OMAHA, Neb., July 18, 2019 /PRNewswire/ --
Second Quarter Results
- Diluted earnings per share of $2.22 increased 12 percent.
- Operating income totaled $2.3
billion, up 8 percent.
- Operating ratio of 59.6 percent, improved 3.4
points.
Union Pacific Corporation (NYSE: UNP) today reported 2019 second
quarter net income of $1.6 billion,
or $2.22 per diluted share. This
compares to $1.5 billion, or
$1.98 per diluted share, in the
second quarter 2018.
"We delivered record second quarter financial results driven by
exceptional operating performance, including an all-time best
quarterly operating ratio of 59.6 percent," said Lance Fritz, Union Pacific chairman, president
and chief executive officer. "These results are a testament to the
dedication of the men and women of Union Pacific, who are embracing
Unified Plan 2020 and who worked closely with our customers to
overcome numerous weather challenges."
Second Quarter Summary
Operating revenue of $5.6 billion
was down 1 percent in second quarter 2019, compared to second
quarter 2018. Second quarter business volumes, as measured by total
revenue carloads, decreased 4 percent compared to 2018. Growth in
industrial volumes were more than offset by flat agricultural
products shipments as well as declines in energy and premium.
In addition:
- Quarterly freight revenue declined 2 percent, compared to
second quarter 2018, as core pricing gains were offset by lower
volumes.
- Union Pacific's all-time best 59.6 percent operating ratio
improved 3.4 points, compared to second quarter 2018.
- The $2.21 per gallon average
quarterly diesel fuel price in the second quarter 2019 was 4
percent lower than second quarter 2018.
- Union Pacific recognized a payroll tax refund of $32 million, along with associated interest
income of $3 million in second
quarter 2019.
- Quarterly freight car velocity was 195 daily miles per car, a 4
percent improvement compared to the second quarter 2018.
- Union Pacific's first half reportable personal injury rate was
0.87 per 200,000 employee-hours, compared to 0.76 in first half
2018.
- The Company repurchased 3.7 million shares in the second
quarter 2019 at an aggregate cost of $639
million.
Summary of Second Quarter Freight Revenues
- Agricultural Products up 4 percent
- Industrial up 4 percent
- Premium down 2 percent
- Energy down 13 percent
2019 Outlook
"We look forward to building on the momentum from Unified Plan
2020 and providing a consistent, reliable service product for our
customers," Fritz said. "We remain focused on driving increased
shareholder returns by appropriately investing capital in the
railroad and returning excess cash to our shareholders."
Second Quarter 2019 Earnings Conference Call
Union Pacific will host its second quarter 2019 earnings release
presentation over live webcast and via teleconference on
Thursday, July 18, 2019 at
8:45 a.m. Eastern Time. The
presentation will be webcast live over the internet on Union
Pacific's website at www.up.com/investor. Alternatively, the
webcast can be accessed directly through the following link.
Participants may join the conference call by dialing 877/407-8293
(or for international participants, 201/689-8349).
ABOUT UNION PACIFIC
Union Pacific Railroad is the principal operating company of
Union Pacific Corporation (NYSE: UNP). One of America's most
recognized companies, Union Pacific Railroad connects 23 states in
the western two-thirds of the country by rail, providing a critical
link in the global supply chain. The railroad's diversified
business mix is classified into its Agricultural Products, Energy,
Industrial and Premium business groups. Union Pacific serves many
of the fastest-growing U.S. population centers, operates from all
major West Coast and Gulf Coast ports to eastern gateways, connects
with Canada's rail systems and is
the only railroad serving all six major Mexico gateways. Union Pacific provides value
to its roughly 10,000 customers by delivering products in a safe,
reliable, fuel-efficient and environmentally responsible
manner.
Supplemental financial information is attached.
This presentation 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
and its ability to improve network performance and customer
service. 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
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 2018, which was filed with the SEC on February 8, 2019. 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.
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Condensed
Consolidated Statements of Income (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions,
Except Per Share Amounts and Percentages,
|
2nd
Quarter
|
|
Year-to-Date
|
For the
Periods Ended June 30,
|
2019
|
2018
|
%
|
|
|
2019
|
2018
|
%
|
|
Operating
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight
revenues
|
$
|
5,236
|
$
|
5,317
|
(2)
|
%
|
|
$
|
10,246
|
$
|
10,439
|
(2)
|
%
|
Other
|
|
360
|
|
355
|
1
|
|
|
|
734
|
|
708
|
4
|
|
Total operating
revenues
|
|
5,596
|
|
5,672
|
(1)
|
|
|
|
10,980
|
|
11,147
|
(1)
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
1,145
|
|
1,241
|
(8)
|
|
|
|
2,350
|
|
2,514
|
(7)
|
|
Purchased services and
materials
|
|
573
|
|
630
|
(9)
|
|
|
|
1,149
|
|
1,229
|
(7)
|
|
Depreciation
|
|
551
|
|
546
|
1
|
|
|
|
1,100
|
|
1,089
|
1
|
|
Fuel
|
|
560
|
|
643
|
(13)
|
|
|
|
1,091
|
|
1,232
|
(11)
|
|
Equipment and other
rents
|
|
260
|
|
265
|
(2)
|
|
|
|
518
|
|
531
|
(2)
|
|
Other
|
|
247
|
|
248
|
-
|
|
|
|
552
|
|
514
|
7
|
|
Total operating
expenses
|
|
3,336
|
|
3,573
|
(7)
|
|
|
|
6,760
|
|
7,109
|
(5)
|
|
Operating
Income
|
|
2,260
|
|
2,099
|
8
|
|
|
|
4,220
|
|
4,038
|
5
|
|
Other
income
|
|
57
|
|
42
|
36
|
|
|
|
134
|
|
-
|
F
|
|
Interest
expense
|
|
(259)
|
|
(203)
|
28
|
|
|
|
(506)
|
|
(389)
|
30
|
|
Income before
income taxes
|
|
2,058
|
|
1,938
|
6
|
|
|
|
3,848
|
|
3,649
|
5
|
|
Income
taxes
|
|
(488)
|
|
(429)
|
14
|
|
|
|
(887)
|
|
(830)
|
7
|
|
Net
Income
|
$
|
1,570
|
$
|
1,509
|
4
|
%
|
|
$
|
2,961
|
$
|
2,819
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share and
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
2.23
|
$
|
1.98
|
13
|
%
|
|
$
|
4.16
|
$
|
3.67
|
13
|
%
|
Earnings per share -
diluted
|
$
|
2.22
|
$
|
1.98
|
12
|
|
|
$
|
4.15
|
$
|
3.65
|
14
|
|
Weighted average
number of shares - basic
|
|
705.5
|
|
760.5
|
(7)
|
|
|
|
711.2
|
|
768.4
|
(7)
|
|
Weighted average
number of shares - diluted
|
|
708.0
|
|
763.7
|
(7)
|
|
|
|
713.8
|
|
771.6
|
(7)
|
|
Dividends declared per
share
|
$
|
0.88
|
$
|
0.73
|
21
|
|
|
$
|
1.76
|
$
|
1.46
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Ratio
|
|
59.6%
|
|
63.0%
|
(3.4)
|
pts
|
|
|
61.6%
|
|
63.8%
|
(2.2)
|
pts
|
Effective
Tax Rate
|
|
23.7%
|
|
22.1%
|
1.6
|
pts
|
|
|
23.1%
|
|
22.7%
|
0.4
|
pts
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Freight Revenues
Statistics (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Year-to-Date
|
For the
Periods Ended June 30,
|
|
2019
|
|
2018
|
%
|
|
|
2019
|
|
2018
|
%
|
Freight
Revenues (Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural
Products
|
$
|
1,155
|
$
|
1,114
|
4
|
%
|
|
$
|
2,222
|
$
|
2,212
|
-
|
%
|
Energy
|
|
966
|
|
1,111
|
(13)
|
|
|
|
1,948
|
|
2,284
|
(15)
|
|
Industrial
|
|
1,494
|
|
1,437
|
4
|
|
|
|
2,904
|
|
2,777
|
5
|
|
Premium
|
|
1,621
|
|
1,655
|
(2)
|
|
|
|
3,172
|
|
3,166
|
-
|
|
Total
|
$
|
5,236
|
$
|
5,317
|
(2)
|
%
|
|
$
|
10,246
|
$
|
10,439
|
(2)
|
%
|
Revenue
Carloads (Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural
Products
|
|
284
|
|
285
|
-
|
%
|
|
|
543
|
|
564
|
(4)
|
%
|
Energy
|
|
351
|
|
387
|
(9)
|
|
|
|
709
|
|
806
|
(12)
|
|
Industrial
|
|
460
|
|
452
|
2
|
|
|
|
889
|
|
863
|
3
|
|
Premium
[a]
|
|
1,042
|
|
1,101
|
(5)
|
|
|
|
2,083
|
|
2,117
|
(2)
|
|
Total
|
|
2,137
|
|
2,225
|
(4)
|
%
|
|
|
4,224
|
|
4,350
|
(3)
|
%
|
Average
Revenue per Car
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural
Products
|
$
|
4,057
|
$
|
3,903
|
4
|
%
|
|
$
|
4,088
|
$
|
3,922
|
4
|
%
|
Energy
|
|
2,753
|
|
2,874
|
(4)
|
|
|
|
2,746
|
|
2,835
|
(3)
|
|
Industrial
|
|
3,242
|
|
3,178
|
2
|
|
|
|
3,266
|
|
3,218
|
1
|
|
Premium
|
|
1,557
|
|
1,503
|
4
|
|
|
|
1,523
|
|
1,495
|
2
|
|
Average
|
$
|
2,450
|
$
|
2,389
|
3
|
%
|
|
$
|
2,425
|
$
|
2,400
|
1
|
%
|
|
|
[a]
|
For intermodal
shipments each container or trailer equals one carload.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Condensed
Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
|
|
|
|
Jun.
30,
|
Dec.
31,
|
Millions,
Except Percentages
|
2019
|
2018
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,049
|
$
|
1,273
|
Short-term
investments
|
|
60
|
|
60
|
Other current
assets
|
|
2,977
|
|
2,830
|
Investments
|
|
1,989
|
|
1,912
|
Net
properties
|
|
53,115
|
|
52,679
|
Operating lease
assets
|
|
2,076
|
|
-
|
Other
assets
|
|
442
|
|
393
|
Total
assets
|
$
|
61,708
|
$
|
59,147
|
|
|
|
|
|
Liabilities
and Common Shareholders' Equity
|
|
|
|
|
Debt due within one
year
|
$
|
2,297
|
$
|
1,466
|
Other current
liabilities
|
|
3,368
|
|
3,160
|
Debt due after one
year
|
|
22,955
|
|
20,925
|
Operating lease
liabilities
|
|
1,612
|
|
-
|
Deferred income
taxes
|
|
11,574
|
|
11,302
|
Other long-term
liabilities
|
|
1,731
|
|
1,871
|
Total
liabilities
|
|
43,537
|
|
38,724
|
Total common
shareholders' equity
|
|
18,171
|
|
20,423
|
Total
liabilities and common shareholders' equity
|
$
|
61,708
|
$
|
59,147
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Condensed
Consolidated Statements of Cash Flows (unaudited)
|
|
|
|
|
|
Millions,
|
Year-to-Date
|
For the
Periods Ended June 30,
|
2019
|
2018
|
Operating
Activities
|
|
|
|
|
Net income
|
$
|
2,961
|
$
|
2,819
|
Depreciation
|
|
1,100
|
|
1,089
|
Deferred income
taxes
|
|
209
|
|
204
|
Other - net
|
|
(370)
|
|
(79)
|
Cash provided
by operating activities
|
|
3,900
|
|
4,033
|
Investing
Activities
|
|
|
|
|
Capital
investments
|
|
(1,560)
|
|
(1,614)
|
Maturities of
short-term investments
|
|
105
|
|
60
|
Purchases of
short-term investments
|
|
(100)
|
|
(60)
|
Other - net
|
|
(55)
|
|
(11)
|
Cash used in
investing activities
|
|
(1,610)
|
|
(1,625)
|
Financing
Activities
|
|
|
|
|
Common share
repurchases
|
|
(3,629)
|
|
(5,973)
|
Debt issued
|
|
2,992
|
|
6,892
|
Dividends
paid
|
|
(1,248)
|
|
(1,125)
|
Debt repaid
|
|
(604)
|
|
(1,295)
|
Accelerated share
repurchase programs pending final settlement
|
|
(500)
|
|
(720)
|
Net issuance of
commercial paper
|
|
471
|
|
196
|
Other - net
|
|
(29)
|
|
(54)
|
Cash used in
financing activities
|
|
(2,547)
|
|
(2,079)
|
Net Change
in Cash, Cash Equivalents and Restricted Cash
|
|
(257)
|
|
329
|
Cash, cash
equivalents, and restricted cash at beginning of year
|
|
1,328
|
|
1,275
|
Cash, Cash
Equivalents, and Restricted Cash at End of Period
|
$
|
1,071
|
$
|
1,604
|
Free Cash
Flow*
|
|
|
|
|
Cash provided by
operating activities
|
$
|
3,900
|
$
|
4,033
|
Cash used in investing
activities
|
|
(1,610)
|
|
(1,625)
|
Dividends
paid
|
|
(1,248)
|
|
(1,125)
|
Free cash
flow
|
$
|
1,042
|
$
|
1,283
|
|
|
*
|
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.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Operating and
Performance Statistics (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
Year-to-Date
|
For the
Periods Ended June 30,
|
2019
|
|
2018
|
%
|
|
|
2019
|
|
2018
|
%
|
|
Operating/Performance
Statistics
|
|
|
|
|
|
|
|
|
|
|
|
Freight car velocity
(daily miles per car)
|
195
|
|
188
|
4
|
%
|
|
191
|
|
181
|
6
|
%
|
Average train speed
(miles per hour)*
|
23.1
|
|
24.7
|
(6)
|
|
|
23.2
|
|
24.8
|
(6)
|
|
Average terminal dwell
time (hours)*
|
25.5
|
|
29.5
|
(14)
|
|
|
26.0
|
|
31.2
|
(17)
|
|
Locomotive
productivity (GTMs per horsepower day)
|
121
|
|
102
|
19
|
|
|
116
|
|
103
|
13
|
|
Gross ton-miles (GTMs)
(millions)
|
220,009
|
|
230,938
|
(5)
|
|
|
430,328
|
|
457,867
|
(6)
|
|
Workforce productivity
(car miles per employee)
|
866
|
|
836
|
4
|
|
|
839
|
|
831
|
1
|
|
Employees
(average)
|
38,657
|
|
42,114
|
(8)
|
|
|
39,355
|
|
41,925
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Locomotive
Fuel Statistics
|
|
|
|
|
|
|
|
|
|
|
|
Average fuel price per
gallon consumed
|
$
2.21
|
|
$ 2.30
|
(4)
|
%
|
|
$
2.14
|
|
$ 2.22
|
(4)
|
%
|
Fuel consumed in
gallons (millions)
|
245
|
|
270
|
(9)
|
|
|
493
|
|
537
|
(8)
|
|
Fuel consumption
rate**
|
1.112
|
|
1.170
|
(5)
|
|
|
1.146
|
|
1.173
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Ton-Miles (Millions)
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural
Products
|
25,218
|
|
25,908
|
(3)
|
%
|
|
48,804
|
|
51,081
|
(4)
|
%
|
Energy
|
34,000
|
|
40,002
|
(15)
|
|
|
69,215
|
|
83,964
|
(18)
|
|
Industrial
|
25,536
|
|
25,750
|
(1)
|
|
|
49,854
|
|
50,040
|
-
|
|
Premium
|
23,990
|
|
25,976
|
(8)
|
|
|
47,521
|
|
49,951
|
(5)
|
|
Total
|
108,744
|
|
117,636
|
(8)
|
%
|
|
215,394
|
|
235,036
|
(8)
|
%
|
|
|
*
|
AAR reported
performance measures.
|
|
|
**
|
Fuel consumption is
computed as follows: gallons of fuel consumed divided by gross
ton-miles in thousands.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Condensed
Consolidated Statements of Income (unaudited)
|
|
|
|
|
|
|
|
|
2019
|
Millions,
Except Per Share Amounts and Percentages,
|
1st
Qtr
|
2nd
Qtr
|
Year-to-Date
|
Operating
Revenues
|
|
|
|
|
|
|
Freight
revenues
|
$
|
5,010
|
$
|
5,236
|
$
|
10,246
|
Other
revenues
|
|
374
|
|
360
|
|
734
|
Total operating
revenues
|
|
5,384
|
|
5,596
|
|
10,980
|
Operating
Expenses
|
|
|
|
|
|
|
Compensation and
benefits
|
|
1,205
|
|
1,145
|
|
2,350
|
Purchased services and
materials
|
|
576
|
|
573
|
|
1,149
|
Depreciation
|
|
549
|
|
551
|
|
1,100
|
Fuel
|
|
531
|
|
560
|
|
1,091
|
Equipment and other
rents
|
|
258
|
|
260
|
|
518
|
Other
|
|
305
|
|
247
|
|
552
|
Total operating
expenses
|
|
3,424
|
|
3,336
|
|
6,760
|
Operating
Income
|
|
1,960
|
|
2,260
|
|
4,220
|
Other
income
|
|
77
|
|
57
|
|
134
|
Interest
expense
|
|
(247)
|
|
(259)
|
|
(506)
|
Income before
income taxes
|
|
1,790
|
|
2,058
|
|
3,848
|
Income
taxes
|
|
(399)
|
|
(488)
|
|
(887)
|
Net
Income
|
$
|
1,391
|
$
|
1,570
|
$
|
2,961
|
|
|
|
|
|
|
|
Share and
Per Share
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
1.94
|
$
|
2.23
|
$
|
4.16
|
Earnings per share -
diluted
|
$
|
1.93
|
$
|
2.22
|
$
|
4.15
|
Weighted average
number of shares - basic
|
|
716.8
|
|
705.5
|
|
711.2
|
Weighted average
number of shares - diluted
|
|
719.5
|
|
708.0
|
|
713.8
|
Dividends declared per
share
|
$
|
0.88
|
$
|
0.88
|
$
|
1.76
|
|
|
|
|
|
|
|
Operating
Ratio
|
|
63.6%
|
|
59.6%
|
|
61.6%
|
Effective
Tax Rate
|
|
22.3%
|
|
23.7%
|
|
23.1%
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Freight Revenues
Statistics (unaudited)
|
|
|
|
|
|
|
|
|
2019
|
|
1st
Qtr
|
2nd
Qtr
|
Year-to-Date
|
Freight
Revenues (Millions)
|
|
|
|
|
|
|
Agricultural
Products
|
$
|
1,067
|
$
|
1,155
|
$
|
2,222
|
Energy
|
|
982
|
|
966
|
|
1,948
|
Industrial
|
|
1,410
|
|
1,494
|
|
2,904
|
Premium
|
|
1,551
|
|
1,621
|
|
3,172
|
Total
|
$
|
5,010
|
$
|
5,236
|
$
|
10,246
|
Revenue
Carloads (Thousands)
|
|
|
|
|
|
|
Agricultural
Products
|
|
259
|
|
284
|
|
543
|
Energy
|
|
358
|
|
351
|
|
709
|
Industrial
|
|
429
|
|
460
|
|
889
|
Premium
[a]
|
|
1,041
|
|
1,042
|
|
2,083
|
Total
|
|
2,087
|
|
2,137
|
|
4,224
|
Average
Revenue per Car
|
|
|
|
|
|
|
Agricultural
Products
|
$
|
4,123
|
$
|
4,057
|
$
|
4,088
|
Energy
|
|
2,740
|
|
2,753
|
|
2,746
|
Industrial
|
|
3,292
|
|
3,242
|
|
3,266
|
Premium
|
|
1,489
|
|
1,557
|
|
1,523
|
Average
|
$
|
2,401
|
$
|
2,450
|
$
|
2,425
|
|
|
[a]
|
For intermodal
shipments each container or trailer equals one carload.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Non-GAAP Measures
Reconciliation to GAAP
|
|
Adjusted Debt /
Adjusted EBITDA*
|
Millions, Except
Ratios
|
Jun.
30,
|
Dec.
31,
|
for the Trailing
Twelve Months Ended [a]
|
2019
|
2018
|
Net
income
|
$
|
6,108
|
$
|
5,966
|
Less:
|
|
|
|
|
Other
income
|
|
228
|
|
94
|
Add:
|
|
|
|
|
Income tax
expense
|
|
1,832
|
|
1,775
|
Depreciation
|
|
2,202
|
|
2,191
|
Interest
expense
|
|
987
|
|
870
|
EBITDA
|
$
|
10,901
|
$
|
10,708
|
Interest on operating lease
liabilities**
|
|
76
|
|
84
|
Adjusted EBITDA
(a)
|
$
|
10,977
|
$
|
10,792
|
Debt
|
$
|
25,252
|
$
|
22,391
|
Operating lease
liabilities***
|
|
2,054
|
|
2,271
|
Unfunded
pension and OPEB, net of taxes of $108 and $135
|
|
359
|
|
456
|
Adjusted debt
(b)
|
$
|
27,665
|
$
|
25,118
|
Adjusted debt /
Adjusted EBITDA (b/a)
|
|
2.5
|
|
2.3
|
|
|
[a]
|
The trailing twelve
months income statement information ended June 30, 2019 is
recalculated by taking the twelve months ended December 31, 2018,
subtracting the six months ended June 30, 2018, and adding the six
months ended June 30, 2019.
|
|
|
*
|
Total debt plus
operating lease liabilities plus after-tax unfunded pension and
OPEB obligation divided by net income less other income plus income
tax expense, depreciation, interest expense, and interest on
operating lease liabilities. Adjusted debt to adjusted EBITDA
(earnings before interest, taxes, depreciation, amortization, and
interest on operating lease liabilities) is considered a non-GAAP
financial measure 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 this measure is 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 should be considered in addition to, rather than as a
substitute for, net income. The table above provides
reconciliations from net income to adjusted debt to adjusted
EBITDA. At both June 30, 2019 and December 31, 2018, the
incremental borrowing rate on operating lease liabilities 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.
|
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SOURCE Union Pacific Corporation