Union Pacific Reports All-Time Quarterly Records

Third Quarter Diluted Earnings per Share up 23 Percent

All-Time Quarterly Records

Diluted earnings per share of $1.53 improved 23 percent.

Operating revenues totaled $6.2 billion, up 11 percent.

Operating income totaled $2.3 billion, up 19 percent.

Operating ratio of 62.3 percent improved 2.5 points.

News provided by

Union Pacific Corporation

Oct 23, 2014, 08:00 ET

OMAHA, Neb., Oct. 23, 2014 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2014 third quarter net income of $1.4 billion, or $1.53 per diluted share, compared to $1.15 billion, or $1.24 per diluted share, in the third quarter 2013.

"Union Pacific achieved record quarterly financial results, leveraging the strengths of our diverse franchise to handle strong volume growth," said Jack Koraleski, Union Pacific chief executive officer. "As we continue to focus on improving our service, we are encouraged by the accomplishments we achieved in the quarter, including a two and a half point improvement in our Operating Ratio to a record 62.3 percent."

Third Quarter Summary

Operating revenue increased 11 percent in the third quarter 2014 to $6.2 billion, versus $5.6 billion in the third quarter 2013. Third quarter business volumes, as measured by total revenue carloads, increased 7 percent compared to 2013. Volume increased in agricultural products, industrial products, intermodal, automotive and chemicals. Coal volumes were flat versus 2013. In addition:

Quarterly freight revenue increased 11 percent compared to the third quarter 2013, driven by volume growth and core pricing gains.
Union Pacific's operating ratio of 62.3 percent was an all-time quarterly record, 2.5 points better than the third quarter 2013 and 1.2 points better than the previous all-time quarterly record set in the second quarter 2014.
The average quarterly diesel fuel price of $3.01 per gallon in the third quarter 2014 was down 5 percent compared to the third quarter 2013.
Quarterly train speed, as reported to the Association of American Railroads, was 23.8 mph, 10 percent slower than the third quarter 2013.
The Company repurchased more than 8.3 million shares in the third quarter 2014 at an average share price of $102.54 and an aggregate cost of $856 million.

Summary of Third Quarter Freight Revenues

Industrial Products up 19 percent
Agricultural Products up 19 percent
Intermodal up 15 percent
Chemicals up 6 percent
Automotive up 3 percent
Coal up 2 percent

2014 Outlook

"We are optimistic about the remainder of the year," Koraleski said. "Assuming the economy and weather cooperate, we are well positioned to finish up the year with record results. We continue to see tremendous opportunity across our diverse franchise and remain focused on improving our network velocity and fluidity so that we can leverage these opportunities by safely providing our customers with excellent service and our shareholders with strong returns."

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 connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2004-2013, Union Pacific invested approximately $30 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.

Investor contact is Mike Staffenbeal, (402) 544-4227.

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

Supplemental financial information is attached.

This presentation 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; the potential impact of weather on its operations; and its ability to generate record financial returns, improve network performance and fluidity, provide quality customer service, and provide returns to 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 2013, which was filed with the SEC on February 7, 2014. 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,		2014		2013	%		2014		2013	%
Operating Revenues
Freight revenues	$	5,819	$	5,250	11%	$	16,766	$	15,387	9%
Other revenues		363		323	12		1,069		946	13
Total operating revenues		6,182		5,573	11		17,835		16,333	9
Operating Expenses
Compensation and benefits		1,287		1,196	8		3,787		3,597	5
Fuel		882		866	2		2,726		2,629	4
Purchased services and materials		650		588	11		1,893		1,730	9
Depreciation		481		447	8		1,415		1,319	7
Equipment and other rents		310		309	-		938		924	2
Other		242		205	18		696		661	5
Total operating expenses		3,852		3,611	7		11,455		10,860	5
Operating Income		2,330		1,962	19		6,380		5,473	17
Other income		20		28	(29)		80		91	(12)
Interest expense		(144)		(138)	4		(415)		(399)	4
Income before income taxes		2,206		1,852	19		6,045		5,165	17
Income taxes		(836)		(701)	19		(2,296)		(1,951)	18
Net Income	$	1,370	$	1,151	19%	$	3,749	$	3,214	17%

Share and Per Share*
Earnings per share - basic	$	1.53	$	1.25	22%	$	4.16	$	3.46	20%
Earnings per share - diluted	$	1.53	$	1.24	23	$	4.14	$	3.44	20
Weighted average number of shares - basic		893.2		923.5	(3)		900.9		929.9	(3)
Weighted average number of shares - diluted		896.9		928.4	(3)		904.8		934.9	(3)
Dividends declared per share	$	0.50	$	0.395	27	$	1.41	$	1.085	30

Operating Ratio		62.3%		64.8%	(2.5)pts		64.2%		66.5%	(2.3)pts
Effective Tax Rate		37.9%		37.9%	-pts		38.0%		37.8%	0.2pts

*	On June 6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)

	*3rd Quarter*					*Year-to-Date*
For the Periods Ended September 30,		2014		2013	%		2014		2013	%
*Freight Revenues (Millions)*
Agricultural	$	915	$	771	19%	$	2,759	$	2,339	18%
Automotive		527		512	3		1,560		1,533	2
Chemicals		936		883	6		2,742		2,646	4
Coal		1,099		1,082	2		3,049		2,993	2
Industrial Products		1,161		975	19		3,302		2,868	15
Intermodal		1,181		1,027	15		3,354		3,008	12
Total	$	5,819	$	5,250	11%	$	16,766	$	15,387	9%
*Revenue Carloads (Thousands)*
Agricultural		239		210	14%		721		631	14%
Automotive		204		195	5		600		576	4
Chemicals		288		282	2		841		840	-
Coal		466		468	-		1,313		1,284	2
Industrial Products		363		325	12		1,033		931	11
Intermodal*		936		848	10		2,693		2,480	9
Total		2,496		2,328	7%		7,201		6,742	7%
*Average Revenue per Car*
Agricultural	$	3,836	$	3,679	4%	$	3,828	$	3,707	3%
Automotive		2,590		2,620	(1)		2,600		2,661	(2)
Chemicals		3,249		3,134	4		3,261		3,151	3
Coal		2,362		2,312	2		2,323		2,331	-
Industrial Products		3,195		2,998	7		3,195		3,080	4
Intermodal*		1,260		1,211	4		1,245		1,213	3
Average	$	2,331	$	2,255	3%	$	2,328	$	2,282	2%
* 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		2014		2013
Assets
Cash and cash equivalents	$	1,887	$	1,432
Other current assets		2,893		2,558
Investments		1,384		1,321
Net properties		45,553		43,749
Other assets		851		671
Total assets	$	52,568	$	49,731

Liabilities and Common Shareholders' Equity
Debt due within one year	$	460	$	705
Other current liabilities		3,373		3,086
Debt due after one year		11,045		8,872
Deferred income taxes		14,421		14,163
Other long-term liabilities		1,716		1,680
Total liabilities		31,015		28,506
Total common shareholders' equity		21,553		21,225
Total liabilities and common shareholders' equity	$	52,568	$	49,731

Debt to Capital		34.8%		31.1%
Adjusted Debt to Capital*		40.2%		37.6%

*	Adjusted Debt to Capital is a non-GAAP measure; however, management believes that it is an important measure 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,	2014		2013
Operating Activities
Net income	$	3,749	$	3,214
Depreciation		1,415		1,319
Deferred income taxes		289		637
Other - net		(95)		(289)
Cash provided by operating activities		5,358		4,881

Investing Activities
Capital investments		(3,226)		(2,635)
Other - net		(99)		39
Cash used in investing activities		(3,325)		(2,596)

Financing Activities
Debt issued		2,588		944
Common shares repurchased		(2,312)		(1,432)
Dividends paid		(1,186)		(968)
Debt repaid		(678)		(217)
Debt exchange		-		(288)
Other - net		10		(21)
Cash used in financing activities		(1,578)		(1,982)

Net Change in Cash and Cash Equivalents		455		303
Cash and cash equivalents at beginning of year		1,432		1,063
Cash and Cash Equivalents End of Period	$	1,887	$	1,366

Free Cash Flow*
Cash provided by operating activities	$	5,358	$	4,881
Cash used in investing activities		(3,325)		(2,596)
Dividends paid		(1,186)		(968)
Free cash flow	$	847	$	1,317

*	Free cash flow is a non-GAAP measure; however, management believes that it is an important measure in evaluating our financial performance and measures our ability to generate cash without additional external financing.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Operating and Performance Statistics (unaudited)

	*3rd Quarter*			*Year-to-Date*
For the Periods Ended September 30,	2014	2013	%	2014	2013	%
Operating/Performance Statistics
Gross ton-miles (GTMs) (millions)	259,969	241,350	8%	752,638	704,434	7%
Employees (average)	47,550	46,605	2	46,922	46,610	1
GTMs (millions) per employee	5.47	5.18	6	16.04	15.11	6

Locomotive Fuel Statistics
Average fuel price per gallon consumed	$ 3.01	$ 3.17	(5)%	$ 3.08	$ 3.17	(3)%
Fuel consumed in gallons (millions)	283	265	7	860	808	6
Fuel consumption rate*	1.091	1.098	(1)	1.143	1.147	-

AAR Reported Performance Measures
Average train speed (miles per hour)	23.8	26.3	(10)%	24.1	26.1	(8)%
Average terminal dwell time (hours)	29.7	26.3	13	30.1	26.8	12

Revenue Ton-Miles (Millions)
Agricultural	22,552	18,452	22%	69,363	56,707	22%
Automotive	4,183	3,995	5	12,481	11,931	5
Chemicals	19,159	18,541	3	56,823	56,211	1
Coal	50,660	51,325	(1)	140,916	141,037	-
Industrial Products	22,859	19,665	16	65,876	58,237	13
Intermodal	21,192	19,305	10	62,452	58,537	7
Total	140,605	131,283	7%	407,911	382,660	7%

*	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)

	2014
Millions, Except Per Share Amounts and Percentages		*1st Qtr*		*2nd Qtr*		*3rd Qtr*	*Year-to-Date*
Operating Revenues
Freight revenues	$	5,286	$	5,661	$	5,819	$	16,766
Other revenues		352		354		363		1,069
Total operating revenues		5,638		6,015		6,182		17,835
Operating Expenses
Compensation and benefits		1,254		1,246		1,287		3,787
Fuel		921		923		882		2,726
Purchased services and materials		607		636		650		1,893
Depreciation		464		470		481		1,415
Equipment and other rents		312		316		310		938
Other		226		228		242		696
Total operating expenses		3,784		3,819		3,852		11,455
Operating Income		1,854		2,196		2,330		6,380
Other income		38		22		20		80
Interest expense		(133)		(138)		(144)		(415)
Income before income taxes		1,759		2,080		2,206		6,045
Income tax expense		(671)		(789)		(836)		(2,296)
Net Income	$	1,088	$	1,291	$	1,370	$	3,749

Share and Per Share*
Earnings per share - basic	$	1.20	$	1.43	$	1.53	$	4.16
Earnings per share - diluted	$	1.19	$	1.43	$	1.53	$	4.14
Weighted average number of shares - basic		908.1		901.5		893.2		900.9
Weighted average number of shares - diluted		912.5		905.0		896.9		904.8
Dividends declared per share	$	0.455	$	0.455	$	0.50	$	1.41

Operating Ratio		67.1%		63.5%		62.3%		64.2%
Effective Tax Rate		38.1%		37.9%		37.9%		38.0%

*	On June 6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)

	2014
		*1st Qtr*		*2nd Qtr*		*3rd Qtr*	*Year-to-Date*
*Freight Revenues (Millions)*
Agricultural	$	910	$	934	$	915	$	2,759
Automotive		488		545		527		1,560
Chemicals		893		913		936		2,742
Coal		961		989		1,099		3,049
Industrial Products		1,011		1,130		1,161		3,302
Intermodal		1,023		1,150		1,181		3,354
Total	$	5,286	$	5,661	$	5,819	$	16,766
*Revenue Carloads (Thousands)*
Agricultural		239		243		239		721
Automotive		188		208		204		600
Chemicals		270		283		288		841
Coal		430		417		466		1,313
Industrial Products		314		356		363		1,033
Intermodal*		833		924		936		2,693
Total		2,274		2,431		2,496		7,201
*Average Revenue per Car*
Agricultural	$	3,815	$	3,833	$	3,836	$	3,828
Automotive		2,591		2,619		2,590		2,600
Chemicals		3,307		3,230		3,249		3,261
Coal		2,236		2,369		2,362		2,323
Industrial Products		3,218		3,175		3,195		3,195
Intermodal*		1,227		1,246		1,260		1,245
Average	$	2,324	$	2,329	$	2,331	$	2,328
* 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		2014		2013
Debt (a)	$	11,505	$	9,577
Equity		21,553		21,225
Capital (b)	$	33,058	$	30,802
Debt to capital (a/b)		34.8%		31.1%

*	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		2014		2013
Debt	$	11,505	$	9,577
Net present value of operating leases		2,866		3,057
Unfunded pension and OPEB		146		170
Adjusted debt (a)		14,517		12,804
Equity		21,553		21,225
Adjusted capital (b)	$	36,070	$	34,029
Adjusted debt to capital (a/b)		40.2%		37.6%

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 5.4% at September 30, 2014, and 5.7% at December 31, 2013. The discount rate reflects our effective interest rate. Management believes this is an important measure in evaluating the total amount of leverage in our capital structure including off-balance sheet obligations.

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SOURCE Union Pacific Corporation