Union Pacific 2002 Annual Report Download - page 44

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Non-Operating Items – Interest expense decreased $68 million (10%) compared to 2001 due to lower weighted-average debt
levels and weighted-average interest rates in 2002. In 2002, the Corporation’s weighted-average debt level (including the
Convertible Preferred Securities) decreased from $9,980 million in 2001 to $9,525 million in 2002. The Corporation’s
weighted-average interest rate was 6.7% in 2002 as compared to 7.0% in 2001. Other income increased $163 million in 2002
compared to 2001 due primarily to the asset sale transactions with the UTA and VTA. Income tax expense increased $108
million (19%) in 2002 over 2001 as a result of higher pre-tax income levels in 2002 which was partially offset by tax
adjustments for prior years.
Key Measures – Net income as a percentage of operating revenues increased to 10.7% in 2002 from 8.1% in 2001. Return
on average common shareholders’ equity was 13.3% in 2002, up from 10.6% in 2001. The Corporation’s operating margin
was 18.6% in 2002 compared to 17.3% in 2001. The Corporation’s operating margin, excluding Overnite for 2002 was 20.2%
compared to 18.6% in 2001.
Rail Segment
Net Income – Rail operations reported net income of $1.37 billion in 2002 compared to $1.06 billion in 2001, up 30%. The
increase in earnings resulted from stronger operating results, the asset sale transactions with the UTA and VTA, lower interest
costs, and a tax adjustment for prior years’ income tax examinations. Higher operating revenue and lower fuel expense
combined with productivity gains and cost control efforts offset inflation and higher volume-related costs.
Operating Revenues – Operating revenue is comprised of commodity revenue and other revenues. Other revenues
primarily include subsidiary revenue from various non-railroad companies that are wholly owned or majority owned by the
Railroad, revenue from the Chicago commuter rail operations and accessorial revenue earned due to customer detainment
of railroad owned or controlled equipment. Rail operating revenues increased $303 million (3%) over 2001 to a record $11.1
billion. Revenue carloads increased 2% primarily driven by growth in the automotive, intermodal and chemicals commodity
groups. Other revenue increased $31 million (8%) due to increased passenger, subsidiary, and accessorial revenues.
The following tables summarize the year-over-year changes in rail commodity revenue, revenue carloads and average
revenue per car by commodity type:
Commodity Revenue in Millions of Dollars 2002 2001 Change
Agricultural...................................................................................................... $ 1,506 $ 1,454 4%
Automotive ...................................................................................................... 1,209 1,118 8
Chemicals......................................................................................................... 1,575 1,545 2
Energy .............................................................................................................. 2,343 2,399 (2)
Industrial Products.......................................................................................... 2,035 1,970 3
Intermodal ....................................................................................................... 1,995 1,905 5
Total.................................................................................................................. $ 10,663 $ 10,391 3%
Revenue Carloads in Thousands 2002 2001 Change
Agricultural...................................................................................................... 881 876 1%
Automotive ...................................................................................................... 818 763 7
Chemicals......................................................................................................... 904 879 3
Energy .............................................................................................................. 2,164 2,161 -
Industrial Products.......................................................................................... 1,413 1,405 1
Intermodal ....................................................................................................... 2,951 2,832 4
Total.................................................................................................................. 9,131 8,916 2%
Average Revenue Per Car 2002 2001 Change
Agricultural...................................................................................................... $ 1,709 $ 1,660 3%
Automotive ...................................................................................................... 1,477 1,465 1
Chemicals......................................................................................................... 1,742 1,756 (1)
Energy .............................................................................................................. 1,083 1,111 (3)
Industrial Products.......................................................................................... 1,440 1,402 3
Intermodal ....................................................................................................... 676 673 -
Total.................................................................................................................. $ 1,168 $ 1,165 -%