UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported) :  January 24, 2005

 

 

Union Pacific Corporation

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Utah		1-6075		13-2626465
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

 

 

1400 Douglas Street, Omaha, Nebraska				68179
(Address of Principal Executive Offices)				(Zip Code)

 

 

 

 

Registrant’s telephone number, including area code: (402) 544-5000

 

 

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the

filing obligation of the registrant under any of the following provisions (see General Instruction

A.2. below):

¨		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02 Results of Operations and Financial Condition

 

 

On January 24, 2005, Union Pacific Corporation issued a press release announcing its

financial results for the fourth quarter of 2004. A copy of the press release is furnished herewith

as Exhibit 99.1 to this Current Report.

 

 

Item 9.01 Financial Statements and Exhibits

 

 

(c)

Exhibits

 

 

Exhibit 99.1		Press Release, dated January 24, 2005, announcing Union Pacific Corporation’s financial results for the fourth quarter of 2004.

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly

caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Dated:  January 24, 2005

 

 

 

Exhibit 99.1

 

UNION PACIFIC REPORTS FOURTH QUARTER EARNINGS

 

 

 

 

 

FOR IMMEDIATE RELEASE:

 

 

OMAHA, Neb., January 24, 2005 – Union Pacific Corporation (NYSE: UNP) today

 

reported 2004 fourth quarter income from continuing operations of $79 million, or $0.30 per

 

diluted share compared to $333 million, or $1.28 per diluted share in the fourth quarter of 2003.

 

Included in the 2004 results is the impact of the $154 million after-tax, or $0.58 per diluted

 

share, non-cash charge for unasserted asbestos claims that the company announced in December.

 

For the full year 2004, income from continuing operations was $604 million, or $2.30 per

 

diluted share compared to $1.1 billion, or $4.07 per diluted share in 2003. The 2004 full year

 

results also include the impact of the non-cash asbestos charge.

 

“High fuel prices and increased operating costs continued to impact earnings,” Dick

 

Davidson, chairman and chief executive officer, said. “However, we continue to be encouraged

 

by the unprecedented demand we have experienced over the past year. In 2004, our operating

 

revenue grew to a record $12.2 billion – a six percent increase over 2003 and our first year over

 

the $12 billion mark. We believe this trend will continue as demand for transportation service

 

exceeds the available supply, giving us an opportunity to improve returns and grow with our

 

customers.”

 

 

 

 

 

 

 

 

 

 

-m o r e-

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-2-

 

2004 Fourth Quarter Summary

 

In the fourth quarter of 2004, Union Pacific Corporation reported operating income of

 

$204 million, which includes the $247 million pre-tax, non-cash asbestos charge. This compares

 

to $589 million during the same period in 2003.

 

·		The Railroad’s Commodity Revenue was up 8 percent to a quarterly best $3.1 billion, with   all commodities except Energy posting increases for the quarter. The main component of the   growth was a six percent increase in Average Revenue per Car, which reached an all-time   record of $1,282 per car in the fourth quarter.
·		Business volumes, as measured by total carloads, grew 1 percent to a fourth quarter record   2.4 million.
·		Operating margin was 6.3 percent versus 19.9 percent last year with 7.7 points of the decline   attributable to the asbestos charge. Operating margin was also impacted by higher fuel costs   and slower operational velocity.
·		The Railroad’s average quarterly fuel price of $1.46 per gallon compares to $0.89 per gallon   paid a year ago, increasing quarterly diesel fuel costs by $195 million.
·		Quarterly average system speed, as reported to the Association of American Railroads,   declined 1.3 mph versus the prior quarter and was 2.2 mph slower than the fourth quarter of   2003.

 

Fourth Quarter Commodity Revenue Summary versus 2003

 

·		Industrial Products up 17 percent
·		Agricultural up 12 percent

 

 

-m o r e-

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-3-

 

·		Intermodal and Chemicals were each up 11 percent
·		Automotive up 2 percent
·		Energy down 5 percent

 

2004 Full Year Summary

 

·		Total Operating Revenue increased 6 percent to a record $12.2 billion.
·		Railroad Commodity Revenue totaled a record $11.7 billion, a 6 percent increase. Half of   this growth is attributable to a $41 increase in Average Revenue per Car to a record $1,236   per car.
·		Business volumes, as measured by total carloads, increased 2 percent to a record level of 9.5   million.
·		Operating margin was 10.6 percent versus 18.5 percent last year with 2.0 points of the year-   over-year margin decline attributable to the asbestos charge. Full year operating margin was   also impacted by higher fuel costs and slower operational velocity.
·		The Railroad’s average yearly fuel price was $1.22 per gallon compared to $0.92 per gallon   in 2003, increasing diesel fuel costs by $416 million.
·		Average system speed, as reported to the Association of American Railroads, declined 2.2   mph in 2004 to 21.4 mph. This compares to an average system speed of 23.6 mph in 2003.

 

2005 Outlook

 

“At the top of our list for 2005 is improving service to our customers,” Davidson said.

 

“Over the past year, efforts to increase our train crew and locomotive resources have been

 

successful. The next step, already underway, is to improve our network management processes

 

-m o r e-

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-4-

 

to make these resources more productive. We are engaged in a comprehensive redesign of our

 

operating network. We are calling this program our Unified Plan, and we expect to implement

 

this plan by the end of the second quarter. Through these efforts, we believe we can simplify our

 

operations, improve velocity and better manage the volume flowing onto our network in the face

 

of continued strong demand.

 

“The year is off to a difficult start with the recent severe storm in California and Nevada,

 

but we continue to believe that 2005 will be a better year for our company. As we put the

 

weather challenges behind us, and our new network initiatives gain momentum, we expect to see

 

improvements in both our service to customers and returns to our shareholders.”

 

Union Pacific Corporation owns 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 major gateways to Mexico, Union Pacific has

 

the premier rail franchise in North America.

 

Supplemental financial information is attached.

 

Additional information is available at our Web site: www.up.com. Contact for

 

investors is Jennifer Hamann at 402-544-4227. Contact for media is Kathryn Blackwell at

 

402-544-3753.

 

-m o r e-

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-5-

 

**********

 

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 continued demand for rail transportation in excess of supply;

expectations regarding operational improvements, including the effectiveness of actions taken and to be undertaken

to improve system velocity, customer service and shareholder returns; expectations as to increased returns, cost

savings, revenue growth and earnings; the time by which certain objectives will be achieved, including expected

improvements in velocity and implementation of network management initiatives; 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; and statements of

management’s beliefs, expectations, 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, including those plans and initiatives to improve system

velocity and network management or otherwise improve operations; industry competition, conditions, performance

and consolidation; general legislative and regulatory developments, including possible enactment of initiatives to

re-regulate the rail business; legislative, regulatory and legal developments involving taxation, including enactment

of new federal or state income tax rates, revisions of controlling authority and the outcome of tax claims and

litigation; changes in securities and capital markets; 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.

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED INCOME

 

Periods Ended December 31

 

(Dollars in Millions, Except Per Share Amounts)

 

(Unaudited)

 

 

 

			Fourth Quarter											Year-to-Date
			2004				2003			Pct Chg				2004				2003			Pct Chg
Operating Revenues		$	3,217			$	2,965			8			$	12,215			$	11,551			6
Operating Expenses
Salaries and Benefits			1,051				999			5				4,167				3,892			7
Equipment and Other Rents			331				305			9				1,374				1,221			13
Depreciation			282				272			4				1,111				1,067			4
Fuel and Utilities			533				336			59				1,816				1,341			35
Materials and Supplies			129				108			19				488				414			18
Purchased Services and Other			687				356			93				1,964				1,483			32
Total Operating Expenses			3,013				2,376			27				10,920				9,418			16
Operating Income			204				589			(65	)			1,295				2,133			(39	)
Other Income - Net			22				46			(52	)			88				78			13
Interest Expense			(130	)			(134	)		(3	)			(527	)			(574	)		(8	)
Income Before Income Taxes			96				501			(81	)			856				1,637			(48	)
Income Tax Expense			(17	)			(168	)		(90	)			(252	)			(581	)		(57	)
Income from Continuing Operations			79				333			(76	)			604				1,056			(43	)
Income from Discontinued Operations			-				218			U				-				255			U
Cumulative Effect of Accounting Change			-				-			-				-				274			U
Net Income		$	79			$	551			(86	)		$	604			$	1,585			(62	)
Basic Earnings Per Share
Income from Continuing Operations		$	0.30			$	1.30			(77	)		$	2.33			$	4.15			(44	)
Income from Discontinued Operations			-				0.85			U				-				1.00			U
Cumulative Effect of Accounting Change			-				-			-				-				1.08			U
Net Income		$	0.30			$	2.15			(86	)		$	2.33			$	6.23			(63	)
Diluted Earnings Per Share
Income from Continuing Operations		$	0.30			$	1.28			(77	)		$	2.30			$	4.07			(43	)
Income from Discontinued Operations			-				0.84			U				-				0.95			U
Cumulative Effect of Accounting Change			-				-			-				-				1.02			U
Net Income		$	0.30			$	2.12			(86	)		$	2.30			$	6.04			(62	)

 

 

 

 

 

 

 

 

 

 

January 24, 2005		(1)

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UNION PACIFIC RAILROAD

 

REVENUE DETAIL

 

Periods Ended December 31

 

(Unaudited)

 

 

 

			Fourth Quarter										Year-to-Date
			2004			2003		Pct Chg					2004			2003		Pct Chg
Commodity Revenue (000):
Agricultural		$	471,260		$	419,934		+		12		$	1,675,077		$	1,577,998		+		6
Automotive			324,374			318,114		+		2			1,235,047			1,216,343		+		2
Chemicals			446,772			401,129		+		11			1,718,761			1,588,579		+		8
Energy			592,839			620,975		-		5			2,404,525			2,411,758				-
Industrial Products			627,289			538,029		+		17			2,418,752			2,180,427		+		11
Intermodal			607,134			544,736		+		11			2,239,815			2,065,947		+		8
Total		$	3,069,668		$	2,842,917		+		8		$	11,691,977		$	11,041,052		+		6
Revenue Carloads:
Agricultural			228,750			237,904		-		4			883,360			882,722				-
Automotive			210,267			209,160		+		1			825,732			819,788		+		1
Chemicals			232,563			218,491		+		6			934,785			888,248		+		5
Energy			529,826			566,459		-		6			2,171,520			2,187,088		-		1
Industrial Products			368,502			365,645		+		1			1,515,021			1,478,268		+		2
Intermodal			824,337			762,951		+		8			3,127,385			2,982,717		+		5
Total			2,394,245			2,360,610		+		1			9,457,803			9,238,831		+		2
Average Revenue per Car:
Agricultural		$	2,060		$	1,765		+		17		$	1,896		$	1,788		+		6
Automotive			1,543			1,521		+		1			1,496			1,484		+		1
Chemicals			1,921			1,836		+		5			1,839			1,788		+		3
Energy			1,119			1,096		+		2			1,107			1,103				-
Industrial Products			1,702			1,471		+		16			1,597			1,475		+		8
Intermodal			737			714		+		3			716			693		+		3
Total		$	1,282		$	1,204		+		6		$	1,236		$	1,195		+		3

 

 

 

 

 

 

 

 

 

 

January 24, 2005		(2)

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

 

As of December 31, 2004 and 2003

 

(Dollars in Millions)

 

(Unaudited)

 

 

 

			December 31,
			2004			2003
Assets:
Cash and Temporary Investments		$	977		$	527
Other Current Assets			1,313			1,562
Investments			767			726
Properties - Net			31,014			30,283
Other Assets			518			396
Total		$	34,589		$	33,494
Liabilities and Shareholders’ Equity:
Current Portion of Long Term Debt		$	150		$	167
Other Current Liabilities			2,366			2,289
Long Term Debt			7,981			7,822
Deferred Income Taxes			9,180			9,102
Other Long Term Liabilities			2,257			1,760
Common Shareholders’ Equity			12,655			12,354
Total		$	34,589		$	33,494

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 24, 2005		(3)

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED CASH FLOWS

 

For the Twelve Months Ended December 31

 

(Dollars in Millions)

 

(Unaudited)

 

 

			2004				2003
Operating Activities:
Net Income		$	604			$	1,585
Income from Discontinued Operations			-				(255	)
Cumulative Effect of Accounting Change			-				(274	)
Depreciation			1,111				1,067
Deferred Income Taxes			359				494
Other			173				(195	)
Cash Provided by Operating Activities			2,247				2,422
Investing Activities:
Capital Investments			(1,876	)			(1,752	)
Proceeds from Sale of Discontinued Operations			-				620
Other			154				276
Cash Used in Investing Activities			(1,722	)			(856	)
Financing Activities:
Dividends Paid			(310	)			(234	)
Debt Repaid			(588	)			(2,117	)
Financings and Other - Net			823				945
Cash Used in Financing Activities			(75	)			(1,406	)
Net Change in Cash and Temporary Investments		$	450			$	160
Non-Cash Capital Lease Financings		$	-			$	188

 

 

 

 

 

 

 

 

 

 

January 24, 2005		(4)

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APPENDIX

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UNION PACIFIC CORPORATION

 

OPERATING AND FINANCIAL STATISTICS

 

Periods Ended December 31

 

(Unaudited)

 

 

 

							Fourth Quarter											Year-to-Date
							2004				2003			Pct Chg				2004				2003			Pct Chg
Operating Statistics:
		Revenue Carloads (Thousands)					2,394				2,361			1				9,458				9,239			2
		Revenue Ton-Miles (Billions)					137.0				137.2			-				546.3				532.9			3
		Gross Ton-Miles (GTMs) (Billions)					262.2				264.0			(1	)			1,037.5				1,018.9			2
		Operating Margin					6.3	%			19.9	%		(13.6	)pt			10.6	%			18.5	%		(7.9	)pt
		Operating Ratio					93.7	%			80.1	%		13.6	pt			89.4	%			81.5	%		7.9	pt
		Average Employees					48,943				45,982			6				48,295				46,371			4
		GTMs (Millions) per Average Employee					5.36				5.74			(7	)			21.48				21.97			(2	)
		Average Fuel Price Per Gallon				$	1.46			$	0.89			64			$	1.22			$	0.92			33
		Fuel Consumed in Gallons (Millions)					343				344			-				1,377				1,330			4
		Fuel Consumption Rate (Gal per 000 GTM)					1.31				1.30			1				1.33				1.31			2
Financial:
		Average Basic Shares Outstanding (Millions)					259.8				256.1			1				259.1				254.4			2
		Average Diluted Shares Outstanding (Millions) (a)					263.1				259.9			1				262.2				268.0			(2	)
		Effective Tax Rate					17.7	%			33.5	%		(15.8	)pt			29.4	%			35.5	%		(6.1	)pt
		Debt to Capital (b)																39.1	%			39.3	%		(0.2	)pt
		Lease Adjusted Debt to Capital (c)																45.1	%			44.8	%		0.3	pt
		Free Cash Flow (After Dividends) (Millions) (d)															$	215			$	1,144			(81	)

 

(a)	Included in the year-to-date 2003 average diluted shares outstanding were 10.3 million weighted average shares related to the Convertible Preferred Securities, which were redeemed in 2003.

 

(b)	Debt to capital is computed as follows: total debt divided by total debt plus equity.

 

(c)	Lease adjusted debt to capital is computed as follows: total debt plus net present value of operating leases divided by total debt plus equity plus net present value of operating leases.

 

(d)

Free cash flow is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance and measures our ability to generate cash without incurring additional external financings. The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow:

 

		Year-to-Date
			2004				2003
Cash Provided by Operating Activities		$	2,247			$	2,422
Cash Used in Investing Activities			(1,722	)			(856	)
Dividends Paid			(310	)			(234	)
Non-Cash Capital Lease Financings			-				(188	)
Free Cash Flow		$	215			$	1,144
Proceeds from Sale of Discontinued Operations			-				(620	)
Net Free Cash Flow		$	215			$	524

 

 

 

 

 

 

 

 

 

 

January 24, 2005		(A-1)

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED INCOME

 

By Quarter and Full Year 2004

 

(Dollars in Millions, Except Per Share Amounts)

 

(Unaudited)

 

 

 

		Quarter Ended:												Year Ended December 31
		March 31			June 30			September 30			December 31
Operating Revenues		$	2,893		$	3,029		$	3,076		$	3,217		$	12,215
Operating Expenses
Salaries and Benefits			1,011			1,048			1,057			1,051			4,167
Equipment and Other Rents			327			362			354			331			1,374
Depreciation			274			277			278			282			1,111
Fuel and Utilities			389			435			459			533			1,816
Materials and Supplies			123			114			122			129			488
Purchased Services and Other			455			434			388			687			1,964
Total Operating Expenses			2,579			2,670			2,658			3,013			10,920
Operating Income			314			359			418			204			1,295
Other Income - Net			28			8			30			22			88
Interest Expense			(135)			(130)			(132)			(130)			(527)
Income Before Income Taxes			207			237			316			96			856
Income Tax Expense			(42)			(79)			(114)			(17)			(252)
Net Income		$	165		$	158		$	202		$	79		$	604
Basic Earnings Per Share		$	0.64		$	0.61		$	0.78		$	0.30		$	2.33
Diluted Earnings Per Share		$	0.63		$	0.60		$	0.77		$	0.30		$	2.30
Average Basic Shares Outstanding (Millions)			258.7			258.9			259.0			259.8			259.1
Average Diluted Shares Outstanding (Millions)			262.5			261.6			261.6			263.1			262.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 24, 2005		(A-2)

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UNION PACIFIC RAILROAD

 

REVENUE DETAIL

 

By Quarter and Full Year 2004

 

(Unaudited)

 

 

		Quarter Ended:												Year Ended
			March 31			June 30			September 30			December 31			December 31
Commodity Revenue (000):
Agricultural		$	411,259		$	398,501		$	394,057		$	471,260		$	1,675,077
Automotive			296,801			326,095			287,777			324,374			1,235,047
Chemicals			410,081			428,822			433,086			446,772			1,718,761
Energy			586,464			596,694			628,528			592,839			2,404,525
Industrial Products			562,734			606,584			622,145			627,289			2,418,752
Intermodal			510,065			543,966			578,650			607,134			2,239,815
Total		$	2,777,404		$	2,900,662		$	2,944,243		$	3,069,668		$	11,691,977
Revenue Carloads:
Agricultural			230,412			215,003			209,195			228,750			883,360
Automotive			203,210			216,983			195,272			210,267			825,732
Chemicals			223,737			238,309			240,176			232,563			934,785
Energy			541,143			539,508			561,043			529,826			2,171,520
Industrial Products			364,728			387,398			394,393			368,502			1,515,021
Intermodal			724,851			770,328			807,869			824,337			3,127,385
Total			2,288,081			2,367,529			2,407,948			2,394,245			9,457,803
Average Revenue per Car:
Agricultural		$	1,785		$	1,853		$	1,884		$	2,060		$	1,896
Automotive			1,461			1,503			1,474			1,543			1,496
Chemicals			1,833			1,799			1,803			1,921			1,839
Energy			1,084			1,106			1,120			1,119			1,107
Industrial Products			1,543			1,566			1,577			1,702			1,597
Intermodal			704			706			716			737			716
Total		$	1,214		$	1,225		$	1,223		$	1,282		$	1,236

 

 

 

 

 

 

 

January 24, 2005		(A-3)