FOR IMMEDIATE RELEASE
---------------------
Bethlehem, PA, October 17 -- Union Pacific Corporation increased its third
quarter income from continuing operations 32 percent, from $160 million in 1995
to $211 million in 1996. Third quarter net income rose 16 percent, from $237
million to $275 million. Net income included income from Union Pacific
Resources, which is being reported as a discontinued operation.
Union Pacific Railroad increased its third quarter operating income 11
percent to $433 million on the strength of both revenue growth and
productivity improvements. Total carloadings were up 3 percent, from 1.47
million to 1.51 million units, with gains in four of the six major commodity
groups. These increases more than offset a weakness in agricultural products,
primarily corn. The Railroad's operating ratio improved 2.0 percentage
points, from 76.9 in the third quarter of 1995 to 74.9 in 1996. Its net income
rose 17 percent to $259 million. The Southern Pacific was merged with Union
Pacific on September 11, 1996, and its earnings offset the higher interest cost
associated with the acquisition. Southern Pacific results will be fully
consolidated with Union Pacific, effective October 1, 1996.
While Overnite Transportation had a third quarter loss of $4 million,
compared with a loss of $2 million in 1995 (before goodwill of $5 million in
both quarters), results showed an improving trend through the quarter. Total
tonnage declined 12 percent, but average prices increased 8 percent, as the
company focused on improving its lower-margin business.
Union Pacific's share of third quarter income reported from Union Pacific
Resources was $64 million, compared with $77 million in 1995. (Earnings in the
third quarter of 1996 reflected only 83 percent of Resources' income, compared
with 100 percent in the prior year). This is the last quarter in which UP
Resources' income will be reported with Union Pacific. On October 15, Union
Pacific Corporation distributed shares of Union Pacific Resources on a tax-free
basis to UP shareholders, using a ratio of .846946 of a share of Resources'
common stock for each UP common share held.
Union Pacific Corporation reported earnings of $675 million in the first
nine months of 1996, compared with $652 million last year. Income from
continuing operations in the first nine months of l996 was $504 million,
compared with $440 million in 1995. Union Pacific Railroad earned $660
million, up 4 percent; Overnite had a loss of $22 million, compared to a loss
of $6 million (before goodwill of $15 million in both periods); and Union
Pacific Resources, the corporation's discontinued operation, earned $171
million, compared to $212 million in 1995.
"We were pleased with the corporation's strong financial results," said
Drew Lewis, chief executive officer. "When combined with the spin-off of our
Resources company and the completion of our Southern Pacific merger, it was a
great quarter on all fronts for Union Pacific."
An income statement for the third quarter and first nine months is
attached.
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED INCOME
Periods Ended September 30
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
Third Quarter Year-to-Date
1996 1995 Pct Chg 1996 1995 Pct Chg
---- ---- ------- ---- ---- -------
$1,996 $1,974 + 1 Operating Revenues.............. $5,976 $5,512 + 8
1,577 1,595 - 1 Operating Expenses.............. 4,903 4,517 + 9
- ------ ------ ------- ------ ------ -------
419 379 + 11 Operating Income................ 1,073 995 + 8
52 35 + 49 Other Income - Net ............. 102 105 - 3
(115) (127) - 9 Interest Expense................ (346) (328) + 5
(24) (26) - 8 Corporate Expenses.............. (75) (80) - 6
- ------ ------ ------- ------ ------ -------
332 261 + 27 Income Before Income Taxes...... 754 692 + 9
(121) (101) + 20 Income Taxes.................... (250) (252) - 1
- ------ ------ ------- ------ ------ -------
211 160 + 32 Income From Continuing Operation 504 440 + 15
64 77 - 17 Discontinued Operations a)...... 171 212 - 19
- ------ ------ ------- ------ ------ -------
$275 $237 + 16 Net Income...................... $675 $652 + 4
====== ====== ======= ====== ====== =======
Earnings Per Share:
$1.00 $0.78 + 28 Income From Continuing Operation $2.42 $2.14 + 13
0.30 0.37 - 19 Discontinued Operations a)...... 0.82 1.03 - 20
- ------ ------ ------- ------ ------ -------
$1.30 $1.15 + 13 Net Income...................... $3.24 $3.17 + 2
====== ====== ======= ====== ====== =======
N/A N/A - Average Shares Outstanding (MM). 208.5 205.8 + 1
a) In September 1996 the Corporation declared a special dividend of its
remaining 83% ownership of Union Pacific Resources Group Inc. (UPRG) to
shareholders of record on September 26, 1996. The dividend was paid October
15, 1996. Income from discontinued operations includes the Corporation's
share of UPRG's income through the record date of the special dividend.