2014

Union Pacific Reports Best-Ever Quarterly Results Diluted Earnings per Share up 13 Percent

OMAHA, Neb., Oct. 17, 2013 /PRNewswire/ -- 

Best-Ever Quarterly Records

  • Diluted earnings per share of $2.48 improved 13 percent.
  • Operating revenues totaled nearly $5.6 billion, up 4 percent.
  • Operating income totaled $1.96 billion, up 10 percent.
  • Operating ratio of 64.8 percent improved 1.8 points.

Union Pacific Corporation (NYSE: UNP) today reported 2013 third quarter net income of $1.15 billion, or $2.48 per diluted share, compared to $1 billion, or $2.19 per diluted share, in the third quarter 2012. 

(Logo: http://photos.prnewswire.com/prnh/20110304/LA59497LOGO)

"Union Pacific achieved all-time record financial results this quarter," said Jack Koraleski, Union Pacific chief executive officer.  "Despite the challenges of lower coal and grain volumes, in addition to disruptions caused by the Colorado flooding, we managed our network efficiently and continued to benefit from the strength of our diverse franchise.  When combined with real core pricing and productivity gains, we more than offset flat volumes to generate a new, best-ever quarterly Operating Ratio of 64.8 percent."

Third Quarter Summary

Operating revenue increased 4 percent in the third quarter 2013 to nearly $5.6 billion versus $5.3 billion in the third quarter 2012.  Third quarter business volumes, as measured by total revenue carloads, were flat compared to 2012.  Volume growth from industrial products, automotive, and chemical shipments was offset by declines in coal, agricultural products, and intermodal shipments.  In addition:

  • Quarterly freight revenue increased 5 percent compared to the third quarter 2012, mainly driven by core pricing gains.
  • Union Pacific's operating ratio of 64.8 percent was a best-ever quarterly record, 1.8 points better than the third quarter 2012 and 0.9 points better than the previous quarterly record set in the second quarter 2013. 
  • The average quarterly diesel fuel price of $3.17 per gallon in the third quarter 2013 was down 1 percent compared to the third quarter 2012. 
  • The Customer Satisfaction Index of 93 was one point lower than the third quarter 2012.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.3 mph, improving 1 percent versus the third quarter 2012.  
  • Lost revenue and increased costs from the flooding in Colorado negatively impacted operating income by about $10 million.
  • The Company repurchased nearly 3.7 million shares in the third quarter 2013 at an average share price of $156.77 and an aggregate cost of $575 million.

Summary of Third Quarter Freight Revenues

  • Automotive up 17 percent
  • Industrial Products up 11 percent
  • Chemicals up 5 percent
  • Coal up 2 percent
  • Intermodal flat
  • Agricultural down 2 percent

2013 Outlook

"As we move through the fourth quarter, we continue to monitor the economic landscape," Koraleski said.  "Supported by our diverse franchise, we remain agile and well positioned for economic recovery.  We'll continue to focus on running a safe, efficient, and reliable network that generates greater value for both our customers and shareholders going forward."

About Union Pacific

Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad links 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2007-2012, Union Pacific invested $18 billion in its network and operations to support America's transportation infrastructure, including a record $3.7 billion in 2012.  The railroad's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific  serves many of the fastest-growing U.S. population centers, operates 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. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.

Investor contact is Michelle Gerhardt, (402) 544-4227.

Media contact is Tom Lange, (402) 544-3560.

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 future economic improvement and its ability to capitalize on any future economic improvement; provide safe, efficient and reliable service; maintain agility; and generate value for its customers and 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 2012, which was filed with the SEC on February 8, 2013.  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,


2013


2012

%




2013


2012

%


 Operating Revenues














      Freight revenues

$

5,250

$

5,019

5

%


$

15,387

$

14,755

4

%

      Other revenues


323


324

-




946


921

3


 Total operating revenues


5,573


5,343

4




16,333


15,676

4


 Operating Expenses














      Compensation and benefits


1,196


1,188

1




3,597


3,550

1


      Fuel


866


880

(2)




2,629


2,688

(2)


      Purchased services and materials


588


542

8




1,730


1,610

7


      Depreciation


447


447

-




1,319


1,307

1


      Equipment and other rents


309


300

3




924


895

3


      Other


205


200

3




661


606

9


 Total operating expenses


3,611


3,557

2




10,860


10,656

2


 Operating Income


1,962


1,786

10




5,473


5,020

9


      Other income


28


28

-




91


65

40


      Interest expense


(138)


(137)

1




(399)


(407)

(2)


 Income before income taxes


1,852


1,677

10




5,165


4,678

10


 Income taxes


(701)


(635)

10




(1,951)


(1,771)

10


 Net Income

$

1,151

$

1,042

10

%


$

3,214

$

2,907

11

%















 Share and Per Share














      Earnings per share - basic

$

2.49

$

2.21

13

%


$

6.91

$

6.13

13

%

      Earnings per share - diluted

$

2.48

$

2.19

13



$

6.88

$

6.08

13


      Weighted average number of shares - basic


461.7


472.0

(2)




465.0


474.5

(2)


      Weighted average number of shares - diluted


464.2


475.2

(2)




467.4


477.9

(2)


      Dividends declared per share

$

0.79

$

0.60

32



$

2.17

$

1.80

21
















 Operating Ratio


64.8%


66.6%

(1.8)

pts 



66.5%


68.0%

(1.5)

pts 

 Effective Tax Rate


37.9%


37.9%

-

pts 



37.8%


37.9%

(0.1)

pts 































 


 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


 Freight Revenues Statistics (unaudited)





3rd Quarter 


Year-to-Date 

 For the Periods Ended September 30,


2013


2012

%




2013


2012

%


 Freight Revenues (Millions)














 Agricultural

$

771

$

783

(2)

%


$

2,339

$

2,495

(6)

%

 Automotive


512


436

17




1,533


1,341

14


 Chemicals


883


841

5




2,646


2,404

10


 Coal


1,082


1,058

2




2,993


2,922

2


 Industrial Products


975


879

11




2,868


2,659

8


 Intermodal


1,027


1,022

-




3,008


2,934

3


 Total

$

5,250

$

5,019

5

%


$

15,387

$

14,755

4

%

 Revenue Carloads (Thousands)














 Agricultural


210


218

(4)

%



631


685

(8)

%

 Automotive


195


181

8




576


551

5


 Chemicals


282


275

3




840


777

8


 Coal


468


501

(7)




1,284


1,408

(9)


 Industrial Products


325


299

9




931


905

3


 Intermodal*


848


857

(1)




2,480


2,481

-


 Total


2,328


2,331

-

%



6,742


6,807

(1)

%

 Average Revenue per Car














 Agricultural

$

3,679

$

3,596

2

%


$

3,707

$

3,643

2

%

 Automotive


2,620


2,407

9




2,661


2,435

9


 Chemicals


3,134


3,064

2




3,151


3,094

2


 Coal


2,312


2,111

10




2,331


2,075

12


 Industrial Products


2,998


2,933

2




3,080


2,938

5


 Intermodal*


1,211


1,192

2




1,213


1,182

3


 Average 

$

2,255

$

2,153

5

%


$

2,282

$

2,168

5

%

*       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


2013


2012

 Assets





      Cash and cash equivalents

$

1,366

$

1,063

      Other current assets


2,698


2,551

      Investments


1,282


1,259

      Net properties


43,311


41,997

      Other assets


301


283

 Total assets

$

48,958

$

47,153






 Liabilities and Common Shareholders' Equity





      Debt due within one year

$

691

$

196

      Other current liabilities


2,964


2,923

      Debt due after one year


8,764


8,801

      Deferred income taxes


13,739


13,108

      Other long-term liabilities


2,026


2,248

 Total liabilities


28,184


27,276

 Total common shareholders' equity


20,774


19,877

 Total liabilities and common shareholders' equity

$

48,958

$

47,153






 Debt to Capital


31.3%


31.2%

 Adjusted Debt to Capital*


38.5%


39.1%







*

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,

2013


2012


 Operating Activities







      Net income

$

3,214


$

2,907


      Depreciation


1,319



1,307


      Deferred income taxes


637



490


      Other - net


(289)



(338)


 Cash provided by operating activities


4,881



4,366










 Investing Activities







      Capital investments


(2,635)



(2,876)


      Other - net


39



10


 Cash used in investing activities


(2,596)



(2,866)










 Financing Activities







      Common shares repurchased


(1,432)



(1,179)


      Dividends paid


(968)



(860)


      Debt issued


944



695


      Debt exchange


(288)



-


      Debt repaid


(217)



(250)


      Other - net


(21)



7


 Cash used in financing activities


(1,982)



(1,587)










 Net Change in Cash and Cash Equivalents


303



(87)


 Cash and cash equivalents at beginning of year


1,063



1,217


 Cash and Cash Equivalents End of Period

$

1,366


$

1,130









 Free Cash Flow*







      Cash provided by operating activities

$

4,881


$

4,366


      Cash used in investing activities


(2,596)



(2,866)


      Dividends paid


(968)



(860)


 Free cash flow

$

1,317


$

640










*

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,

2013

2012

%



2013

2012

%


 Operating/Performance Statistics 










      Gross ton-miles (GTMs) (millions)

241,350

245,415

(2)

%


704,434

720,382

(2)

%

      Employees (average)

46,605

46,205

1



46,610

45,882

2


      GTMs (millions) per employee

5.18

5.31

(2)



15.11

15.70

(4)


      Customer satisfaction index

93

94

(1)

pt 


93

93

-

pts 











 Locomotive Fuel Statistics










      Average fuel price per gallon consumed

$ 3.17

$ 3.19

(1)

%


$ 3.17

$ 3.21

(1)

%

      Fuel consumed in gallons (millions)

265

267

(1)



808

811

-


      Fuel consumption rate*

1.098

1.084

1



1.147

1.125

2












 AAR Reported Performance Measures










      Average train speed (miles per hour)

26.3

26.1

1

%


26.1

26.4

(1)

%

      Average terminal dwell time (hours)

26.3

26.0

1



26.8

26.0

3


      Average rail car inventory (thousands)

258.5

268.0

(4)



261.2

270.7

(4)












 Revenue Ton-Miles (Millions)










      Agricultural

18,452

19,349

(5)

%


56,707

62,470

(9)

%

      Automotive

3,995

3,596

11



11,931

11,113

7


      Chemicals

18,541

17,608

5



56,211

50,446

11


      Coal

51,325

55,468

(7)



141,037

156,169

(10)


      Industrial Products

19,665

17,772

11



58,237

53,915

8


      Intermodal

19,305

19,513

(1)



58,537

58,529

-


 Total

131,283

133,306

(2)

%


382,660

392,642

(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)



2013

 Millions, Except Per Share Amounts and Percentages

1st Qtr



2nd Qtr



3rd Qtr


Year-to-Date

 Operating Revenues












      Freight revenues

$

4,984


$

5,153


$

5,250


$

15,387

      Other revenues


306



317



323



946

 Total operating revenues


5,290



5,470



5,573



16,333

 Operating Expenses












      Compensation and benefits


1,216



1,185



1,196



3,597

      Fuel


900



863



866



2,629

      Purchased services and materials


557



585



588



1,730

      Depreciation


434



438



447



1,319

      Equipment and other rents


313



302



309



924

      Other


237



219



205



661

 Total operating expenses


3,657



3,592



3,611



10,860

 Operating Income


1,633



1,878



1,962



5,473

      Other income


40



23



28



91

      Interest expense


(128)



(133)



(138)



(399)

 Income before income taxes


1,545



1,768



1,852



5,165

 Income tax expense


(588)



(662)



(701)



(1,951)

 Net Income

$

957


$

1,106


$

1,151


$

3,214













 Share and Per Share












      Earnings per share - basic

$

2.05


$

2.38


$

2.49


$

6.91

      Earnings per share - diluted

$

2.03


$

2.37


$

2.48


$

6.88

      Weighted average number of shares - basic


467.8



465.3



461.7



465.0

      Weighted average number of shares - diluted


470.5



467.6



464.2



467.4

      Dividends declared per share

$

0.69


$

0.69


$

0.79


$

2.17













 Operating Ratio


69.1%



65.7%



64.8%



66.5%

 Effective Tax Rate


38.1%



37.4%



37.9%



37.8%

 


 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)












2013



1st Qtr



2nd Qtr



3rd Qtr


Year-to-Date

 Freight Revenues (Millions)












 Agricultural

$

784


$

784


$

771


$

2,339

 Automotive


487



534



512



1,533

 Chemicals


873



890



883



2,646

 Coal


936



975



1,082



2,993

 Industrial Products


916



977



975



2,868

 Intermodal


988



993



1,027



3,008

 Total

$

4,984


$

5,153


$

5,250


$

15,387

 Revenue Carloads (Thousands)












 Agricultural


212



209



210



631

 Automotive


184



197



195



576

 Chemicals


271



287



282



840

 Coal


402



414



468



1,284

 Industrial Products


289



317



325



931

 Intermodal*


810



822



848



2,480

 Total


2,168



2,246



2,328



6,742

 Average Revenue per Car












 Agricultural

$

3,694


$

3,750


$

3,679


$

3,707

 Automotive


2,648



2,715



2,620



2,661

 Chemicals


3,225



3,098



3,134



3,151

 Coal


2,329



2,353



2,312



2,331

 Industrial Products


3,174



3,079



2,998



3,080

 Intermodal*


1,219



1,210



1,211



1,213

 Average

$

2,299


$

2,295


$

2,255


$

2,282

*      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


2013


2012

 Debt (a)

$

9,455

$

8,997

 Equity


20,774


19,877

 Capital (b)

$

30,229

$

28,874

 Debt to capital (a/b)


31.3%


31.2%







*

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


2013


2012

 Debt

$

9,455

$

8,997

 Net present value of operating leases


3,027


3,096

 Unfunded pension and OPEB


543


679

 Adjusted debt (a)


13,025


12,772

 Equity


20,774


19,877

 Adjusted capital (b)

$

33,799

$

32,649

 Adjusted debt to capital (a/b)


38.5%


39.1%







*

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 5.7% at September 30, 2013 and 6.0% at December 31, 2012. The discount rate reflects our effective interest rate. 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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