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Press release from PR Newswire

Union Pacific Reports Best-Ever Quarterly Results

Thursday, July 19, 2012

Union Pacific Reports Best-Ever Quarterly Results08:00 EDT Thursday, July 19, 2012Second Quarter Diluted Earnings per Share Up 32 Percent All-Time Quarterly Records - Diluted earnings per share of $2.10 improved 32 percent. - Operating revenues totaled $5.2 billion, up 7 percent. - Operating income totaled $1.7 billion, up 24 percent. - Operating ratio of 67.0 percent improved 4.3 points. - Customer satisfaction index reached 93, up 1 point and tied the best-ever quarterly record.OMAHA, Neb., July 19, 2012 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2012 second quarter net income of $1 billion, or $2.10 per diluted share, compared to $785 million, or $1.59 per diluted share, in the second quarter 2011.  (Logo: http://photos.prnewswire.com/prnh/20110304/LA59497LOGO)"We're clearly delivering on the strength of our diverse franchise," said Jack Koraleski, Union Pacific chief executive officer.  "Volume growth across many of our market sectors offset the 17 percent decline in coal volumes.  When combined with solid pricing, efficient network operations and continued productivity gains, the net result was our best-ever quarter by nearly every financial measure."Second Quarter SummarySecond quarter business volumes, as measured by total revenue carloads, were up slightly compared to 2011.  Volume growth in four of Union Pacific's six business groups - automotive, chemicals, industrial products and intermodal - was offset by declines in shipments of coal and agricultural products.  Quarterly operating revenue increased 7 percent in the second quarter 2012 to $5.2 billion versus $4.9 billion in the second quarter 2011.  In addition:Five of Union Pacific's six business groups reported freight revenue growth in the second quarter, driven by core pricing gains and improved fuel surcharge recovery.  Volume growth also contributed to revenue growth for four of the business groups. Union Pacific's operating ratio of 67.0 percent was an all-time quarterly best, 4.3 points better than the second quarter 2011 and 1.2 points better than the previous record set in the third quarter 2010.  Pricing gains, improved fuel surcharge recovery and efficient operations drove this record performance.  Lower fuel prices also contributed to 1.1 points of the improvement versus last year. Average quarterly diesel fuel prices decreased 2 percent to $3.21 per gallon in the second quarter 2012 from $3.29 per gallon in the second quarter 2011.  The Customer Satisfaction Index of 93 tied the all-time quarterly record and was 1 point better than the second quarter 2011. Quarterly train speed, as reported to the Association of American Railroads, was 26.6 mph, increasing 2 percent compared to the second quarter 2011. The Company repurchased 3.8 million shares in the second quarter 2012 at an average share price of $110.02 and an aggregate cost of $415 million. Summary of Second Quarter Freight RevenuesAutomotive up 25 percent Industrial Products up 14 percent Chemicals up 13 percent Intermodal up 10 percent Agricultural up 1 percent Coal down 9 percent 2012 Outlook"Looking ahead to the second half of the year, the global economic outlook has become more uncertain and coal volumes remain a challenge," Koraleski said.  "However, we'll continue to take advantage of the opportunities provided by our diverse franchise to drive record financial results and increase shareholder returns once again this year."  About Union PacificIt 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 and its ability to take advantage of growth opportunities, including opportunities in markets other than coal; and whether it can generate record financial results and increase returns to 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,2nd QuarterYear-to-Date For the Periods Ended June 30, 20122011%20122011% Operating Revenues      Freight revenues$4,913$4,5957%$9,736$8,84310%      Other revenues3082631759750518 Total operating revenues5,2214,858710,3339,34811 Operating Expenses      Compensation and benefits1,1511,166(1)2,3622,3331      Fuel882904(2)1,8081,7305      Purchased services and materials54251651,0689918      Depreciation43340188607968      Equipment and other rents29928365955852      Other 190196(3)4063846 Total operating expenses3,4973,46617,0996,8194 Operating Income1,7241,392243,2342,52928      Other income 2126(19)3741(10)      Interest expense(135)(148)(9)(270)(289)(7) Income before income taxes1,6101,270273,0012,28132 Income taxes (608)(485)25(1,136)(857)33 Net Income$1,002$78528%$1,865$1,42431% Share and Per Share       Earnings per share - basic$2.11$1.6131%$3.92$2.9135%      Earnings per share - diluted$2.10$1.5932$3.89$2.8935      Weighted average number of shares - basic473.8488.4(3)475.8489.0(3)      Weighted average number of shares - diluted477.2492.4(3)479.3493.3(3)      Dividends declared per share$0.60$0.47526$1.20$0.85540 Operating Ratio67.0%71.3%(4.3)pts68.7%72.9%(4.2)pts Effective Tax Rate 37.8%38.2%(0.4)pts37.9%37.6%0.3pts UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)2nd QuarterYear-to-Date For the Periods Ended June 30, 20122011%20122011% Freight Revenues (Millions) Agricultural $854$8491%$1,712$1,6563% Automotive 4753812590572325 Chemicals 795703131,5631,36714 Coal*869950(9)1,8641,902(2) Industrial Products 917803141,7801,49319 Intermodal 1,003909101,9121,70212 Total $4,913$4,5957%$9,736$8,84310% Revenue Carloads (Thousands) Agricultural233237(2)%467475(2)% Automotive1901651537032215 Chemicals2612331250245610 Coal*412496(17)9071,034(12) Industrial Products31629766065608 Intermodal**84681931,6241,5892 Total2,2582,247-%4,4764,4361% Average Revenue per Car Agricultural$3,665$3,5802%$3,665$3,4835% Automotive2,5052,32182,4492,2509 Chemicals3,0443,02413,1113,0004 Coal*2,1091,916102,0551,84012 Industrial Products2,9072,69782,9412,66510 Intermodal**1,1851,10871,1771,07110 Average  $2,176$2,0456%$2,175$1,9939%*       Formerly titled Energy.**     Each intermodal container or trailer equals one carload.UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESCondensed Consolidated Statements of Financial Position (unaudited)Jun. 30,Dec. 31, Millions, Except Percentages 20122011 Assets      Cash and cash equivalents$1,201$1,217      Other current assets 2,7552,510      Investments1,2111,175      Net properties 40,93739,934      Other assets270260 Total assets $46,374$45,096 Liabilities and Common Shareholders' Equity      Debt due within one year $780$209      Other current liabilities3,1373,108      Debt due after one year 8,6368,697      Deferred income taxes 12,64612,368      Other long-term liabilities2,0882,136 Total liabilities27,28726,518 Total common shareholders' equity19,08718,578 Total liabilities and common shareholders' equity$46,374$45,096 Debt to Capital33.0%32.4% Adjusted Debt to Capital*40.6%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 June 30, 20122011 Operating Activities      Net income $1,865$1,424      Depreciation 860796      Deferred income taxes 274459      Other - net (223)(39) Cash provided by operating activities 2,7762,640 Investing Activities      Capital investments (1,816)(1,327)      Other - net (66)(39) Cash used in investing activities (1,882)(1,366) Financing Activities      Common shares repurchased(833)(608)      Debt issued 695-      Dividends paid (575)(374)      Debt repaid (193)(131)      Debt exchange-(272)      Other - net (4)80 Cash used in financing activities (910)(1,305) Net Change in Cash and Cash Equivalents (16)(31) Cash and cash equivalents at beginning of year 1,2171,086 Cash and Cash Equivalents End of Period$1,201$1,055 Free Cash Flow*      Cash provided by operating activities$2,776$2,640      Cash used in investing activities(1,882)(1,366)      Dividends paid(575)(374) Free cash flow $319$900*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)2nd QuarterYear-to-Date For the Periods Ended June 30, 20122011%20122011% Operating/Performance Statistics      Gross ton-miles (GTMs) (millions)234,483239,216(2)%474,967474,622-%      Employees (average)45,79744,971245,72044,5083      GTMs (millions) per employee5.125.32(4)10.3910.66(3)      Customer satisfaction index93921pt93921pt Locomotive Fuel Statistics      Average fuel price per gallon consumed $ 3.21$ 3.29(2)%$ 3.22$ 3.085%      Fuel consumed in gallons (millions)265265-544543-      Fuel consumption rate* 1.1321.10921.1461.144- AAR Reported Performance Measures      Average train speed (miles per hour)26.626.12%26.526.12%      Average terminal dwell time (hours)25.525.6-26.026.0-      Average rail car inventory (thousands)268.6271.9(1)272.0271.5- Revenue Ton-Miles (Millions)      Agricultural21,21222,548(6)%43,12145,154(5)%      Automotive3,8603,205207,5176,38218      Chemicals16,79314,9531232,83829,52111      Coal**46,32254,730(15)100,701113,000(11)      Industrial Products18,45517,001936,14332,10613      Intermodal19,98719,726139,01638,7651 Total126,629132,163(4)%259,336264,928(2)%*  Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.  **Formerly titled Energy. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Income (unaudited)2012 Millions, Except Per Share Amounts and Percentages1st Qtr2nd QtrYear-to-Date Operating Revenues      Freight revenues$4,823$4,913$9,736      Other revenues289308597 Total operating revenues5,1125,22110,333 Operating Expenses      Compensation and benefits1,2111,1512,362      Fuel9268821,808      Purchased services and materials5265421,068      Depreciation427433860      Equipment and other rents296299595      Other 216190406 Total operating expenses3,6023,4977,099 Operating Income1,5101,7243,234      Other income162137      Interest expense(135)(135)(270) Income before income taxes1,3911,6103,001 Income tax expense(528)(608)(1,136) Net Income$863$1,002$1,865 Share and Per Share      Earnings per share - basic$1.81$2.11$3.92      Earnings per share - diluted$1.79$2.10$3.89      Weighted average number of shares - basic477.8473.8475.8      Weighted average number of shares - diluted481.4477.2479.3      Dividends declared per share$0.60$0.60$1.20 Operating Ratio70.5%67.0%68.7% Effective Tax Rate38.0%37.8%37.9% UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)20121st Qtr 2nd QtrYear-to-Date Freight Revenues (Millions) Agricultural $858$854$1,712 Automotive430475905 Chemicals7687951,563 Coal*9958691,864 Industrial Products8639171,780 Intermodal9091,0031,912 Total$4,823$4,913$9,736 Revenue Carloads (Thousands) Agricultural 234233467 Automotive180190370 Chemicals241261502 Coal*495412907 Industrial Products290316606 Intermodal**7788461,624 Total2,2182,2584,476 Average Revenue per Car Agricultural $3,664$3,665$3,665 Automotive2,3902,5052,449 Chemicals3,1843,0443,111 Coal*2,0102,1092,055 Industrial Products2,9772,9072,941 Intermodal**1,1691,1851,177 Average$2,175$2,176$2,175*       Formerly titled Energy.**      Each intermodal container or trailer equals one carload. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Non-GAAP Measures Reconciliation to GAAP Debt to Capital*Jun. 30,Dec. 31, Millions, Except Percentages20122011 Debt (a)$9,416$8,906 Equity19,08718,578 Capital (b)$28,503$27,484 Debt to capital (a/b)33.0%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* Jun. 30,Dec. 31, Millions, Except Percentages20122011 Debt$9,416$8,906 Net present value of operating leases3,0203,224 Unfunded pension and OPEB623623 Adjusted debt (a)13,059$12,753 Equity19,08718,578 Adjusted capital (b)$32,146$31,331 Adjusted debt to capital (a/b)40.6%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 6.1% at June 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 CorporationFor further information: Investor, Michelle Gerhardt, +1 (402) 544-4227, or Media, Donna Kush, +1 (402) 544-3753