01—Abstract
Summary
Summary of the 10-K filed February 7, 2014. Cited figures are marked; the original filing is the authoritative source.
Union Pacific Corporation (UNP) demonstrated strong financial performance in 2013, achieving record earnings per share of $9.42a and an all-time best operating ratio of 66.1%.
This was driven by core pricing gains and ongoing efficiency improvements across its diversified freight business, which includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products, and Intermodal. Despite headwinds in the coal market and drought impacts on grain shipments, growth in automotive, chemicals, and industrial products, along with shale-related movements and domestic intermodal traffic, compensated for the declines. The company returned significant value to shareholders through a 19%b increase in dividends and a 50% increase in share repurchases compared to 2012.
UNP also invested $3.6 billionc in its network to enhance safety and reliability, including progress on the federally mandated Positive Train Control (PTC) program. Looking ahead, Union Pacific anticipates continued growth opportunities driven by population increases, resurgent chemical industries, and favorable cross-border trade with Mexico, while maintaining a focus on safety and service excellence.
02—Key points
Key Highlights
- Record earnings per share of $9.42 in 2013.
- Achieved an all-time best operating ratio of 66.1% in 2013.
- Freight revenues grew 5% to $20.7 billion, driven by price increases and favorable business mix shifts, offsetting flat volumes.
- Shareholder returns were strong, with a 19% increase in dividends and a 50% increase in share repurchases year-over-year.
- Invested $3.6 billion in capital expenditures for infrastructure, safety, and growth initiatives, including $419 million towards Positive Train Control (PTC).
- The company is well-positioned to benefit from growth in automotive, chemicals, industrial products, and cross-border trade with Mexico.
- Maintains a strong liquidity position with $1.8 billion in available credit facilities and no outstanding borrowings on its revolving credit facility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 7, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $21.96B$20.93B | +5.0% |
| Operating Expenses | $14.52B$14.18B | +2.4% |
| Operating Income | $7.45B$6.75B | +10.4% |
| Interest Expense | $526.00M$535.00M | −1.7% |
| Net Income | $4.39B$3.94B | +11.3% |
| EPS (Basic) | $4.74$4.17 | +13.7% |
| EPS (Diluted) | $4.71$4.14 | +13.8% |
| Shares Outstanding (Basic) | 926.50M946.20M | −2.1% |
| Shares Outstanding (Diluted) | 931.50M952.90M | −2.2% |
05—Questions
Frequently Asked Questions
What was Union Pacific's overall financial performance in 2013?
Union Pacific reported record earnings per share of $9.42 and achieved its best-ever operating ratio of 66.1% in 2013. Operating income increased by 10% to $7.4 billion, driven by core pricing gains and operational efficiencies.
How did different commodity groups perform in 2013?
Five of the six commodity groups experienced revenue growth, with automotive, chemicals, industrial products, and shale-related movements showing strength. Coal and agricultural product volumes declined, but pricing and mix shifts helped offset some of these decreases.
What is Union Pacific's strategy regarding capital investments and shareholder returns?
The company invested $3.6 billion in capital expenditures in 2013, focusing on infrastructure replacement, safety enhancements, and growth initiatives, including significant progress on the Positive Train Control (PTC) system. Union Pacific also returned substantial value to shareholders through a 19% increase in dividends and a 50% increase in share repurchases compared to 2012.
What are the key risks Union Pacific faces?
Key risks include fluctuating demand for services, transportation of hazardous materials, significant governmental regulation, general economic conditions, competition from other transportation modes, severe weather events, reliance on technology, potential litigation, environmental regulations, climate change impacts, labor disputes, and reliance on key suppliers.
06—Continue