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.

19 Jul, 2012, 08:00 ET from Union Pacific Corporation

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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