18 percent to a record $1.6 billion, or $6.04 per diluted share, compared to $1.3 billion or $5.05 per diluted share in 2002. Total earnings per diluted share included the sale of Overnite and the cumulative effect of an accounting change. The company earned $1.1 billion or $4.07 per diluted share from continuing operations in 2003 versus $4.78 per diluted share in 2002.
“In 2003, we accomplished some very important goals to improve shareholder value,” Dick Davidson, chairman and chief executive officer, said. “The industry and economic climates were right for the successful completion of the Overnite IPO. The combination of the Railroad’s strong cash generation and proceeds from the sale of Overnite has allowed us to further strengthen our balance sheet. We have retired the entire $1.5 billion of convertible preferred securities issued in 1998 and improved our debt ratios to below the 1994 level, which was before the Chicago and North Western and Southern Pacific mergers. We also rewarded our shareholders with a 30 percent increase in the quarterly dividend.”
Fourth Quarter Highlights
In the fourth quarter of 2003, Union Pacific Corporation reported a 5 percent increase in operating income to $589 million compared to $562 million during the same period in 2002.
— The Railroad’s commodity revenue was up 6 percent to a fourth quarter record $2.8 billion, with all commodities posting increases for the quarter.
— Business volume, as measured by gross ton-miles, was up 5 percent over
2002 to a fourth quarter record level of 264 billion.
— Operating margin remained flat, in spite of continued high diesel fuel prices.
Fourth Quarter Commodity Revenue Summary versus 2002
— Intermodal up 13 percent
— Industrial Products up 9 percent
— Chemicals and Energy up 3 percent
— Agricultural up 2 percent
— Automotive up 1 percent
“Our business teams demonstrated an outstanding performance this quarter with a commodity revenue increase of nearly 6 percent,” Davidson said. “This marks the first time since 1999 that all six business groups achieved quarterly revenue growth, reflecting the success of our Yield Strategy and innovative product offerings.”
2003 Full Year Highlights
— Total Operating Revenue increased 4 percent to a record $11.6 billion.
— Commodity revenue at the Railroad increased 4 percent, driven largely by best-ever results in five of our business groups.
— Business volume, as measured by gross ton-miles, reached a record level of more than 1 trillion in a tough economy.
— Employee productivity increased 5 percent to an all-time record level of 22 million gross ton-miles moved per employee.
— Record cash from Operating Activities increased 10 percent to $2.4 billion
2004 Outlook
“Looking ahead, I see a great deal of potential for Union Pacific in 2004, but some challenges as well,” Davidson said. “Last year’s earnings suffered due to increased fuel costs, which could be an issue again in 2004. However, on the positive side, we began to see a pickup in the economy toward the last half of the year — a trend that I’m happy to say is continuing today.”
“All-in-all, 2004 looks to be a promising year for Union Pacific. Through our Yield Strategy, we intend to leverage this improving economy into profitable growth opportunities for our company.”
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 six key gateways to Mexico, Union Pacific has the premier rail franchise in North America.