2014

Union Pacific Reports Best-Ever Quarterly Results Second Quarter Diluted Earnings per Share Up 32 Percent

All-Time Quarterly Records

- Diluted earnings per share of $2.10 improved 32 percent.

- Operating revenues totaled $5.2 billion, up 7 percent.

- Operating income totaled $1.7 billion, up 24 percent.

- Operating ratio of 67.0 percent improved 4.3 points.

- Customer satisfaction index reached 93, up 1 point and tied the best-ever quarterly record.

OMAHA, Neb., July 19, 2012 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2012 second quarter net income of $1 billion, or $2.10 per diluted share, compared to $785 million, or $1.59 per diluted share, in the second quarter 2011. 

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"We're clearly delivering on the strength of our diverse franchise," said Jack Koraleski, Union Pacific chief executive officer.  "Volume growth across many of our market sectors offset the 17 percent decline in coal volumes.  When combined with solid pricing, efficient network operations and continued productivity gains, the net result was our best-ever quarter by nearly every financial measure."

Second Quarter Summary

Second quarter business volumes, as measured by total revenue carloads, were up slightly compared to 2011.  Volume growth in four of Union Pacific's six business groups - automotive, chemicals, industrial products and intermodal - was offset by declines in shipments of coal and agricultural products.  Quarterly operating revenue increased 7 percent in the second quarter 2012 to $5.2 billion versus $4.9 billion in the second quarter 2011.  In addition:

  • Five of Union Pacific's six business groups reported freight revenue growth in the second quarter, driven by core pricing gains and improved fuel surcharge recovery.  Volume growth also contributed to revenue growth for four of the business groups.
  • Union Pacific's operating ratio of 67.0 percent was an all-time quarterly best, 4.3 points better than the second quarter 2011 and 1.2 points better than the previous record set in the third quarter 2010.  Pricing gains, improved fuel surcharge recovery and efficient operations drove this record performance.  Lower fuel prices also contributed to 1.1 points of the improvement versus last year.
  • Average quarterly diesel fuel prices decreased 2 percent to $3.21 per gallon in the second quarter 2012 from $3.29 per gallon in the second quarter 2011. 
  • The Customer Satisfaction Index of 93 tied the all-time quarterly record and was 1 point better than the second quarter 2011.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.6 mph, increasing 2 percent compared to the second quarter 2011.
  • The Company repurchased 3.8 million shares in the second quarter 2012 at an average share price of $110.02 and an aggregate cost of $415 million.

Summary of Second Quarter Freight Revenues

  • Automotive up 25 percent
  • Industrial Products up 14 percent
  • Chemicals up 13 percent
  • Intermodal up 10 percent
  • Agricultural up 1 percent
  • Coal down 9 percent

2012 Outlook

"Looking ahead to the second half of the year, the global economic outlook has become more uncertain and coal volumes remain a challenge," Koraleski said.  "However, we'll continue to take advantage of the opportunities provided by our diverse franchise to drive record financial results and increase shareholder returns once again this year." 

About Union Pacific

It was 150 years ago that Abraham Lincoln signed the Pacific Railway Act of July 1, 1862, creating the original Union Pacific. One of America's iconic companies, today, Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP), linking 23 states in the western two-thirds of the country by rail and providing freight solutions and logistics expertise to the global supply chain. From 2000 through 2011, Union Pacific spent more than $31 billion on its network and operations, making needed investments in America's infrastructure and enhancing its ability to provide safe, reliable, fuel-efficient and environmentally responsible freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. The railroad serves many of the fastest-growing U.S. population centers and emphasizes excellent customer service. Union Pacific operates competitive routes from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways.

Supplemental financial information is attached.

This press release and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically the statements regarding the Corporation's expectations with respect to economic conditions and its ability to take advantage of growth opportunities, including opportunities in markets other than coal; and whether it can generate record financial results and increase returns to shareholders.  These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.  Forward-looking statements also generally include, without limitation, information or statements regarding:  projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial, and operational results, and future economic performance;  and management's beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved.  Forward-looking information, including expectations regarding operational and financial improvements and the Corporation's future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement.  Important factors, including risk factors, could affect the Corporation's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements.  Information regarding risk factors and other cautionary information are available in the Corporation's Annual Report on Form 10-K for 2011, which was filed with the SEC on February 3, 2012.  The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).  

Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made.  The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.  If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements.  References to our website are provided for convenience and, therefore, information on or available through the website is not, and should not be deemed to be, incorporated by reference herein.

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


 Condensed Consolidated Statements of Income (unaudited)














 Millions, Except Per Share Amounts and Percentages,

2nd Quarter


Year-to-Date


 For the Periods Ended June 30,


2012


2011

%




2012


2011

%



 Operating Revenues















      Freight revenues

$

4,913

$

4,595

7%



$

9,736

$

8,843

10%



      Other revenues


308


263

17




597


505

18



 Total operating revenues


5,221


4,858

7




10,333


9,348

11



 Operating Expenses















      Compensation and benefits


1,151


1,166

(1)




2,362


2,333

1



      Fuel


882


904

(2)




1,808


1,730

5



      Purchased services and materials


542


516

5




1,068


991

8



      Depreciation


433


401

8




860


796

8



      Equipment and other rents


299


283

6




595


585

2



      Other


190


196

(3)




406


384

6



 Total operating expenses


3,497


3,466

1




7,099


6,819

4



 Operating Income


1,724


1,392

24




3,234


2,529

28



      Other income


21


26

(19)




37


41

(10)



      Interest expense


(135)


(148)

(9)




(270)


(289)

(7)



 Income before income taxes


1,610


1,270

27




3,001


2,281

32



 Income taxes


(608)


(485)

25




(1,136)


(857)

33



 Net Income

$

1,002

$

785

28%



$

1,865

$

1,424

31%


















 Share and Per Share















      Earnings per share - basic

$

2.11

$

1.61

31%



$

3.92

$

2.91

35%



      Earnings per share - diluted

$

2.10

$

1.59

32



$

3.89

$

2.89

35



      Weighted average number of shares - basic


473.8


488.4

(3)




475.8


489.0

(3)



      Weighted average number of shares - diluted


477.2


492.4

(3)




479.3


493.3

(3)



      Dividends declared per share

$

0.60

$

0.475

26



$

1.20

$

0.855

40


















 Operating Ratio


67.0%


71.3%

(4.3)

pts



68.7%


72.9%

(4.2)

pts


 Effective Tax Rate


37.8%


38.2%

(0.4)

pts



37.9%


37.6%

0.3

pts






































 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


 Freight Revenues Statistics (unaudited)





2nd Quarter


Year-to-Date

 For the Periods Ended June 30,


2012


2011

%




2012


2011

%


 Freight Revenues (Millions)














 Agricultural

$

854

$

849

1%



$

1,712

$

1,656

3%


 Automotive


475


381

25




905


723

25


 Chemicals


795


703

13




1,563


1,367

14


 Coal*


869


950

(9)




1,864


1,902

(2)


 Industrial Products


917


803

14




1,780


1,493

19


 Intermodal


1,003


909

10




1,912


1,702

12


 Total

$

4,913

$

4,595

7%



$

9,736

$

8,843

10%


 Revenue Carloads (Thousands)














 Agricultural


233


237

(2)%




467


475

(2)%


 Automotive


190


165

15




370


322

15


 Chemicals


261


233

12




502


456

10


 Coal*


412


496

(17)




907


1,034

(12)


 Industrial Products


316


297

6




606


560

8


 Intermodal**


846


819

3




1,624


1,589

2


 Total


2,258


2,247

-%




4,476


4,436

1%


 Average Revenue per Car














 Agricultural

$

3,665

$

3,580

2%



$

3,665

$

3,483

5%


 Automotive


2,505


2,321

8




2,449


2,250

9


 Chemicals


3,044


3,024

1




3,111


3,000

4


 Coal*


2,109


1,916

10




2,055


1,840

12


 Industrial Products


2,907


2,697

8




2,941


2,665

10


 Intermodal**


1,185


1,108

7




1,177


1,071

10


 Average 

$

2,176

$

2,045

6%



$

2,175

$

1,993

9%


*       Formerly titled Energy.


**     Each intermodal container or trailer equals one carload.

















UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Condensed Consolidated Statements of Financial Position (unaudited)












Jun. 30,


Dec. 31,


 Millions, Except Percentages





2012


2011


 Assets









      Cash and cash equivalents




$

1,201

$

1,217


      Other current assets





2,755


2,510


      Investments





1,211


1,175


      Net properties





40,937


39,934


      Other assets





270


260


 Total assets




$

46,374

$

45,096











 Liabilities and Common Shareholders' Equity









      Debt due within one year




$

780

$

209


      Other current liabilities





3,137


3,108


      Debt due after one year





8,636


8,697


      Deferred income taxes





12,646


12,368


      Other long-term liabilities





2,088


2,136


 Total liabilities





27,287


26,518


 Total common shareholders' equity





19,087


18,578


 Total liabilities and common shareholders' equity




$

46,374

$

45,096











 Debt to Capital





33.0%


32.4%


 Adjusted Debt to Capital*





40.6%


40.7%












*

Adjusted Debt to Capital is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance. See page 8 for a reconciliation to GAAP.











 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Cash Flows (unaudited)








 Millions,

Year-to-Date

 For the Periods Ended June 30,

2012


2011

 Operating Activities






      Net income

$

1,865


$

1,424

      Depreciation


860



796

      Deferred income taxes


274



459

      Other - net


(223)



(39)

 Cash provided by operating activities


2,776



2,640








 Investing Activities






      Capital investments


(1,816)



(1,327)

      Other - net


(66)



(39)

 Cash used in investing activities


(1,882)



(1,366)








 Financing Activities






      Common shares repurchased


(833)



(608)

      Debt issued


695



-

      Dividends paid


(575)



(374)

      Debt repaid


(193)



(131)

      Debt exchange


-



(272)

      Other - net


(4)



80

 Cash used in financing activities


(910)



(1,305)








 Net Change in Cash and Cash Equivalents


(16)



(31)

 Cash and cash equivalents at beginning of year


1,217



1,086

 Cash and Cash Equivalents End of Period

$

1,201


$

1,055







 Free Cash Flow*






      Cash provided by operating activities

$

2,776


$

2,640

      Cash used in investing activities


(1,882)



(1,366)

      Dividends paid


(575)



(374)

 Free cash flow

$

319


$

900








*

Free cash flow is a non-GAAP measure; however, we believe that it is important to management and investors in evaluating our financial performance and measures our ability to generate cash without incurring additional financing.












 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


 Operating and Performance Statistics (unaudited)






2nd Quarter


Year-to-Date

 For the Periods Ended June 30,

2012

2011

%



2012

2011

%


 Operating/Performance Statistics










      Gross ton-miles (GTMs) (millions)

234,483

239,216

(2)%



474,967

474,622

-%


      Employees (average)

45,797

44,971

2



45,720

44,508

3


      GTMs (millions) per employee

5.12

5.32

(4)



10.39

10.66

(3)


      Customer satisfaction index

93

92

1

pt


93

92

1

pt











 Locomotive Fuel Statistics










      Average fuel price per gallon consumed

$ 3.21

$ 3.29

(2)%



$ 3.22

$ 3.08

5%


      Fuel consumed in gallons (millions)

265

265

-



544

543

-


      Fuel consumption rate*

1.132

1.109

2



1.146

1.144

-












 AAR Reported Performance Measures










      Average train speed (miles per hour)

26.6

26.1

2%



26.5

26.1

2%


      Average terminal dwell time (hours)

25.5

25.6

-



26.0

26.0

-


      Average rail car inventory (thousands)

268.6

271.9

(1)



272.0

271.5

-












 Revenue Ton-Miles (Millions)










      Agricultural

21,212

22,548

(6)%



43,121

45,154

(5)%


      Automotive

3,860

3,205

20



7,517

6,382

18


      Chemicals

16,793

14,953

12



32,838

29,521

11


      Coal**

46,322

54,730

(15)



100,701

113,000

(11)


      Industrial Products

18,455

17,001

9



36,143

32,106

13


      Intermodal

19,987

19,726

1



39,016

38,765

1


 Total

126,629

132,163

(4)%



259,336

264,928

(2)%













Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands. 


**

Formerly titled Energy.
















 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


 Condensed Consolidated Statements of Income (unaudited)





2012


 Millions, Except Per Share Amounts and Percentages


1st Qtr



2nd Qtr


Year-to-Date


 Operating Revenues










      Freight revenues

$

4,823


$

4,913


$

9,736


      Other revenues


289



308



597


 Total operating revenues


5,112



5,221



10,333


 Operating Expenses










      Compensation and benefits


1,211



1,151



2,362


      Fuel


926



882



1,808


      Purchased services and materials


526



542



1,068


      Depreciation


427



433



860


      Equipment and other rents


296



299



595


      Other


216



190



406


 Total operating expenses


3,602



3,497



7,099


 Operating Income


1,510



1,724



3,234


      Other income


16



21



37


      Interest expense


(135)



(135)



(270)


 Income before income taxes


1,391



1,610



3,001


 Income tax expense


(528)



(608)



(1,136)


 Net Income

$

863


$

1,002


$

1,865












 Share and Per Share










      Earnings per share - basic

$

1.81


$

2.11


$

3.92


      Earnings per share - diluted

$

1.79


$

2.10


$

3.89


      Weighted average number of shares - basic


477.8



473.8



475.8


      Weighted average number of shares - diluted


481.4



477.2



479.3


      Dividends declared per share

$

0.60


$

0.60


$

1.20












 Operating Ratio


70.5%



67.0%



68.7%


 Effective Tax Rate


38.0%



37.8%



37.9%








 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


 Freight Revenues Statistics (unaudited)











2012




1st Qtr



2nd Qtr


Year-to-Date


 Freight Revenues (Millions)










 Agricultural

$

858


$

854


$

1,712


 Automotive


430



475



905


 Chemicals


768



795



1,563


 Coal*


995



869



1,864


 Industrial Products


863



917



1,780


 Intermodal


909



1,003



1,912


 Total

$

4,823


$

4,913


$

9,736


 Revenue Carloads (Thousands)










 Agricultural


234



233



467


 Automotive


180



190



370


 Chemicals


241



261



502


 Coal*


495



412



907


 Industrial Products


290



316



606


 Intermodal**


778



846



1,624


 Total


2,218



2,258



4,476


 Average Revenue per Car










 Agricultural

$

3,664


$

3,665


$

3,665


 Automotive


2,390



2,505



2,449


 Chemicals


3,184



3,044



3,111


 Coal*


2,010



2,109



2,055


 Industrial Products


2,977



2,907



2,941


 Intermodal**


1,169



1,185



1,177


 Average

$

2,175


$

2,176


$

2,175


*       Formerly titled Energy.










**      Each intermodal container or trailer equals one carload.

















 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES





 Non-GAAP Measures Reconciliation to GAAP











 Debt to Capital*








Jun. 30,


Dec. 31,

 Millions, Except Percentages


2012


2011

 Debt (a)

$

9,416

$

8,906

 Equity


19,087


18,578

 Capital (b)

$

28,503

$

27,484

 Debt to capital (a/b)


33.0%


32.4%







*

Total debt divided by total debt plus equity. Management believes this is an important measure in evaluating our balance sheet strength and is important in managing our credit ratios and financing relationships.








 Adjusted Debt to Capital, Reconciliation to GAAP*







Jun. 30,


Dec. 31,

 Millions, Except Percentages


2012


2011

 Debt

$

9,416

$

8,906

 Net present value of operating leases


3,020


3,224

 Unfunded pension and OPEB


623


623

 Adjusted debt (a)


13,059

$

12,753

 Equity


19,087


18,578

 Adjusted capital (b)

$

32,146

$

31,331

 Adjusted debt to capital (a/b)


40.6%


40.7%







*

Total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation divided by total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation plus equity. Operating leases were discounted using 6.1% at June 30, 2012 and 6.2% at December 31, 2011. The lower discount rate reflects changes to interest rates and our current financing costs. Management believes this is an important measure to management and investors in evaluating the total amount of leverage in our capital structure including off-balance sheet obligations.


 

SOURCE Union Pacific Corporation



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