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Form 8-K UNION PACIFIC CORP For: Jan 22

January 22, 2015 8:09 AM EST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section�13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January�22, 2015 (January 22, 2015)

UNION PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)

Utah �� 1-6075 �� 13-2626465

(State or other jurisdiction

of Incorporation)

��

(Commission

File Number)

��

(IRS Employer

Identification No.)

1400 Douglas Street, Omaha, Nebraska �� 68179
(Address of principal executive offices) �� (Zip Code)

Registrant�s telephone number, including area code: (402) 544-5000

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item�2.02 Results of Operations and Financial Condition.

On January�22, 2015, Union Pacific Corporation issued a press release announcing its financial results for the quarter and year ended December�31, 2014. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item�9.01 Financial Statements and Exhibits.

(d)

Exhibits.

99.1

Press Release of Union Pacific Corporation, dated January�22, 2015, announcing its financial results for the quarter and year ended December�31, 2014.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: January�22, 2015

UNION PACIFIC CORPORATION
By: /s/ Robert M. Knight, Jr.

�Robert M. Knight, Jr.

�Executive Vice President � Finance and

�Chief Financial Officer


Exhibit Index

99.1 �� Press Release of Union Pacific Corporation, dated January 22, 2015.

Exhibit 99.1

Union Pacific Reports Fourth Quarter and Full Year 2014 Results

Fourth Quarter 2014 Diluted Earnings per Share up 27 Percent

FOR IMMEDIATE RELEASE

All-Time Quarterly Records

Diluted earnings per share of $1.61 improved 27 percent.

Operating income totaled $2.4 billion, up 20 percent.

Operating ratio of 61.4 percent improved 3.6 points.

Full Year Records

Diluted earnings per share of $5.75 improved 22 percent.

Operating revenues totaled $24.0 billion, up 9 percent.

Operating income totaled $8.8 billion, up 18 percent.

Operating ratio of 63.5 percent improved 2.6 points.

Omaha, Neb., January�22, 2015 � Union Pacific Corporation (NYSE: UNP) today reported 2014 fourth quarter net income of $1.4 billion, or $1.61 per diluted share, compared to $1.2 billion, or $1.27 per diluted share, in the fourth quarter 2013.

�Union Pacific achieved record quarterly financial results, driven by strong volumes, solid core pricing and productivity gains,� said Jack Koraleski, Union Pacific chief executive officer. �Robust volumes challenged our network for much of the year, and we remained focused on adding the necessary resources to safely improve service. We are encouraged with the progress we are making.�

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Fourth Quarter Summary

Operating revenue increased in the fourth quarter 2014 to $6.2 billion, a 9 percent increase over fourth quarter 2013. Fourth quarter business volumes, as measured by total revenue carloads, increased 6 percent compared to 2013. Volume increased in all business groups � led by growth in industrial products and coal. In addition:

Quarterly freight revenue increased 9 percent compared to the fourth quarter 2013, driven by volume growth and core pricing gains.

The average quarterly diesel fuel price of $2.66 per gallon in the fourth quarter 2014 was down 14 percent compared to the fourth quarter 2013.

Union Pacific�s operating ratio of 61.4 percent was an all-time quarterly record, 3.6 points better than the fourth quarter 2013. The net impact of lower fuel prices contributed about 1.5 points of this improvement.

Quarterly train speed, as reported to the Association of American Railroads, was 23.8 mph, 8 percent slower than the fourth quarter 2013.

The Company repurchased more than 7.7�million shares in the fourth quarter 2014 at an average share price of $113.77 and an aggregate cost of $880 million.

Summary of Fourth Quarter Freight Revenues

Industrial Products up 15 percent

Intermodal up 11 percent

Coal up 9 percent

Agricultural Products up 9 percent

Chemicals up 8 percent

Automotive flat

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2014 Full Year Summary

For the full year 2014, Union Pacific reported net income of $5.2 billion or $5.75 per diluted share. This compares to $4.4 billion or $4.71 per diluted share in 2013, 18 and 22 percent increases, respectively. Operating revenue totaled a record $24.0 billion versus $22.0 billion in 2013. Operating income totaled $8.8 billion, an 18 percent increase over 2013. In addition:

Freight revenue increased to $22.6 billion, a 9 percent increase over 2013. Carloadings were up 7 percent versus 2013, with growth in each business group. Volume growth was led by agricultural products, industrial products, and intermodal.

Average diesel fuel prices decreased 6 percent to $2.97 per gallon in 2014 from $3.15 per gallon in 2013.

Union Pacific�s operating ratio of 63.5 percent was a full year record, improving 2.6 points from the previous record set in 2013.

Train speed, as reported to the Association of American Railroads, was 24.0 mph, 8 percent slower compared to the full year 2013.

Union Pacific�s capital program in 2014 totaled $4.1 billion, an increase of approximately $500 million compared to the full year 2013.

The Company increased its quarterly declared dividend per share by 10 percent to $0.50 cents per share in the third quarter 2014. Total dividends declared for the full year 2014 grew 29 percent compared to the full year 2013.

The Company repurchased more than 32.0�million shares in 2014 at an average share price of $100.65, and an aggregate cost of more than $3.2 billion.

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2015 Outlook

�With 2014 behind us, we�re intently focused on the year ahead,� Koraleski said. �Overall, the U.S. economy continues to move forward at a moderate pace, but of course, there are always uncertainties. Clearly, one of the biggest uncertainties is the outlook for energy markets, which will bring both challenges and opportunities as we move ahead. We�re entering the year well-resourced and we�re looking forward to safely providing efficient, value-added service for our customers, and increasing returns for our shareholders in 2015.�

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 connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2005-2014, Union Pacific invested more than $31 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 Mike Staffenbeal, (402)�544-4227.

Media contact is Aaron Hunt, (402)�544-0100.

Supplemental financial information is attached.

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****

This presentation 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 generate financial returns, improve network performance, provide quality customer service, and provide returns to its 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 2013, which was filed with the SEC on February�7, 2014. 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,

2014 2013 % 2014 2013 %

Operating Revenues

Freight revenues

$ ��5,794� $ ��5,297� 9� %� $ ��22,560� $ ��20,684� 9� %�

Other revenues

359� 333� 8� 1,428� 1,279� 12�

Total operating revenues

6,153� 5,630� 9� 23,988� 21,963� 9�

Operating Expenses

Compensation and benefits

1,289� 1,210� 7� 5,076� 4,807� 6�

Fuel

813� 905� (10) �� 3,539� 3,534� -�

Purchased services and materials

665� 585� 14� 2,558� 2,315� 10�

Depreciation

489� 458� 7� 1,904� 1,777� 7�

Equipment and other rents

296� 311� (5) �� 1,234� 1,235� -�

Other

228� 188� 21� 924� 849� 9�

Total operating expenses

3,780� 3,657� 3� 15,235� 14,517� 5�

Operating Income

2,373� 1,973� 20� 8,753� 7,446� 18�

Other income

71� 37� 92� 151� 128� 18�

Interest expense

(146) �� (127) �� 15� (561) �� (526) �� 7�

Income before income taxes

2,298� 1,883� 22� 8,343� 7,048� 18�

Income taxes

(867) �� (709) �� 22� (3,163) �� (2,660) �� 19�

Net Income

$ 1,431� $ 1,174� 22� %� $ 5,180� $ 4,388� 18� %�

Share and Per Share*

Earnings per share - basic

$ 1.62� $ 1.28� 27� %� $ 5.77� $ 4.74� 22� %�

Earnings per share - diluted

$ 1.61� $ 1.27� 27� $ 5.75� $ 4.71� 22�

Weighted average number of shares - basic

885.7� 916.2� (3) �� 897.1� 926.5� (3) ��

Weighted average number of shares - diluted

889.8� 921.4� (3) �� 901.1� 931.5� (3) ��

Dividends declared per share

$ 0.50� $ 0.395� 27� $ 1.91� $ 1.48� 29�

Operating Ratio

61.4%� �� 65.0%� �� (3.6)� pts� 63.5%� �� 66.1%� �� (2.6) pts�

Effective Tax Rate

37.7%� �� 37.7%� �� -�� pts� 37.9%� �� 37.7%� �� 0.2� pts�

*

On June�6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

�� 4th Quarter �� Full Year

For the Periods Ended December�31,

�� 2014 �� 2013 �� % �� 2014 �� 2013 �� %

Freight Revenues (Millions)

�� �� �� �� �� ��

Agricultural Products

�� $ 1,018� �� $ 937� �� 9� %� �� $ 3,777� �� $ 3,276� �� 15� %�

Automotive

�� 543� �� 544� �� -� �� 2,103� �� 2,077� �� 1�

Chemicals

�� 922� �� 855� �� 8� �� 3,664� �� 3,501� �� 5�

Coal

�� 1,078� �� 985� �� 9� �� 4,127� �� 3,978� �� 4�

Industrial Products

�� 1,098� �� 954� �� 15� �� 4,400� �� 3,822� �� 15�

Intermodal

�� 1,135� �� 1,022� �� 11� �� 4,489� �� 4,030� �� 11�

Total

�� $ 5,794� �� $ 5,297� �� 9� %� �� $ ����22,560� �� $ ����20,684� �� 9� %�
�� �� �� �� �� ��

Revenue Carloads (Thousands)

�� �� �� �� �� ��

Agricultural Products

�� 252� �� 243� �� 4� %� �� 973� �� 874� �� 11� %�

Automotive

�� 209� �� 205� �� 2� �� 809� �� 781� �� 4�

Chemicals

�� 275� �� 263� �� 5� �� 1,116� �� 1,103� �� 1�

Coal

�� 455� �� 419� �� 9� �� 1,768� �� 1,703� �� 4�

Industrial Products

�� 335� �� 305� �� 10� �� 1,368� �� 1,236� �� 11�

Intermodal*

�� 898� �� 845� �� 6� �� 3,591� �� 3,325� �� 8�

Total

�� 2,424� �� 2,280� �� 6� %� �� 9,625� �� 9,022� �� 7� %�
�� �� �� �� �� ��

Average Revenue per Car

�� �� �� �� �� ��

Agricultural Products

�� $ 4,031� �� $ 3,846� �� 5� %� �� $ 3,881� �� $ 3,746� �� 4� %�

Automotive

�� 2,607� �� 2,653� �� (2) �� �� 2,602� �� 2,659� �� (2) ��

Chemicals

�� 3,344� �� 3,255� �� 3� �� 3,282� �� 3,176� �� 3�

Coal

�� 2,366� �� 2,352� �� 1� �� 2,334� �� 2,336� �� -�

Industrial Products

�� 3,283� �� 3,134� �� 5� �� 3,217� �� 3,093� �� 4�

Intermodal*

�� 1,265� �� 1,208� �� 5� �� 1,250� �� 1,212� �� 3�

Average

�� $ ����2,390� �� $ ����2,323� �� 3� %� �� $ 2,344� �� $ 2,293� �� 2� %�
�� �� �� �� �� ��

*

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,
2014
�� Dec.�31,
2013

Assets

�� ��

Cash and cash equivalents

�� $ 1,586� �� $ 1,432�

Other current assets

�� 3,093� �� 2,558�

Investments

�� 1,390� �� 1,321�

Net properties

�� 46,272� �� 43,749�

Other assets

�� 375� �� 671�

Total assets

�� $ 52,716� �� $ 49,731�
�� ��
�� ��
�� ��

Liabilities and Common Shareholders� Equity

�� ��

Debt due within one year

�� $ 462� �� $ 705�

Other current liabilities

�� 3,303� �� 3,086�

Debt due after one year

�� 11,018� �� 8,872�

Deferred income taxes

�� 14,680� �� 14,163�

Other long-term liabilities

�� 2,064� �� 1,680�

Total liabilities

�� 31,527� �� 28,506�
�� ��

Total common shareholders� equity

�� 21,189� �� 21,225�
�� ��

Total liabilities and common shareholders� equity

�� $ ����52,716� �� $ ����49,731�
�� ��
�� ��
�� ��

Debt to Capital

�� 35.1%� �� �� 31.1%� ��

Adjusted Debt to Capital*

�� 41.3%� �� �� 37.6%� ��

Return on Invested Capital*

�� 16.2%� �� �� 14.7%� ��

*

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.

3


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)

Millions,

�� Full Year

For the Periods Ended December�31,

�� 2014 �� 2013

Operating Activities

�� ��

Net income

�� $ 5,180� �� $ 4,388�

Depreciation

�� 1,904� �� 1,777�

Deferred income taxes

�� 895� �� 723�

Other - net

�� (594) �� �� (65) ��

Cash provided by operating activities

�� 7,385� �� 6,823�
�� ��
�� ��
�� ��

Investing Activities

�� ��

Capital investments

�� (4,346) �� �� (3,496) ��

Other - net

�� 97� �� 91�

Cash used in investing activities

�� (4,249) �� �� (3,405) ��
�� ��
�� ��
�� ��

Financing Activities

�� ��

Common shares repurchased

�� (3,225) �� �� (2,218) ��

Debt issued

�� 2,588� �� 1,443�

Dividends paid

�� (1,632) �� �� (1,333) ��

Debt repaid

�� (710) �� �� (640) ��

Debt exchange

�� -� �� (289) ��

Other - net

�� (3) �� �� (12) ��

Cash used in financing activities

�� (2,982) �� �� (3,049) ��
�� ��
�� ��
�� ��

Net Change in Cash and Cash Equivalents

�� 154� �� 369�

Cash and cash equivalents at beginning of year

�� 1,432� �� 1,063�

Cash and Cash Equivalents End of Period

�� $ 1,586� �� $ ����1,432�
�� ��
�� ��
�� ��

Free Cash Flow*

�� ��

Cash provided by operating activities

�� $ 7,385� �� $ 6,823�

Cash used in investing activities

�� (4,249) �� �� (3,405) ��

Dividends paid

�� (1,632) �� �� (1,333) ��

Free cash flow

�� $ ����1,504� �� $ 2,085�
�� ��

*

Free cash flow is a non-GAAP measure; however, management believes that it is an important measure in evaluating our financial performance and measures our ability to generate cash without additional external financing.

4


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Operating and Performance Statistics (unaudited)

�� 4th Quarter �� Full Year

For the Periods Ended December�31,

�� 2014 �� 2013 �� % �� 2014 �� 2013 �� %

Operating/Performance Statistics

�� �� �� �� �� ��

Gross ton-miles (GTMs) (millions)

�� 262,267� �� 244,631� �� 7� %� �� 1,014,905� �� 949,065� �� 7� %�

Employees (average)

�� 48,037� �� 45,951� �� 5� �� 47,201� �� 46,445� �� 2�

GTMs (millions) per employee

�� 5.46� �� 5.32� �� 3� �� 21.50� �� 20.43� �� 5�
�� �� �� �� �� ��
�� �� �� �� �� ��

Locomotive Fuel Statistics

�� �� �� �� �� ��

Average fuel price per gallon consumed

�� $2.66� �� $3.11� �� (14) �%� �� $2.97� �� $3.15� �� (6) �%�

Fuel consumed in gallons (millions)

�� 298� �� 283� �� 5� �� 1,158� �� 1,091� �� 6�

Fuel consumption rate*

�� 1.135� �� 1.157� �� (2) �� �� 1.141� �� 1.149� �� (1) ��
�� �� �� �� �� ��
�� �� �� �� �� ��

AAR Reported Performance Measures

�� �� �� �� �� ��

Average train speed (miles per hour)

�� 23.8� �� 25.8� �� (8) �%� �� 24.0� �� 26.0� �� (8) �%�

Average terminal dwell time (hours)

�� 31.0� �� 28.0� �� 11� �� 30.3� �� 27.1� �� 12�
�� �� �� �� �� ��
�� �� �� �� �� ��

Revenue Ton-Miles (Millions)

�� �� �� �� �� ��

Agricultural Products

�� 24,910� �� 24,197� �� 3� %� �� 94,273� �� 80,904� �� 17� %�

Automotive

�� 4,316� �� 4,238� �� 2� �� 16,797� �� 16,169� �� 4�

Chemicals

�� 18,696� �� 17,752� �� 5� �� 75,519� �� 73,963� �� 2�

Coal

�� 50,443� �� 45,865� �� 10� �� 191,359� �� 186,902� �� 2�

Industrial Products

�� 22,178� �� 19,523� �� 14� �� 88,054� �� 77,760� �� 13�

Intermodal

�� 21,175� �� 20,037� �� 6� �� 83,627� �� 78,574� �� 6�

Total

�� 141,718� �� 131,612� �� 8� %� �� 549,629� �� 514,272� �� 7� %�
�� �� �� �� �� ��

*

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)

�� 2014

Millions, Except Per Share Amounts and Percentages

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

Operating Revenues

�� �� �� �� ��

Freight revenues

�� $ ����5,286� �� $ ����5,661� �� $ ����5,819� �� $ ����5,794� �� $ ����22,560�

Other revenues

�� 352� �� 354� �� 363� �� 359� �� 1,428�

Total operating revenues

�� 5,638� �� 6,015� �� 6,182� �� 6,153� �� 23,988�
�� �� �� �� ��

Operating Expenses

�� �� �� �� ��

Compensation and benefits

�� 1,254� �� 1,246� �� 1,287� �� 1,289� �� 5,076�

Fuel

�� 921� �� 923� �� 882� �� 813� �� 3,539�

Purchased services and materials

�� 607� �� 636� �� 650� �� 665� �� 2,558�

Depreciation

�� 464� �� 470� �� 481� �� 489� �� 1,904�

Equipment and other rents

�� 312� �� 316� �� 310� �� 296� �� 1,234�

Other

�� 226� �� 228� �� 242� �� 228� �� 924�

Total operating expenses

�� 3,784� �� 3,819� �� 3,852� �� 3,780� �� 15,235� ��
�� �� �� �� ��

Operating Income

�� 1,854� �� 2,196� �� 2,330� �� 2,373� �� 8,753�

Other income

�� 38� �� 22� �� 20� �� 71� �� 151�

Interest expense

�� (133) �� �� (138) �� �� (144) �� �� (146) �� �� (561) ��

Income before income taxes

�� 1,759� �� 2,080� �� 2,206� �� 2,298� �� 8,343�

Income tax expense

�� (671) �� �� (789) �� �� (836) �� �� (867) �� �� (3,163) ��

Net Income

�� $ 1,088� �� $ 1,291� �� $ 1,370� �� $ 1,431� �� $ 5,180�
�� �� �� �� ��
�� �� �� �� ��
�� �� �� �� ��

Share and Per Share*

�� �� �� �� ��

Earnings per share - basic

�� $ 1.20� �� $ 1.43� �� $ 1.53� �� $ 1.62� �� $ 5.77�

Earnings per share - diluted

�� $ 1.19� �� $ 1.43� �� $ 1.53� �� $ 1.61� �� $ 5.75�

Weighted average number of shares - basic

�� 908.1� �� 901.5� �� 893.2� �� 885.7� �� 897.1�

Weighted average number of shares - diluted

�� 912.5� �� 905.0� �� 896.9� �� 889.8� �� 901.1�

Dividends declared per share

�� $ 0.455� �� $ 0.455� �� $ 0.50� �� $ 0.50� �� $ 1.91�
�� �� �� �� ��
�� �� �� �� ��

Operating Ratio

�� 67.1%� �� �� 63.5%� �� �� 62.3%� �� �� 61.4%� �� �� 63.5%� ��

Effective Tax Rate

�� 38.1%� �� �� 37.9%� �� �� 37.9%� �� �� 37.7%� �� �� 37.9%� ��

*

On June�6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

6


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

�� 2014
�� 1st�Qtr �� 2nd�Qtr �� 3rd�Qtr �� 4th Qtr �� Full�Year

Freight Revenues (Millions)

�� �� �� �� ��

Agricultural Products

�� $ 910 �� $ 934 �� $ 915 �� $ 1,018 �� $ 3,777

Automotive

�� 488 �� 545 �� 527 �� 543 �� 2,103

Chemicals

�� 893 �� 913 �� 936 �� 922 �� 3,664

Coal

�� 961 �� 989 �� 1,099 �� 1,078 �� 4,127

Industrial Products

�� 1,011 �� 1,130 �� 1,161 �� 1,098 �� 4,400

Intermodal

�� 1,023 �� 1,150 �� 1,181 �� 1,135 �� 4,489

Total

�� $ 5,286 �� $ 5,661 �� $ 5,819 �� $ 5,794 �� $ 22,560
�� �� �� �� ��

Revenue Carloads (Thousands)

�� �� �� �� ��

Agricultural Products

�� 239 �� 243 �� 239 �� 252 �� 973

Automotive

�� 188 �� 208 �� 204 �� 209 �� 809

Chemicals

�� 270 �� 283 �� 288 �� 275 �� 1,116

Coal

�� 430 �� 417 �� 466 �� 455 �� 1,768

Industrial Products

�� 314 �� 356 �� 363 �� 335 �� 1,368

Intermodal*

�� 833 �� 924 �� 936 �� 898 �� 3,591

Total

�� 2,274 �� 2,431 �� 2,496 �� 2,424 �� 9,625
�� �� �� �� ��

Average Revenue per Car

�� �� �� �� ��

Agricultural Products

�� $ 3,815 �� $ 3,833 �� $ 3,836 �� $ 4,031 �� $ 3,881

Automotive

�� 2,591 �� 2,619 �� 2,590 �� 2,607 �� 2,602

Chemicals

�� 3,307 �� 3,230 �� 3,249 �� 3,344 �� 3,282

Coal

�� 2,236 �� 2,369 �� 2,362 �� 2,366 �� 2,334

Industrial Products

�� 3,218 �� 3,175 �� 3,195 �� 3,283 �� 3,217

Intermodal*

�� 1,227 �� 1,246 �� 1,260 �� 1,265 �� 1,250

Average

�� $ ����2,324 �� $ ����2,329 �� $ ����2,331 �� $ ����2,390 �� $ ����2,344
�� �� �� �� ��

*

Each intermodal container or trailer equals one carload.

7


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP

Debt to Capital*

Millions, Except Percentages

�� Dec.�31,
2014
�� Dec.�31,
2013

Debt (a)

�� $ 11,480� �� $ 9,577�

Equity

�� 21,189� �� 21,225�

Capital (b)

�� $ ������32,669� �� $ ������30,802�
�� ��

Debt to capital (a/b)

�� 35.1%� �� �� 31.1%� ��
�� ��

*

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,
2014
�� Dec.�31,
2013

Debt

�� $ 11,480� �� $ 9,577�

Net present value of operating leases

�� 2,902� �� 3,057�

Unfunded pension and OPEB

�� 523� �� 170�

Adjusted debt (a)

�� $ 14,905� �� $ 12,804�

Equity

�� 21,189� �� 21,225�

Adjusted capital (b)

�� $ ������36,094� �� $ ������34,029�
�� ��

Adjusted debt to capital (a/b)

�� 41.3%� �� �� 37.6%� ��
�� ��

*

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 5.3% at December�31, 2014 and 5.7% at December�31, 2013. The discount rate reflects our effective interest rate. 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,
2014
Dec.�31,
2013

Net income

�� $ 5,180 $ 4,388

Interest expense

�� 561 526

Interest on present value of operating leases

�� 158 175

Taxes on interest

�� (273 )� (264 )�

Net operating profit after taxes as adjusted (a)

�� $ 5,626 $ 4,825
��

Average equity

�� $ 21,207 $ 20,551

Average debt

�� 10,529 9,287

Average present value of operating leases

�� 2,980 3,077

Average invested capital as adjusted (b)

�� $ ������34,716 $ ������32,915
��

Return on invested capital as adjusted (a/b)

�� 16.2% �� 14.7% ��
��

*

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.

9



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