Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

UNION PACIFIC REPORTS SECOND QUARTER EARNINGS

FOR IMMEDIATE RELEASE

Second Quarter 2009 Highlights

•

Operating income totaled $751 million, down 19 percent.

•

Net income declined 12 percent to $468 million.

•

On-going efficiency and pricing gains contributed to a record second quarter operating ratio of 77.3 percent.

•

Average quarterly diesel fuel prices decreased 56 percent to $1.57 per gallon.

•

Customer Satisfaction Index of 87 tied a quarterly best, up 4 points.

OMAHA, Neb., July 23, 2009 – Union Pacific Corporation (NYSE: UNP) today reported 2009 second quarter net income of $468 million, or $0.92 per diluted share, compared to $531 million, or $1.02 per diluted share for the second quarter 2008. Included in the second quarter 2009 net income is $72 million, or $0.14 per diluted share, related to a June land sale to Colorado’s Regional Transportation District.

“Union Pacific produced solid second quarter results despite a business environment that continues to be extremely challenging,” said Jim Young, Union Pacific chairman and chief executive officer. “This performance demonstrates our unrelenting focus on safety, productivity and customer service, which helped drive lower costs and improved returns.”

Second Quarter Summary

The continued weak global economy affected all six of Union Pacific’s business groups. Second quarter 2009 operating revenues totaled $3.3 billion versus $4.6 billion in the second quarter 2008. In addition:

-more-

•

Business volumes, as measured by total revenue carloads, were down 22 percent versus the second quarter 2008. Reflecting lower volumes, year-over-year freight revenues declined 28 percent to $3.1 billion in the second quarter 2009. Lower fuel surcharge revenue in the second quarter, down over $500 million year-over-year, contributed to this decline.

•

Quarterly diesel fuel prices decreased 56 percent from an average of $3.60 per gallon in the second quarter 2008 to an average of $1.57 per gallon. The second quarter 2009 fuel consumption rate, measured by gallons per thousand gross ton-miles, declined 6 percent to a quarterly best rate of 1.142.

•

Second quarter 2009 operating ratio improved 2.3 points to 77.3 percent, in part as a result of the Company’s on-going efficiency initiatives and pricing gains. Union Pacific’s ongoing safety performance contributed about 1 point to the quarterly operating ratio improvement. A semi-annual actuarial study identified continued safety improvements and lower estimated settlement costs, resulting in a $38 million casualty expense reduction year-over-year.

•

Union Pacific’s Customer Satisfaction Index improved 4 points to 87, matching the Company’s best quarterly mark.

•

Quarterly train speed, as reported to the Association of American Railroads, was 27.4 mph, up nearly 5 mph or 20 percent versus the second quarter 2008. This improvement reflected productivity and operational improvements as well as lower volumes.

•

In June 2009, the Company closed a land sale to Colorado’s Regional Transportation District, resulting in a $116 million pre-tax gain, adding $72 million to net income.

-more-

-2-

Summary of Second Quarter Freight Revenues

•

Agricultural was down 21 percent.

•

Energy was down 22 percent.

•

Intermodal was down 23 percent.

•

Chemicals was down 24 percent.

•

Industrial Products was down 39 percent.

•

Automotive was down 54 percent.

Outlook

“Although we expect it will be some time before the economy recovers, it appears that volume levels may have hit the bottom as the economy seems to have stabilized,” Young said. “Despite these economic challenges, we are dedicated to running a safe and productive network, maintaining our competitive advantages that come from excellent customer service and being a fuel efficient and an environmentally friendly railroad.”

Non-GAAP Reconciliation

The second quarter 2009 adjusted net income of $396 million and diluted earnings per share of $0.78, which excludes the June land sale to Colorado’s Regional Transportation District, are non-GAAP measures. Management believes these measures provide an alternative presentation of results that more accurately reflect on-going Company operations, without the distorting effect of the land sale. These measures should be considered in addition to, not as a substitute for, net income and diluted earnings per share. The following table reconciles second quarter 2009 net income and diluted earnings per share, excluding the land sale, to net income and diluted earnings per share:

-more-

-3-

Dollars in millions, except per share amounts


	Second Quarter
	2009			2008		%
Net Income
As reported	$	468		$	531	(12	)
RTD Land Sale		(72	)		—	—

Adjusted	$	396		$	531	(25	)


Diluted EPS
As reported	$	0.92		$	1.02	(10	)
RTD Land Sale		(0.14	)		—	—

Adjusted	$	0.78		$	1.02	(24	)

About Union Pacific

Union Pacific Corporation owns one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country. Union Pacific serves many of the fastest-growing U.S. population centers and provides Americans with a fuel-efficient, environmentally responsible and safe mode of freight transportation. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad emphasizes excellent customer service and offers competitive routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico, making it North America’s premier rail franchise.

Supplemental financial information is attached.

Additional information is available at our Web site: www.up.com

Investor contact is Jennifer Hamann, (402) 544-4227.

Media contact is Donna Kush, (402) 544-3753.

-more-

-4-

This press release and related materials contain statements about the Corporation’s future that are not statements of historical fact, including specifically expectations regarding the Corporation’s outlook regarding economic conditions, future operating and safety performance, competitiveness of service and capital investments. 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 2008, which was filed with the SEC on February 6, 2009. 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 Web site are provided for convenience and, therefore, information on or available through the Web site is not, and should not be deemed to be, incorporated by reference herein.

###

-5-

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited)


*Millions, Except Per Share Amounts,* *For the Periods Ended June 30,*	*2nd Quarter*								*Year-to-Date*
	*2009*			*2008*			%		*2009*			*2008*			%
Operating Revenues
Freight revenues	$	3,121		$	4,349		(28	)%	$	6,361		$	8,408		(24	)%
Other revenues		182			219		(17	)		357			430		(17	)
Total operating revenues		3,303			4,568		(28	)		6,718			8,838		(24	)
Operating Expenses
Compensation and benefits		976			1,101		(11	)		2,046			2,233		(8	)
Purchased services and materials		391			494		(21	)		790			963		(18	)
Fuel		370			1,159		(68	)		756			2,116		(64	)
Depreciation		355			346		3			700			686		2
Equipment and other rents		307			338		(9	)		624			680		(8	)
Other		153			199		(23	)		379			441		(14	)
Total operating expenses		2,552			3,637		(30	)		5,295			7,119		(26	)
Operating income		751			931		(19	)		1,423			1,719		(17	)
Other income		135			19		F			158			44		F
Interest expense		(150	)		(128	)	17			(291	)		(254	)	15
Income before income taxes		736			822		(10	)		1,290			1,509		(15	)
Income taxes		(268	)		(291	)	(8	)		(460	)		(535	)	(14	)
Net income	$	468		$	531		(12	)%	$	830		$	974		(15	)%

Share and Per Share
Earnings per share - basic	$	0.93		$	1.03		(10	)%	$	1.65		$	1.89		(13	)%
Earnings per share - diluted	$	0.92		$	1.02		(10	)	$	1.64		$	1.87		(12	)
Weighted average number of shares - basic		502.9			514.3		(2	)		502.8			516.3		(3	)
Weighted average number of shares - diluted		505.3			519.0		(3	)		505.0			521.0		(3	)
Dividends declared per share	$	0.27		$	0.22		23		$	0.54		$	0.44		23
Operating Ratio		77.3	%		79.6	%	(2.3	) pts		78.8	%		80.5	%	(1.7	) pts
Effective Tax Rate		36.4	%		35.4	%	1.0	pts		35.7	%		35.5	%	0.2	pts

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)


	*2nd Quarter*						*Year-to-Date*
*For the Periods Ending June 30,*	*2009*		*2008*		%		*2009*		*2008*		%
*Freight Revenues (Millions)*
Agricultural	$	618	$	778	(21	)%	$	1,279	$	1,534	(17	)%
Automotive		163		352	(54	)		325		715	(55	)
Chemicals		499		654	(24	)		1,012		1,257	(19	)
Energy		715		919	(22	)		1,522		1,776	(14	)
Industrial Products		531		877	(39	)		1,077		1,650	(35	)
Intermodal		595		769	(23	)		1,146		1,476	(22	)
Total	$	3,121	$	4,349	(28	)%	$	6,361	$	8,408	(24	)%
*Revenue Carloads (Thousands)*
Agricultural		203		236	(14	)%		415		476	(13	)%
Automotive		93		176	(47	)		190		364	(48	)
Chemicals		188		241	(22	)		368		466	(21	)
Energy		470		561	(16	)		991		1,143	(13	)
Industrial Products		229		346	(34	)		451		650	(31	)
Intermodal		669		811	(18	)		1,284		1,607	(20	)
Total		1,852		2,371	(22	)%		3,699		4,706	(21	)%
*Average Revenue per Car*
Agricultural	$	3,045	$	3,301	(8	)%	$	3,081	$	3,225	(4	)%
Automotive		1,755		2,005	(12	)		1,714		1,966	(13	)
Chemicals		2,659		2,714	(2	)		2,749		2,696	2
Energy		1,520		1,639	(7	)		1,536		1,554	(1	)
Industrial Products		2,319		2,537	(9	)		2,388		2,538	(6	)
Intermodal		889		947	(6	)		893		918	(3	)
Average	$	1,685	$	1,835	(8	)%	$	1,720	$	1,787	(4	)%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited)


*Millions of Dollars, Except Percentages*	Jun. 30, 2009			Dec. 31, 2008
Assets
Cash and cash equivalents	$	1,656		$	1,249
Other current assets		1,690			1,564
Investments		990			974
Net properties		36,763			35,701
Other assets		451			234
Total assets	$	41,550		$	39,722

Liabilities and Common Shareholders’ Equity
Debt due within one year	$	174		$	320
Other current liabilities		2,660			2,560
Debt due after one year		9,816			8,607
Deferred income taxes		10,487			10,282
Other long-term liabilities		2,394			2,506
Total liabilities		25,531			24,275
Total common shareholders’ equity		16,019			15,447
Total liabilities and common shareholders’ equity	$	41,550		$	39,722
Debt to Capital		38.4	%		36.6	%
Adjusted Debt to Capital*		48.1	%		47.4	%

*	Adjusted Debt to Capital is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance. See Union Pacific Web site under Investor Relations for reconciliation to GAAP.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)


*Millions of Dollars,* *For the Periods Ending June 30,*	*Year-to-Date*
	*2009*			*2008*
Operating Activities
Net income	$	830		$	974
Depreciation		700			686
Deferred income taxes		210			160
Other - net		(219	)		16
Cash provided by operating activities		1,521			1,836

Investing Activities
Capital investments		(1,079	)		(1,324	)
Other - net		(73	)		(158	)
Cash used in investing activities		(1,152	)		(1,482	)

Financing Activities
Debt issued		843			942
Common shares repurchased		—			(910	)
Debt repaid		(628	)		(497	)
Dividends paid		(272	)		(230	)
Other - net		95			74
Cash provided by/(used in) financing activities		38			(621	)

Net change in cash and cash equivalents		407			(267	)
Cash and cash equivalents at beginning of year		1,249			878
Cash and cash equivalents end of period	$	1,656		$	611

Free Cash Flow*
Cash provided by operating activities	$	1,521		$	1,836
Cash used in investing activities		(1,152	)		(1,482	)
Dividends paid		(272	)		(230	)
Free cash flow	$	97		$	124

*	Free cash flow is a non-GAAP measure; however, we believe that it is important 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 Quarter*						*Year-to-Date*
*For the Periods Ending June 30,*	*2009*		*2008*		%		*2009*		*2008*		%
Operating/Performance Statistics
Gross ton-miles (GTMs) (millions)		200,810		257,199	(22	)%		407,432		514,373	(21	)%
Employees (average)		43,721		48,693	(10	)		44,359		48,882	(9	)
GTMs (millions) per employee		4.59		5.28	(13	)		9.18		10.52	(13	)
Customer satisfaction index		87		83	4	pts		87		82	5	pts
Locomotive Fuel Statistics
Average fuel price per gallon consumed	$	1.57	$	3.60	(56	)%	$	1.53	$	3.21	(52	)%
Fuel consumed in gallons (millions)		229		313	(27	)		481		643	(25	)
Fuel consumption rate*		1.142		1.216	(6	)		1.180		1.250	(6	)
AAR Reported Performance Measures
Average train speed (miles per hour)		27.4		22.8	20	%		27.3		22.5	21	%
Average terminal dwell time (hours)		24.5		24.5	—			24.4		24.9	(2	)
Average rail car inventory (thousands)		281.8		303.1	(7	)		284.1		304.8	(7	)
Revenue Ton-Miles (Millions)
Agricultural		18,854		22,111	(15	)%		38,921		44,596	(13	)%
Automotive		1,995		3,646	(45	)		3,947		7,536	(48	)
Chemicals		11,481		14,559	(21	)		23,480		28,498	(18	)
Energy		50,740		61,748	(18	)		106,743		125,082	(15	)
Industrial Products		12,842		19,138	(33	)		25,965		36,645	(29	)
Intermodal		17,322		19,737	(12	)		32,598		39,289	(17	)
Total		113,234		140,939	(20	)%		231,654		281,646	(18	)%

*	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)


	*2009*
*In Millions, Except per Share Amounts and Percentages*	*1st Qtr*			*2nd Qtr*			*Year-to-Date*
Operating Revenues
Freight revenues	$	3,240		$	3,121		$	6,361
Other revenues		175			182			357
Total operating revenues		3,415			3,303			6,718
Operating Expenses
Compensation and benefits		1,070			976			2,046
Purchased services and materials		399			391			790
Fuel		386			370			756
Depreciation		345			355			700
Equipment and other rents		317			307			624
Other		226			153			379
Total operating expenses		2,743			2,552			5,295
Operating income		672			751			1,423
Other income		23			135			158
Interest expense		(141	)		(150	)		(291	)
Income before income taxes		554			736			1,290
Income tax expense		(192	)		(268	)		(460	)
Net income	$	362		$	468		$	830

Share and Per Share
Earnings per share - basic	$	0.72		$	0.93		$	1.65
Earnings per share - diluted	$	0.72		$	0.92		$	1.64
Weighted average number of shares - basic		502.7			502.9			502.8
Weighted average number of shares - diluted		504.6			505.3			505.0
Dividends declared per share	$	0.27		$	0.27		$	0.54
Operating Ratio		80.3	%		77.3	%		78.8	%
Effective Tax Rate		34.7	%		36.4	%		35.7	%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)


	*2009*
	*1st Qtr*		*2nd Qtr*		*Year-to-Date*
*Freight Revenues (Millions)*
Agricultural	$	661	$	618	$	1,279
Automotive		162		163		325
Chemicals		513		499		1,012
Energy		807		715		1,522
Industrial Products		546		531		1,077
Intermodal		551		595		1,146
Total	$	3,240	$	3,121	$	6,361
*Revenue Carloads (Thousands)*
Agricultural		212		203		415
Automotive		97		93		190
Chemicals		180		188		368
Energy		521		470		991
Industrial Products		222		229		451
Intermodal		615		669		1,284
Total		1,847		1,852		3,699
*Average Revenue per Car*
Agricultural	$	3,116	$	3,045	$	3,081
Automotive		1,675		1,755		1,714
Chemicals		2,843		2,659		2,749
Energy		1,550		1,520		1,536
Industrial Products		2,459		2,319		2,388
Intermodal		897		889		893
Average	$	1,755	$	1,685	$	1,720