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) : July 21, 2005

 

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)		(I.R.S. 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

 

(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))

 

 

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Item 2.02 Results of Operations and Financial Condition

 

On July 21, 2005, Union Pacific Corporation issued a press release announcing its financial results for the quarter ended June 30, 2005. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report.

 

Item 9.01 Financial Statements and Exhibits

 

 

(c	)		Exhibits
			Exhibit 99.1		Press Release, July 21, 2005, announcing Union Pacific Corporation’s financial results for the second quarter of 2005.

 

 

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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: July 21, 2005

 

 

 

 

Exhibit 99.1

 

UNION PACIFIC SECOND QUARTER EARNINGS UP 47 PERCENT

 

FOR IMMEDIATE RELEASE:

 

OMAHA, Neb., July 21, 2005 – Union Pacific Corporation (NYSE: UNP) today reported second quarter 2005 net income of $233 million, or $.88 per diluted share. This is a 47 percent improvement compared to the second quarter of 2004 when the company reported net income of $158 million, or $.60 per diluted share. Operating income during the second quarter of 2005 was $468 million, up 30 percent from $359 million reported in the second quarter of 2004.

 

“We continue to see strong demand for our services and we are improving our ability to handle the increased volumes more efficiently,” said Dick Davidson, chairman and chief executive officer. “This is our first year-over-year operating income growth in six quarters. While we still have a lot of work to do, our progress is encouraging and we look forward to continuing this positive trend as we begin to see the benefits of our network management initiatives.”

 

Second Quarter Overview

 

•

Quarterly operating revenue was an all-time record $3.3 billion compared to $3.0 billion in the second quarter of 2004.

 

•

Commodity revenue set an all-time quarterly record, up 10 percent to $3.2 billion. This compares to $2.9 billion in the second quarter of 2004 and was driven by a 1 percent increase in volumes as well as higher fuel surcharge recoveries and improved yields.

 

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-2-

 

•

Second quarter 2005 operating income of $468 million was the highest reported since the fourth quarter of 2003.

 

•

The second quarter 2005 operating margin increased to 14 percent compared to 11.9 percent in 2004.

 

•

Two of the Railroad’s three key operating metrics, as reported to the Association of American Railroads, improved in the second quarter of 2005 versus the second quarter of 2004. Average terminal dwell time improved 11 percent from 30.9 hours to 27.4 hours and rail car inventory improved 2 percent to 318,434 cars. Average quarterly train speed fell slightly, from 21.3 mph to 21.2 mph comparing the second quarter of 2004 to 2005.

 

•

The Railroad’s average quarterly fuel price increased 44 percent versus the year ago quarter, from $1.16 per gallon in 2004 to $1.67 per gallon in the second quarter of 2005.

 

Second Quarter Railroad Commodity Revenue Summary versus 2004

 

•

Industrial Products up 19 percent

 

•

Agricultural up 16 percent

 

•

Intermodal up 10 percent

 

•

Chemicals up 7 percent

 

•

Energy up 5 percent

 

•

Automotive up 1 percent

 

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-3-

 

Looking Forward

 

“We are confident that the men and women of Union Pacific are taking the right steps to once again produce improving financial results for our shareholders and better service performance for our customers,” Davidson said. “Today our company has more business demand than we are able to fulfill – a situation that I haven’t seen during my 45-year career. We are encouraged by the changes we see in our day-to-day operations and firmly believe that the long-term future of this great Railroad has never been brighter.”

 

Union Pacific Corporation owns one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country and serves the fastest-growing U.S. population centers. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad offers competitive long-haul routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico, making it North America’s premier rail franchise.

 

Supplemental financial information is attached.

 

Additional information is available at our Web site: www.up.com. Our contact for investors is Jennifer Hamann at (402) 544-4227. Our media contact is Kathryn Blackwell at (402) 544-3753.

 

**********

 

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-4-

 

This press release and related materials may contain statements about the Corporation’s future that are not statements of historical fact. 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 include, without limitation, statements regarding: expectations as to continued or increasing demand for rail transportation in excess of supply; expectations as to the timing of completion and impact of ongoing track maintenance and restoration work being performed in the Southern Powder River Basin of Wyoming; expectations regarding operational improvements, including the effectiveness of network management initiatives that have been or will be implemented to improve system velocity, customer service and shareholder returns; expectations as to increased returns, cost savings, revenue growth and earnings; expectations regarding fuel price; the time by which certain objectives will be achieved, including expected improvements in velocity and implementation of network management initiatives; estimates of costs relating to environmental remediation and restoration; proposed new products and services; expectations that claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; and statements concerning projections, predictions, expectations, estimates or forecasts as to the Corporation’s and its subsidiaries’ business, financial and operational results, and future economic performance; and statements of 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 as to operational, service and network fluidity improvements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.

 

Important factors that 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 include, but are not limited to: whether the Corporation and its subsidiaries are fully successful in implementing their financial and operational initiatives, including those plans and management initiatives to improve system velocity and network performance or otherwise improve operations; industry competition, conditions, performance and consolidation; general legislative and regulatory developments, including possible enactment of initiatives to re-regulate the rail business; legislative, regulatory and legal developments involving taxation, including enactment of new federal or state income tax rates, revisions of controlling authority and the outcome of tax claims and litigation; changes in securities and capital markets; natural events such as severe weather, fire, floods and earthquakes; the effects of adverse general economic conditions, both within the United States and globally; any adverse economic or operational repercussions from terrorist activities and any governmental response thereto; war or risk of war; changes in fuel prices; changes in labor costs; labor stoppages; and the outcome of claims and litigation, including those related to environmental contamination, personal injuries, and occupational illnesses arising from hearing loss, repetitive motion and exposure to asbestos and diesel fumes.

 

Forward-looking statements speak only as of 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 the website is not, and should not be construed to be, incorporated by reference herein.

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UNION PACIFIC CORPORATION

STATEMENTS OF CONSOLIDATED INCOME

Periods Ended June 30

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

 

		Second Quarter											Year-to-Date
		2005				2004				Pct Chg			2005				2004				Pct Chg
Operating Revenues		$	3,344			$	3,029			10			$	6,496			$	5,922			10
Operating Expenses
Salaries, Wages, and Employee Benefits			1,075				1,048			3				2,174				2,059			6
Equipment and Other Rents			340				362			(6	)			693				689			1
Depreciation			292				277			5				581				551			5
Fuel and Utilities			597				435			37				1,136				824			38
Materials and Supplies			128				114			12				263				237			11
Purchased Services and Other			444				434			2				868				889			(2	)
Total Operating Expenses			2,876				2,670			8				5,715				5,249			9
Operating Income			468				359			30				781				673			16
Other Income—Net			29				8			F				49				36			F
Interest Expense			(128	)			(130	)		(2	)			(260	)			(265	)		(2	)
Income Before Income Taxes			369				237			56				570				444			28
Income Tax Expense			(136	)			(79	)		72				(209	)			(121	)		73
Net Income		$	233			$	158			47			$	361			$	323			12
Basic Earnings Per Share		$	0.89			$	0.61			46			$	1.38			$	1.25			10
Diluted Earnings Per Share		$	0.88			$	0.60			47			$	1.36			$	1.23			11

 

July 21, 2005

(1)

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UNION PACIFIC RAILROAD

 

REVENUE DETAIL

 

Periods Ended June 30

 

(Unaudited)

 

		Second Quarter									Year-to-Date
		2005			2004			Pct Chg			2005			2004			Pct Chg
Commodity Revenue (000):
Agricultural		$	463,261		$	398,494		16			$	911,163		$	809,744		13
Automotive			329,166			326,095		1				622,271			622,896		—
Chemicals			458,880			428,840		7				899,899			838,948		7
Energy			629,437			596,694		5				1,297,220			1,183,158		10
Industrial Products			718,977			606,573		19				1,349,173			1,169,289		15
Intermodal			596,755			543,966		10				1,120,682			1,054,031		6
Total		$	3,196,476		$	2,900,662		10			$	6,200,408		$	5,678,066		9
Revenue Carloads:
Agricultural			215,257			214,992		—				431,012			445,636		(3	)
Automotive			210,321			216,983		(3	)			402,638			420,193		(4	)
Chemicals			235,889			238,322		(1	)			463,631			462,081		—
Energy			525,470			539,508		(3	)			1,099,457			1,080,651		2
Industrial Products			397,418			387,396		3				755,978			751,870		1
Intermodal			806,633			770,328		5				1,538,476			1,495,179		3
Total			2,390,988			2,367,529		1				4,691,192			4,655,610		1
Average Revenue per Car:
Agricultural		$	2,152		$	1,854		16			$	2,114		$	1,817		16
Automotive			1,565			1,503		4				1,545			1,482		4
Chemicals			1,945			1,799		8				1,941			1,816		7
Energy			1,198			1,106		8				1,180			1,095		8
Industrial Products			1,809			1,566		16				1,785			1,555		15
Intermodal			740			706		5				728			705		3
Total		$	1,337		$	1,225		9			$	1,322		$	1,220		8

 

July 21, 2005		(2)

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

 

As of June 30, 2005 and December 31, 2004

 

(Dollars in Millions)

 

(Unaudited)

 

		June 30, 2005			December 31, 2004
Assets:
Cash and Temporary Investments		$	164		$	977
Other Current Assets			1,697			1,313
Investments			786			767
Properties—Net			31,546			31,014
Other Assets			916			518
Total		$	35,109		$	34,589
Liabilities and Shareholders’ Equity:
Current Portion of Long Term Debt		$	139		$	150
Other Current Liabilities			2,646			2,366
Long Term Debt			7,565			7,981
Deferred Income Taxes			9,521			9,180
Other Long Term Liabilities			2,253			2,257
Common Shareholders’ Equity			12,985			12,655
Total		$	35,109		$	34,589

 

July 21, 2005 (3)

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED CASH FLOWS

 

For the Six Months Ended June 30

 

(Dollars in Millions)

 

(Unaudited)

 

 

		2005				2004
Operating Activities:
Net Income		$	361			$	323
Depreciation			581				551
Deferred Income Taxes			155				248
Other			40				(172	)
Cash Provided by Operating Activities			1,137				950
Investing Activities:
Capital Investments			(1,078	)			(857	)
Other			(388	)			(54	)
Cash Used in Investing Activities			(1,466	)			(911	)
Financing Activities:
Dividends Paid			(156	)			(155	)
Debt Repaid			(639	)			(394	)
Financings and Other—Net			311				640
Cash (Used in) Provided by Financing Activities			(484	)			91
Net Change in Cash and Temporary Investments		$	(813	)		$	130
Non-Cash Capital Lease Financings		$	—			$	—

 

July 21, 2005 (4)

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APPENDIX

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UNION PACIFIC CORPORATION

 

OPERATING AND FINANCIAL STATISTICS

 

Periods Ended June 30

 

(Unaudited)

 

		Second Quarter													Year-to-Date
		2005				2004				Pct Chg					2005				2004				Pct Chg
Operating Statistics:
Revenue Carloads (Thousands)			2,391				2,368			1						4,691				4,656			1
Revenue Ton-Miles (Billions)			136.8				136.1			1						274.3				270.7			1
Gross Ton-Miles (GTMs) (Billions)			260.0				260.6			—						518.4				512.5			1
Operating Margin			14.0	%			11.9	%		2.1			pt			12.0	%			11.4	%		0.6			pt
Operating Ratio			86.0	%			88.1	%		(2.1	)		pt			88.0	%			88.6	%		(0.6	)		pt
Average Employees			49,785				48,383			3						49,441				47,610			4
GTMs (Millions) per Average Employee			5.22				5.39			(3	)					10.49				10.76			(3	)
Average Fuel Price Per Gallon		$	1.67			$	1.16			44					$	1.56			$	1.09			43
Fuel Consumed in Gallons (Millions)			335				346			(3	)					679				694			(2	)
Fuel Consumption Rate (Gal per 000 GTM)			1.29				1.33			(3	)					1.31				1.35			(3	)
AAR Reported Performance Measures:
Average Train Speed (Miles per Hour)			21.2				21.3			—						21.2				21.6			(2	)
Average Terminal Dwell Time (Hours)			27.4				30.9			(11	)					28.4				30.4			(7	)
Rail Car Inventory			318,434				325,361			(2	)					319,972				323,361			(1	)
Financial:
Average Basic Shares Outstanding (Millions)			262.8				258.9			2						262.1				258.8			1
Average Diluted Shares Outstanding (Millions)			265.6				261.6			2						265.0				262.1			1
Effective Tax Rate			36.9	%			33.3	%		3.6			pt			36.7	%			27.3	%		9.4			pt
Debt to Capital (a)																37.2	%			39.1	%		(1.9	)		pt
Lease Adjusted Debt to Capital (b)																43.5	%			45.1	%		(1.6	)		pt
Free Cash Flow (After Dividends) (Millions) (c)															$	(485	)		$	(116	)		U

 

(a)	Debt to capital is computed as follows: total debt divided by total debt plus equity. 2004 percentages are as of December 31, 2004.

 

(b)	Lease adjusted debt to capital is computed as follows: total debt plus net present value of operating leases divided by total debt plus equity plus net present value of operating leases. 2004 percentages are as of December 31, 2004.

 

(c)

Free cash flow is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance and measures our ability to generate cash without incurring additional external financings. The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow:

 

		Year-to-Date
		2005				2004
Cash Provided by Operating Activities		$	1,137			$	950
Cash Used in Investing Activities			(1,466	)			(911	)
Dividends Paid			(156	)			(155	)
Non-Cash Financings			—				—
Free Cash Flow		$	(485	)		$	(116	)

 

July 21, 2005		(A-1)

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UNION PACIFIC CORPORATION

 

STATEMENTS OF CONSOLIDATED INCOME

 

By Quarter and Year-to-Date 2005

 

(Dollars in Millions, Except Per Share Amounts)

 

(Unaudited)

 

		Period Ended:								Year-to-Date June 30
		March 31				June 30
Operating Revenues		$	3,152			$	3,344			$	6,496
Operating Expenses
Salaries, Wages, and Employee Benefits			1,099				1,075				2,174
Equipment and Other Rents			353				340				693
Depreciation			289				292				581
Fuel and Utilities			539				597				1,136
Materials and Supplies			135				128				263
Purchased Services and Other			424				444				868
Total Operating Expenses			2,839				2,876				5,715
Operating Income			313				468				781
Other Income—Net			20				29				49
Interest Expense			(132	)			(128	)			(260	)
Income Before Income Taxes			201				369				570
Income Tax Expense			(73	)			(136	)			(209	)
Net Income		$	128			$	233			$	361
Basic Earnings Per Share		$	0.49			$	0.89			$	1.38
Diluted Earnings Per Share		$	0.48			$	0.88			$	1.36

 

July 21, 2005 (A-2)

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UNION PACIFIC RAILROAD

 

REVENUE DETAIL

 

By Quarter and Year-to-Date 2005

 

(Unaudited)

 

		Period Ended						Year-to-Date June 30
		March 31			June 30
Commodity Revenue (000):
Agricultural		$	447,902		$	463,261		$	911,163
Automotive			293,105			329,166			622,271
Chemicals			441,019			458,880			899,899
Energy			667,783			629,437			1,297,220
Industrial Products			630,196			718,977			1,349,173
Intermodal			523,927			596,755			1,120,682
Total		$	3,003,932		$	3,196,476		$	6,200,408
Revenue Carloads:
Agricultural			215,755			215,257			431,012
Automotive			192,317			210,321			402,638
Chemicals			227,742			235,889			463,631
Energy			573,987			525,470			1,099,457
Industrial Products			358,560			397,418			755,978
Intermodal			731,843			806,633			1,538,476
Total			2,300,204			2,390,988			4,691,192
Average Revenue per Car:
Agricultural		$	2,076		$	2,152		$	2,114
Automotive			1,524			1,565			1,545
Chemicals			1,936			1,945			1,941
Energy			1,163			1,198			1,180
Industrial Products			1,758			1,809			1,785
Intermodal			716			740			728
Total		$	1,306		$	1,337		$	1,322

 

 

July 21, 2005 (A-3)