EXHIBIT 99
RECORD REVENUE FOR UNION PACIFIC
STRONG PERFORMANCE IN AGRICULTURAL, INDUSTRIAL PRODUCTS AND ENERGY
OMAHA, NEB., OCTOBER 23, 2003 - Union Pacific Corporation (NYSE:UNP)
today reported net income for the third quarter of $317 million or $1.21 per
diluted share. This compares to $437 million or $1.63 per diluted share in the
third quarter of 2002, which included income gains from a major real estate
sale, as well as a tax settlement. These two items added $0.44 per diluted share
to the 2002 quarterly earnings.
"As in the first half of the year, fuel prices continued to be a drain
on earnings, adding nearly $50 million to third quarter expenses," said Dick
Davidson, chairman and chief executive officer. "On the plus side, however, we
achieved record revenue of nearly $3 billion - a four percent increase over last
year."
THIRD QUARTER HIGHLIGHTS
For the third quarter, Union Pacific Corporation reported operating
income from continuing operations of $592 million compared to $619 million for
the same period in 2002.
o Revenue was a record $3.0 billion - up 4 percent versus 2002
o Operating Margin of 20 percent - down 1.7 points versus 2002, primarily
as a result of higher energy costs
THIRD QUARTER RAILROAD BUSINESS REVENUE SUMMARY VERSUS 2002
Overall, commodity revenue was up 4 percent with three groups,
Agricultural, Industrial Products and Energy all achieving best ever quarterly
revenue as follows:
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o Agricultural up 10 percent
o Industrial Products up 7 percent
o Energy up 6 percent
o Chemicals and Intermodal were flat
o Automotive down 3 percent
"Even in the face of some operational challenges, we leveraged Union
Pacific's diverse businesses into a solid revenue performance," said Davidson.
"This competitive advantage enabled us to see strong demand in three of our six
business groups and more than offset weaknesses in finished vehicle and chemical
demand."
OVERNITE'S THIRD QUARTER RESULTS
Due to the pending IPO of Overnite Corporation, the company's results
are reported as Discontinued Operations.
Overnite reported a 13 percent increase in third quarter operating
income of $28.8 million compared to $25.6 million in 2002. Operating revenues
increased 8 percent to $384.2 million compared to $354.7 million last year.
Overnite's 2003 operating ratio improved 0.3 percentage points to 92.5 percent
from 92.8 percent in 2002.
YEAR-TO-DATE SUMMARY
For the first nine months of 2003, Union Pacific Corporation reported
operating income from continuing operations of $1.54 billion compared with $1.69
billion in 2002, down 9 percent. Net income for the nine months ended September
30, 2003, rose 7 percent to $1.03 billion versus $963 million for the same
period a year ago. The $1.03 billion includes $274 million from the cumulative
effect of an accounting change recorded in the first quarter of 2003.
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OUTLOOK
"We're fairly optimistic that we'll see continued broad-based growth in
our business and improving economic conditions as we round out 2003," Davidson
said. "While we have been experiencing some operational difficulties in the
second half of the year, we expect operations to improve throughout the fourth
quarter, enabling Union Pacific to enter 2004 with a balanced, fluid system that
is positioned for new growth and new business."
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, Inc. which owns its less-than-truckload carriers Overnite
Transportation and Motor Cargo.
Supplemental financial information is attached.
ADDITIONAL INFORMATION IS AVAILABLE AT OUR WEBSITE: WWW.UP.COM. OUR
MEDIA CONTACT IS KATHRYN BLACKWELL, 402 271-3753. OUR CONTACT FOR INVESTORS IS
JENNIFER HAMANN, 402 271-4227.
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**********
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 new tax rates and possible enactment of initiatives to re-regulate
the rail industry; 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 September 30
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
<Table>
<Caption>
2003 2002 Pct Chg
------- ------- -------
OPERATING REVENUES $ 2,956 $ 2,850 + 4
Operating Expenses 2,364 2,231 + 6
------- -------
OPERATING INCOME 592 619 - 4
Other Income - Net 15 160 - 91
Interest Expense (140) (157) - 11
------- -------
INCOME BEFORE INCOME TAXES 467 622 - 25
Income Tax Expense (167) (234) - 29
------- -------
INCOME FROM CONTINUING OPERATIONS 300 388 - 23
Income from Discontinued Operations 17 49 - 65
------- -------
NET INCOME $ 317 $ 437 - 27
======= =======
BASIC EARNINGS PER SHARE
Income from Continuing Operations $ 1.18 $ 1.54 - 23
Income from Discontinued Operations 0.07 0.19 - 63
------- -------
NET INCOME $ 1.25 $ 1.73 - 28
======= =======
DILUTED EARNINGS PER SHARE
Income from Continuing Operations $ 1.15 $ 1.45 - 21
Income from Discontinued Operations 0.06 0.18 - 67
------- -------
NET INCOME $ 1.21 $ 1.63 - 26
======= =======
Average Basic Shares Outstanding (MM) 254.3 252.5
Average Diluted Shares Outstanding (MM) 265.0 277.3
</Table>
October 23, 2003
(1)
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED INCOME
For the Nine Months Ended September 30
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
<Table>
<Caption>
2003 2002 Pct Chg
------- ------- -------
OPERATING REVENUES $ 8,586 $ 8,334 + 3
Operating Expenses 7,042 6,643 + 6
------- -------
OPERATING INCOME 1,544 1,691 - 9
Other Income - Net 32 216 - 85
Interest Expense (440) (478) - 8
------- -------
INCOME BEFORE INCOME TAXES 1,136 1,429 - 21
Income Tax Expense (413) (532) - 22
------- -------
INCOME FROM CONTINUING OPERATIONS 723 897 - 19
Income from Discontinued Operations 37 66 - 44
Cumulative Effect of Accounting Change 274 -- F
------- -------
NET INCOME $ 1,034 $ 963 + 7
======= =======
BASIC EARNINGS PER SHARE
Income from Continuing Operations $ 2.85 $ 3.56 - 20
Income from Discontinued Operations 0.14 0.27 - 48
Cumulative Effect of Accounting Change 1.08 -- F
------- -------
NET INCOME $ 4.07 $ 3.83 + 6
======= =======
DILUTED EARNINGS PER SHARE
Income from Continuing Operations $ 2.79 $ 3.40 - 18
Income from Discontinued Operations 0.13 0.24 - 46
Cumulative Effect of Accounting Change 1.02 -- F
------- -------
NET INCOME $ 3.94 $ 3.64 + 8
======= =======
Average Basic Shares Outstanding (MM) 253.9 251.8
Average Diluted Shares Outstanding (MM) 269.1 276.5
</Table>
October 23, 2003
(2)
UNION PACIFIC RAILROAD
REVENUE DETAIL
Periods Ended September 30
(Unaudited)
<Table>
<Caption>
Third Quarter Year-to-Date
2003 2002 Pct Chg 2003 2002 Pct Chg
- ----------- ----------- ------- ----------- ----------- -------
COMMODITY REVENUE (000):
$ 411,244 $ 373,165 + 10 Agricultural $ 1,158,027 $ 1,095,859 + 6
276,030 284,942 - 3 Automotive 898,229 892,982 + 1
400,000 398,778 -- Chemicals 1,187,450 1,186,297 --
627,898 591,381 + 6 Energy 1,790,783 1,743,068 + 3
571,974 535,597 + 7 Industrial Products 1,642,379 1,542,554 + 6
540,138 542,115 -- Intermodal 1,521,267 1,511,693 + 1
- ----------- ----------- ----------- -----------
$ 2,827,284 $ 2,725,978 + 4 Total $ 8,198,135 $ 7,972,453 + 3
=========== =========== =========== ===========
REVENUE CARLOADS:
224,919 214,495 + 5 Agricultural 644,868 641,757 --
189,734 192,640 - 2 Automotive 610,628 604,930 + 1
224,686 230,674 - 3 Chemicals 669,757 680,943 - 2
562,700 539,915 + 4 Energy 1,620,629 1,604,997 + 1
389,976 379,954 + 3 Industrial Products 1,112,562 1,077,384 + 3
774,764 801,251 - 3 Intermodal 2,219,777 2,253,392 - 1
- ----------- ----------- ----------- -----------
2,366,779 2,358,929 -- Total 6,878,221 6,863,403 --
=========== =========== =========== ===========
AVERAGE REVENUE PER CAR:
$ 1,828 $ 1,740 + 5 Agricultural $ 1,796 $ 1,708 + 5
1,455 1,479 - 2 Automotive 1,471 1,476 --
1,780 1,729 + 3 Chemicals 1,773 1,742 + 2
1,116 1,095 + 2 Energy 1,105 1,086 + 2
1,467 1,410 + 4 Industrial Products 1,476 1,432 + 3
697 677 + 3 Intermodal 685 671 + 2
- ----------- ----------- ----------- -----------
$ 1,195 $ 1,156 + 3 Total $ 1,192 $ 1,162 + 3
=========== =========== =========== ===========
</Table>
October 23, 2003
(3)
RAIL AND OTHER OPERATIONS - a)
REVIEW OF OPERATIONS
Periods Ended September 30
(Dollars in Millions, Except Operating Statistics)
(Unaudited)
<Table>
<Caption>
Third Quarter Year-to-Date
2003 2002 Pct Chg 2003 2002 Pct Chg
- -------- -------- ------- -------- -------- -------
$ 2,956 $ 2,850 + 4 OPERATING REVENUES $ 8,586 $ 8,334 + 3
OPERATING EXPENSES
977 919 + 6 Salaries and Benefits 2,893 2,745 + 5
308 316 - 3 Rent Expense 916 939 - 2
267 288 - 7 Depreciation 795 858 - 7
330 277 + 19 Fuel and Utilities 1,005 770 + 31
104 119 - 13 Materials and Supplies 306 365 - 16
378 312 + 21 Purchased Services and Other 1,127 966 + 17
- -------- -------- -------- --------
2,364 2,231 + 6 Total 7,042 6,643 + 6
- -------- -------- -------- --------
$ 592 $ 619 - 4 OPERATING INCOME $ 1,544 $ 1,691 - 9
======== ======== ======== ========
OPERATING STATISTICS:
2,367 2,359 -- Revenue Carloads (Thousands) 6,878 6,863 --
137.0 131.5 + 4 Revenue Ton-Miles (Billions) 395.7 387.5 + 2
259.8 253.3 + 3 Gross Ton-Miles (Billions) 754.9 741.3 + 2
2.06 cents 2.07 cents -- Rev/RTM (Commodity Revenue Based) 2.07 cents 2.06 cents --
$ 1,195 $ 1,156 + 3 Average Commodity Revenue Per Car $ 1,192 $ 1,162 + 3
46,369 47,906 - 3 Average Employees 46,499 47,639 - 2
90 cents 75 cents + 20 Average Fuel Price Per Gallon 93 cents 70 cents + 33
334 331 + 1 Fuel Consumed in Gallons (MM) 985 985 --
1.29 1.31 - 2 Fuel Consumption Rate (Gal/000 GTM) 1.30 1.33 - 2
20.0 21.7 - 1.7 pt. Operating Margin (%) 18.0 20.3 - 2.3 pt.
80.0 78.3 + 1.7 pt. Operating Ratio (%) 82.0 79.7 + 2.3 pt.
</Table>
a) Excludes Overnite's operations.
October 23, 2003
(4)
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
As of September 30, 2003 and December 31, 2002
(Dollars in Millions)
(Unaudited)
<Table>
<Caption>
September 30, December 31,
2003 2002
------------- ------------
ASSETS:
Cash and Temporary Investments $ 223 $ 367
Other Current Assets 1,559 1,531
Investments 722 699
Properties - Net 30,121 29,004
Other Assets 397 381
Assets of Discontinued Operations 793 782
------- -------
Total $33,815 $32,764
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Portion of Long Term Debt $ 162 $ 275
Other Current Liabilities 2,314 2,248
Long Term Debt 8,058 7,428
Deferred Income Taxes 9,057 8,550
Other Long Term Liabilities 1,807 1,805
Liabilities of Discontinued Operations 341 307
Convertible Preferred Securities a) 500 1,500
Common Shareholders' Equity 11,576 10,651
------- -------
Total $33,815 $32,764
======= =======
</Table>
a) $1 billion of the Convertible Preferred Securities were redeemed in the
first nine months of 2003.
October 23, 2003
(5)
UNION PACIFIC CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended September 30
(Dollars in Millions)
(Unaudited)
<Table>
<Caption>
2003 2002
------- -------
OPERATING ACTIVITIES:
Net Income $ 1,034 $ 963
Income from Discontinued Operations (37) (66)
Cumulative Effect of Accounting Change (274) --
Depreciation 795 858
Deferred Income Taxes 346 455
Other (93) (393)
------- -------
Cash Provided by Operating Activities 1,771 1,817
------- -------
INVESTING ACTIVITIES:
Capital Investments (1,300) (1,301)
Other 174 243
------- -------
Cash Used in Investing Activities (1,126) (1,058)
------- -------
FINANCING ACTIVITIES:
Dividends Paid (175) (151)
Debt Repaid (1,398) (1,032)
Financings and Other - Net 784 768
------- -------
Cash Used in Financing Activities (789) (415)
------- -------
NET CHANGE IN CASH AND TEMPORARY INVESTMENTS $ (144) $ 344
======= =======
</Table>
October 23, 2003
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