advertisement

---

Union Pacific Corp. capped off a fiscally pleasing year by earning record fourth-quarter net income of $551 million, a 46 percent increase compared with $378 million in fourth-quarter 2002.

The railroad also increased quarterly operating revenue and income 5 percent to $2.96 billion and $589 million, respectively, and set quarterly commodity revenue and gross ton-mile records at $2.8 billion and 264 billion, respectively. However, quarterly operating expenses rose 5 percent to $2.38 billion and the railroad's operating ratio remained unchanged at 80.1 compared with the same 2002 period.

"This marks the first time since 1999 that all six business groups achieved quarterly revenue growth, reflecting the success of our yield strategy and innovative product offerings," said UP Chairman and Chief Executive Officer Dick Davidson in a prepared statement.

For the full year, UP set annual records for operating revenue at $11.6 billion (up 4 percent), gross ton-miles at 1.4 trillion (up 5 percent) and employee productivity at 22 million gross ton-miles moved per employee (up 5 percent). The railroad also increased net income 18 percent to $1.6 billion compared with 2002.

But annual operating income dropped 5 percent to $2.1 billion, operating expenses rose 6 percent to $9.4 billion and UP's operating ratio worsened 1.7 points to 81.5 compared with the previous year.

"I see a great deal of potential for Union Pacific in 2004, but some challenges as well," said Davidson. "Last year's earnings suffered due to increased fuel costs, which could be an issue again in 2004. However, on the positive side, we began to see a pickup in the economy toward the last half of the year — a trend that I'm happy to say is continuing today."