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.

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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.