Union Pacific Corporation · NYSE:UNP

Union Pacific — Q3 2003 Earnings Presentation

28 slides from Union Pacific's earnings presentation, Nov 27, 2003

  1. Slide 1: Union Pacific Corporation

    Union Pacific Corporation Dick Davidson Chairman & CEO

  2. Slide 2: Earnings per Share – Third Quarter

    Earnings per Share Union Pacific Corporation – Third Quarter $1.63 UTA UTA Sale Sale & & $1.21 Tax Tax Settlement Settlement $1.19 2002 2003

  3. Slide 3: Cost of Quality

    Cost of Quality Union Pacific Railroad – September YTD Percent Percent of of Revenue Revenue 13.9% 13.9% 13.0% 13.0% 11.6% 11.6% • Improvement Despite 11.0% 11.0% Operational Challenges • Service Improvement Plans • Quality Commitment 2000 2000 2001 2001 2002 2002 2003 2003

  4. Slide 4: Third Quarter Summary

    Third Quarter Summary • Record Revenue • Strong Demand – Wheat, Coal & Industrial Products • New Business Growth • Strong Overnite Operating Income

  5. Slide 5: Union Pacific Corporation – Jim Young, EVP Finance & CFO

    Union Pacific Corporation Jim Young EVP - Finance & CFO

  6. Slide 6: Income Statement – Third Quarter

    Income Statement – Third Quarter Union Pacific Corporation ($ ($ Millions Millions Except Except EPS) EPS) 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

  7. Slide 7: 3rd Quarter Recap – Earnings per Share

    3rd Quarter Recap Union Pacific Corporation – Earnings per Share $1.63 Overnite Overnite Earnings Earnings & & Tax Tax Settlement Settlement $0.18 $0.18 UTA UTA Real Real Estate Estate $1.21 Overnite Overnite Sale Sale $0.32 $0.32 Earnings Earnings $0.06 $0.06 $1.13 $1.15 Continuing Operations 2002

  8. Slide 8: Other Income

    Other Income Union Pacific Corporation Includes Includes Land Land Sales: Sales: In In Millions Millions Q3 Q3 -- UTA UTA for for $141 $141 Million Million $160 Q4 Q4 -- VTA VTA for for $73 $73 Million Million $108 $35 $30-$40 $21 $15* $13 $4* Q1 Q2 Q3 Q4 * Includes Includes Convertible Convertible

  9. Slide 9: Average Revenue per Car

    Average Revenue per Car Union Pacific Railroad $1,195 +$17 +$12 $1,156 +$10 Q3 Fuel Price Mix & Q3 2002 Surcharge Other 2003

  10. Slide 10: Review of Operations – Rail & Other Operations

    Review of Operations Rail & Other Operations - Third Quarter Reported Adj For ($ ($ Millions) Millions) 2003 2002 Change FAS 143 Operating Revenues $ 2,956 $ 2,850 + 4% + 4% Operating Expenses Salaries and Benefits 977 919 + 6 + 3 Rent Expense 308 316 - 3 - 3 Depreciation 267 288 - 7 + 1 Fuel and Ut

  11. Slide 11: Fuel Outlook

    Fuel Outlook Q4 Hedge Position Rail & Other Operations • 24% Via Swaps at 81¢ Price Price per per Gallon Gallon • 7% Via Collars 100¢¢ 100 88¢¢ 88 90¢¢ 90 85-90¢¢ 85-90 81¢¢ 81 72¢ 75¢ • Avg Fuel Prices: 61¢ - 91¢ for 2003 - 73¢ in 2002 • Cost Increase - $250 Million vs PY • Recovered 40% in ‘03 Q1

  12. Slide 12: Review of Operations – Overnite

    Review of Operations Overnite - Third Quarter ($ ($ Millions) Millions) 2003 2002 Pct Chg Operating Revenues $ 384.2 $ 354.7 + 8% Operating Expenses $ 355.4 $ 329.1 + 8% Operating Income $ 28.8 $ 25.6 + 13 % Operating Ratio 92.5 % 92.8 % - 0.3 pt.

  13. Slide 13: Cash Outlook

    Cash Outlook Union Pacific Corporation Cash From Operations Free Cash Flow In In Billions Billions After After Dividends Dividends -- In In Millions Millions $2.50+ $528 $500+ $2.25 $1.99 $250 2001 2002 2003 2001 2002 2003 Est Est

  14. Slide 14: Union Pacific Railroad – Ike Evans, President & COO

    Union Pacific Railroad Ike Evans President & COO

  15. Slide 15: Business Diversity

    Business Diversity Third Quarter – 2003 Vs 2002 Revenue Carloads Agricultural +10% +5% Industrial +7% +3% Energy +6% +4% Chemicals 0% -3% Intermodal 0% -3% Automotive -3% -2% Total +4% 0%

  16. Slide 16: Productivity

    Productivity Rail & Other Operations Employees Gross Ton-Miles Billions Billions 259.8 47,906 253.3 46,369 Q3 2002 Q3 2003 Q3 2002 Q3 2003

  17. Slide 17: Attrition & Hiring

    Attrition & Hiring Attrition Attrition Union Pacific Railroad Hiring Hiring 3,500 3,100 3,000 2,500 2,000+ 2,000 2003 Est 2004 Est

  18. Slide 18: Service Metrics

    Service Metrics Third Quarter Velocity (MPH) (MPH) Car Dwell Hours 18.2 27.6 17.1 25.5 2002 2002 2003 2003 2002 2002 2003 2003 To/From Industry Recrew Rate 85% 84% 6.4% 5.2% 2002 2002 2003 2003 2002 2002 2003 2003

  19. Slide 19: Customer Service Measures

    Customer Service Measures September Year-to-Date 79% Customer Satisfaction • Network Inefficiency Service Delivery 72% • Focused on Improvement Index 2000 2001 2002 2003

  20. Slide 20: Safety is First Priority

    Safety is First Priority September Year-to-Date Reportable Injuries Derailment Costs Reportables Reportables Per Per 200,000 200,000 Man Man Hours Hours In In Millions Millions 2.57 $145 2.27 $114 1.84 $97 2001 2002 2003 2001 2002 2003

  21. Slide 21: 4th Quarter Revenue Outlook

    4th Quarter Revenue Outlook Positives Negatives • Intermodal • Chemical Feed Stock • Coal Demand Prices & Demand • Grain Harvest • Finished Vehicles • Industrial Products – Truck Conversions

  22. Slide 22: Union Pacific Railroad – Building America

    Union Pacific Railroad BUILDING AMERICA™

  23. Slide 23: Union Pacific Corporation – Dick Davidson, Chairman & CEO

    Union Pacific Corporation Dick Davidson Chairman & CEO

  24. Slide 24: 4th Quarter Outlook

    4th Quarter Outlook • Revenue Upside • Improving Service • Volatile Fuel Costs • Strong Cash Flow • Overnite Sale Completed

  25. Slide 25: 4th Quarter Earnings Outlook

    4th Quarter Earnings Outlook Union Pacific Corporation $1.41 Overnite Overnite Earnings Earnings $0.03 $0.03 $1.17+ Real Real Estate Estate & & Tax Tax Adjustments Adjustments $0.31 $0.31 Continuing $1.07 Operations 2002 2003

  26. Slide 26: Union Pacific Is Committed To Be A Company Where

    Union Pacific Is Committed To Be A Company Where Customers Want To Do Business Employees Are Proud To Work Shareholder Value Is Created

  27. Slide 27: Disclosure Statement

    Disclosure Statement This This presentation presentation andand related related materials materials maymay contain contain statements statements about about thethe Corporation's Corporation's future future thatthat are are not not statements statements of of historical historical fact. fact. These T

  28. Slide 28: Union Pacific Corporation – Building America

    Union Pacific Corporation BUILDING AMERICA™

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