Union Pacific Corp. (UNP, Financial) filed Quarterly Report for the period ended 2010-06-30.
Union Pacific Corp. has a market cap of $36.63 billion; its shares were traded at around $72.4 with a P/E ratio of 18.6 and P/S ratio of 2.5. The dividend yield of Union Pacific Corp. stocks is 1.8%. Union Pacific Corp. had an annual average earning growth of 3.3% over the past 10 years.UNP is in the portfolios of David Williams of Columbia Value and Restructuring Fund, David Williams of Columbia Value and Restructuring Fund, Tweedy Browne of Tweedy Browne CO LLC, Bruce Kovner of Caxton Associates, NWQ Managers of NWQ Investment Management Co, Chris Shumway of Shumway Capital Partners LLC, Richard Aster Jr of Meridian Fund, Kenneth Fisher of Fisher Asset Management, LLC, PRIMECAP Management, John Buckingham of Al Frank Asset Management, Inc., John Buckingham of Al Frank Asset Management, Inc., George Soros of Soros Fund Management LLC, Pioneer Investments, John Keeley of Keeley Fund Management, Dodge & Cox, Murray Stahl of Horizon Asset Management, Steven Cohen of SAC Capital Advisors.
A large real estate transaction generated earnings in the second quarter and year-to-date period of 2009, creating an unfavorable variance with 2010. In June of 2009, we closed a $118 million sale of land to the Regional Transportation District (RTD) in Colorado, resulting in a $116 million pre-tax gain.
Our fuel surcharge programs (excluding index-based contract escalators that contain some provision for fuel) generated $309 million and $565 million in freight revenues in the second quarter and year-to-date period of 2010, compared to $84 million and $231 million in the same periods of 2009, respectively. Increases in both fuel prices and volume levels drove the higher fuel surcharge amounts in both periods. Additionally, fuel surcharge revenue is not entirely comparable to prior periods due to implementation of new mileage-based fuel surcharge programs. In April 2007, we converted regulated traffic, which represents approximately 17% of our current revenue base, to mileage-based fuel surcharge programs. In addition, we continue to convert portions of our non-regulated traffic to mileage-based fuel surcharge programs. At the time of the conversion, we also reset the base fuel price at which the new mileage-based fuel surcharges take effect. Resetting the fuel price at which the fuel surcharge begins, in conjunction with rebasing the affected transportation rates to include a portion of what had been in the fuel surcharge, does not materially change our freight revenue as higher base rates offset lower fuel surcharge revenue.
Compensation and Benefits Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, other postretirement benefits, and incentive costs. General wage and benefit inflation, volume-related expenses, and higher equity and incentive compensation drove costs up in the second quarter and year-to-date period. Ongoing productivity initiatives led to a 3% and 5% decline in our workforce in the second quarter and year-to-date period of 2010 compared to 2009, saving $36 million and $119 million, respectively.
Fuel Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Higher diesel fuel prices, which averaged $2.29 and $2.22 per gallon (including taxes and transportation costs) in the second quarter and six-month period of 2010 compared to $1.57 and $1.53 per gallon in the same periods in 2009, increased expenses by $186 million and $357 million. Volume, as measured by gross ton-miles, increased 14% and 11% in the second quarter and six-month period versus 2009, driving expenses up by $48 million and $79 million, respectively. Conversely, the use of newer, more fuel efficient locomotives, our fuel conservation programs, and efficient network operations drove 1% and 3% improvements in our fuel consumption rate in the second quarter and six-month period, resulting in $4 million and $18 million of cost savings versus 2009.
Depreciation The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. A higher depreciable asset base, reflecting higher capital spending in recent years, increased depreciation expense in the second quarter and year-to-date period of 2010 compared to 2009. Costs also increased $10 million and $25 million in the second quarter and six-month period of 2010 due to the restructuring of certain locomotive leases in the second quarter of 2009. Lower depreciation rates for rail and other track material partially offset the increases. The lower rates, which became effective January 1, 2010, resulted from reduced track usage (based on lower gross ton-miles) in 2009.
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Union Pacific Corp. has a market cap of $36.63 billion; its shares were traded at around $72.4 with a P/E ratio of 18.6 and P/S ratio of 2.5. The dividend yield of Union Pacific Corp. stocks is 1.8%. Union Pacific Corp. had an annual average earning growth of 3.3% over the past 10 years.UNP is in the portfolios of David Williams of Columbia Value and Restructuring Fund, David Williams of Columbia Value and Restructuring Fund, Tweedy Browne of Tweedy Browne CO LLC, Bruce Kovner of Caxton Associates, NWQ Managers of NWQ Investment Management Co, Chris Shumway of Shumway Capital Partners LLC, Richard Aster Jr of Meridian Fund, Kenneth Fisher of Fisher Asset Management, LLC, PRIMECAP Management, John Buckingham of Al Frank Asset Management, Inc., John Buckingham of Al Frank Asset Management, Inc., George Soros of Soros Fund Management LLC, Pioneer Investments, John Keeley of Keeley Fund Management, Dodge & Cox, Murray Stahl of Horizon Asset Management, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
We reported earnings of $1.40 per diluted share on net income of $711 million in the second quarter of 2010, compared to earnings of $0.92 per diluted share on net income of $465 million for the second quarter of 2009. Year-to-date, net income was $1.2 billion versus $827 million for the same period in 2009. Freight revenues (excluding fuel surcharges) increased $610 million in the second quarter compared to the same period of 2009, driven by volume growth of 18% and core pricing gains. Demand for our services increased compared to the second quarter of 2009, as adverse economic conditions during 2009 substantially reduced demand for rail service. Consistent with the first quarter, we continued Company-wide efforts to improve efficiency and reduce costs, in addition to adjusting our resources to reflect demand levels. We leveraged additional traffic volumes during the quarter with enhancements to our transportation plan, which improved asset utilization and minimized operational cost increases compared to the second quarter of 2009. As of June 30, 2010, we had 22% of our road locomotives and 14% of our freight car inventory in storage or maintained off-line, compared to 32% and 21%, respectively, at June 30, 2009. Additionally, our productivity initiatives reduced our workforce by 3% compared to the second quarter of 2009.A large real estate transaction generated earnings in the second quarter and year-to-date period of 2009, creating an unfavorable variance with 2010. In June of 2009, we closed a $118 million sale of land to the Regional Transportation District (RTD) in Colorado, resulting in a $116 million pre-tax gain.
Our fuel surcharge programs (excluding index-based contract escalators that contain some provision for fuel) generated $309 million and $565 million in freight revenues in the second quarter and year-to-date period of 2010, compared to $84 million and $231 million in the same periods of 2009, respectively. Increases in both fuel prices and volume levels drove the higher fuel surcharge amounts in both periods. Additionally, fuel surcharge revenue is not entirely comparable to prior periods due to implementation of new mileage-based fuel surcharge programs. In April 2007, we converted regulated traffic, which represents approximately 17% of our current revenue base, to mileage-based fuel surcharge programs. In addition, we continue to convert portions of our non-regulated traffic to mileage-based fuel surcharge programs. At the time of the conversion, we also reset the base fuel price at which the new mileage-based fuel surcharges take effect. Resetting the fuel price at which the fuel surcharge begins, in conjunction with rebasing the affected transportation rates to include a portion of what had been in the fuel surcharge, does not materially change our freight revenue as higher base rates offset lower fuel surcharge revenue.
Compensation and Benefits Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, other postretirement benefits, and incentive costs. General wage and benefit inflation, volume-related expenses, and higher equity and incentive compensation drove costs up in the second quarter and year-to-date period. Ongoing productivity initiatives led to a 3% and 5% decline in our workforce in the second quarter and year-to-date period of 2010 compared to 2009, saving $36 million and $119 million, respectively.
Fuel Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Higher diesel fuel prices, which averaged $2.29 and $2.22 per gallon (including taxes and transportation costs) in the second quarter and six-month period of 2010 compared to $1.57 and $1.53 per gallon in the same periods in 2009, increased expenses by $186 million and $357 million. Volume, as measured by gross ton-miles, increased 14% and 11% in the second quarter and six-month period versus 2009, driving expenses up by $48 million and $79 million, respectively. Conversely, the use of newer, more fuel efficient locomotives, our fuel conservation programs, and efficient network operations drove 1% and 3% improvements in our fuel consumption rate in the second quarter and six-month period, resulting in $4 million and $18 million of cost savings versus 2009.
Depreciation The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. A higher depreciable asset base, reflecting higher capital spending in recent years, increased depreciation expense in the second quarter and year-to-date period of 2010 compared to 2009. Costs also increased $10 million and $25 million in the second quarter and six-month period of 2010 due to the restructuring of certain locomotive leases in the second quarter of 2009. Lower depreciation rates for rail and other track material partially offset the increases. The lower rates, which became effective January 1, 2010, resulted from reduced track usage (based on lower gross ton-miles) in 2009.
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