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Press release from PR Newswire

Union Pacific Reports Record Fourth Quarter and Full Year

Thursday, January 24, 2013

Union Pacific Reports Record Fourth Quarter and Full Year08:00 EST Thursday, January 24, 2013OMAHA, Neb., Jan. 24, 2013 /PRNewswire/ --Fourth Quarter RecordsDiluted 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 RecordsDiluted 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: 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 SummaryFourth 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 RevenuesChemicals 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 SummaryFor 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 PacificUnion 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 QuarterFull Year For the Periods Ended December 31,20122011%20122011% Operating Revenues      Freight revenues$4,931$4,8292%$19,686$18,5086%      Other revenues319279141,2401,04918            Total operating revenues5,2505,108320,92619,5577 Operating Expenses      Compensation and benefits1,1351,155(2)4,6854,681-      Fuel920935(2)3,6083,5811      Purchased services and materials53350852,1432,0057      Depreciation453413101,7601,6179      Equipment and other rents30228941,1971,1673      Other 182191(5)7887821            Total operating expenses3,5253,491114,18113,8333 Operating Income1,7251,61776,7455,72418      Other income 4354(20)108112(4)      Interest expense(128)(141)(9)(535)(572)(6) Income before income taxes1,6401,53076,3185,26420 Income taxes (604)(566)7(2,375)(1,972)20 Net Income$1,036$9647%$3,943$3,29220% Share and Per Share       Earnings per share - basic$2.21$2.0110%$8.33$6.7823%      Earnings per share - diluted$2.19$1.9910$8.27$6.7223      Weighted average number of shares - basic468.8480.7(2)473.1485.7(3)      Weighted average number of shares - diluted472.0484.7(3)476.5489.8(3)      Dividends declared per share$0.69$0.6015$2.49$1.9329 Operating Ratio67.1%68.3%(1.2)pts67.8%70.7%(2.9)pts Effective Tax Rate 36.8%37.0%(0.2)pts37.6%37.5%0.1pts UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESFreight Revenues Statistics (unaudited)4th QuarterFull YearFor the Periods Ended December 31,20122011%20122011%Freight Revenues (Millions)Agricultural $785$854(8)%$3,280$3,324(1)%Automotive 466408141,8071,51020Chemicals 834728153,2382,81515Coal 9901,070(7)3,9124,084(4)Industrial Products 83581033,4943,16610Intermodal1,02195963,9553,60910Total $4,931$4,8292%$19,686$18,5086%Revenue Carloads (Thousands)Agricultural215236(9)%900934(4)%Automotive187171973865313Chemicals265232141,04292113Coal 463558(17)1,8712,164(14)Industrial Products280281-1,1851,1463Intermodal *83181723,3123,2542Total2,2412,295(2)%9,0489,072-%Average Revenue per CarAgricultural$3,647$3,630-%$3,644$3,5612%Automotive2,4872,37852,4482,3116Chemicals3,1463,131-3,1073,0552Coal 2,1411,917122,0921,88811Industrial Products2,9782,87832,9472,7627Intermodal *1,2291,17551,1941,1098Average $2,200$2,1035%$2,176$2,0407%* Each intermodal container or trailer equals one carload. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESCondensed Consolidated Statements of Financial Position (unaudited)Dec. 31,Dec. 31,Millions, Except Percentages 20122011Assets   Cash and cash equivalents$1,063$1,217   Other current assets 2,5512,510   Investments1,2591,175   Net properties 41,99739,934   Other assets283260Total assets $47,153$45,096Liabilities and Common Shareholders' Equity   Debt due within one year $196$209   Other current liabilities2,9233,108   Debt due after one year 8,8018,697   Deferred income taxes 13,10812,368   Other long-term liabilities2,2482,136Total liabilities27,27626,518Total common shareholders' equity19,87718,578Total liabilities and common shareholders' equity$47,153$45,096Debt to Capital31.2%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 COMPANIESCondensed Consolidated Statements of Cash Flows (unaudited)Millions,Full YearFor the Periods Ended December 31,20122011Operating Activities   Net income $3,943$3,292   Depreciation 1,7601,617   Deferred income taxes 887986   Other - net (429)(22)Cash provided by operating activities 6,1615,873Investing Activities   Capital investments (3,738)(3,176)   Other - net 10557   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 695486   Debt exchange-(272)   Other - net 1108Cash used in financing activities (2,682)(2,623)Net Change in Cash and Cash Equivalents (154)131Cash and cash equivalents at beginning of year 1,2171,086Cash and Cash Equivalents End of Period$1,063$1,217Free 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 COMPANIESOperating and Performance Statistics (unaudited)4th QuarterFull YearFor the Periods Ended December 31,20122011%20122011%Operating/Performance Statistics   Gross ton-miles (GTMs) (millions)238,898252,686(5)%959,280978,163(2)%   Employees (average)46,06744,922345,92844,8612   GTMs (millions) per employee5.195.62(8)20.8921.80(4)   Customer satisfaction index93921pts93921ptsLocomotive Fuel Statistics   Average fuel price per gallon consumed $ 3.25$ 3.163%$ 3.22$ 3.123%   Fuel consumed in gallons (millions)274286(4)1,0851,106(2)   Fuel consumption rate* 1.1481.13511.1311.131-AAR Reported Performance Measures   Average train speed (miles per hour)26.725.64%26.525.64%   Average terminal dwell time (hours)26.826.5126.226.2-   Average rail car inventory (thousands)264.4274.1(4)269.1272.9(1)Revenue Ton-Miles (Millions)   Agricultural18,93721,949(14)%81,40788,094(8)%   Automotive3,8293,4041214,94213,00415   Chemicals17,64915,1661668,09559,54214   Coal51,29762,293(18)207,466238,567(13)   Industrial Products17,00916,971-70,92466,8236   Intermodal19,74819,641178,27778,367-Total128,469139,424(8)%521,111544,397(4)% * Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESCondensed Consolidated Statements of Income (unaudited)2012Millions, Except Per Share Amounts and Percentages1st Qtr2nd Qtr3rd Qtr4th QtrFull YearOperating Revenues   Freight revenues$4,823$4,913$5,019$4,931$19,686   Other revenues2893083243191,240Total operating revenues5,1125,2215,3435,25020,926Operating Expenses   Compensation and benefits1,2111,1511,1881,1354,685   Fuel9268828809203,608   Purchased services and materials5265425425332,143   Depreciation4274334474531,760   Equipment and other rents2962993003021,197   Other 216190200182788Total operating expenses3,6023,4973,5573,52514,181Operating Income1,5101,7241,7861,7256,745   Other income16212843108   Interest expense(135)(135)(137)(128)(535)Income before income taxes1,3911,6101,6771,6406,318Income tax expense(528)(608)(635)(604)(2,375)Net Income$863$1,002$1,042$1,036$3,943Share 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 - basic477.8473.8472.0468.8473.1   Weighted average number of shares - diluted481.4477.2475.2472.0476.5   Dividends declared per share$0.60$0.60$0.60$0.69$2.49Operating Ratio70.5%67.0%66.6%67.1%67.8%Effective Tax Rate38.0%37.8%37.9%36.8%37.6% UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESFreight Revenues Statistics (unaudited)20121st Qtr 2nd Qtr3rd Qtr4th QtrFull YearFreight Revenues (Millions)Agricultural $858$854$783$785$3,280Automotive4304754364661,807Chemicals7687958418343,238Coal9958691,0589903,912Industrial Products8639178798353,494Intermodal9091,0031,0221,0213,955Total$4,823$4,913$5,019$4,931$19,686Revenue Carloads (Thousands)Agricultural 234233218215900Automotive180190181187738Chemicals2412612752651,042Coal4954125014631,871Industrial Products2903162992801,185Intermodal *7788468578313,312Total2,2182,2582,3312,2419,048Average Revenue per CarAgricultural $3,664$3,665$3,596$3,647$3,644Automotive2,3902,5052,4072,4872,448Chemicals3,1843,0443,0643,1463,107Coal2,0102,1092,1112,1412,092Industrial Products2,9772,9072,9332,9782,947Intermodal *1,1691,1851,1921,2291,194Average$2,175$2,176$2,153$2,200$2,176* Each intermodal container or trailer equals one carload. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESNon-GAAP Measures Reconciliation to GAAPDebt to Capital*Dec. 31,Dec. 31,Millions, Except Percentages20122011Debt (a)$8,997$8,906Equity19,87718,578Capital (b)$28,874$27,484Debt 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 Percentages20122011Debt8,9978,906Net present value of operating leases3,0963,224Unfunded pension and OPEB679623Adjusted debt (a)$12,772$12,753Equity19,87718,578Adjusted capital (b)$32,649$31,331Adjusted 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 COMPANIESNon-GAAP Measures Reconciliation to GAAPReturn on Invested Capital as Adjusted (ROIC)*Dec. 31,Dec. 31,Millions, Except Percentages20122011Net income$3,943$3,292Add: Interest expense535572Add: Interest on present value of operating leases190208Less: Taxes on interest(273)(293)Net operating profit after taxes as adjusted (a)$4,395$3,779Average equity$19,228$18,171Add: Average debt8,9529,074Add: Average present value of operating leases3,1603,350Average invested capital as adjusted (b)$31,340$30,595Return 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 CorporationFor further information: investors; Michelle Gerhardt, +1-402) 544-4227, or Media; Donna Kush, +1-402-544-3753