Union Pacific Reports Best-Ever Quarterly Results Third Quarter Diluted Earnings per Share Up 18 Percent

OMAHA, Neb., Oct. 18, 2012 /PRNewswire/ --

All-Time Quarterly Records

  • Diluted earnings per share of $2.19 improved 18 percent.
  • Operating revenues totaled $5.3 billion, up 5 percent.
  • Operating income totaled $1.8 billion, up 13 percent.
  • Operating ratio of 66.6 percent improved 2.5 points.
  • Customer satisfaction index reached 94, up 3 points.

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Union Pacific Corporation (NYSE: UNP) today reported 2012 third quarter net income of $1 billion, or $2.19 per diluted share, compared to $904 million, or $1.85 per diluted share, in the third quarter 2011. 

"Despite a 12 percent decline in coal volumes and significantly weaker steel and scrap metal markets, we generated best-ever financial results across the board," said Jack Koraleski, Union Pacific chief executive officer.  "We achieved solid core pricing gains, managed our network efficiently and delivered on the benefits of our diverse franchise with growth in other markets."

Third Quarter Summary

Third quarter business volumes, as measured by total revenue carloads, were down slightly compared to 2011.  Volume growth in chemicals, automotive and intermodal offset declines in shipments of coal, agricultural products and industrial products.  Quarterly operating revenue increased 5 percent in the third quarter 2012 to $5.3 billion versus $5.1 billion in the third quarter 2011.  In addition:

  • Quarterly freight revenue increased 4 percent compared to the third quarter 2011, mainly driven by core pricing gains of 5 percent.
  • Union Pacific's operating ratio of 66.6 percent was an all-time quarterly best, 2.5 points better than the third quarter 2011 and a 0.4 point improvement from the previous record set in the second quarter 2012. 
  • Average quarterly diesel fuel prices were flat at $3.19 per gallon in the third quarter 2012 compared to $3.18 per gallon in the third quarter 2011. 
  • The Customer Satisfaction Index of 94 set an all-time quarterly record and was 3 points better than the third quarter 2011.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, increasing 6 percent compared to the third quarter 2011.  Severe drought conditions in the South negatively impacted train speed in the third quarter of last year.
  • The Company repurchased 3.1 million shares in the third quarter 2012 at an average share price of $122.13 and an aggregate cost of $378 million.

Summary of Third Quarter Freight Revenues

  • Chemicals up 17 percent
  • Automotive up 15 percent
  • Intermodal up 8 percent
  • Industrial Products up 2 percent
  • Agricultural down 4 percent
  • Coal down 5 percent

2012 Outlook

"As we look out over the next several months, the political and financial challenges in the U.S. and abroad have increased economic uncertainty," Koraleski said.  "In this environment, we'll continue to be agile as we were in the third quarter.  We'll adapt to changing market conditions and leverage our diverse franchise to provide excellent customer service and generate strong returns for our shareholders."

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; its ability to adapt to changing market conditions and continue providing quality customer service; and its ability to generate returns for its 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,

3rd Quarter


Year-to-Date

For the Periods Ended September 30,


2012


2011

%



2012


2011

%

Operating Revenues












     Freight revenues

$

5,019

$

4,836

4%


$

14,755

$

13,679

8%

     Other revenues


324


265

22



921


770

20

Total operating revenues


5,343


5,101

5



15,676


14,449

8

Operating Expenses












     Compensation and benefits


1,188


1,193

-



3,550


3,526

1

     Fuel


880


916

(4)



2,688


2,646

2

     Purchased services and materials


542


506

7



1,610


1,497

8

     Depreciation


447


408

10



1,307


1,204

9

     Equipment and other rents


300


293

2



895


878

2

     Other


200


207

(3)



606


591

3

Total operating expenses


3,557


3,523

1



10,656


10,342

3

Operating Income


1,786


1,578

13



5,020


4,107

22

     Other income


28


17

65



65


58

12

     Interest expense


(137)


(142)

(4)



(407)


(431)

(6)

Income before income taxes


1,677


1,453

15



4,678


3,734

25

Income taxes


(635)


(549)

16



(1,771)


(1,406)

26

Net Income

$

1,042

$

904

15%


$

2,907

$

2,328

25%













Share and Per Share












     Earnings per share - basic

$

2.21

$

1.87

18


$

6.13

$

4.78

28

     Earnings per share - diluted

$

2.19

$

1.85

18


$

6.08

$

4.74

28

     Weighted average number of shares - basic


472.0


484.2

(3)



474.5


487.4

(3)

     Weighted average number of shares - diluted


475.2


488.1

(3)



477.9


491.5

(3)

     Dividends declared per share

$

0.60

$

0.475

26


$

1.80

$

1.33

35













Operating Ratio


66.6%


69.1%

(2.5)



68.0%


71.6%

(3.6)

Effective Tax Rate


37.9%


37.8%

0.1



37.9%


37.7%

0.2



























 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)



3rd Quarter


Year-to-Date

For the Periods Ended September 30,


2012


2011

%



2012


2011

%

Freight Revenues (Millions)












Agricultural

$

783

$

814

(4)%


$

2,495

$

2,470

1%

Automotive


436


379

15



1,341


1,102

22

Chemicals


841


720

17



2,404


2,087

15

Coal


1,058


1,112

(5)



2,922


3,014

(3)

Industrial Products


879


863

2



2,659


2,356

13

Intermodal


1,022


948

8



2,934


2,650

11

Total

$

5,019

$

4,836

4%


$

14,755

$

13,679

8%

Revenue Carloads (Thousands)












Agricultural


218


223

(2)%



685


698

(2)%

Automotive


181


160

13



551


482

14

Chemicals


275


233

18



777


689

13

Coal


501


572

(12)



1,408


1,606

(12)

Industrial Products


299


305

(2)



905


865

5

Intermodal*


857


848

1



2,481


2,437

2

Total


2,331


2,341

-%



6,807


6,777

-%

Average Revenue per Car












Agricultural

$

3,596

$

3,655

(2)%


$

3,643

$

3,537

3%

Automotive


2,407


2,364

2



2,435


2,287

6

Chemicals


3,064


3,087

(1)



3,094


3,029

2

Coal


2,111


1,945

9



2,075


1,877

11

Industrial Products


2,933


2,832

4



2,938


2,724

8

Intermodal*


1,192


1,119

7



1,182


1,087

9

Average

$

2,153

$

2,066

4%


$

2,168

$

2,019

7%

* Each intermodal container or trailer equals one carload


 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited)




Sep. 30,


Dec. 31,

Millions, Except Percentages


2012


2011

Assets





     Cash and cash equivalents

$

1,130

$

1,217

     Other current assets


2,816


2,510

     Investments


1,235


1,175

     Net properties


41,617


39,934

     Other assets


272


260

Total assets

$

47,070

$

45,096






Liabilities and Common Shareholders' Equity





     Debt due within one year

$

713

$

209

     Other current liabilities


3,161


3,108

     Debt due after one year


8,773


8,697

     Deferred income taxes


12,858


12,368

     Other long-term liabilities


2,016


2,136

Total liabilities


27,521


26,518

Total common shareholders' equity


19,549


18,578

Total liabilities and common shareholders' equity

$

47,070

$

45,096






Debt to Capital


32.7%


32.4%

Adjusted Debt to Capital*


40.2%


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 September 30,

2012


2011

Operating Activities






     Net income

$

2,907


$

2,328

     Depreciation


1,307



1,204

     Deferred income taxes


490



721

     Other - net


(338)



81

Cash provided by operating activities


4,366



4,334








Investing Activities






     Capital investments


(2,876)



(2,218)

     Other - net


10



(23)

Cash used in investing activities


(2,866)



(2,241)








Financing Activities






     Common shares repurchased


(1,179)



(1,036)

     Dividends paid


(860)



(607)

     Debt issued


695



486

     Debt repaid


(250)



(188)

     Debt exchange


-



(272)

     Other - net


7



85

Cash used in financing activities


(1,587)



(1,532)








Net Change in Cash and Cash Equivalents


(87)



561

Cash and cash equivalents at beginning of year


1,217



1,086

Cash and Cash Equivalents End of Period

$

1,130


$

1,647







Free Cash Flow*






     Cash provided by operating activities

$

4,366


$

4,334

     Cash used in investing activities


(2,866)



(2,241)

     Dividends paid


(860)



(607)

Free cash flow

$

640


$

1,486








*

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)






3rd Quarter


Year-to-Date

For the Periods Ended September 30,

2012

2011

%



2012

2011

%


Operating/Performance Statistics










     Gross ton-miles (GTMs) (millions)

245,415

250,855

(2)%



720,382

725,477

(1)%


     Employees (average)

46,205

45,507

2



45,882

44,841

2


     GTMs (millions) per employee

5.31

5.51

(4)



15.70

16.18

(3)


     Customer satisfaction index

94

91

3

pts


93

91

2

pts











Locomotive Fuel Statistics










     Average fuel price per gallon consumed

$3.19

$3.18

-%



$3.21

$3.11

3%


     Fuel consumed in gallons (millions)

267

277

(4)



811

820

(1)


     Fuel consumption rate*

1.084

1.103

(2)



1.125

1.130

-












AAR Reported Performance Measures










     Average train speed (miles per hour)

26.1

24.6

6%



26.4

25.6

3%


     Average terminal dwell time (hours)

26.0

26.2

(1)



26.0

26.1

-


     Average rail car inventory (thousands)

268.0

274.4

(2)



270.7

272.5

(1)












Revenue Ton-Miles (Millions)










     Agricultural

19,349

20,991

(8)%



62,470

66,145

(6)%


     Automotive

3,596

3,218

12



11,113

9,600

16


     Chemicals

17,608

14,855

19



50,446

44,376

14


     Coal

55,468

63,274

(12)



156,169

176,274

(11)


     Industrial Products

17,772

17,746

-



53,915

49,852

8


     Intermodal

19,513

19,961

(2)



58,529

58,726

-


Total

133,306

140,045

(5)%



392,642

404,973

(3)%













*

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

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited)



2012

Millions, Except Per Share Amounts and Percentages


1st Qtr



2nd Qtr



3rd Qtr


Year-to-Date

Operating Revenues












     Freight revenues

$

4,823


$

4,913


$

5,019


$

14,755

     Other revenues


289



308



324



921

Total operating revenues


5,112



5,221



5,343



15,676

Operating Expenses












     Compensation and benefits


1,211



1,151



1,188



3,550

     Fuel


926



882



880



2,688

     Purchased services and materials


526



542



542



1,610

     Depreciation


427



433



447



1,307

     Equipment and other rents


296



299



300



895

     Other


216



190



200



606

Total operating expenses


3,602



3,497



3,557



10,656

Operating Income


1,510



1,724



1,786



5,020

     Other income


16



21



28



65

     Interest expense


(135)



(135)



(137)



(407)

Income before income taxes


1,391



1,610



1,677



4,678

Income tax expense


(528)



(608)



(635)



(1,771)

Net Income

$

863


$

1,002


$

1,042


$

2,907













Share and Per Share












     Earnings per share - basic

$

1.81


$

2.11


$

2.21


$

6.13

     Earnings per share - diluted

$

1.79


$

2.10


$

2.19


$

6.08

     Weighted average number of shares - basic


477.8



473.8



472.0



474.5

     Weighted average number of shares - diluted


481.4



477.2



475.2



477.9

     Dividends declared per share

$

0.60


$

0.60


$

0.60


$

1.80













Operating Ratio


70.5%



67.0%



66.6%



68.0%

Effective Tax Rate


38.0%



37.8%



37.9%



37.9%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Freight Revenues Statistics (unaudited)














2012




1st Qtr



2nd Qtr



3rd Qtr


Year-to-Date


Freight Revenues (Millions)













Agricultural

$

858


$

854


$

783


$

2,495


Automotive


430



475



436



1,341


Chemicals


768



795



841



2,404


Coal


995



869



1,058



2,922


Industrial Products


863



917



879



2,659


Intermodal


909



1,003



1,022



2,934


Total

$

4,823


$

4,913


$

5,019


$

14,755


Revenue Carloads (Thousands)













Agricultural


234



233



218



685


Automotive


180



190



181



551


Chemicals


241



261



275



777


Coal


495



412



501



1,408


Industrial Products


290



316



299



905


Intermodal*


778



846



857



2,481


Total


2,218



2,258



2,331



6,807


Average Revenue per Car













Agricultural

$

3,664


$

3,665


$

3,596


$

3,643


Automotive


2,390



2,505



2,407



2,435


Chemicals


3,184



3,044



3,064



3,094


Coal


2,010



2,109



2,111



2,075


Industrial Products


2,977



2,907



2,933



2,938


Intermodal*


1,169



1,185



1,192



1,182


Average

$

2,175


$

2,176


$

2,153


$

2,168


* Each intermodal container or trailer equals one carload.


 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES





Non-GAAP Measures Reconciliation to GAAP











Debt to Capital*








Sep. 30,


Dec. 31,

Millions, Except Percentages


2012


2011

Debt (a)

$

9,486

$

8,906

Equity


19,549


18,578

Capital (b)

$

29,035

$

27,484

Debt to capital (a/b)


32.7%


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*







Sep. 30,


Dec. 31,

Millions, Except Percentages


2012


2011

Debt

$

9,486

$

8,906

Net present value of operating leases


3,096


3,224

Unfunded pension and OPEB


548


623

Adjusted debt (a)


13,130


12,753

Equity


19,549


18,578

Adjusted capital (b)

$

32,679

$

31,331

Adjusted debt to capital (a/b)


40.2%


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 6.0% at September 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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