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On Oct. 23, Union Pacific Corp. reported record third-quarter revenue of $3 billion, which increased 4 percent compared with the same 2002 period.

However, the railroad's quarterly fuel expenses increased $50 million, helping increase operating expenses 6 percent to $2.3 billion, and quarterly operating income declined 4 percent to $592 million.

Quarterly net income of $317 million dropped 27 percent compared with third-quarter 2002's $437 million, which included income gains from a real-estate sale and tax settlement. Also, UP's quarterly operating ratio of 80 worsened 1.7 points compared with the same 2002 period.

The record revenue was driven by increasing carloads of agricultural products (10 percent), industrial products (7 percent) and energy-related products (6 percent), which offset declines in chemical and automotive carloads.

"Even in the face of some operational challenges, we leveraged [our] diverse businesses into a solid revenue performance," said UP Chairman and Chief Executive Officer Dick Davidson in a prepared statement.

During 2003's first nine months, UP recorded $8.5 billion in revenue and $1 billion in net income, which rose 3 percent and 7 percent, respectively, compared with the same 2002 period. But operating income of $1.5 billion dropped 9 percent, operating expenses of $7 billion increased 6 percent and UP's operating ratio of 82 worsened 2.3 points compared with last year.

"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," said Davidson.