EXHIBIT 99
RECORD QUARTER, RECORD YEAR FOR UNION PACIFIC
FOURTH STRAIGHT YEAR OF EARNINGS IMPROVEMENT
OMAHA, NE, JANUARY 22, 2003 - 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."
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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.
o 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
o Gross ton-miles were up 2 percent over 2001 to a fourth
quarter record level of 252.4 billion
o 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:
o Automotive up 10 percent
o Agricultural up 8 percent
o Industrial Products up 7 percent
o Chemicals up 3 percent
o Intermodal down 2 percent
o Energy down 3 percent
2002 FULL YEAR HIGHLIGHTS
o 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
o Railroad Employee Productivity increased 6.7 percent to an
all-time record level of 21.0 million gross-ton miles moved
per employee
o Total Operating Revenues increased 4 percent to $12.5 billion
o 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
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o 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.
Supplemental financial information is attached.
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ADDITIONAL INFORMATION IS AVAILABLE AT OUR WEBSITE: www.up.com. CONTACT FOR
INVESTORS IS JENNIFER HAMANN AT 402-271-4227. CONTACT FOR MEDIA IS KATHRYN
BLACKWELL AT 402-271-3753.
This press release and related materials may contain statements about
the Corporation's future that are not statements of historical fact. These
statements are, or will be, forward-looking statements as defined by the
Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking
statements include, without limitation, statements regarding: expectations as to
operational improvements; expectations as to cost savings, revenue growth and
earnings; the time by which certain objectives will be achieved; estimates of
costs relating to environmental remediation and restoration; proposed new
products and services; expectations that claims, lawsuits, environmental costs,
commitments, contingent liabilities, labor negotiations or agreements, or other
matters will not have a material adverse effect on our consolidated financial
position, results of operations or liquidity; and statements concerning
projections, predictions, expectations, estimates or forecasts as to the
Corporation's and its subsidiaries' business, financial and operational results,
and future economic performance, statements of management's goals and objectives
and other similar expressions concerning matters that are not historical facts.
Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the
times that, or by which, such performance or results will be achieved.
Forward-looking information is based on information available at the time and/or
management's good faith belief with respect to future events, and is subject to
risks and uncertainties that could cause actual performance or results to differ
materially from those expressed in the statements.
Important factors that could affect the Corporation's and its
subsidiaries' future results and could cause those results or other outcomes to
differ materially from those expressed or implied in the forward-looking
statements include, but are not limited to: whether the Corporation and its
subsidiaries are fully successful in implementing their financial and
operational initiatives; industry competition, conditions, performance and
consolidation; legislative and regulatory developments, including possible
enactment of initiatives to re-regulate the rail business; natural events such
as severe weather, fire, floods and earthquakes; the effects of adverse general
economic conditions, both within the United States and globally; any adverse
economic or operational repercussions from terrorist activities and any
governmental response thereto; war or risk of war; changes in fuel prices;
changes in labor costs; labor stoppages; and the outcome of claims and
litigation, including those related to environmental contamination, personal
injuries, and occupational illnesses arising from hearing loss, repetitive
motion and exposure to asbestos and diesel fumes.
Forward-looking statements speak only as of the date the statements
were made. The Corporation assumes no obligation to update forward-looking
information to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information. If the Corporation does
update one or more forward-looking statements, no inference should be drawn that
the Corporation will make additional updates with respect thereto or with
respect to other forward-looking statements.
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED INCOME
For the Three Months Ended December 31
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
<Table>
<Caption>
2002 a) 2001 b) Pct Chg
------------ ------------ ----------
OPERATING REVENUES $ 3,171 $ 3,006 + 5
Operating Expenses 2,592 2,441 + 6
------------ ------------
OPERATING INCOME 579 565 + 2
Other Income - Net 108 26 F
Interest Expense (154) (167) - 8
------------ ------------
INCOME BEFORE INCOME TAXES 533 424 + 26
Income Tax Expense (155) (149) + 4
------------ ------------
NET INCOME $ 378 $ 275 + 37
============ ============
BASIC EARNINGS PER SHARE $ 1.49 $ 1.10 + 35
DILUTED EARNINGS PER SHARE $ 1.41 $ 1.06 + 33
Average Basic Shares Outstanding (MM) 253.0 249.3
Average Diluted Shares Outstanding (MM) 277.8 272.9
</Table>
a) Motor Cargo contributed operating revenues of $37.4 million, operating
expense of $34.8 million and operating income of $2.6 million during the
fourth quarter of 2002.
b) Includes the December 2001 results of Motor Cargo, acquired November 30,
2001. Motor Cargo contributed operating revenues of $10.2 million,
operating expense of $9.8 million and operating income of $0.4 million.
(1)
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED INCOME
For the Twelve Months Ended December 31
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
<Table>
<Caption>
2002 a) 2001 b) Pct Chg
-------------- -------------- ----------
OPERATING REVENUES $ 12,491 $ 11,973 + 4
Operating Expenses 10,167 9,901 + 3
-------------- --------------
OPERATING INCOME 2,324 2,072 + 12
Other Income - Net 325 162 F
Interest Expense (633) (701) - 10
-------------- --------------
INCOME BEFORE INCOME TAXES 2,016 1,533 + 32
Income Tax Expense (675) (567) + 19
-------------- --------------
NET INCOME $ 1,341 $ 966 + 39
============== ==============
BASIC EARNINGS PER SHARE $ 5.32 $ 3.90 + 36
DILUTED EARNINGS PER SHARE $ 5.05 $ 3.77 + 34
Average Basic Shares Outstanding (MM) 252.1 248.0
Average Diluted Shares Outstanding (MM) 276.8 271.9
</Table>
a) Motor Cargo contributed operating revenues of $142.2 million, operating
expense of $132.2 million and operating income of $10.0 million during
2002.
b) Includes the December 2001 results of Motor Cargo, acquired November 30,
2001. Motor Cargo contributed operating revenues of $10.2 million,
operating expense of $9.8 million and operating income of $0.4 million.
(2)
UNION PACIFIC RAILROAD
REVENUE DETAIL
Periods Ended December 31
(Unaudited)
<Table>
<Caption>
Fourth Quarter Year-to-Date
2002 2001 Pct Chg 2002 2001 Pct Chg
- ---------------- -------------- -------- --------------- ------------ -------
COMMODITY REVENUE (000):
$ 409,823 $ 381,059 + 8 Agricultural $ 1,505,648 $1,454,216 + 4
316,186 287,777 + 10 Automotive 1,209,168 1,117,629 + 8
388,175 375,912 + 3 Chemicals 1,574,472 1,544,614 + 2
600,287 618,366 - 3 Energy 2,343,355 2,399,606 - 2
492,455 461,947 + 7 Industrial Products 2,035,043 1,970,513 + 3
483,227 493,240 - 2 Intermodal 1,994,920 1,904,764 + 5
- ---------------- -------------- --------------- ------------
$2,690,153 $2,618,301 + 3 Total $ 10,662,606 $ 10,391,342 + 3
================ ============== =============== ============
REVENUE CARLOADS:
234,218 230,709 + 2 Agricultural 880,848 875,935 + 1
213,644 201,524 + 6 Automotive 818,574 762,978 + 7
222,780 214,194 + 4 Chemicals 903,723 879,539 + 3
558,787 558,482 - Energy 2,163,784 2,160,599 -
340,335 327,711 + 4 Industrial Products 1,412,846 1,405,395 + 1
698,181 719,200 - 3 Intermodal 2,951,573 2,831,614 + 4
- ---------------- -------------- --------------- ------------
2,267,945 2,251,820 + 1 Total 9,131,348 8,916,060 + 2
================ ============== =============== ============
AVERAGE REVENUE PER CAR:
$1,750 $1,652 + 6 Agricultural $1,709 $1,660 + 3
1,480 1,428 + 4 Automotive 1,477 1,465 + 1
1,742 1,755 - 1 Chemicals 1,742 1,756 - 1
1,074 1,107 - 3 Energy 1,083 1,111 - 3
1,447 1,410 + 3 Industrial Products 1,440 1,402 + 3
692 686 + 1 Intermodal 676 673 -
- ---------------- -------------- --------------- ------------
$1,186 $1,163 + 2 Total $1,168 $1,165 -
================ ============== =============== ============
</Table>
(3)
RAIL AND OTHER OPERATIONS - a)
REVIEW OF OPERATIONS
Periods Ended December 31
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
<Table>
<Caption>
Fourth Quarter Year-to-Date
2002 2001 Pct Chg 2002 2001 Pct Chg
- ------------ ---------- -------- ----------- ----------- --------
$ 2,825 $ 2,725 + 4 OPERATING REVENUES $11,159 $10,830 + 3
OPERATING EXPENSES
949 898 + 6 Salaries and Benefits 3,694 3,586 + 3
301 293 + 3 Rent Expense 1,240 1,214 + 2
289 285 + 1 Depreciation 1,147 1,126 + 2
295 293 + 1 Fuel and Utilities 1,065 1,249 - 15
111 107 + 4 Materials and Supplies 476 487 - 2
318 295 + 8 Purchased Services and Other 1,284 1,150 + 12
- ------------ ---------- ----------- -----------
2,263 2,171 + 4 Total 8,906 8,812 + 1
- ------------ ---------- ----------- -----------
$ 562 $ 554 + 1 OPERATING INCOME $ 2,253 $ 2,018 + 12
============ ========== =========== ===========
OPERATING STATISTICS:
2,268 2,252 + 1 Revenue Carloads (Thousands) 9,131 8,916 + 2
131.2 128.4 + 2 Revenue Ton-Miles (Billions) 518.7 503.7 + 3
252.4 246.6 + 2 Gross Ton-Miles (Billions) 993.7 957.7 + 4
2.05(cent) 2.04(cent) - Rev/RTM (Commodity Revenue Based) 2.06(cent) 2.06(cent) -
$ 1,186 $ 1,163 + 2 Average Commodity Revenue Per Car $ 1,168 $ 1,165 -
46,276 47,435 - 2 Average Employees 47,298 48,632 - 3
81(cent) 81(cent) - Average Fuel Price Per Gallon 73(cent) 88(cent)- 17
329 328 - Fuel Consumed in Gallons (MM) 1,315 1,287 + 2
1.30 1.33 - 2 Fuel Consumption Rate (Gal/000 GTM) 1.32 1.34 - 1
19.9 20.3 - 0.4 pt. Operating Margin (%) 20.2 18.6 + 1.6 pt.
80.1 79.7 + 0.4 pt. Operating Ratio (%) 79.8 81.4 - 1.6 pt.
</Table>
a) Excludes Overnite's operations.
(4)
OVERNITE CORPORATION
REVIEW OF OPERATIONS - PRO FORMA
Periods Ended December 31
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
<Table>
<Caption>
Fourth Quarter Year-to-Date
2002 2001 a) Pct Chg 2002 2001 a) Pct Chg
------------- --------- -------- --------- --------- --------
$ 346.3 $ 305.5 + 13 OPERATING REVENUES $ 1,332.5 $ 1,270.4 + 5
OPERATING EXPENSES
203.4 183.4 + 11 Salaries and Benefits 807.1 755.6 + 7
36.1 25.5 + 42 Rent Expense 126.0 107.0 + 18
14.7 14.2 + 4 Depreciation 58.5 55.9 + 5
19.3 16.0 + 21 Fuel and Utilities 68.4 75.6 - 10
14.9 14.2 + 5 Materials and Supplies 54.3 55.8 - 3
41.1 38.1 + 8 Other 147.0 156.5 - 6
------------- --------- --------- ---------
329.5 291.4 + 13 Total 1,261.3 1,206.4 + 5
------------- --------- --------- ---------
$ 16.8 $ 14.1 + 19 OPERATING INCOME $ 71.2 $ 64.0 + 11
============= ========= ========= =========
OPERATING STATISTICS:
2,176 2,018 + 8 Millions of Pounds Hauled - LTL 8,693 8,355 + 4
2,386 2,202 + 8 Millions of Pounds Hauled - Combined 9,532 9,093 + 5
$ 14.58 $ 13.97 + 4 Revenue/CWT - LTL $ 14.07 $ 13.99 + 1
$ 13.87 $ 13.35 + 4 Revenue/CWT - Combined $ 13.40 $ 13.41 -
14,093 13,749 + 3 Average Employees 13,649 13,753 - 1
88(cent) 67(cent)+ 31 Average Fuel Price Per Gallon 76(cent) 83(cent)- 8
16,039 15,639 + 3 Fuel Consumed in Gallons (000s) 63,179 64,289 - 2
4.8 4.6 + 0.2 pt. Operating Margin (%) 5.3 5.0 + 0.3 pt.
95.2 95.4 - 0.2 pt. Operating Ratio (%) 94.7 95.0 - 0.3 pt.
</Table>
a) Includes the pro forma effects of the Motor Cargo acquisition, as if the
acquisition had been effective January 1, 2001. The actual results of
Overnite Corporation for the fourth quarter and year-to-date of 2001,
respectively, were as follows: operating revenues - $281.2 million and
$1,143.3 million, operating expenses - $269.4 million and $1,089.1 million,
and operating income - $11.8 million and $54.2 million.
(5)
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
As of December 31, 2002 and 2001
(Dollars in Millions)
(Unaudited)
<Table>
<Caption>
2002 2001
------------------- --------------------
ASSETS:
Cash and Temporary Investments $ 369 $ 113
Other Current Assets 1,783 1,429
Investments 699 786
Properties - Net 29,505 28,792
Other Assets 408 431
------------------- --------------------
Total $ 32,764 $ 31,551
=================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Portion of Long Term Debt $ 276 $ 194
Other Current Liabilities 2,425 2,552
Long Term Debt 7,428 7,886
Deferred Income Taxes 8,478 7,882
Other Long Term Liabilities 2,006 1,962
Convertible Preferred Securities 1,500 1,500
Common Shareholders' Equity 10,651 9,575
------------------- --------------------
Total $ 32,764 $ 31,551
=================== ====================
</Table>
(6)
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Twelve Months Ended December 31
(Dollars in Millions)
(Unaudited)
<Table>
<Caption>
2002 2001
------------- -------------
OPERATING ACTIVITIES:
Net Income $ 1,341 $ 966
Depreciation 1,206 1,174
Deferred Income Taxes 574 424
Other (871) (572)
------------- -------------
Cash Provided by Operating Activities 2,250 1,992
------------- -------------
INVESTING ACTIVITIES:
Capital Investments (1,887) (1,736)
Other 366 192
-------------- --------------
Cash Used in Investing Activities (1,521) (1,544)
------------- -------------
FINANCING ACTIVITIES:
Dividends Paid (201) (198)
Debt Repaid (1,197) (1,219)
Financings and Other - Net 925 977
------------- -------------
Cash Used in Financing Activities (473) (440)
------------- -------------
NET CHANGE IN CASH AND TEMPORARY INVESTMENTS $ 256 $ 8
============= =============
</Table>
(7)