2014

Union Pacific Reports Record Fourth Quarter and Full Year

OMAHA, Neb., Jan. 24, 2013 /PRNewswire/ --

Fourth Quarter Records

  • Diluted earnings per share of $2.19 improved 10 percent.
  • Operating revenues totaled $5.25 billion, up 3 percent.
  • Operating income totaled $1.7 billion, up 7 percent.
  • Operating ratio of 67.1 percent improved 1.2 points.

2012 Full Year Records

  • Diluted earnings per share of $8.27 improved 23 percent.
  • Operating revenues totaled $20.9 billion, up 7 percent.
  • Operating income totaled $6.7 billion, up 18 percent.
  • Operating ratio of 67.8 percent improved 2.9 points.
  • Customer satisfaction index reached 93, up 1 point.

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

Union Pacific Corporation (NYSE: UNP) today reported 2012 fourth quarter net income of $1 billion, or $2.19 per diluted share, compared to $964 million, or $1.99 per diluted share, in the fourth quarter 2011. 

"Our diverse portfolio of business, solid core pricing gains, and efficient network operations drove these results despite significantly weaker coal and grain markets,"  said Jack Koraleski, Union Pacific chief executive officer.  "Although it was a challenging year on many fronts, 2012 was Union Pacific's most profitable year in our 150-year history.  It's a testament to the strength and diversity of our franchise, the dedication and commitment of our employees, and our unrelenting focus on creating value for our customers."

Fourth Quarter Summary

Fourth quarter business volumes, as measured by total revenue carloads, were down 2 percent compared to 2011.  Volume declines in coal and agricultural products more than offset growth in chemicals, automotive and intermodal shipments.  Volumes for industrial products were flat versus 2011.  Quarterly operating revenue increased 3 percent in the fourth quarter 2012 to $5.25 billion versus $5.1 billion in the fourth quarter 2011.  In addition:

  • Quarterly freight revenue increased 2 percent compared to the fourth quarter 2011, mainly driven by core pricing gains and fuel surcharge recoveries.
  • Union Pacific's operating ratio of 67.1 percent was a fourth quarter record, 1.2 points better than the fourth quarter 2011. 
  • Average quarterly diesel fuel prices increased 3 percent to $3.25 per gallon in the fourth quarter 2012 compared to $3.16 per gallon in the fourth quarter 2011. 
  • The Customer Satisfaction Index of 93 set a fourth quarter record, 1 point better than the fourth quarter 2011.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.7 mph, up 4 percent from the fourth quarter 2011. 
  • The Company repurchased 2.0 million shares in the fourth quarter 2012 at an average share price of $121.81 and an aggregate cost of $248 million.

Summary of Fourth Quarter Freight Revenues

  • Chemicals up 15 percent
  • Automotive up 14 percent
  • Intermodal up 6 percent
  • Industrial Products up 3 percent
  • Coal down 7 percent
  • Agricultural down 8 percent

2012 Full Year Summary

For the full year 2012, Union Pacific reported net income of $3.9 billion or $8.27 per diluted share.  This compares to $3.3 billion or $6.72 per diluted share in 2011, 20 and 23 percent increases, respectively. Operating revenue totaled a record $20.9 billion versus $19.6 billion in 2011.  Operating income increased 18 percent to $6.7 billion, up from $5.7 billion in 2011.

  • Four of the six business groups reported freight revenue and volume growth in 2012.  Freight revenue grew 6 percent to $19.7 billion compared to $18.5 billion in 2011.  Carloadings were flat versus 2011.
  • UP's operating ratio in 2012 was 67.8 percent, improving 2.9 points compared to 2011. 
  • Average diesel fuel prices increased 3 percent to $3.22 per gallon in 2012 from $3.12 per gallon in 2011. 
  • The Company increased its quarterly dividend per share by 15 percent to $0.69 cents per share.  Total dividends declared for the full year 2012 grew 29 percent compared to the full year 2011.
  • The Company repurchased more than 12.8 million shares in 2012 at an average share price of $115.01, and an aggregate cost of $1.5 billion.

2013 Outlook
"For 2013, we're expecting to see many of the same challenges we faced last year," Koraleski said.  "We'll also be watching to see what happens in Washington and how it impacts potential economic growth.  That said, we successfully navigated through the complexities of 2012, and we'll continue to follow that same strategy going forward.  We'll remain agile and leverage the strengths of our diverse franchise with a focus on creating value for our customers and generating strong returns for our shareholders again in 2013."

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.  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.

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 general economic conditions and financial returns; its business strategy for the upcoming year; and legislative activity.  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,

4th Quarter


Full Year

 For the Periods Ended December 31,


2012


2011

%




2012


2011

%


 Operating Revenues














      Freight revenues

$

4,931

$

4,829

2%



$

19,686

$

18,508

6%


      Other revenues


319


279

14




1,240


1,049

18


            Total operating revenues


5,250


5,108

3




20,926


19,557

7


 Operating Expenses














      Compensation and benefits


1,135


1,155

(2)




4,685


4,681

-


      Fuel


920


935

(2)




3,608


3,581

1


      Purchased services and materials


533


508

5




2,143


2,005

7


      Depreciation


453


413

10




1,760


1,617

9


      Equipment and other rents


302


289

4




1,197


1,167

3


      Other


182


191

(5)




788


782

1


            Total operating expenses


3,525


3,491

1




14,181


13,833

3


 Operating Income


1,725


1,617

7




6,745


5,724

18


      Other income


43


54

(20)




108


112

(4)


      Interest expense


(128)


(141)

(9)




(535)


(572)

(6)


 Income before income taxes


1,640


1,530

7




6,318


5,264

20


 Income taxes


(604)


(566)

7




(2,375)


(1,972)

20


 Net Income

$

1,036

$

964

7%



$

3,943

$

3,292

20%
















 Share and Per Share














      Earnings per share - basic

$

2.21

$

2.01

10%



$

8.33

$

6.78

23%


      Earnings per share - diluted

$

2.19

$

1.99

10



$

8.27

$

6.72

23


      Weighted average number of shares - basic


468.8


480.7

(2)




473.1


485.7

(3)


      Weighted average number of shares - diluted


472.0


484.7

(3)




476.5


489.8

(3)


      Dividends declared per share

$

0.69

$

0.60

15



$

2.49

$

1.93

29
















 Operating Ratio


67.1%


68.3%

(1.2)

pts



67.8%


70.7%

(2.9)

pts

 Effective Tax Rate


36.8%


37.0%

(0.2)

pts



37.6%


37.5%

0.1

pts
















 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES









Freight Revenues Statistics (unaudited)





























4th Quarter



Full Year


For the Periods Ended December 31,


2012


2011

%




2012


2011

%


Freight Revenues (Millions)














Agricultural

$

785

$

854

(8)

%


$

3,280

$

3,324

(1)

%

Automotive


466


408

14




1,807


1,510

20


Chemicals


834


728

15




3,238


2,815

15


Coal


990


1,070

(7)




3,912


4,084

(4)


Industrial Products


835


810

3




3,494


3,166

10


Intermodal


1,021


959

6




3,955


3,609

10


Total

$

4,931

$

4,829

2

%


$

19,686

$

18,508

6

%

Revenue Carloads (Thousands)














Agricultural


215


236

(9)

%



900


934

(4)

%

Automotive


187


171

9




738


653

13


Chemicals


265


232

14




1,042


921

13


Coal


463


558

(17)




1,871


2,164

(14)


Industrial Products


280


281

-




1,185


1,146

3


Intermodal *


831


817

2




3,312


3,254

2


Total


2,241


2,295

(2)

%



9,048


9,072

-

%

Average Revenue per Car














Agricultural

$

3,647

$

3,630

-

%


$

3,644

$

3,561

2

%

Automotive


2,487


2,378

5




2,448


2,311

6


Chemicals


3,146


3,131

-




3,107


3,055

2


Coal


2,141


1,917

12




2,092


1,888

11


Industrial Products


2,978


2,878

3




2,947


2,762

7


Intermodal *


1,229


1,175

5




1,194


1,109

8


Average

$

2,200

$

2,103

5

%


$

2,176

$

2,040

7

%















* Each intermodal container or trailer equals one carload.










 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Condensed Consolidated Statements of Financial Position (unaudited)






Dec. 31,


Dec. 31,


Millions, Except Percentages


2012


2011


Assets






   Cash and cash equivalents

$

1,063

$

1,217


   Other current assets


2,551


2,510


   Investments


1,259


1,175


   Net properties


41,997


39,934


   Other assets


283


260


Total assets

$

47,153

$

45,096








Liabilities and Common Shareholders' Equity






   Debt due within one year

$

196

$

209


   Other current liabilities


2,923


3,108


   Debt due after one year


8,801


8,697


   Deferred income taxes


13,108


12,368


   Other long-term liabilities


2,248


2,136


Total liabilities


27,276


26,518


Total common shareholders' equity


19,877


18,578


Total liabilities and common shareholders' equity

$

47,153

$

45,096








Debt to Capital


31.2%


32.4%


Adjusted Debt to Capital*


39.1%


40.7%


Return on Invested Capital*


14.0%


12.4%









 

*

Adjusted Debt to Capital and Return on Invested Capital are non-GAAP measures; however, we believe that they are important in evaluating our financial performance. See pages 8 and 9 for a reconciliation to GAAP.









 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)








Millions,

Full Year

For the Periods Ended December 31,

2012


2011

Operating Activities






   Net income

$

3,943


$

3,292

   Depreciation


1,760



1,617

   Deferred income taxes


887



986

   Other - net


(429)



(22)

Cash provided by operating activities


6,161



5,873








Investing Activities






   Capital investments


(3,738)



(3,176)

   Other - net


105



57

   Cash used in investing activities


(3,633)



(3,119)








Financing Activities






   Common shares repurchased


(1,474)



(1,418)

   Dividends paid


(1,146)



(837)

   Debt repaid


(758)



(690)

   Debt issued


695



486

   Debt exchange


-



(272)

   Other - net


1



108

Cash used in financing activities


(2,682)



(2,623)








Net Change in Cash and Cash Equivalents


(154)



131

Cash and cash equivalents at beginning of year


1,217



1,086

Cash and Cash Equivalents End of Period

$

1,063


$

1,217







Free Cash Flow*






   Cash provided by operating activities

$

6,161


$

5,873

   Cash used in investing activities


(3,633)



(3,119)

   Dividends paid


(1,146)



(837)

Free cash flow

$

1,382


$

1,917








 

*

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)






4th Quarter


Full Year

For the Periods Ended December 31,

2012

2011

%



2012

2011

%


Operating/Performance Statistics










   Gross ton-miles (GTMs) (millions)

238,898

252,686

(5)

%


959,280

978,163

(2)

%

   Employees (average)

46,067

44,922

3



45,928

44,861

2


   GTMs (millions) per employee

5.19

5.62

(8)



20.89

21.80

(4)


   Customer satisfaction index

93

92

1

pts


93

92

1

pts











Locomotive Fuel Statistics










   Average fuel price per gallon consumed

$ 3.25

$ 3.16

3

%


$ 3.22

$ 3.12

3

%

   Fuel consumed in gallons (millions)

274

286

(4)



1,085

1,106

(2)


   Fuel consumption rate*

1.148

1.135

1



1.131

1.131

-












AAR Reported Performance Measures










   Average train speed (miles per hour)

26.7

25.6

4

%


26.5

25.6

4

%

   Average terminal dwell time (hours)

26.8

26.5

1



26.2

26.2

-


   Average rail car inventory (thousands)

264.4

274.1

(4)



269.1

272.9

(1)












Revenue Ton-Miles (Millions)










   Agricultural

18,937

21,949

(14)

%


81,407

88,094

(8)

%

   Automotive

3,829

3,404

12



14,942

13,004

15


   Chemicals

17,649

15,166

16



68,095

59,542

14


   Coal

51,297

62,293

(18)



207,466

238,567

(13)


   Industrial Products

17,009

16,971

-



70,924

66,823

6


   Intermodal

19,748

19,641

1



78,277

78,367

-


Total

128,469

139,424

(8)

%


521,111

544,397

(4)

%












 

*

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


4th Qtr


Full Year


Operating Revenues
















   Freight revenues

$

4,823


$

4,913


$

5,019


$

4,931


$

19,686


   Other revenues


289



308



324



319



1,240


Total operating revenues


5,112



5,221



5,343



5,250



20,926


Operating Expenses
















   Compensation and benefits


1,211



1,151



1,188



1,135



4,685


   Fuel


926



882



880



920



3,608


   Purchased services and materials


526



542



542



533



2,143


   Depreciation


427



433



447



453



1,760


   Equipment and other rents


296



299



300



302



1,197


   Other


216



190



200



182



788


Total operating expenses


3,602



3,497



3,557



3,525



14,181


Operating Income


1,510



1,724



1,786



1,725



6,745


   Other income


16



21



28



43



108


   Interest expense


(135)



(135)



(137)



(128)



(535)


Income before income taxes


1,391



1,610



1,677



1,640



6,318


Income tax expense


(528)



(608)



(635)



(604)



(2,375)


Net Income

$

863


$

1,002


$

1,042


$

1,036


$

3,943


















Share and Per Share
















   Earnings per share - basic

$

1.81


$

2.11


$

2.21


$

2.21


$

8.33


   Earnings per share - diluted

$

1.79


$

2.10


$

2.19


$

2.19


$

8.27


   Weighted average number of shares - basic


477.8



473.8



472.0



468.8



473.1


   Weighted average number of shares - diluted


481.4



477.2



475.2



472.0



476.5


   Dividends declared per share

$

0.60


$

0.60


$

0.60


$

0.69


$

2.49


















Operating Ratio


70.5%



67.0%



66.6%



67.1%



67.8%


Effective Tax Rate


38.0%



37.8%



37.9%



36.8%



37.6%


 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Freight Revenues Statistics (unaudited)

















2012




1st Qtr



2nd Qtr



3rd Qtr



4th Qtr


Full Year


Freight Revenues (Millions)
















Agricultural

$

858


$

854


$

783


$

785


$

3,280


Automotive


430



475



436



466



1,807


Chemicals


768



795



841



834



3,238


Coal


995



869



1,058



990



3,912


Industrial Products


863



917



879



835



3,494


Intermodal


909



1,003



1,022



1,021



3,955


Total

$

4,823


$

4,913


$

5,019


$

4,931


$

19,686


Revenue Carloads (Thousands)
















Agricultural


234



233



218



215



900


Automotive


180



190



181



187



738


Chemicals


241



261



275



265



1,042


Coal


495



412



501



463



1,871


Industrial Products


290



316



299



280



1,185


Intermodal *


778



846



857



831



3,312


Total


2,218



2,258



2,331



2,241



9,048


Average Revenue per Car
















Agricultural

$

3,664


$

3,665


$

3,596


$

3,647


$

3,644


Automotive


2,390



2,505



2,407



2,487



2,448


Chemicals


3,184



3,044



3,064



3,146



3,107


Coal


2,010



2,109



2,111



2,141



2,092


Industrial Products


2,977



2,907



2,933



2,978



2,947


Intermodal *


1,169



1,185



1,192



1,229



1,194


Average

$

2,175


$

2,176


$

2,153


$

2,200


$

2,176


















* Each intermodal container or trailer equals one carload.


 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES





Non-GAAP Measures Reconciliation to GAAP











Debt to Capital*








Dec. 31,


Dec. 31,

Millions, Except Percentages


2012


2011

Debt (a)

$

8,997

$

8,906

Equity


19,877


18,578

Capital (b)

$

28,874

$

27,484

Debt to capital (a/b)


31.2%


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*







Dec. 31,


Dec. 31,

Millions, Except Percentages


2012


2011

Debt


8,997


8,906

Net present value of operating leases


3,096


3,224

Unfunded pension and OPEB


679


623

Adjusted debt (a)

$

12,772

$

12,753

Equity


19,877


18,578

Adjusted capital (b)

$

32,649

$

31,331

Adjusted debt to capital (a/b)


39.1%


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 December 31, 2012 and 6.2% at December 31, 2011. 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.

 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES





Non-GAAP Measures Reconciliation to GAAP











Return on Invested Capital as Adjusted (ROIC)*








Dec. 31,


Dec. 31,

Millions, Except Percentages


2012


2011

Net income

$

3,943

$

3,292

Add: Interest expense


535


572

Add: Interest on present value of operating leases


190


208

Less: Taxes on interest


(273)


(293)

Net operating profit after taxes as adjusted (a)

$

4,395

$

3,779

Average equity

$

19,228

$

18,171

Add: Average debt


8,952


9,074

Add: Average present value of operating leases


3,160


3,350

Average invested capital as adjusted (b)

$

31,340

$

30,595

Return on invested capital as adjusted (a/b)


14.0%


12.4%







 

*

ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K, and may not be defined and calculated by other companies in the same manner. We believe this measure is important in evaluating the efficiency and effectiveness of the Corporation's long-term capital investments, and we currently use ROIC as a performance criteria in determining certain elements of equity compensation for our executives. ROIC should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is Return on Average Common Shareholders' Equity.






 

SOURCE Union Pacific Corporation




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