01—Abstract
Summary
Summary of the 10-K filed February 3, 2012. Cited figures are marked; the original filing is the authoritative source.
Union Pacific Corporation (UNP) reported a strong financial performance in 2011, marking its safest and most profitable year in its 150-year history.
The company achieved record earnings per share of $6.72a and a return on invested capital of 12.4%. This success was driven by a 15% increase in freight revenues to $18.5 billion, supported by volume growth across most commodity groups and improved pricing, despite facing challenges like economic uncertainty and adverse weather conditions. Key financial highlights include a 58% increase in the quarterly dividend and over $1.4 billion in share repurchases, reflecting a commitment to shareholder returns.
The company invested a record $3.2 billionb in its network to enhance safety, reliability, and support business growth. Looking ahead, Union Pacific anticipates continued growth opportunities driven by expanding international trade, domestic population growth, and the energy sector's increased reliance on rail. The company is also actively investing in Positive Train Control (PTC) technology, aiming for full implementation by the end of 2015, with an estimated cost of $2 billion.
02—Key points
Key Highlights
- Achieved record earnings per share of $6.72 in 2011.
- Increased freight revenues by 15% to $18.5 billion.
- Recorded a 58% increase in quarterly dividend and returned over $1.4 billion to shareholders via share repurchases.
- Invested a record $3.2 billion in capital expenditures to improve infrastructure and support growth.
- Maintained a strong safety record, with employee injuries at an all-time low.
- Experienced volume growth in most commodity groups, with significant increases in chemicals, industrial products, and automotive.
- Anticipates continued growth from international trade, energy sector expansion, and domestic demand.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 3, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $19.56B$16.96B | +15.3% |
| Operating Expenses | $13.83B$11.98B | +15.4% |
| Operating Income | $5.72B$4.98B | +14.9% |
| Interest Expense | $572.00M$602.00M | −5.0% |
| Net Income | $3.29B$2.78B | +18.4% |
| EPS (Basic) | $3.39$2.79 | +21.5% |
| EPS (Diluted) | $3.36$2.77 | +21.5% |
| Shares Outstanding (Basic) | 971.40M996.40M | −2.5% |
| Shares Outstanding (Diluted) | 979.60M1.01B | −2.6% |
05—Questions
Frequently Asked Questions
What were Union Pacific's primary financial achievements in 2011?
In 2011, Union Pacific achieved record earnings per share of $6.72 and a return on invested capital of 12.4%. Freight revenues grew by 15% to $18.5 billion. The company also increased its quarterly dividend by 58% and repurchased over $1.4 billion in shares, demonstrating a strong focus on shareholder returns.
How did Union Pacific address network capacity and operational efficiency?
Union Pacific invested a record $3.2 billion in its network in 2011, with over half dedicated to replacing and hardening infrastructure to enhance safety and reliability. Despite facing weather challenges that impacted train speed and terminal dwell time, the company reported record customer satisfaction ratings, indicating effective management of operational challenges and value delivery to customers.
What are Union Pacific's key growth drivers and outlook for the future?
Union Pacific sees significant growth potential in expanding international trade, the burgeoning energy sector (especially crude oil and natural gas from shale formations), and long-term demand from an increasing U.S. population. Its strategic position, including being the only railroad serving all six major gateways to Mexico, positions it well to benefit from increased North American trade.
What is Union Pacific's strategy regarding Positive Train Control (PTC)?
Union Pacific is actively investing in the development and implementation of Positive Train Control (PTC), a collision avoidance technology, in compliance with a federal mandate to have it installed by the end of 2015. The company estimated this would cost approximately $2 billion by 2015 and invested $335 million in 2012. They are continuing to test and evaluate the technology's effectiveness.
06—Continue