Union Pacific (UNP) 10-Q 24 Jul 09 2009 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
In Millions, except Share data	6 Months Ended Jun. 30, 2009	Jul. 17, 2009	Jun. 30, 2008
Document Information
Document type	10-Q
Document period end date	2009-06-30
Amendment flag	false
Amendment description	NONE
Entity Information
Entity registrant name	UNION PACIFIC CORPORATION
Entity central index key	0000100885
Entity current reporting status	Yes
Entity voluntary filers	No
Current fiscal year end date	--12-31
Entity filer category	Large Accelerated Filer
Entity well known seasoned issuer	Yes
Entity common stock shares outstanding		504,304,711
Entity public float			$41,586

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Share data in Thousands	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Operating revenues:
Freight revenues	$3,121	$4,349	$6,361	$8,408
Other revenues	182	219	357	430
Total operating revenues	3,303	4,568	6,718	8,838
Operating expenses:
Compensation and benefits	976	1,101	2,046	2,233
Purchased services and materials	391	494	790	963
Fuel	370	1,159	756	2,116
Depreciation	355	346	700	686
Equipment and other rents	307	338	624	680
Other	153	199	379	441
Total operating expenses	2,552	3,637	5,295	7,119
Operating income	751	931	1,423	1,719
Other income (note 6)	135	19	158	44
Interest expense	(150)	(128)	(291)	(254)
Income before income taxes	736	822	1,290	1,509
Income taxes	(268)	(291)	(460)	(535)
Net income	$468	$531	$830	$974
Share and Per Share (note 3 and 8):
Earnings per share - basic	0.93	1.03	1.65	1.89
Earnings per share - diluted	0.92	1.02	1.64	1.87
Weighted average number of shares - basic	502,904	514,264	502,792	516,336
Weighted average number of shares - diluted	505,338	519,005	504,962	521,022
Dividends declared per share	0.27	0.22	0.54	0.44

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Financial Position (Unaudited) (USD $)
In Millions	Jun. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$1,656	$1,249
Accounts receivable, net	629	594
Materials and supplies	507	450
Current deferred income taxes	283	276
Other current assets	271	244
Total current assets	3,346	2,813
Investments	990	974
Net properties (note 10)	36,763	35,701
Other assets	451	234
Total assets	41,550	39,722
Current liabilities:
Accounts payable and other current liabilities (note 11)	2,660	2,560
Debt due within one year (note 13)	174	320
Total current liabilities	2,834	2,880
Debt due after one year (note 13)	9,816	8,607
Deferred income taxes	10,487	10,282
Other long-term liabilities	2,394	2,506
Commitments and contingencies (note 14)
Total liabilities	25,531	24,275
Common shareholders' equity (note 3):
Common shares, $2.50 par value, 800,000,000 authorized; 553,520,549 and 552,775,812 issued; 504,274,996 and 503,225,705 outstanding, respectively	1,384	1,382
Paid-in-surplus	3,949	3,949
Retained earnings	14,371	13,813
Treasury stock	(2,971)	(2,993)
Accumulated other comprehensive loss (note 9)	(714)	(704)
Total common shareholders' equity	16,019	15,447
Total liabilities and common shareholders' equity	$41,550	$39,722

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) (USD $)
	Jun. 30, 2009	Dec. 31, 2008
Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals)
Common shares, par value	2.5	2.5
Common shares authorized	800,000,000	800,000,000
Common shares issued	553,520,549	552,775,812
Common shares outstanding	504,274,996	503,225,705

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Operating Activities
Net income	$830	$974
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	700	686
Deferred income taxes and unrecognized tax benefits	210	160
Net gain on non-operating asset dispositions	(132)	(19)
Other operating activities, net	(68)	67
Changes in Current Assets and Liabilities
Accounts receivable, net.	(35)	(245)
Materials and supplies.	(57)	(127)
Other current assets.	(27)	33
Accounts payable and other current liabilities	100	307
Cash provided by operating activities	1,521	1,836
Investing Activities
Capital investments	(1,079)	(1,324)
Proceeds from asset sales	142	45
Acquisition of equipment pending financing	(216)	(307)
Proceeds from sale of assets financed	0	175
Other investing activities, net	1	(71)
Cash used in investing activities	(1,152)	(1,482)
Financing Activities
Debt issued	843	942
Common share repurchases (note 15)	0	(910)
Debt repaid	(628)	(497)
Dividends paid	(272)	(230)
Other financing activities, net	95	74
Cash provided by (used in) financing activities	38	(621)
Net change in cash and cash equivalents	407	(267)
Cash and cash equivalents at beginning of year	1,249	878
Cash and cash equivalents at end of period	1,656	611
Supplemental Cash Flow Information:
Capital lease financings	742	175
Cash dividends declared but not yet paid	132	110
Capital investments accrued but not yet paid	62	93
Settlement of current liabilities for debt	14	0
Common shares repurchased but not yet paid	0	56
Cash (paid) refunded for:
Interest, net of amounts capitalized	(277)	(252)
Income taxes paid	($88)	($210)

4_Condensed Consolidated Statem

Condensed Consolidated Statements of Changes in Common Shareholders' Equity (Unaudited) (USD $)
In Millions	Common Stock (units)	Treasury Stock (units)	Common Stock	Paid-in-Surplus	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Total
Common shares, beginning balance at Dec. 31, 2007	276	(15)
Stockholders' equity, beginning balance at Dec. 31, 2007			$690	$3,926	$12,667	($1,624)	($74)	$15,585
Comprehensive income:
Net income			0	0	974	0	0	974
Other comp. loss			0	0	0	0	5	5
Total comp. income (note 9)			0	0	974	0	5	979
Conversion, stock option exercises, forfeitures, and other (value)			1	0	0	113	0	114
Conversion, stock option exercises, forfeitures, and other (shares)	0	2
Share repurchases (value) (note 15)			0	0	0	(883)	0	(883)
Share repurchases (shares) (note 15)	0	(13)
Common stock dividend (value) (note 3)			691	0	(691)	0	0	0
Common stock dividend (shares) (note 3)	276	(15)
Cash dividends declared			0	0	(229)	0	0	(229)
Stockholders' equity, ending balance at Jun. 30, 2008			1,382	3,926	12,721	(2,394)	(69)	15,566
Common shares, ending balance at Jun. 30, 2008	553	41
Comprehensive income:
Common shares, beginning balance at Dec. 31, 2008	553	(50)
Stockholders' equity, beginning balance at Dec. 31, 2008			1,382	3,949	13,813	(2,993)	(704)	15,447
Comprehensive income:
Net income			0	0	830	0	0	830
Other comp. loss			0	0	0	0	(10)	(10)
Total comp. income (note 9)			0	0	830	0	(10)	820
Conversion, stock option exercises, forfeitures, and other (value)			2	0	0	22	0	24
Conversion, stock option exercises, forfeitures, and other (shares)	1	0
Cash dividends declared			0	0	(272)	0	0	(272)
Stockholders' equity, ending balance at Jun. 30, 2009			$1,384	$3,949	$14,371	($2,971)	($714)	$16,019
Common shares, ending balance at Jun. 30, 2009	554	(49)

5_Condensed Consolidated Statem

Condensed Consolidated Statements of Changes in Common Shareholders' Equity (Parentheticals) (Unaudited) (USD $)
	6 Months Ended Jun. 30, 2009	6 Months Ended Jun. 30, 2008
Cash dividends
Cash dividends declared per share	0.54	0.44

Basis of Presentation

Basis of Presentation
	6 Months Ended Jun. 30, 2009
Basis of Presentation:
Basis of Presentation	For purposes of this report, unless the context otherwise requires, all references herein to the Corporation, UPC, we, us, and our mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which will be separately referred to herein as UPRR or the Railroad. 1. Basis of Presentation Our Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (GAAP). Our Consolidated Statement of Financial Position at December 31, 2008, is derived from audited financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and notes thereto contained in our 2008 Annual Report on Form 10-K. The results of operations for the six months ended June 30, 2009, are not necessarily indicative of the results for the entire year ending December 31, 2009. We evaluated the effects of all subsequent events through July 24, 2009, the date of this report, which is concurrent with the date we file this report with the U.S. Securities and Exchange Commission (SEC).

Operations and Segmentation

Operations and Segmentation
	6 Months Ended Jun. 30, 2009
Operations and Segmentation:
Operations and Segmentation	2. Operations and Segmentation The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although revenue is analyzed by commodity group, we analyze the net financial results of the Railroad as one segment due to the integrated nature of our rail network. The following table provides freight revenue by commodity group: Three Months Ended June 30, Six Months Ended June 30, Millions of Dollars 2009 2008 2009 2008 Agricultural $ 618 $ 778 $ 1,279 $ 1,534 Automotive 163 352 325 715 Chemicals 499 654 1,012 1,257 Energy 715 919 1,522 1,776 Industrial Products 531 877 1,077 1,650 Intermodal 595 769 1,146 1,476 Total freight revenues $ 3,121 $ 4,349 $ 6,361 $ 8,408 Other revenues 182 219 357 430 Total operating revenues $ 3,303 $ 4,568 $ 6,718 $ 8,838

Stock Split

Stock Split
	6 Months Ended Jun. 30, 2009
Stock Split:
Stock Split	3. Stock Split On May 28, 2008, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. The stock split entitled all shareholders of record at the close of business on May 12, 2008, to receive one additional share of our common stock, par value $2.50 per share, for each share of common stock held on that date. All references to common shares and per share amounts (excluding the Condensed Consolidated Statement of Changes in Common Shareholders Equity for the six month period ended June 30, 2008) have been restated to reflect the stock split for all periods presented.

Stock Based Compensation

Stock Based Compensation
	6 Months Ended Jun. 30, 2009
Stock Based Compensation:
Stock Based Compensation	4. Stock-Based Compensation We have several stock-based compensation plans under which employees and non-employee directors receive stock options, nonvested retention shares, and nonvested stock units. We refer to the nonvested shares and stock units collectively as retention awards. We have elected to issue treasury shares to cover option exercises and stock unit vestings, while new shares are issued when retention shares vest. Information regarding stock-based compensation appears in the table below: Three Months Ended June 30, Six Months Ended June 30, Millions of Dollars 2009 2008 2009 2008 Stock-based compensation, before tax: Stock options $ 6 $ 6 $ 10 $ 12 Retention awards 6 11 14 19 Total stock-based compensation, before tax $ 12 $ 17 $ 24 $ 31 Total stock-based compensation, after tax $ 7 $ 10 $ 15 $ 19 Excess tax benefits from equity compensation plans $ 1 $ 28 $ 3 $ 40 Stock Options We estimate the fair value of our stock option awards using the Black-Scholes option pricing model. Groups of employees and non-employee directors that have similar historical and expected exercise behavior are considered separately for valuation purposes. The table below shows the year-to-date weighted-average assumptions used for valuation purposes: Six Months Ended June 30, Weighted-Average Assumptions 2009 2008 Risk-free interest rate 1.9% 2.8% Dividend yield 2.3% 1.4% Expected life (years) 5.1 5.3 Volatility 31.3% 22.2% Weighted-average grant-date fair value of options granted $ 11.33 $ 13.35 The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected exercise behavior; and volatility is based on the historical volatility of our stock price over the expected life of the option. A summary of stock option activity during the six months ended June 30, 2009 is presented below: Shares (thous.) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (millions) Outstanding at January 1, 2009 11,983 $ 40.81 5.6 yrs. $ 108 Granted 1,865 47.28 N/A N/A Exercised (224) 30.53 N/A N/A Forfeited or expired (14) 56.49 N/A N/A Outstanding at June 30, 2009 13,610 $ 41.85 5.8 yrs. $ 155 Vested or expected to vest 13,510 $ 41.77 5.8 yrs. $ 155 at June 30, 2009 Options exercisable at June 30, 2009 10,273 $ 38.56 4.7 yrs. $ 144 Stock options are granted at the closing price on the date of grant, have ten-year contractual terms, and vest no later than three years from the date of grant. None of the stock options outstanding at June 30, 2009 are subject to performance or market-based vesting conditions. At June 30, 2009, there was $32 million of unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.7 years. Additional information regarding stock option exercises appears in the table

Retirement Plans

Retirement Plans
	6 Months Ended Jun. 30, 2009
Retirement Plans:
Retirement Plans	5. Retirement PlansPension and Other Postretirement Benefits Pension Plans We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements.Other Postretirement Benefits (OPEB) We provide defined contribution medical and life insurance benefits for eligible retirees. These benefits are funded as medical claims and life insurance premiums are paid.Expense Both pension and OPEB expense are determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a five-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately, but are deferred and, if necessary, amortized as pension or OPEB expense. The components of our net periodic pension cost were as follows: Pension Three Months Ended June 30, Six Months Ended June 30, Millions of Dollars 2009 2008 2009 2008 Service cost $ 9 $ 9 $ 19 $ 18 Interest cost 35 33 69 66 Expected return on plan assets (41) (38) (81) (76) Amortization of: Prior service cost 1 1 3 3 Actuarial loss 7 2 13 3 Net periodic benefit cost $ 11 $ 7 $ 23 $ 14 The components of our net periodic OPEB cost/(benefit) were as follows: OPEB Three Months Ended June 30, Six Months Ended June 30, Millions of Dollars 2009 2008 2009 2008 Service cost $ 1 $ 1 $ 2 $ 2 Interest cost 7 5 13 10 Amortization of: Prior service (credit) (8) (9) (17) (17) Actuarial loss 4 2 8 3 Net periodic benefit cost/(benefit) $ 4 $ (1) $ 6 $ (2) Cash Contributions As of June 30, 2009, we have made $45 million of cash contributions to the qualified pension plan. Additional contributions made in the second half of the year will be based on cash generated from operations and financial market considerations. All contributions made to the qualified pension plan during the six months ended June 30, 2009 were voluntary and were made with cash generated from operations.

Other Income

Other Income
	6 Months Ended Jun. 30, 2009
Other Income:
Other Income.	6. Other Income Other income included the following: Three Months Ended June 30, Six Months Ended June 30, Millions of Dollars 2009 2008 2009 2008 Rental income $ 19 $ 20 $ 39 $ 44 Net gain on non-operating asset dispositions 126 8 132 19 Interest income 2 4 4 12 Sale of receivables fees (2) (5) (5) (12) Non-operating environmental costs and other (10) (8) (12) (19) Total $ 135 $ 19 $ 158 $ 44 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. The agreement with the RTD involves a 33-mile industrial lead track in Boulder, Colorado.

Income Taxes

Income Taxes
	6 Months Ended Jun. 30, 2009
Income Taxes:
Income Taxes	7. Income Taxes Internal Revenue Service (IRS) examinations have been completed and settled for all years prior to 1999, and the statute of limitations bars any additional tax assessments. Some interest calculations remain open back to 1986. The IRS has completed its examinations and issued notices of deficiency for tax years 1999 through 2004. We disagree with many of their proposed adjustments, and we are at IRS Appeals for these years. During the second quarter of 2009, the IRS completed its examination and issued a notice of deficiency for tax years 2005 and 2006. We disagree with many of their proposed adjustments, and will contest the adjustments through the IRS Appeals process and potentially through litigation. Additionally, several state tax authorities are examining our state income tax returns for tax years 2000 through 2006.At June 30, 2009, our liability for unrecognized tax benefits was $36 million, of which $3 million was classified as current.In February of 2009, California enacted legislation that changed how corporate taxpayers determine the amount of their income subject to California tax. This change reduced our deferred tax expense by $14 million in the first quarter.

Earnings Per Share

Earnings Per Share
	6 Months Ended Jun. 30, 2009
Earnings Per Share:
Earnings Per Share	8. Earnings Per ShareThe following table provides a reconciliation between basic and diluted earnings per share for the three and six months ended June 30: Three Months Ended June 30, Six Months Ended June 30, Millions, Except Per Share Amounts 2009 2008 2009 2008 Net income $ 468 $ 531 $ 830 $ 974 Weighted-average number of shares outstanding: Basic 502.9 514.3 502.8 516.3 Dilutive effect of stock options 1.3 3.7 1.1 3.8 Dilutive effect of retention shares and units 1.1 1.0 1.1 0.9 Diluted 505.3 519.0 505.0 521.0 Earnings per share basic $ 0.93 $ 1.03 $ 1.65 $ 1.89 Earnings per share diluted $ 0.92 $ 1.02 $ 1.64 $ 1.87 Stock options excluded as their inclusion would be antidilutive 7.7 0 7.4 0.8

Comprehensive Income

Comprehensive Income (Loss)
	6 Months Ended Jun. 30, 2009
Comprehensive Income (Loss):
Comprehensive Income (Loss)	9. Comprehensive Income/(Loss) Comprehensive income/(loss) was as follows: Three Months Ended June 30, Six Months Ended June 30, Millions of Dollars 2009 2008 2009 2008 Net income $ 468 $ 531 $ 830 $ 974 Other comprehensive income/(loss): Defined benefit plans 2 0 (11) (4) Foreign currency translation 14 6 1 9 Derivatives 0 1 0 0 Total other comprehensive income/(loss) [a] 16 7 (10) 5 Total comprehensive income $ 484 $ 538 $ 820 $ 979 [a] Net of deferred taxes of $10 million and $1 million during the three and six months ended June 30, 2009, respectively, and $4 million and $6 million during the three and six months ended June 30, 2008, respectively. The after-tax components of accumulated other comprehensive loss were as follows: Jun. 30, Dec. 31, Millions of Dollars 2009 2008 Defined benefit plans $ (670) $ (659) Foreign currency translation (40) (41) Derivatives (4) (4) Total $ (714) $ (704)

Properties

Properties
	6 Months Ended Jun. 30, 2009
Properties:
Properties	10. PropertiesThe following table lists the major categories of property and equipment, as well as the average composite depreciation rate for each category: Jun. 30, Dec. 31, Depreciation Millions of Dollars, Except Percentages 2009 2008 Rate for 2009 Land $ 4,851 $ 4,861 N/A Road Rail and other track material 11,694 11,366 3.6% Ties 7,061 6,827 2.7% Ballast 3,756 3,635 2.9% Other [a] 12,758 12,520 2.4% Total Road 35,269 34,348 2.9% Equipment Locomotives 5,900 5,157 5.0% Freight cars 1,956 1,985 4.2% Work equipment and other 163 158 3.6% Total Equipment 8,019 7,300 4.8% Technology and other 507 468 12.2% Construction in progress 875 938 N/A Total properties $ 49,521 $ 47,915 N/A Accumulated depreciation (12,758) (12,214) N/A Net properties $ 36,763 $ 35,701 N/A [a] Other includes grading, bridges and tunnels, signals, buildings, and other road assets.

Accounts Payable and Other Curr

Accounts Payable and Other Current Liabilities
	6 Months Ended Jun. 30, 2009
Accounts Payable And Other Current Liabilities:
Accounts Payable and Other Current Liabilities	11. Accounts Payable and Other Current Liabilities Jun. 30, Dec. 31, Millions of Dollars 2009 2008 Accounts payable $ 667 $ 629 Accrued casualty costs 392 390 Accrued wages and vacation 357 367 Dividends and interest 339 328 Income and other taxes 328 207 Equipment rents payable 85 93 Other 492 546 Total accounts payable and other current liabilities $ 2,660 $ 2,560

Financial Instruments

Financial Instruments
	6 Months Ended Jun. 30, 2009
Financial Instruments:
Financial Instruments	12. Financial InstrumentsStrategy and Risk We may use derivative financial instruments in limited instances for other than trading purposes to assist in managing our overall exposure to fluctuations in interest rates and fuel prices. We are not a party to leveraged derivatives and, by policy, do not use derivative financial instruments for speculative purposes. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. We formally document the nature and relationships between the hedging instruments and hedged items at inception, as well as our risk-management objectives, strategies for undertaking the various hedge transactions, and method of assessing hedge effectiveness. Changes in the fair market value of derivative financial instruments that do not qualify for hedge accounting are charged to earnings. We may use swaps, collars, futures, and/or forward contracts to mitigate the risk of adverse movements in interest rates and fuel prices; however, the use of these derivative financial instruments may limit future benefits from favorable interest rate and fuel price movements.Market and Credit Risk We address market risk related to derivative financial instruments by selecting instruments with value fluctuations that highly correlate with the underlying hedged item. We manage credit risk related to derivative financial instruments, which is minimal, by requiring high credit standards for counterparties and periodic settlements. At June 30, 2009 and December 31, 2008, we were not required to provide collateral, nor had we received collateral, relating to our hedging activities. Determination of Fair Value We determine the fair values of our derivative financial instrument positions based upon current fair values as quoted by recognized dealers or the present value of expected future cash flows. Interest Rate Fair Value Hedges We manage our overall exposure to fluctuations in interest rates by adjusting the proportion of fixed and floating rate debt instruments within our debt portfolio over a given period. We generally manage the mix of fixed and floating rate debt through the issuance of targeted amounts of each as debt matures or as we require incremental borrowings. We employ derivatives, primarily swaps, as one of the tools to obtain the targeted mix. In addition, we also obtain flexibility in managing interest costs and the interest rate mix within our debt portfolio by evaluating the issuance of and managing outstanding callable fixed-rate debt securities. Swaps allow us to convert debt from fixed rates to variable rates and thereby hedge the risk of changes in the debts fair value attributable to the changes in interest rates. We account for swaps as fair value hedges using the short-cut method pursuant to Financial Accounting Standards Board (FASB) Statement No. 133, Accounting for Derivative Instruments and Hedging Activities; therefore, we do not record any ineffectiveness within our Condensed Consolidated Financial Statements. The following is a summary of ou

Debt

Debt
	6 Months Ended Jun. 30, 2009
Debt:
Debt	13. DebtCredit Facilities At June 30, 2009, we had $1.9 billion of credit available under our revolving credit facility (the facility). The facility is designated for general corporate purposes and supports the issuance of commercial paper. We did not draw on the facility during the six months ended June 30, 2009. Commitment fees and interest rates payable under the facility are similar to fees and rates available to comparably rated, investment-grade borrowers. The facility allows for borrowings at floating rates based on London Interbank Offered Rates, plus a spread, depending upon our senior unsecured debt ratings. The facility requires us to maintain a debt-to-net-worth coverage ratio as a condition to making a borrowing. At June 30, 2009 and December 31, 2008 (and at all times during the first and second quarters), we were in compliance with this covenant. The definition of debt used for purposes of calculating the debt-to-net-worth coverage ratio includes, among other things, certain credit arrangements, capital leases, guarantees and unfunded and vested pension benefits under Title IV of ERISA. At June 30, 2009, the debt-to-net-worth coverage ratio allowed us to carry up to $32 billion of debt (as defined in the facility), and we had $10.9 billion of debt (as defined in the facility) outstanding at that date. Under our current capital plans, we expect to continue to satisfy the debt-to-net-worth coverage ratio; however, many factors beyond our reasonable control could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post collateral. The facility also includes a $75 million cross-default provision and a change-of-control provision. The term of the facility will expire in April 2012, and we currently intend to replace the facility with a substantially similar credit agreement on or before the expiration date, which is consistent with our past practices with respect to our credit facilities.At June 30, 2009, we had no commercial paper outstanding. Outstanding commercial paper balances are supported by our revolving credit facility but do not reduce the amount of borrowings available under the facility. During the six months ended June 30, 2009, we issued $100 million of commercial paper and repaid $200 million. Shelf Registration Statement and Significant New Borrowings Under our current shelf registration statement, we may issue, from time to time, any combination of debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one or more offerings.On February 20, 2009, we issued a total of $750 million of unsecured fixed-rate notes under our shelf registration statement. We issued $350 million of 5.125% notes due February 15, 2014 and $400 million of 6.125% notes due February 15, 2020. The net proceeds from this offering are for general corporate purposes.We have no immediate plans to issue equity securities; however, we will continue to explore opportunities to replace existing debt or access capital thro

Commitments and Contingencies

Commitments and Contingencies
	6 Months Ended Jun. 30, 2009
Commitments And Contingencies:
Commitments and Contingencies	14. Commitments and ContingenciesAsserted and Unasserted Claims Various claims and lawsuits are pending against us and certain of our subsidiaries. We cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations, financial condition, or liquidity; however, to the extent possible, where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated, we have recorded a liability. We do not expect that any known lawsuits, claims, environmental costs, commitments, contingent liabilities, or guarantees will have a material adverse effect on our consolidated results of operations, financial condition, or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters.Personal Injury The cost of personal injuries to employees and others related to our activities is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use third-party actuaries to assist us in measuring the expense and liability, including unasserted claims. The Federal Employers Liability Act (FELA) governs compensation for work-related accidents. Under FELA, damages are assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work. Our personal injury liability is discounted to present value using applicable U.S. Treasury rates. Approximately 86% of the recorded liability related to asserted claims, and approximately 14% related to unasserted claims at June 30, 2009. Cost estimates can vary over time due to evolving trends in litigation. Our personal injury liability activity was as follows: Six Months Ended June 30, Millions of Dollars 2009 2008 Beginning balance $ 621 $ 593 Accruals 49 108 Payments (86) (85) Ending balance at June 30 $ 584 $ 616 Current portion, ending balance at June 30 $ 186 $ 204 Asbestos We are a defendant in a number of lawsuits in which current and former employees and other parties allege exposure to asbestos. Additionally, we have received claims for asbestos exposure that have not been litigated. The claims and lawsuits (collectively referred to as claims) allege occupational illness resulting from exposure to asbestos-containing products. In most cases, the claimants do not have credible medical evidence of physical impairment resulting from the alleged exposures. Additionally, most claims filed against us do not specify an amount of alleged damages. Our asbestos-related liability activity was as follows: Six Months Ended June 30, Millions of Dollars 2009 2008 Beginning balance $ 213 $ 265 Accruals - - Payments (5) (7) Ending balance at June 30 $ 208 $ 258 Current portion, ending balance at June 30 $ 12 $ 11 We have insurance coverage for a portion of the costs incurred to resolve asbestos-related claims, and we have recognized an asset for estimated insurance recoveries at June 30, 2009 and December 31, 2008. We believe that our estimates of liability for asbestos-related

Share Repurchase Program

Share Repurchase Program
	6 Months Ended Jun. 30, 2009
Share Repurchase Program:
Share Repurchase Program	15.Share Repurchase Program On January 30, 2007, our Board of Directors authorized the repurchase of up to 40 million shares of Union Pacific Corporation common stock through the end of 2009. On May 1, 2008, our Board of Directors authorized the repurchase of an additional 40 million common shares by March 31, 2011. Managements assessments of market conditions and other pertinent facts guide the timing and volume of all repurchases. During the six months ended June 30, 2009, we did not repurchase shares under this program. During the three and six months ended June 30, 2008, we repurchased approximately 6.3 million and 12.8 million shares, respectively, under this program at an aggregate purchase price of approximately $481 million and $883 million, respectively. Repurchased shares are recorded in treasury stock at cost, which includes any applicable commissions and fees.

Accounting Pronouncements

Accounting Pronouncements
	6 Months Ended Jun. 30, 2009
Accounting Pronouncements:
Accounting Pronouncements	16. Accounting Pronouncements In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principlesa replacement of FASB Statement No. 162 (FAS 168). The Codification will become the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of FAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. FAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. FAS 168 is not expected to have a material impact on our financial statements.In June 2009, the FASB issued Statement No. 167, Amendments to FASB Interpretation No. 46(R) (FAS 167). FAS 167 retains the scope of Interpretation 46(R), Consolidation of Variable Interest Entities, with the addition of entities previously considered qualifying special-purpose entities, as the concept of these entities was eliminated in FASB Statement No.166, Accounting for Transfers of Financial Assetsan amendment of FASB Statement No. 140. FAS 167 shall be effective as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. FAS 167 is not expected to have a material impact on our financial statements.In June 2009, the FASB issued Statement No. 166, Accounting for Transfers of Financial Assetsan amendment of FASB Statement No. 140 (FAS 166). On and after the effective date of FAS 166 , the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities (as defined under previous accounting standards) should be evaluated for consolidation by reporting entities on and after the effective date in accordance with the applicable consolidation guidance. FAS 166 must be applied as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. FAS 166 is not expected to have a material impact on our financial statements.In May 2009, the FASB issued Statement No.165, Subsequent Events (FAS 165). FAS 165 establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. FAS 165 was effective for interim or annual financial periods ending after June 15, 2009. The adoption of FAS 165 did not affect our consolidated financial position, results of operatio