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Exhibit 99.1

UNION PACIFIC REPORTS RECORD FOURTH QUARTER AND FULL YEAR

FOR IMMEDIATE RELEASE

Fourth Quarter Records

 

   

Diluted 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 Records

 

   

Diluted 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.

Omaha, Neb., January 24, 2013 – Union 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.”

 

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Fourth Quarter Summary

Fourth 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 Revenues

 

   

Chemicals up 15 percent

 

   

Automotive up 14 percent

 

   

Intermodal up 6 percent

 

   

Industrial Products up 3 percent

 

   

Coal down 7 percent

 

   

Agricultural down 8 percent

 

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2012 Full Year Summary

For 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.”

 

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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 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.

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 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.

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited)

 

Millions, Except Per Share Amounts and Percentages,

  4th Quarter          Full Year  

For the Periods Ended December 31,

  2012     2011     %          2012     2011     %  

Operating Revenues

             

Freight revenues

  $   4,931      $   4,829            $   19,686      $   18,508       

Other revenues

    319        279        14            1,240        1,049        18   

 

Total operating revenues

    5,250        5,108                20,926        19,557         
                                                     

Operating Expenses

             

Compensation and benefits

    1,135        1,155        (2)          4,685        4,681         

Fuel

    920        935        (2)          3,608        3,581         

Purchased services and materials

    533        508                2,143        2,005         

Depreciation

    453        413        10          1,760        1,617         

Equipment and other rents

    302        289                1,197        1,167         

Other

    182        191        (5)            788        782         

 

Total operating expenses

    3,525        3,491                14,181        13,833         
                                                     

Operating Income

    1,725        1,617                6,745        5,724        18   

Other income

    43        54        (20)          108        112        (4)   

Interest expense

    (128)        (141)        (9)            (535)        (572)        (6)   

 

Income before income taxes

    1,640        1,530                6,318        5,264        20   

Income taxes

    (604)        (566)                  (2,375)        (1,972)        20   

Net Income

  $ 1,036      $ 964            $ 3,943      $ 3,292        20 
                                                     
             
                                                     

Share and Per Share

             

Earnings per share - basic

  $ 2.21      $ 2.01        10      $ 8.33      $ 6.78        23 

Earnings per share - diluted

  $ 2.19      $ 1.99        10        $ 8.27      $ 6.72        23   

Weighted average number of shares - basic

    468.8        480.7        (2)          473.1        485.7        (3)   

Weighted average number of shares - diluted

    472.0        484.7        (3)          476.5        489.8        (3)   

Dividends declared per share

  $ 0.69      $ 0.60        15          $ 2.49      $ 1.93        29   
             
                                                     

Operating Ratio

    67.1%         68.3%         (1.2)  pts        67.8%         70.7%         (2.9) pts 

Effective Tax Rate

    36.8%         37.0%         (0.2)  pts          37.6%         37.5%         0.1  pts 

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

 

      4th Quarter           Full Year  

For the Periods Ended December 31,

   2012      2011      %           2012      2011      %  

Freight Revenues (Millions)

                   

Agricultural

   $ 785       $ 854         (8)      $ 3,280       $ 3,324         (1)

Automotive

     466         408         14           1,807         1,510         20   

Chemicals

     834         728         15           3,238         2,815         15   

Coal

     990         1,070         (7)           3,912         4,084         (4)   

Industrial Products

     835         810                  3,494         3,166         10   

Intermodal

     1,021         959                    3,955         3,609         10   

 

Total

   $ 4,931       $ 4,829              $ 19,686       $ 18,508        
                                                           

Revenue Carloads (Thousands)

                   

Agricultural

     215         236         (9)        900         934         (4)

Automotive

     187         171                  738         653         13   

Chemicals

     265         232         14           1,042         921         13   

Coal

     463         558         (17)           1,871         2,164         (14)   

Industrial Products

     280         281                  1,185         1,146          

Intermodal*

     831         817                    3,312         3,254          

 

Total

     2,241         2,295         (2)        9,048         9,072        
                                                           

Average Revenue per Car

                   

Agricultural

   $ 3,647       $ 3,630              $ 3,644       $ 3,561        

Automotive

     2,487         2,378                  2,448         2,311          

Chemicals

     3,146         3,131                  3,107         3,055          

Coal

     2,141         1,917         12           2,092         1,888         11   

Industrial Products

     2,978         2,878                  2,947         2,762          

Intermodal*

     1,229         1,175                    1,194         1,109          

 

Average

   $     2,200       $     2,103              $     2,176       $     2,040        
                                                           

 

*

Each intermodal container or trailer equals one carload.

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited)

 

Millions, Except Percentages

   Dec. 31,
2012
     Dec. 31,
2011
 

Assets

     

Cash and cash equivalents

   $ 1,063       $ 1,217   

Other current assets

     2,551         2,510   

Investments

     1,259         1,175   

Net properties

     41,997         39,934   

Other assets

     283         260   

 

Total assets

   $ 47,153       $     45,096   
                   
     
                   

Liabilities and Common Shareholders’ Equity

     

Debt due within one year

   $ 196       $ 209   

Other current liabilities

     2,923         3,108   

Debt due after one year

     8,801         8,697   

Deferred income taxes

     13,108         12,368   

Other long-term liabilities

     2,248         2,136   

 

Total liabilities

     27,276         26,518   
                   

 

Total common shareholders’ equity

     19,877         18,578   
                   

 

Total liabilities and common shareholders’ equity

   $     47,153       $ 45,096   
                   
     
                   

Debt to Capital

     31.2%          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.

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)

 

Millions,

   Full Year  

For the Periods Ended December 31,

   2012      2011  

Operating Activities

     

Net income

   $ 3,943       $ 3,292   

Depreciation

     1,760         1,617   

Deferred income taxes

     887         986   

Other - net

     (429)         (22)   

 

Cash provided by operating activities

     6,161         5,873   
                   
     
                   

Investing Activities

     

Capital investments

     (3,738)         (3,176)   

Other - net

     105         57   

 

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

     695         486   

Debt exchange

            (272)   

Other - net

            108   

 

Cash used in financing activities

     (2,682)         (2,623)   
                   
     
                   

Net Change in Cash and Cash Equivalents

     (154)         131   

Cash and cash equivalents at beginning of year

     1,217         1,086   

 

Cash and Cash Equivalents End of Period

   $     1,063       $     1,217   
                   
     
                   

Free 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.

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Operating and Performance Statistics (unaudited)

 

      4th Quarter           Full Year  

For the Periods Ended December 31,

   2012      2011      %           2012      2011      %  

Operating/Performance Statistics

                   

Gross ton-miles (GTMs) (millions)

     238,898         252,686         (5)        959,280         978,163         (2)

Employees (average)

     46,067         44,922                  45,928         44,861          

GTMs (millions) per employee

     5.19         5.62         (8)           20.89         21.80         (4)   

Customer satisfaction index

     93         92         pts           93         92         pts 
                   
                                                           

Locomotive Fuel Statistics

                   

Average fuel price per gallon consumed

     $3.25          $3.16                 $3.22          $3.12         

Fuel consumed in gallons (millions)

     274         286         (4)           1,085         1,106         (2)   

Fuel consumption rate*

     1.148         1.135                    1.131         1.131          
                   
                                                           

AAR Reported Performance Measures

                   

Average train speed (miles per hour)

     26.7         25.6                26.5         25.6        

Average terminal dwell time (hours)

     26.8         26.5                  26.2         26.2          

Average rail car inventory (thousands)

     264.4         274.1         (4)             269.1         272.9         (1)   
                   
                                                           

Revenue Ton-Miles (Millions)

                   

Agricultural

     18,937         21,949         (14)        81,407         88,094         (8)

Automotive

     3,829         3,404         12           14,942         13,004         15   

Chemicals

     17,649         15,166         16           68,095         59,542         14   

Coal

     51,297         62,293         (18)           207,466         238,567         (13)   

Industrial Products

     17,009         16,971                  70,924         66,823          

Intermodal

     19,748         19,641                    78,277         78,367          

Total

     128,469         139,424         (8)        521,111         544,397         (4)
                                                           

 

*

Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.

 

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited)

 

      2012  

Millions, Except Per Share Amounts and Percentages

   1st Qtr      2nd Qtr      3rd Qtr      4th Qtr      Full Year  

Operating Revenues

              

Freight revenues

   $     4,823       $     4,913       $     5,019       $     4,931       $     19,686   

Other revenues

     289         308         324         319         1,240   

 

Total operating revenues

     5,112         5,221         5,343         5,250         20,926   
                                              

Operating Expenses

              

Compensation and benefits

     1,211         1,151         1,188         1,135         4,685   

Fuel

     926         882         880         920         3,608   

Purchased services and materials

     526         542         542         533         2,143   

Depreciation

     427         433         447         453         1,760   

Equipment and other rents

     296         299         300         302         1,197   

Other

     216         190         200         182         788   

 

Total operating expenses

     3,602         3,497         3,557         3,525         14,181   
                                              

Operating Income

     1,510         1,724         1,786         1,725         6,745   

Other income

     16         21         28         43         108   

Interest expense

     (135)         (135)         (137)         (128)         (535)   

 

Income before income taxes

     1,391         1,610         1,677         1,640         6,318   

Income tax expense

     (528)         (608)         (635)         (604)         (2,375)   

 

Net Income

   $ 863       $ 1,002       $ 1,042       $ 1,036       $ 3,943   
                                              
              
                                              

Share 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 - basic

     477.8         473.8         472.0         468.8         473.1   

Weighted average number of shares - diluted

     481.4         477.2         475.2         472.0         476.5   

Dividends declared per share

   $ 0.60       $ 0.60       $ 0.60       $ 0.69       $ 2.49   
              
                                              

Operating Ratio

     70.5%          67.0%          66.6%          67.1%          67.8%    

Effective Tax Rate

     38.0%          37.8%          37.9%          36.8%          37.6%    

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

 

      2012  
      1st Qtr      2nd Qtr      3rd Qtr      4th Qtr      Full Year  

Freight Revenues (Millions)

              

Agricultural

   $ 858       $ 854       $ 783       $ 785       $ 3,280   

Automotive

     430         475         436         466         1,807   

Chemicals

     768         795         841         834         3,238   

Coal

     995         869         1,058         990         3,912   

Industrial Products

     863         917         879         835         3,494   

Intermodal

     909         1,003         1,022         1,021         3,955   

 

Total

   $ 4,823       $ 4,913       $ 5,019       $ 4,931       $ 19,686   
                                              

Revenue Carloads (Thousands)

              

Agricultural

     234         233         218         215         900   

Automotive

     180         190         181         187         738   

Chemicals

     241         261         275         265         1,042   

Coal

     495         412         501         463         1,871   

Industrial Products

     290         316         299         280         1,185   

Intermodal*

     778         846         857         831         3,312   

 

Total

     2,218         2,258         2,331         2,241         9,048   
                                              

Average Revenue per Car

              

Agricultural

   $ 3,664       $ 3,665       $ 3,596       $ 3,647       $ 3,644   

Automotive

     2,390         2,505         2,407         2,487         2,448   

Chemicals

     3,184         3,044         3,064         3,146         3,107   

Coal

     2,010         2,109         2,111         2,141         2,092   

Industrial Products

     2,977         2,907         2,933         2,978         2,947   

Intermodal*

     1,169         1,185         1,192         1,229         1,194   

 

Average

   $     2,175       $     2,176       $     2,153       $     2,200       $     2,176   
                                              

 

*

Each intermodal container or trailer equals one carload.

 

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP

 

Debt to Capital*

 

Millions, Except Percentages

   Dec. 31,
2012 
     Dec. 31,
2011 
 

Debt (a)

   $ 8,997       $ 8,906   

Equity

     19,877         18,578   

Capital (b)

   $       28,874       $       27,484   
                   

Debt 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*

 

Millions, Except Percentages

   Dec. 31,
2012 
     Dec. 31,
2011 
 

Debt

     8,997         8,906   

Net present value of operating leases

     3,096         3,224   

Unfunded pension and OPEB

     679         623   

Adjusted debt (a)

   $       12,772       $       12,753   

Equity

     19,877         18,578   

Adjusted capital (b)

   $ 32,649       $ 31,331   
                   

Adjusted 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.

 

8


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP

 

Return on Invested Capital as Adjusted (ROIC)*

 

Millions, Except Percentages

   Dec. 31,
2012 
     Dec. 31,
2011 
 

Net income

   $ 3,943       $ 3,292   

Add: Interest expense

     535         572   

Add: Interest on present value of operating leases

     190         208   

Less: Taxes on interest

     (273)         (293)   

Net operating profit after taxes as adjusted (a)

   $ 4,395       $ 3,779   

Average equity

   $ 19,228       $ 18,171   

Add: Average debt

     8,952         9,074   

Add: Average present value of operating leases

     3,160         3,350   

Average invested capital as adjusted (b)

   $       31,340       $       30,595   

Return 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.

 

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