10-KPeriod: FY2011

UNION PACIFIC CORP Annual Report, Year Ended Dec 31, 2011

Filed February 3, 2012For Securities:UNP

Summary

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 $6.72 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 billion 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.

Financial Highlights

49 data points
Beta

Revenue

$19.56B

Net Income

$3.29B

16.8% Net Margin

EPS (Diluted)

$3.36

Total Assets

$45.10B

Cash & Equivalents

$1.22B

Free Cash Flow

$2.70B

Financial Statements
Beta
Revenue$19.56B
Operating Expenses$13.83B
Operating Income$5.72B
Interest Expense$572.00M
Net Income$3.29B
EPS (Basic)$3.39
EPS (Diluted)$3.36
Shares Outstanding (Basic)971.40M
Shares Outstanding (Diluted)979.60M

Key Highlights

  • 1Achieved record earnings per share of $6.72 in 2011.
  • 2Increased freight revenues by 15% to $18.5 billion.
  • 3Recorded a 58% increase in quarterly dividend and returned over $1.4 billion to shareholders via share repurchases.
  • 4Invested a record $3.2 billion in capital expenditures to improve infrastructure and support growth.
  • 5Maintained a strong safety record, with employee injuries at an all-time low.
  • 6Experienced volume growth in most commodity groups, with significant increases in chemicals, industrial products, and automotive.
  • 7Anticipates continued growth from international trade, energy sector expansion, and domestic demand.

Frequently Asked Questions

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.

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.

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.

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.