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Union Pacific Reports Record Second Quarter

Achieves Best-Ever Earnings per Share

Omaha, Neb., July 21, 2011 – Union Pacific Corporation (NYSE: UNP) today reported 2011 second quarter net income of $785 million, or $1.59 per diluted share, compared to $711 million, or $1.40 per diluted share, in the second quarter 2010.

Second Quarter Records

  • Diluted earnings per share improved 14 percent to $1.59.
  • Operating revenues totaled $4.9 billion, up 16 percent.
  • Operating income totaled $1.4 billion, up 9 percent.
  • Net income increased 10 percent to $785 million.
  • Customer Satisfaction Index improved three points to 92, an all-time quarterly record.

"Union Pacific achieved another strong quarter, delivering best-ever quarterly earnings," said Jim Young, Union Pacific chairman and chief executive officer. "We saw the benefits of our diverse franchise, with volume growth in five of our six commodity groups. We generated record second quarter operating income and cash from operations despite the impact of severe flooding in the Midwest."

Second Quarter Summary

Second quarter business volumes, as measured by total revenue carloads, grew 3 percent versus 2010. Five of Union Pacific's six business groups reported volume growth, with strong growth in shipments of agricultural products and chemicals. Intermodal volumes were down slightly during the quarter compared to 2010. Quarterly operating revenue increased 16 percent in the second quarter 2011 to $4.9 billion versus $4.2 billion in the second quarter 2010. In addition:

  • Each of Union Pacific's six business groups reported freight revenue growth in the second quarter. Increased fuel cost recoveries, core pricing gains, and volume growth contributed to these increases.
  • Quarterly diesel fuel prices increased 44 percent from an average of $2.29 per gallon in the second quarter 2010 to an average of $3.29 per gallon in the second quarter 2011.
  • Union Pacific's operating ratio of 71.3 percent was 1.9 points worse than the previous second-quarter record set in 2010.  The impact of higher fuel prices negatively impacted operating ratio and earnings by 2.0 points and $0.02 per diluted share compared to 2010.
  • Flood-related issues increased operating expenses by $14 million, or $0.02 per diluted share and resulted in missed coal revenue of approximately $20 million, or $0.02 per diluted share net of estimated cost savings.
  • The Customer Satisfaction Index of 92 set a new all-time quarterly best record, three points better than the second quarter 2010.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, decreasing one percent compared to the second quarter 2010.
  • The Company repurchased 3.6 million shares in the second quarter 2011 at an average share price of $100.75 and an aggregate cost of approximately $360 million.

Summary of Second Quarter Freight Revenues

  • Agricultural up 22 percent
  • Chemicals up 19 percent
  • Industrial Products up 16 percent
  • Energy up 14 percent
  • Automotive up 14 percent
  • Intermodal up 13 percent

2011 Outlook

"Looking to the second half of the year, we expect stronger performance despite some economic uncertainties and ongoing flood challenges," said Young. "With our diverse franchise and strong value proposition, we're well-positioned to leverage volume growth and achieve pricing gains that will improve financial returns for our shareholders."

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.

Investor contact is Michelle Gerhardt, (402) 544-4227.
Media contact is Donna Kush, (402) 544-3753.

Supplemental financial information is attached.

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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 performance for the rest of the year; and its ability to leverage volume growth and improve pricing and financial returns. 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 2010, which was filed with the SEC on February 4, 2011. 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.

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