EXHIBIT 99
UNION PACIFIC UPDATES EARNINGS OUTLOOK
HIGH FUEL PRICES IMPACTING BUSINESS RESULTS
OMAHA, NEB., MARCH 24, 2003 - Union Pacific Corporation (NYSE: UNP)
today announced that its first quarter diluted earnings per share from
continuing operations is expected to be in the $0.58 to $0.60 range. This
compares to $0.86 in the first quarter of 2002 and is lower than the Company's
initial target estimate for the quarter. During the quarter, war fears
dramatically increased the Company's fuel cost and contributed to a recent
softening in economic demand. In addition, winter storms have had an impact on
financial results.
"Average diesel fuel prices for the quarter are almost $0.40 per gallon
more than we paid a year ago. Operating costs for the entire transportation
industry have been inflated by fuel prices that reached all-time highs during
the quarter," said Dick Davidson, chairman and chief executive officer. "In
addition, while first quarter revenues started out fairly strong, as war
tensions increased and crude oil prices rose, we saw a weakening in some
customer shipments. As a result, we have not experienced the growth we'd
expected, particularly in March, which is typically the strongest month of the
quarter."
2003 FIRST QUARTER IMPACTS
Key factors affecting the quarterly earnings results include:
o Rising diesel fuel prices will add approximately $130 million
to operating expenses, or costing nearly $0.30 per diluted
share from 2002 to 2003.
o Coal inventory adjustments at utility plants and the
operational impact of a severe March storm will result in
lower than expected Energy revenues.
o Softening demand toward the end of the quarter has resulted in
lower than expected growth in our domestic intermodal and
chemicals businesses.
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o Severance costs will total $0.04 per diluted share in the
quarter. Work force level reductions are on plan, but overall
costs are less than anticipated due to higher attrition rates
and lower severance payments.
Excluding the effects of increased fuel prices and one-time severance
payments, Union Pacific Railroad's operating margin will likely match, or be
slightly better than last year's rate.
FAS 143
In the first quarter, the Company will also report a cumulative effect
of a change in accounting principle that will add approximately $250 to $300
million after tax to Union Pacific's first quarter net income. This change
results from the adoption of FAS 143 (Accounting for Asset Retirement
Obligations). This new standard is being adopted by all rail transportation
companies and changes the way the rail industry accounts for track structure
removal costs. This change will have no impact on liquidity.
2003 OUTLOOK
"It appears that high fuel prices and economic weakness in the first
half of the year will challenge the Company's ability to reach our 2003 goal of
5 to 10 percent earnings growth over 2002 core earnings* of $4.30 per diluted
share," said Davidson. "In the face of these head winds, however, the men and
women of Union Pacific remain dedicated to achieving continued productivity
gains, improved service reliability and increased customer satisfaction.
"Looking ahead, I'm hopeful that a quick and positive outcome to the
war in Iraq will restore consumer confidence, strengthen the economy and
continue to drive fuel prices lower, thus helping to drive a strong second half
performance for the 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
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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.
UNION PACIFIC WILL HOST A CONFERENCE CALL TOMORROW TO DISCUSS THE
EARNINGS OUTLOOK. YOU ARE INVITED TO LISTEN TO THE BROADCAST LIVE OVER THE
INTERNET OR VIA TELECONFERENCE ON TUESDAY, MARCH 25, 2003 AT 9:00 AM EASTERN
TIME. THE INTERNET WEBCAST CAN BE ACCESSED AT www.up.com (UNDER INVESTORS) OR
DIAL-IN TELEPHONE ACCESS AT 888/560-1989 (DOMESTIC) OR 973/582-2824
(INTERNATIONAL). IF YOU ARE UNABLE TO PARTICIPATE DURING THE LIVE
TELECONFERENCE, THE CALL WILL BE ARCHIVED ON UNION PACIFIC'S WEBSITE AT
www.up.com. TO ACCESS THE REPLAY, CLICK ON INVESTORS.
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 contains statements about the Corporation's future
that are not statements of historical fact and are considered forward-looking
statements within the meaning of the federal securities laws. 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 due to, among other factors, changes in global,
political, economic, business, competitive, market and regulatory factors. More
detailed information about such factors is contained in the Corporation's
filings with the Securities and Exchange Commission.
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.
*2002 REPORTED EARNINGS WERE $5.05 PER DILUTED SHARE. CORE EARNINGS PER SHARE
EXCLUDES ONE-TIME ITEMS TOTALING $0.75 PER DILUTED SHARE THAT UNION PACIFIC
REPORTED IN THE THIRD AND FOURTH QUARTERS OF 2002. ONE TIME ADJUSTMENTS WERE (1)
UTAH TRANSIT AUTHORITY REAL ESTATE SALE, (2) SANTA CLARA VALLEY TRANSPORTATION
AUTHORITY REAL ESTATE SALE, (3) OVERNITE TAX ADJUSTMENT AND (4) OTHER PRIOR YEAR
TAX ADJUSTMENTS.