The sun., 1919-05-21
UNION PACIFIC NET
DROPS $S,9S4,296
Actual Net Operating Return
Is S12, 100000 Over Rental
From Administration.
EoSS REVENUE HAS GAIN
Statisticians Estimate Would
Have 10 P. c. for Common
if Privately Owned.

The actuslt net income from opera-
tons Of the Union Pacific Railroad Com
pany was s12,4oO,ooO greater than the
rental received from the Railroad Adj
mlnistration and yet, on the basis Of
the rental contract, tho road earned
1887 per cent. for the common stock.
These figures shown in the annual re-
port issued yesterday indicate the well
come with which stockholders and d.
rectors will receive back their property
OF the close Of this year. provided that
The recommendations of President VIII
Hon be carried out. Had Union Pacific
been operated privately the percentage
earnings on the common stock, statisti-
clans estimate, would have been more
than IS per cent against dividend pay
ments of 10 per cent.
The following tabulation consolldates
the results of transportation operations.
as reported to the Federal auditors
with the corporate statement based on
the rental contract.
1915 Chang
Operating revenue. ..sl5s.s45,l5 Inc s2sf43, 81
Operating expenses. l0l, .s05 Inc 2Ssoe, 74s
Net revenue....:..... 5764o,269 Inc t,Sss,5s
Net income from
operations ..:...... tos2:,ilo Inc. 6,5oS.s4s
Rental contract...... Ss,4l6.l11 ..,.,,,,
Excess income to
the Government. l., 100000 .
Operating income
after taxes S5,la5.5le Dec. s5o5 55s
Total income.....:... T1oLlo2 Dec. s,425,o32
Net income after
charges ...:.....,.,. sf.so7,2o4 Dec. s,ssl,2se
Preferred dividends. 1881, 700 ...-
Balance for common ess9o.4sl Dec. 1854, est
p. 9. on COMMON. E.S Dec t0s
Surplus after divs.. s,s91. 2A Dec ASA s9s
Robert S. Lovett, president of the COM
pany, in the annual report explains the
figures. as follows:
The standard return of the Union Pa
ciao system. as certified by the Inter-
state Commerce Commission. was s3s.-
4S.1l0, being the average of the rail-
way operating income during the three
years ended June 80, 1917. which, after
deducting corporate operating expenses,
s42i,95S. results in a reduction in rail-
way operating income of s7.s37,s92 COM
pared with 1917. The test period, upon
which the standard return was based
included not only the prosperous years
ended June 80. 1916 and 1917, when the
railway operating income was S4O,7s3,-
sos and s44.3s4.S2s. respectively, but
also the exceptionally lean year ended
June 80, 1915, when the railway operat-
ing income was only s3o,o5o.19s, the low
est since 1905. which. of course, reduced
the average.
The additional return Of interest on
expenditures chargeable TO capital ac-
count during 1918 for additions, better
ments and road extensions and for ter
minals, motive power. cars and other
equipment as provided in the Federal
control act and the contract has not been
included in the income account for the
year for the reason that the amount
thereof has not been determined by the
Director-General. ~
The net income from all sources for
1918. less sinking fund requirements and
dividend on preferred stock. amounted to
;2s60s,995 and is equivalent to 1887 per
cent on s222,2s1,600 common stock out
standing as compared with 1859 per
cent for. 1917, or decrease Of 400 per
cent.
The years surplus income, after pay
Tnent OF dividends. was appropriated for
additions and betterments as in the pre-
Vious year
THE average annual net income avail
able for dividends on common stock for
the test period OF three years ended June
30. 1917, was 1850 per cent, being 1.73
per cent more than the net income avail
able for 1918. As the rental paid by the
Government for the control and use of
the properties during 1913 is the equiva-
lent Of the average annual railway OPP
Grating income for the test period. ques-
ton may arise as to the cause of this
decrease in the return applicable TO the
common stock. 1t is substantially ac-
counted for by charges to income during
1918 in addition to or in excess OF
'harges during the test period, as fol-
lows:
Operating expenses. corporate, not as
tlmsd BY the Railroad Administration
si?4,95S.
Federal war taxes 32.7s5,s33.
Increase In interest on funded debt,
sj7t.75e.
Miscellaneous. s536sl.
The operating results of the Railroad
Administration for 1918 compare with
the average for the three years ended
June 80. 1917, as follows:
Operating revenue. .s1bs, st57s inc. St.lss,15e
Operating expense loi. 2o4 .sos inc, 4o,7sS6o4
Net income from oper-