UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction | (Commission | (IRS Employer | ||
of Incorporation) | File Number) | Identification No.) | ||
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Registrant's telephone number, including area code:
N/A
(Former name or former address, if changed since last report)
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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):
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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)) | ||
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Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each Class | Trading Symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Item 2.02 Results of Operations and Financial Condition.
On January 21, 2021, Union Pacific Corporation issued a press release announcing its financial results for the quarter and year ended December 31, 2020. 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.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).
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 21, 2021
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| UNION PACIFIC CORPORATION | ||
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| By: | /s/ Jennifer L. Hamann | |
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| Jennifer L. Hamann | |
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| Executive Vice President and Chief Financial Officer | |
Exhibit 99.1
Union Pacific Reports Fourth Quarter and Full Year 2020 Results
FOR IMMEDIATE RELEASE
Omaha, Neb., January 21, 2021 – Union Pacific Corporation (NYSE: UNP) today reported 2020 fourth quarter net income of $1.4 billion, or $2.05 per diluted share. These results include a previously announced $278 million pre-tax, non-cash impairment charge. Excluding the effects of that charge, adjusted fourth quarter net income was $1.6 billion, or $2.36 per diluted share. This compares to $1.4 billion, or $2.02 per diluted share, in the fourth quarter 2019.
“These outstanding results demonstrate the true potential of our franchise as we leveraged all three profitability drivers simultaneously – volume growth, productivity, and pricing – to produce record fourth quarter results,” said Lance Fritz, Union Pacific chairman, president, and chief executive officer. “The women and men of Union Pacific persevered throughout the pandemic to provide our customers with a safe, reliable, and consistent service product.”
Fourth Quarter Summary
Operating revenue of $5.1 billion was down 1% in fourth quarter 2020 compared to fourth quarter 2019. Fourth quarter business volumes, as measured by total revenue carloads, increased 3% compared to 2019. Premium volumes increased compared to 2019, while bulk was flat and industrial declined. In addition:
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Quarterly freight revenue declined 1% compared to fourth quarter 2019, as volume growth and core pricing gains were more than offset by decreased fuel surcharge revenue and a less favorable business mix. |
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Union Pacific’s 61.0% reported operating ratio when adjusted for the impairment charge is an all-time quarterly record of 55.6%, 410 basis points lower than fourth quarter 2019. Lower fuel prices positively impacted the operating ratio by 90 basis points. |
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Quarterly freight car velocity was 223 daily miles per car, a 1% improvement compared to fourth quarter 2019. |
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Quarterly locomotive productivity was 142 gross ton-miles per horsepower day, a 13% improvement compared to fourth quarter 2019. |
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Quarterly workforce productivity was 1,032 car miles per employee, an 18% improvement compared to fourth quarter 2019. |
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Average maximum train length was 9,154 feet, a 12% increase compared to fourth quarter 2019. |
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The Company repurchased 3.8 million shares in fourth quarter 2020 at an aggregate cost of $749 million. |
Summary of Fourth Quarter Freight Revenues
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Bulk up 1% |
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Industrial down 7% |
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Premium up 5% |
2020 Full Year Summary
For the full year 2020, Union Pacific reported net income of $5.3 billion or $7.88 per diluted share. Excluding the effects of the $278 million pre-tax, non-cash impairment charge, adjusted full year net income was $5.6 billion, or $8.19 per diluted share. This compares to $5.9 billion, or $8.38 per diluted share, in 2019.
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Operating revenue totaled $19.5 billion compared to $21.7 billion in 2019. Operating income totaled $7.8 billion, which decreased compared to 2019. In addition:
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Freight revenue totaled $18.3 billion, a 10% decrease compared to 2019. Carloadings were down 7% versus 2019, as all three business teams – bulk, industrial, and premium – declined due to the economic conditions brought on by the COVID-19 pandemic. |
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Union Pacific’s full year 59.9% reported operating ratio when adjusted for the impairment charge is a best ever 58.5%, 210 basis points lower than 2019. Lower fuel prices positively impacted the operating ratio by 130 basis points. |
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Union Pacific’s reportable personal injury rate of 0.90 incidents per 200,000 employee hours was flat compared to full year 2019. The Company’s FRA reportable rail equipment incident rate of 3.54 per million train miles improved 17% compared to full year 2019. |
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Through continued implementation of precision scheduled railroading principles, Union Pacific made year-over-year improvements in its key operating performance indicators: |
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Freight car velocity – 6% improvement |
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Average terminal dwell – 8% improvement |
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Locomotive productivity – 14% improvement |
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Workforce productivity – 11% improvement |
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Train length – 14% improvement |
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Intermodal car trip plan compliance – 6 pt. improvement |
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Manifest/Autos car trip plan compliance – 6 pt. improvement |
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Fuel consumption rate, measured in gallons of fuel per thousand gross ton miles, improved 2% in 2020 compared to 2019. |
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Union Pacific’s capital program in 2020 totaled $2.8 billion. |
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Union Pacific repurchased 22 million shares in 2020 at an aggregate cost of $3.7 billion. |
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2021 Outlook
“While the economic outlook for 2021 remains uncertain, we will build off our solid 2020 performance to produce continued strong productivity through operational excellence. We expect our enhanced service product will support both solid core pricing gains while also increasing our share of the freight transportation market,” Fritz said. “Our confidence in our ability to drive value for all of our stakeholders has never been greater.”
Fourth Quarter 2020 Earnings Conference Call
Union Pacific will webcast its fourth quarter 2020 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, January 21, 2021, at 8:45 a.m. Eastern Time. Participants may join the conference call by dialing 877-407-8293 (or for international participants, 201-689-8349).
ABOUT UNION PACIFIC
Union Pacific (NYSE: UNP) delivers the goods families and businesses use every day with safe, reliable and efficient service. Operating in 23 western states, the company connects its customers and communities to the global economy. Trains are the most environmentally responsible way to move freight, helping Union Pacific protect future generations. More information about Union Pacific is available at www.up.com.
Union Pacific Investor contact: Brad Stock at 402-544-4227 or bkstock@up.com
Union Pacific Media contact: Clarissa Beyah at 402-957-4793 or cbeyah@up.com
Supplemental financial information is attached.
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****
This news release and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically the statements regarding the Company’s expectations with respect to economic conditions and demand levels, its ability to improve network performance, its results of operations, and potential impacts of the COVID-19 pandemic. These statements are, or will be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of 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 Company’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 Company’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 Company’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 Company’s Annual Report on Form 10-K for 2019, which was filed with the SEC on February 7, 2020, and the Company’s Quarterly Report on Form 10-Q, which was filed with the SEC on July 23, 2020. The Company 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 Company 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 Company does update one or more forward-looking statements, no inference should be drawn that the Company 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)
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Millions, Except Per Share Amounts and Percentages, |
4th Quarter |
Full Year |
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For the Periods Ended December 31, |
2020 | 2019 |
% |
2020 | 2019 |
% |
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Operating Revenues |
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Freight revenues |
$ |
4,803 |
$ |
4,851 | (1) |
% |
$ |
18,251 |
$ |
20,243 | (10) |
% |
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Other |
338 | 361 | (6) | 1,282 | 1,465 | (12) | |||||||
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Total operating revenues |
5,141 | 5,212 | (1) | 19,533 | 21,708 | (10) | |||||||
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Operating Expenses |
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Compensation and benefits |
1,021 | 1,049 | (3) | 3,993 | 4,533 | (12) | |||||||
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Depreciation |
557 | 559 |
- |
2,210 | 2,216 |
- |
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Purchased services and materials |
492 | 531 | (7) | 1,962 | 2,254 | (13) | |||||||
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Fuel |
332 | 512 | (35) | 1,314 | 2,107 | (38) | |||||||
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Equipment and other rents |
220 | 230 | (4) | 875 | 984 | (11) | |||||||
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Other |
513 | 231 |
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1,345 | 1,060 | 27 | |||||||
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Total operating expenses |
3,135 | 3,112 | 1 | 11,699 | 13,154 | (11) | |||||||
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Operating Income |
2,006 | 2,100 | (4) | 7,834 | 8,554 | (8) | |||||||
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Other income |
66 | 56 | 18 | 287 | 243 | 18 | |||||||
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Interest expense |
(279) | (278) |
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(1,141) | (1,050) | 9 | |||||||
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Income before income taxes |
1,793 | 1,878 | (5) | 6,980 | 7,747 | (10) | |||||||
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Income taxes |
(413) | (475) | (13) | (1,631) | (1,828) | (11) | |||||||
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Net Income |
$ |
1,380 |
$ |
1,403 | (2) |
$ |
5,349 |
$ |
5,919 | (10) | |||
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Share and Per Share |
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Earnings per share - basic |
$ |
2.05 |
$ |
2.03 | 1 |
% |
$ |
7.90 |
$ |
8.41 | (6) |
% |
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Earnings per share - diluted |
$ |
2.05 |
$ |
2.02 | 1 |
$ |
7.88 |
$ |
8.38 | (6) | |||
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Weighted average number of shares - basic |
672.2 | 692.2 | (3) | 677.3 | 703.5 | (4) | |||||||
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Weighted average number of shares - diluted |
674.1 | 694.9 | (3) | 679.1 | 706.1 | (4) | |||||||
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Dividends declared per share |
$ |
0.97 |
$ |
0.97 |
- |
$ |
3.88 |
$ |
3.70 | 5 | |||
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Operating Ratio |
61.0% | 59.7% | 1.3 |
pts |
59.9% | 60.6% | (0.7) |
pts |
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Effective Tax Rate |
23.0% | 25.3% | (2.3) | 23.4% | 23.6% | (0.2) | |||||||
1
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)
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4th Quarter |
Full Year |
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For the Periods Ended December 31, |
2020 | 2019 |
% |
2020 | 2019 |
% |
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Freight Revenues (Millions) |
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Grain & grain products |
$ |
801 |
$ |
696 | 15 |
% |
$ |
2,829 |
$ |
2,776 | 2 |
% |
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Fertilizer |
161 | 161 |
- |
660 | 653 | 1 | |||||||
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Food & refrigerated |
243 | 241 | 1 | 937 | 1,008 | (7) | |||||||
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Coal & renewables |
357 | 451 | (21) | 1,534 | 2,092 | (27) | |||||||
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Bulk |
1,562 | 1,549 | 1 | 5,960 | 6,529 | (9) | |||||||
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Industrial chemicals & plastics |
461 | 457 | 1 | 1,845 | 1,885 | (2) | |||||||
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Metals & minerals |
378 | 429 | (12) | 1,580 | 2,042 | (23) | |||||||
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Forest products |
307 | 282 | 9 | 1,160 | 1,160 |
- |
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Energy & specialized markets |
515 | 626 | (18) | 2,037 | 2,385 | (15) | |||||||
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Industrial |
1,661 | 1,794 | (7) | 6,622 | 7,472 | (11) | |||||||
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Automotive |
486 | 507 | (4) | 1,680 | 2,123 | (21) | |||||||
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Intermodal |
1,094 | 1,001 | 9 | 3,989 | 4,119 | (3) | |||||||
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Premium |
1,580 | 1,508 | 5 | 5,669 | 6,242 | (9) | |||||||
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Total |
$ |
4,803 |
$ |
4,851 | (1) |
% |
$ |
18,251 |
$ |
20,243 | (10) |
% |
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Revenue Carloads (Thousands) |
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Grain & grain products |
216 | 180 | 20 |
% |
745 | 708 | 5 |
% |
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Fertilizer |
44 | 45 | (2) | 193 | 190 | 2 | |||||||
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Food & refrigerated |
48 | 45 | 7 | 185 | 192 | (4) | |||||||
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Coal & renewables |
190 | 226 | (16) | 797 | 997 | (20) | |||||||
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Bulk |
498 | 496 |
- |
1,920 | 2,087 | (8) | |||||||
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Industrial chemicals & plastics |
148 | 148 |
- |
587 | 611 | (4) | |||||||
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Metals & minerals |
154 | 165 | (7) | 646 | 744 | (13) | |||||||
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Forest products |
59 | 53 | 11 | 220 | 220 |
- |
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Energy & specialized markets |
137 | 164 | (16) | 539 | 624 | (14) | |||||||
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Industrial |
498 | 530 | (6) | 1,992 | 2,199 | (9) | |||||||
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Automotive |
202 | 208 | (3) | 692 | 858 | (19) | |||||||
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Intermodal [a] |
853 | 759 | 12 | 3,149 | 3,202 | (2) | |||||||
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Premium |
1,055 | 967 | 9 | 3,841 | 4,060 | (5) | |||||||
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Total |
2,051 | 1,993 | 3 |
% |
7,753 | 8,346 | (7) |
% |
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Average Revenue per Car |
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Grain & grain products |
$ |
3,710 |
$ |
3,860 | (4) |
% |
$ |
3,797 |
$ |
3,919 | (3) |
% |
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Fertilizer |
3,647 | 3,636 |
- |
3,427 | 3,448 | (1) | |||||||
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Food & refrigerated |
5,030 | 5,340 | (6) | 5,047 | 5,241 | (4) | |||||||
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Coal & renewables |
1,887 | 1,991 | (5) | 1,926 | 2,098 | (8) | |||||||
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Bulk |
3,139 | 3,121 | 1 | 3,104 | 3,128 | (1) | |||||||
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Industrial chemicals & plastics |
3,125 | 3,086 | 1 | 3,144 | 3,087 | 2 | |||||||
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Metals & minerals |
2,448 | 2,606 | (6) | 2,445 | 2,745 | (11) | |||||||
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Forest products |
5,184 | 5,313 | (2) | 5,269 | 5,264 |
- |
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Energy & specialized markets |
3,747 | 3,818 | (2) | 3,780 | 3,821 | (1) | |||||||
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Industrial |
3,331 | 3,386 | (2) | 3,324 | 3,398 | (2) | |||||||
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Automotive |
2,399 | 2,441 | (2) | 2,427 | 2,474 | (2) | |||||||
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Intermodal [a] |
1,284 | 1,319 | (3) | 1,267 | 1,286 | (1) | |||||||
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Premium |
1,497 | 1,560 | (4) | 1,476 | 1,538 | (4) | |||||||
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Average |
$ |
2,341 |
$ |
2,435 | (4) |
% |
$ |
2,354 |
$ |
2,425 | (3) |
% |
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[a]For intermodal shipments, each container or trailer equals one carload.
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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Financial Position (unaudited)
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Dec. 31, |
Dec. 31, |
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Millions, Except Percentages |
2020 | 2019 | ||
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Assets |
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Cash and cash equivalents |
$ |
1,799 |
$ |
831 |
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Short-term investments |
60 | 60 | ||
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Other current assets |
2,355 | 2,568 | ||
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Investments |
2,164 | 2,050 | ||
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Net properties |
54,161 | 53,916 | ||
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Operating lease assets |
1,610 | 1,812 | ||
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Other assets |
249 | 436 | ||
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Total assets |
$ |
62,398 |
$ |
61,673 |
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Liabilities and Common Shareholders' Equity |
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Debt due within one year |
$ |
1,069 |
$ |
1,257 |
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Other current liabilities |
3,104 | 3,094 | ||
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Debt due after one year |
25,660 | 23,943 | ||
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Operating lease liabilities |
1,283 | 1,471 | ||
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Deferred income taxes |
12,247 | 11,992 | ||
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Other long-term liabilities |
2,077 | 1,788 | ||
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Total liabilities |
45,440 | 43,545 | ||
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Total common shareholders' equity |
16,958 | 18,128 | ||
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Total liabilities and common shareholders' equity |
$ |
62,398 |
$ |
61,673 |
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Return on Average Common Shareholders' Equity |
30.5% | 30.7% | ||
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Return on Invested Capital as Adjusted (ROIC)* |
13.9% | 15.0% | ||
*ROIC is a non-GAAP measure; however, management believes that it is an important measure in evaluating the efficiency and effectiveness of our long-term capital investments. See page 9 for a reconciliation to GAAP.
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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows (unaudited)
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Millions, |
Full Year |
|||
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For the Periods Ended December 31, |
2020 | 2019 | ||
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Operating Activities |
||||
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Net income |
$ |
5,349 |
$ |
5,919 |
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Depreciation |
2,210 | 2,216 | ||
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Deferred income taxes |
340 | 566 | ||
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Other - net |
641 | (92) | ||
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Cash provided by operating activities |
8,540 | 8,609 | ||
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Investing Activities |
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Capital investments* |
(2,927) | (3,453) | ||
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Maturities of short-term investments |
141 | 130 | ||
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Purchases of short-term investments |
(136) | (115) | ||
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Other - net |
246 | 3 | ||
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Cash used in investing activities |
(2,676) | (3,435) | ||
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Financing Activities |
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Debt issued |
4,004 | 3,986 | ||
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Share repurchase programs |
(3,705) | (5,804) | ||
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Dividends paid |
(2,626) | (2,598) | ||
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Debt repaid |
(2,053) | (817) | ||
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Debt exchange |
(328) | (387) | ||
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Net issuance of commercial paper |
(127) | (6) | ||
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Other - net |
(67) | (20) | ||
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Cash used in financing activities |
(4,902) | (5,646) | ||
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Net Change in Cash, Cash Equivalents, and Restricted Cash |
962 | (472) | ||
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Cash, cash equivalents, and restricted cash at beginning of year |
856 | 1,328 | ||
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Cash, Cash Equivalents, and Restricted Cash at End of Year |
$ |
1,818 |
$ |
856 |
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Free Cash Flow** |
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Cash provided by operating activities |
$ |
8,540 |
$ |
8,609 |
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Cash used in investing activities |
(2,676) | (3,435) | ||
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Dividends paid |
(2,626) | (2,598) | ||
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Free cash flow |
$ |
3,238 |
$ |
2,576 |
*Capital investments include locomotive and freight car early lease buyouts of $38 million in 2020 and $290 million in 2019.
**Free cash flow is a non-GAAP measure; however, we believe this measure is important to management and investors 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)
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4th Quarter |
Full Year |
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For the Periods Ended December 31, |
2020 | 2019 |
% |
2020 | 2019 |
% |
|||||
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Operating/Performance Statistics |
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Freight car velocity (daily miles per car) [a] |
223 | 220 | 1 |
% |
221 | 209 | 6 |
% |
|||
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Average train speed (miles per hour) [a] * |
26.1 | 26.2 |
- |
25.9 | 25.1 | 3 | |||||
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Average terminal dwell time (hours) [a] * |
22.4 | 23.3 | (4) | 22.7 | 24.8 | (8) | |||||
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Locomotive productivity (GTMs per horsepower day) |
142 | 126 | 13 | 137 | 120 | 14 | |||||
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Gross ton-miles (GTMs) (millions) |
202,844 | 200,801 | 1 | 771,765 | 846,616 | (9) | |||||
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Train length (feet) |
9,154 | 8,185 | 12 | 8,798 | 7,747 | 14 | |||||
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Intermodal car trip plan compliance (%) |
83 | 84 | (1) |
pts |
81 | 75 | 6 |
pts |
|||
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Manifest/Automotive car trip plan compliance (%) |
74 | 71 | 3 |
pts |
71 | 65 | 6 |
pts |
|||
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Workforce productivity (car miles per employee) |
1,032 | 874 | 18 | 947 | 857 | 11 | |||||
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Total employees (average) |
29,753 | 34,563 | (14) | 30,960 | 37,483 | (17) | |||||
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Locomotive Fuel Statistics |
|||||||||||
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Average fuel price per gallon consumed |
$1.45 |
$ 2.16 |
(33) |
% |
$ 1.50 |
$ 2.13 |
(30) |
% |
|||
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Fuel consumed in gallons (millions) |
222 | 228 | (3) | 849 | 953 | (11) | |||||
|
Fuel consumption rate** |
1.092 | 1.140 | (4) | 1.100 | 1.126 | (2) | |||||
|
Revenue Ton-Miles (Millions) |
|||||||||||
|
Grain & grain products |
21,591 | 16,298 | 32 |
% |
71,979 | 66,264 | 9 |
% |
|||
|
Fertilizer |
2,932 | 2,809 | 4 | 12,024 | 11,531 | 4 | |||||
|
Food & refrigerated |
4,662 | 4,433 | 5 | 17,534 | 18,470 | (5) | |||||
|
Coal & renewables |
18,128 | 21,335 | (15) | 76,695 | 100,035 | (23) | |||||
|
Bulk |
47,313 | 44,875 | 5 | 178,232 | 196,300 | (9) | |||||
|
Industrial chemicals & plastics |
7,465 | 6,705 | 11 | 28,095 | 28,000 |
- |
|||||
|
Metals & minerals |
7,091 | 7,772 | (9) | 28,562 | 37,175 | (23) | |||||
|
Forest products |
6,206 | 5,734 | 8 | 23,527 | 23,445 |
- |
|||||
|
Energy & specialized markets |
9,200 | 12,194 | (25) | 36,527 | 45,367 | (19) | |||||
|
Industrial |
29,962 | 32,405 | (8) | 116,711 | 133,987 | (13) | |||||
|
Automotive |
4,337 | 4,395 | (1) | 14,835 | 18,349 | (19) | |||||
|
Intermodal |
19,854 | 18,257 | 9 | 75,198 | 74,797 | 1 | |||||
|
Premium |
24,191 | 22,652 | 7 | 90,033 | 93,146 | (3) | |||||
|
Total |
101,466 | 99,932 | 2 |
% |
384,976 | 423,433 | (9) |
% |
|||
[a] Prior years have been recast to conform to the current year presentation.
*Surface Transportation Board reported performance measures.
**Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.
5
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Income (unaudited)
|
|
||||||||||
|
|
2020 |
|||||||||
|
Millions, Except Per Share Amounts and Percentages, |
1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Full Year |
|||||
|
Operating Revenues |
||||||||||
|
Freight revenues |
$ |
4,880 |
$ |
3,972 |
$ |
4,596 |
$ |
4,803 |
$ |
18,251 |
|
Other |
349 | 272 | 323 | 338 | 1,282 | |||||
|
Total operating revenues |
5,229 | 4,244 | 4,919 | 5,141 | 19,533 | |||||
|
Operating Expenses |
||||||||||
|
Compensation and benefits |
1,059 | 905 | 1,008 | 1,021 | 3,993 | |||||
|
Depreciation |
547 | 551 | 555 | 557 | 2,210 | |||||
|
Purchased services and materials |
521 | 441 | 508 | 492 | 1,962 | |||||
|
Fuel |
434 | 247 | 301 | 332 | 1,314 | |||||
|
Equipment and other rents |
227 | 211 | 217 | 220 | 875 | |||||
|
Other |
298 | 235 | 299 | 513 | 1,345 | |||||
|
Total operating expenses |
3,086 | 2,590 | 2,888 | 3,135 | 11,699 | |||||
|
Operating Income |
2,143 | 1,654 | 2,031 | 2,006 | 7,834 | |||||
|
Other income |
53 | 131 | 37 | 66 | 287 | |||||
|
Interest expense |
(278) | (289) | (295) | (279) | (1,141) | |||||
|
Income before income taxes |
1,918 | 1,496 | 1,773 | 1,793 | 6,980 | |||||
|
Income taxes |
(444) | (364) | (410) | (413) | (1,631) | |||||
|
Net Income |
$ |
1,474 |
$ |
1,132 |
$ |
1,363 |
$ |
1,380 |
$ |
5,349 |
|
Share and Per Share |
||||||||||
|
Earnings per share - basic |
$ |
2.15 |
$ |
1.67 |
$ |
2.02 |
$ |
2.05 |
$ |
7.90 |
|
Earnings per share - diluted |
$ |
2.15 |
$ |
1.67 |
$ |
2.01 |
$ |
2.05 |
$ |
7.88 |
|
Weighted average number of shares - basic |
684.3 | 677.7 | 675.0 | 672.2 | 677.3 | |||||
|
Weighted average number of shares - diluted |
686.2 | 679.2 | 676.8 | 674.1 | 679.1 | |||||
|
Dividends declared per share |
$ |
0.97 |
$ |
0.97 |
$ |
0.97 |
$ |
0.97 |
$ |
3.88 |
|
Operating Ratio |
59.0% | 61.0% | 58.7% | 61.0% | 59.9% | |||||
|
Effective Tax Rate |
23.1% | 24.3% | 23.1% | 23.0% | 23.4% | |||||
6
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)
|
|
||||||||||
|
|
2020 |
|||||||||
|
|
1st Qtr |
2nd Qtr |
3rd Qtr |
4th Qtr |
Full Year |
|||||
|
Freight Revenues (Millions) |
||||||||||
|
Grain & grain products |
$ |
689 |
$ |
644 |
$ |
695 |
$ |
801 |
$ |
2,829 |
|
Fertilizer |
174 | 168 | 157 | 161 | 660 | |||||
|
Food & refrigerated |
250 | 205 | 239 | 243 | 937 | |||||
|
Coal & renewables |
421 | 369 | 387 | 357 | 1,534 | |||||
|
Bulk |
1,534 | 1,386 | 1,478 | 1,562 | 5,960 | |||||
|
Industrial chemicals & plastics |
495 | 435 | 454 | 461 | 1,845 | |||||
|
Metals & minerals |
469 | 368 | 365 | 378 | 1,580 | |||||
|
Forest products |
303 | 266 | 284 | 307 | 1,160 | |||||
|
Energy & specialized markets |
627 | 431 | 464 | 515 | 2,037 | |||||
|
Industrial |
1,894 | 1,500 | 1,567 | 1,661 | 6,622 | |||||
|
Automotive |
524 | 189 | 481 | 486 | 1,680 | |||||
|
Intermodal |
928 | 897 | 1,070 | 1,094 | 3,989 | |||||
|
Premium |
1,452 | 1,086 | 1,551 | 1,580 | 5,669 | |||||
|
Total |
$ |
4,880 |
$ |
3,972 |
$ |
4,596 |
$ |
4,803 |
$ |
18,251 |
|
Revenue Carloads (Thousands) |
||||||||||
|
Grain & grain products |
175 | 167 | 187 | 216 | 745 | |||||
|
Fertilizer |
46 | 53 | 50 | 44 | 193 | |||||
|
Food & refrigerated |
48 | 41 | 48 | 48 | 185 | |||||
|
Coal & renewables |
208 | 186 | 213 | 190 | 797 | |||||
|
Bulk |
477 | 447 | 498 | 498 | 1,920 | |||||
|
Industrial chemicals & plastics |
154 | 141 | 144 | 148 | 587 | |||||
|
Metals & minerals |
174 | 162 | 156 | 154 | 646 | |||||
|
Forest products |
56 | 50 | 55 | 59 | 220 | |||||
|
Energy & specialized markets |
162 | 115 | 125 | 137 | 539 | |||||
|
Industrial |
546 | 468 | 480 | 498 | 1,992 | |||||
|
Automotive |
208 | 79 | 203 | 202 | 692 | |||||
|
Intermodal [a] |
709 | 724 | 863 | 853 | 3,149 | |||||
|
Premium |
917 | 803 | 1,066 | 1,055 | 3,841 | |||||
|
Total |
1,940 | 1,718 | 2,044 | 2,051 | 7,753 | |||||
|
Average Revenue per Car |
||||||||||
|
Grain & grain products |
$ |
3,940 |
$ |
3,861 |
$ |
3,705 |
$ |
3,710 |
$ |
3,797 |
|
Fertilizer |
3,768 | 3,181 | 3,172 | 3,647 | 3,427 | |||||
|
Food & refrigerated |
5,277 | 4,986 | 4,891 | 5,030 | 5,047 | |||||
|
Coal & renewables |
2,022 | 1,979 | 1,820 | 1,887 | 1,926 | |||||
|
Bulk |
3,219 | 3,099 | 2,964 | 3,139 | 3,104 | |||||
|
Industrial chemicals & plastics |
3,205 | 3,086 | 3,154 | 3,125 | 3,144 | |||||
|
Metals & minerals |
2,697 | 2,276 | 2,337 | 2,448 | 2,445 | |||||
|
Forest products |
5,457 | 5,256 | 5,181 | 5,184 | 5,269 | |||||
|
Energy & specialized markets |
3,866 | 3,739 | 3,742 | 3,747 | 3,780 | |||||
|
Industrial |
3,469 | 3,201 | 3,271 | 3,331 | 3,324 | |||||
|
Automotive |
2,525 | 2,388 | 2,368 | 2,399 | 2,427 | |||||
|
Intermodal [a] |
1,307 | 1,241 | 1,238 | 1,284 | 1,267 | |||||
|
Premium |
1,583 | 1,354 | 1,454 | 1,497 | 1,476 | |||||
|
Average |
$ |
2,516 |
$ |
2,312 |
$ |
2,248 |
$ |
2,341 |
$ |
2,354 |
[a]For intermodal shipments, each container or trailer equals one carload.
7
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Reconciliation of Non-GAAP Financial Measures
|
Adjusted Debt / Adjusted EBITDA* |
||||||
|
Millions, Except Ratios |
Dec. 31, |
Dec. 31, |
Dec. 31, |
|||
|
for the Twelve Months Ended |
2020 | 2019 | 2018 | |||
|
Net income |
$ |
5,349 |
$ |
5,919 |
$ |
5,966 |
|
Add: |
||||||
|
Income tax expense/(benefit) |
1,631 | 1,828 | 1,775 | |||
|
Depreciation |
2,210 | 2,216 | 2,191 | |||
|
Interest expense |
1,141 | 1,050 | 870 | |||
|
EBITDA |
$ |
10,331 |
$ |
11,013 |
$ |
10,802 |
|
Adjustments: |
||||||
|
Other income |
(287) | (243) | (94) | |||
|
Interest on operating lease liabilities** |
59 | 68 | 84 | |||
|
Adjusted EBITDA |
$ |
10,103 |
$ |
10,838 |
$ |
10,792 |
|
Debt |
$ |
26,729 |
$ |
25,200 |
$ |
22,391 |
|
Operating lease liabilities*** |
1,604 | 1,833 | 2,271 | |||
|
Unfunded pension and OPEB, |
||||||
|
net of taxes of $195, $124, and $135 |
637 | 400 | 456 | |||
|
Adjusted debt |
$ |
28,970 |
$ |
27,433 |
$ |
25,118 |
|
Adjusted debt / Adjusted EBITDA |
2.9 | 2.5 | 2.3 | |||
|
|
||||||
|
Comparable Adjusted Debt / Adjusted EBITDA* |
||||||
|
|
Dec. 31, |
Dec. 31, |
Dec. 31, |
|||
|
|
2020 | 2019 | 2018 | |||
|
Adjusted debt / Adjusted EBITDA |
2.9 | 2.5 | 2.3 | |||
|
Factors Affecting Comparability: |
||||||
|
Brazos yard impairment [a] |
(0.1) |
N/A |
N/A |
|||
|
Comparable Adjusted Debt / Adjusted EBITDA* |
2.8 | 2.5 | 2.3 | |||
[a]Adjustments remove the impact of $209 million from net income and $69 million from income tax expense for the year ended December 31, 2020. See page 10 for a reconciliation to GAAP.
|
|
*Total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB obligation divided by net income plus income tax expense, depreciation, amortization, interest expense, and adjustments for other income and interest on operating lease liabilities. Adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, other income, and interest on operating lease liabilities) and comparable adjusted debt to adjusted EBITDA are considered non-GAAP financial measures 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 these measures are important to management and investors in evaluating the Company’s ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA and comparable adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income. The tables above provide reconciliations from net income to adjusted debt to adjusted EBITDA and comparable adjusted debt to adjusted EBITDA. At December 31, 2020, 2019, and 2018, the incremental borrowing rate on operating leases was 3.7%.
**Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.
***Effective January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases. ASU 2016-02 requires companies to recognize lease assets and lease liabilities on the balance sheet. Prior to adoption, the present value of operating leases was used in this calculation.
8
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Reconciliation of Non-GAAP Financial Measures
|
|
||||||
|
Return on Average Common Shareholders' Equity |
||||||
|
|
||||||
|
Millions, Except Percentages |
2020 | 2019 | 2018 | |||
|
Net income |
$ |
5,349 |
$ |
5,919 |
$ |
5,966 |
|
Average equity |
$ |
17,543 |
$ |
19,276 |
$ |
22,640 |
|
Return on average common shareholders' equity |
30.5% | 30.7% | 26.4% | |||
|
|
||||||
|
Return on Invested Capital as Adjusted (ROIC)* |
||||||
|
|
||||||
|
Millions, Except Percentages |
2020 | 2019 | 2018 | |||
|
Net income |
$ |
5,349 |
$ |
5,919 |
$ |
5,966 |
|
Interest expense |
1,141 | 1,050 | 870 | |||
|
Interest on average operating lease liabilities |
64 | 76 | 82 | |||
|
Taxes on interest |
(282) | (266) | (218) | |||
|
Net operating profit after taxes as adjusted |
$ |
6,272 |
$ |
6,779 |
$ |
6,700 |
|
Average equity |
$ |
17,543 |
$ |
19,276 |
$ |
22,640 |
|
Average debt |
25,965 | 23,796 | 19,668 | |||
|
Average operating lease liabilities |
1,719 | 2,052 | 2,206 | |||
|
Average invested capital as adjusted |
$ |
45,227 |
$ |
45,124 |
$ |
44,514 |
|
Return on invested capital as adjusted |
13.9% | 15.0% | 15.1% | |||
|
|
||||||
|
Comparable Return on Invested Capital as Adjusted (Comparable ROIC)* |
||||||
|
|
||||||
|
|
2020 | 2019 | 2018 | |||
|
Return on invested capital as adjusted |
13.9% | 15.0% | 15.1% | |||
|
Factors Affecting Comparability: |
||||||
|
Brazos yard impairment [a] |
0.4 |
N/A |
N/A |
|||
|
Comparable return on invested capital as adjusted |
14.3% | 15.0% | 15.1% | |||
[a]Adjustments remove the impact of $209 million from both net income for the year ended and shareholders’ equity as of December 31, 2020. See page 10 for a reconciliation to GAAP.
*ROIC and comparable ROIC are considered non-GAAP financial measures 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 these measures are important to management and investors in evaluating the efficiency and effectiveness of our long-term capital investments. In addition, we currently use ROIC as a performance criteria in determining certain elements of equity compensation for our executives. ROIC and comparable 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. The tables above provide reconciliations from return on average common shareholders’ equity to ROIC and comparable ROIC. At December 31, 2020, 2019, and 2018, the incremental borrowing rate on operating leases was 3.7%.
9
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Reconciliation of Non-GAAP Financial Measures
|
Financial Performance* |
|||||||||
|
Millions, Except Per Share Amounts and Percentages |
Reported results |
Brazos Yard |
Adjusted results |
||||||
|
For the Three Months Ended December 31, 2020 |
(GAAP) |
Impairment |
(non-GAAP) |
||||||
|
Operating expense |
$ |
3,135 |
$ |
(278) |
$ |
2,857 | |||
|
Operating income |
2,006 | 278 | 2,284 | ||||||
|
Income taxes |
413 | 69 | 482 | ||||||
|
Net income |
$ |
1,380 |
$ |
209 |
$ |
1,589 | |||
|
Diluted EPS |
$ |
2.05 |
$ |
0.31 |
$ |
2.36 | |||
|
Operating ratio |
61.0 |
% |
(5.4) |
pts |
55.6 |
% |
|||
|
|
|||||||||
|
Millions, Except Per Share Amounts and Percentages |
Reported results |
Brazos Yard |
Adjusted results |
||||||
|
|
(GAAP) |
Impairment |
(non-GAAP) |
||||||
|
For the Year Ended December 31, 2020 |
|||||||||
|
Operating expense |
$ |
11,699 |
$ |
(278) |
$ |
11,421 | |||
|
Operating income |
7,834 | 278 | 8,112 | ||||||
|
Income taxes |
1,631 | 69 | 1,700 | ||||||
|
Net income |
$ |
5,349 |
$ |
209 |
$ |
5,558 | |||
|
Diluted EPS |
$ |
7.88 |
$ |
0.31 |
$ |
8.19 | |||
|
Operating ratio |
59.9 |
% |
(1.4) |
pts |
58.5 |
% |
|||
|
As of December 31, 2020 |
|||||||||
|
Shareholders' equity |
$ |
16,958 |
$ |
209 |
$ |
17,167 | |||
*The above tables reconcile our results for the three-months and year ended December 31, 2020, and as of December 31, 2020, to adjust results that exclude the impact of certain items identified as affecting comparability. We use adjusted operating expense, adjusted operating income, adjusted income taxes, adjusted net income, adjusted diluted earnings per share (EPS), adjusted operating ratio, and adjusted shareholders’ equity, as applicable, among other measures, to evaluate our actual operating performance. We believe these non-GAAP financial measures provide valuable information regarding earnings and business trends by excluding specific items that we believe are not indicative of our ongoing operating results of our business, providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry. Since these are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, operating expense, operating income, income taxes, net income, diluted EPS, operating ratio, and shareholders’ equity as indicators of operating performance.
10