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Friday, Jul. 24, 1998

Another quarterly loss for Union Pacific

Settlements with customers due to snafus are cited as main cause of company's $419 million shortfall

By KATIE FAIRBANK
Associated Press

   DALLAS - Union Pacific Corp. reported a $419 million loss on Thursday, the third straight quarterly loss for the nation's largest railroad.
   The loss, which worked out to $1.70 per share on a diluted basis, compared with earnings of $216 million in the same quarter a year ago, or 87 cents per share on a diluted basis. Revenues in the quarter fell 11 percent to $4.70 billion compared with $5.24 billion.
   The loss was primarily attributed to the railroad's settlements with customers angry over massive congestion problems that began on the tracks last summer.
   Since that time, the railroad has been plagued by a service backlog that critics have blamed on its merger with Southern Pacific.
   Shippers claimed they lost money due to delivery delays. The railroad has been in talks with most of their customers and have settled more than 200 smaller claims for poor service, as well as a major lawsuit with DuPont, the nation's largest chemical company.
   For the quarter ended June 30, Union Pacific took a $155 million after-tax charge, or 63 cents per diluted share, for the resolution of customer claims. A spokesman for the railroad said he was unable to say whether the DuPont settlement was included in the charge.
   Union Pacific's stock rose 6 cents to close at $42.25 on the New York Stock Exchange.
   The railroad said it had also been hurt by traffic slowdowns related to major track maintenance and capacity expansion. The company is spending nearly $1 billion this year in improving and maintaining its 35,000 miles of track in 23 states.

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