Document and Entity Information
Document and Entity Information (USD $) | |||
In Millions, except Share data | 3 Months Ended
Mar. 31, 2010 | Apr. 16, 2010
| Jun. 30, 2009
|
Document and Entity Information Abstract | |||
Document type | 10-Q | ||
Document period end date | 2010-03-31 | ||
Amendment flag | false | ||
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 | 506,122,839 | ||
Entity public float | $28,701 | ||
Document Fiscal Year Focus | 2,010 | ||
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Operating revenues: | ||
Freight revenues | $3,755 | $3,240 |
Other revenues | 210 | 175 |
Total operating revenues | 3,965 | 3,415 |
Operating expenses: | ||
Compensation and benefits | 1,059 | 1,070 |
Fuel | 583 | 386 |
Purchased services and materials | 432 | 404 |
Depreciation | 367 | 341 |
Equipment and other rents | 290 | 317 |
Other | 246 | 226 |
Total operating expenses | 2,977 | 2,744 |
Operating income | 988 | 671 |
Other income (Note 7) | 1 | 23 |
Interest expense | (155) | (141) |
Income before income taxes | 834 | 553 |
Income taxes | (318) | (191) |
Net income | $516 | $362 |
Share and Per Share (Notes 9): | ||
Earnings per share - basic | 1.02 | 0.72 |
Earnings per share - diluted | 1.01 | 0.72 |
Weighted average number of shares - basic | 504.5 | 502.7 |
Weighted average number of shares - diluted | 508.7 | 504.6 |
Dividends declared per share | 0.27 | 0.27 |
1_Condensed Consolidated Statem
Condensed Consolidated Statements of Financial Position (Unaudited) (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Current assets: | ||
Cash and cash equivalents | $1,753 | $1,850 |
Accounts receivable, net (Note 2) | 1,218 | 666 |
Materials and supplies | 506 | 475 |
Current deferred income taxes | 355 | 339 |
Other current assets | 280 | 350 |
Total current assets | 4,112 | 3,680 |
Investments | 1,036 | 1,036 |
Net properties (Note 11) | 37,301 | 37,202 |
Other assets | 263 | 266 |
Total assets | 42,712 | 42,184 |
Current liabilities: | ||
Accounts payable and other current liabilities (Note 12) | 2,670 | 2,470 |
Debt due within one year (Note 14) | 239 | 212 |
Total current liabilities | 2,909 | 2,682 |
Debt due after one year (Note 14) | 9,480 | 9,636 |
Deferred income taxes | 11,116 | 11,044 |
Other long-term liabilities | 1,994 | 2,021 |
Commitments and contingencies (Note 15) | ||
Total liabilities | 25,499 | 25,383 |
Common shareholders' equity: | ||
Common shares, $2.50 par value, 800,000,000 authorized; 553,967,438 and 553,497,981 issued; 506,104,823 and 505,039,952 outstanding, respectively | 1,385 | 1,384 |
Paid-in-surplus | 3,959 | 3,968 |
Retained Earnings | 15,406 | 15,027 |
Treasury stock | (2,889) | (2,924) |
Accumulated other comprehensive lost (Note 10) | (648) | (654) |
Total common shareholders' equity | 17,213 | 16,801 |
Total liabilities and common shareholders' equity | $42,712 | $42,184 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) | ||
Mar. 31, 2010
| Dec. 31, 2009
| |
Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) Abstract | ||
Common shares, par value | 2.5 | 2.5 |
Common shares authorized | 800,000,000 | 800,000,000 |
Common shares issued | 553,967,438 | 553,497,981 |
Common shares outstanding | 506,104,823 | 505,039,952 |
3_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Operating Activities | ||
Net income | $516 | $362 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 367 | 341 |
Deferred income taxes and unrecognized tax benefits | 54 | 19 |
Net gain on non-operating asset dispositions | (4) | (6) |
Other operating activities, net | 36 | (10) |
Changes in Current Assets and Liabilities | ||
Accounts receivable, net (Note 2) | (552) | 46 |
Materials and supplies. | (31) | 4 |
Other current assets. | 70 | (23) |
Accounts payable and other current liabilities | 200 | (15) |
Cash provided by operating activities | 656 | 718 |
Investing Activities | ||
Capital investments | (461) | (521) |
Proceeds from asset sales | 12 | 12 |
Acquisition of equipment pending financing | 0 | (113) |
Other investing activities, net | (46) | (6) |
Cash used in investing activities | (495) | (628) |
Financing Activities | ||
Debt issued (Note 2) | 400 | 843 |
Debt repaid | (531) | (581) |
Dividends paid | (135) | (136) |
Other financing activities, net | 8 | 1 |
Cash provided by/(used) in financing activities | (258) | 127 |
Net change in cash and cash equivalents | (97) | 217 |
Cash and cash equivalents at beginning of year | 1,850 | 1,249 |
Cash and cash equivalents at end of year | 1,753 | 1,466 |
Supplemental Cash Flow Information | ||
Cash dividends declared but not yet paid | 133 | 132 |
Capital investments accrued but not yet paid | 60 | 72 |
Cash (paid)/refunded for: | ||
Interest, net of amounts capitalized | (218) | (188) |
Income taxes | $136 | $59 |
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 (Note 9)
| Total
|
Common shares, beginning balance at Dec. 31, 2008 | 552.8 | -49.6 | ||||||
Stockholders' equity, beginning balance at Dec. 31, 2008 | $1,382 | $3,949 | $13,813 | ($2,993) | ($704) | $15,447 | ||
Cumulative effect of change in accounting principle (Note 3) | 0 | 0 | (132) | 0 | 0 | (132) | ||
Comprehensive income: | ||||||||
Net income | 0 | 0 | 362 | 0 | 0 | 362 | ||
Other comp. income/(loss) | 0 | 0 | 0 | 0 | (26) | (26) | ||
Total comp. income (Note 10) | 0 | 0 | 362 | 0 | (26) | 336 | ||
Conversion, stock option exercises, forfeitures, and other | 2 | (6) | 0 | 10 | 0 | 6 | ||
Conversion, stock option exercises, forfeitures, and other (shares) | 0.7 | 0.2 | ||||||
Cash dividends declared | 0 | 0 | (135) | 0 | 0 | (135) | ||
Stockholders' equity, ending balance at Mar. 31, 2009 | 1,384 | 3,943 | 13,908 | (2,983) | (730) | 15,522 | ||
Common shares, ending balance at Mar. 31, 2009 | 553.5 | -49.4 | ||||||
Common shares, beginning balance at Dec. 31, 2009 | 553.5 | -48.5 | ||||||
Stockholders' equity, beginning balance at Dec. 31, 2009 | 1,384 | 3,968 | 15,167 | (2,924) | (654) | 16,941 | ||
Cumulative effect of change in accounting principle (Note 3) | 0 | 0 | (140) | 0 | 0 | (140) | ||
Comprehensive income: | ||||||||
Net income | 0 | 0 | 516 | 0 | 0 | 516 | ||
Other comp. income/(loss) | 0 | 0 | 0 | 0 | 6 | 6 | ||
Total comp. income (Note 10) | 0 | 0 | 516 | 0 | 6 | 522 | ||
Conversion, stock option exercises, forfeitures, and other | 1 | (9) | 0 | 35 | 0 | 27 | ||
Conversion, stock option exercises, forfeitures, and other (shares) | 0.5 | 0.6 | ||||||
Cash dividends declared | 0 | 0 | (137) | 0 | 0 | (137) | ||
Stockholders' equity, ending balance at Mar. 31, 2010 | $1,385 | $3,959 | $15,406 | ($2,889) | ($648) | $17,213 | ||
Common shares, ending balance at Mar. 31, 2010 | 554 | -47.9 |
5_Condensed Consolidated Statem
Condensed Consolidated Statements of Changes in Common Shareholders' Equity (Unaudited) (Parentheticals) | ||
3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 | |
Cash dividends | ||
Cash dividends declared per share | 0.27 | 0.27 |
Basis Of Presentation
Basis Of Presentation | |
3 Months Ended
Mar. 31, 2010 | |
Basis of Presentation Abstract | |
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. Our Consolidated Statement of Financial Position at December 31, 2009, 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 2009 Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2010, are not necessarily indicative of the results for the entire year ending December 31, 2010. The Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (GAAP) as codified in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). |
Adoption Of New Accounting Pron
Adoption Of New Accounting Pronouncement | |
3 Months Ended
Mar. 31, 2010 | |
Adoption Of New Accounting Pronouncement Abstract | |
Adoption of New Accounting Pronouncement | 2. Adoption of New Accounting Pronouncement In June 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2009-16, Accounting for Transfers of Financial Assets (ASU 2009-16). ASU 2009-16 limits the circumstances in which transferred financial assets can be derecognized and requires enhanced disclosures regarding transfers of financial assets and a transferor's continuing involvement with transferred financial assets. We adopted the authoritative accounting guidance on January 1, 2010. As a result, we no longer account for the value of the outstanding undivided interest held by investors under our receivables securitization facility as a sale. In addition, transfers of receivables occurring on or after January 1, 2010 are reflected as debt issued in our Condensed Consolidated Statements of Cash Flows and recognized as debt due after one year in our Condensed Consolidated Statements of Financial Position. See the discussion of our receivables securitization facility in Note 14. |
Change In Accounting Principle
Change In Accounting Principle | |
3 Months Ended
Mar. 31, 2010 | |
Change In Accounting Principle Abstract | |
Change in Accounting Principle | 3. Change in Accounting Principle Effective January 1, 2010, we changed our accounting policy for rail grinding costs from a capitalization method, under which we capitalized the cost of rail grinding and depreciated such capitalized costs, to a direct expense method, under which we expense rail grinding costs as incurred. The expense as incurred method is preferable, as it eliminates the subjectivity in determining the period of benefit associated with rail grinding over which to depreciate the associated capitalized costs. This change was reflected as a change in accounting principle from an acceptable accounting principle to a preferable accounting principle. The application of the change in accounting principle is presented retrospectively to all periods presented. The effects of the adjustments from 1992 (the year we started capitalizing rail grinding) to January 1, 2009 resulted in an adjustment to decrease net properties, deferred income taxes, and shareholders' equity by $213 million, $81 million, and $132 million, respectively. The following tables show the effects of the change in our policy for rail grinding costs on the Condensed Consolidated Financial Statements: Condensed Consolidated Statements of Income For the Three Months Ended March 31, 2010 For the Three Months Ended March 31, 2009 Millions, Except Per Share Amounts Computed under Prior Method Impact of Adjustment As Reported As Originally Reported Impact of Adjustment As Adjusted Purchased services materials $ 424 $ 8 $ 432 $ 399 $ 5 $ 404 Depreciation $ 371 $ (4) $ 367 $ 345 $ (4) $ 341 Total operating expenses $ 2,973 $ 4 $ 2,977 $ 2,743 $ 1 $ 2,744 Operating income $ 992 $ (4) $ 988 $ 672 $ (1) $ 671 Income before income taxes $ 838 $ (4) $ 834 $ 554 $ (1) $ 553 Income taxes $ (320) $ 2 $ (318) $ (192) $ 1 $ (191) Net income $ 518 $ (2) $ 516 $ 362 $ 0 $ 362 Earnings per share - basic $ 1.03 $ (0.01) $ 1.02 $ 0.72 $ 0 $ 0.72 Earnings per share - diluted $ 1.02 $ (0.01) $ 1.01 $ 0.72 $ 0 $ 0.72 Condensed Consolidated Statements of Financial Position March 31, 2010 December 31, 2009 Computed under Prior Method Impact of Adjustment As Reported As Originally Reported Impact of Adjustment As Adjusted Millions Net properties $ 37,531 $ (230) $ 37,301 $ 37,428 $ (226) $ 37,202 Total assets $ 42,942 $ (230) $ 42,712 $ 42,410 $ (226) $ 42,184 Deferred income taxes $ 11,204 $ (88) $ 11,116 $ 11,130 $ (86) $ 11,044 Total liabilities $ 25,587 $ (88) $ 25,499 $ 25,469 $ (86) $ 25,383 Retained earnings $ 15,548 $ (142) $ 15,406 $ 15,167 $ (140) $ 15,027 Total common shareholders' equity $ 17,355 $ (142) $ 17,213 $ 16,941 $ (140) $ 16,801 Total liabilities common shareholders' equity $ 42,942 $ (230) $ 42,712 $ 42,410 $ (226) $ 42,184 Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2010 For the Three Months Ended March 31, 2009 Computed under Prior Method Impact of Adjustment As Reported As Originally Reported Impact of Adjustment |
Operations And Segmentation
Operations And Segmentation | |
3 Months Ended
Mar. 31, 2010 | |
Operations and Segmentation Abstract | |
Operations and Segmentation | 4. 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: Millions, for the Three Months Ended March 31, 2010 2009 Agricultural $ 730 $ 661 Automotive 305 162 Chemicals 587 513 Energy 844 807 Industrial Products 598 546 Intermodal 691 551 Total freight revenues $ 3,755 $ 3,240 Other revenues 210 175 Total operating revenues $ 3,965 $ 3,415 Although our revenues are principally derived from customers domiciled in the United States, the ultimate points of origination or destination for some products transported are outside the United States. |
Stock Options And Other Stock P
Stock Options And Other Stock Plans | |
3 Months Ended
Mar. 31, 2010 | |
Stock Options and Other Stock Plans Abstract | |
Stock Options and Other Stock Plans | 5. 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: Millions, for the Three Months Ended March 31, 2010 2009 Stock-based compensation, before tax: Stock options $ 4 $ 4 Retention awards 13 8 Total stock-based compensation, before tax $ 17 $ 12 Total stock-based compensation, after tax $ 11 $ 8 Excess tax benefits from equity compensation plans $ 9 $ 2 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: Weighted-Average Assumptions, for the Three Months Ended March 31, 2010 2009 Risk-free interest rate 2.4% 1.9% Dividend yield 1.8% 2.3% Expected life (years) 5.4 5.1 Volatility 35.2% 31.3% Weighted-average grant-date fair value of options granted $ 18.26 $ 11.33 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 three months ended March 31, 2010 is presented below: Shares (thous.) Weighted- Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (millions) Outstanding at January 1, 2010 12,699 $ 42.27 5.5 yrs. $ 275 Granted 788 60.98 Exercised (559) 35.42 N/A N/A Forfeited or expired (11) 53.61 N/A N/A Outstanding at March 31, 2010 12,917 $ 43.70 5.6 yrs. $ 383 Vested or expected to vest 12,841 $ 43.60 5.6 yrs. $ 382 at March 31, 2010 Options exercisable at March 31, 2010 10,404 $ 41.04 4.8 yrs. $ 336 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 March 31, 2010 are subject to performance or market-based vesting conditions. At March 31, 2010, 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 below: Millions, for the Three Months Ended March 31, 2 |
Retirement Plans
Retirement Plans | |
3 Months Ended
Mar. 31, 2010 | |
Retirement Plans Abstract | |
Retirement Plans | 6. Retirement Plans Pension 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 and OPEB cost/(benefit) were as follows for the three months ended March 31: Pension OPEB Millions 2010 2009 2010 2009 Service cost $ 11 $ 10 $ 1 $ 1 Interest cost 35 34 4 6 Expected return on plan assets (45) (40) - - Amortization of: Prior service cost/(credit) 1 2 (11) (9) Actuarial loss 11 6 3 4 Net periodic benefit cost/(benefit) $ 13 $ 12 $ (3) $ 2 Cash Contributions For the three months ended March 31, 2010, we have made no cash contributions to the qualified pension plan. Any additional contributions made during 2010 will be based on cash generated from operations and financial market considerations. |
Other Income
Other Income | |
3 Months Ended
Mar. 31, 2010 | |
Other Income Abstract | |
Other Income. | 7. Other Income Other income included the following: Millions for the Three Months Ended March 31, 2010 2009 Rental income $ 20 $ 20 Net gain on non-operating asset dispositions 4 6 Interest income 1 2 Receivable securitization fees [a] - (3) Early extinguishment of debt (16) - Non-operating environmental costs and other (8) (2) Total $ 1 $ 23 [a] Receivable securitization fees totaling $2 million for the first quarter of 2010 are now classified as interest expense. See Note 2 and Note 14 for further discussion. |
Income Taxes
Income Taxes | |
3 Months Ended
Mar. 31, 2010 | |
Income Taxes Abstract | |
Income Taxes | 8. 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 2006. We disagree with many of their proposed adjustments, and we are at IRS Appeals for these years. The IRS is examining our federal income tax returns for 2007 and 2008. Additionally, some of our state income tax returns for 2003-2006 are under examination. At March 31, 2010, our liability for unrecognized tax benefits was $61 million, of which we classified $4 million as current. |
Earnings Per Share
Earnings Per Share | |
3 Months Ended
Mar. 31, 2010 | |
Earnings Per Share Disclosure Abstract | |
Earnings Per Share | 9. Earnings Per Share The following table provides a reconciliation between basic and diluted earnings per share: Millions, Except Per Share Amounts, for the Three Months Ended March 31, 2010 2009 (Adjusted)* Net income $ 516 $ 362 Weighted-average number of shares outstanding: Basic 504.5 502.7 Dilutive effect of stock options 3.0 1.0 Dilutive effect of retention shares and units 1.2 0.9 Diluted 508.7 504.6 Earnings per share basic $ 1.02 $ 0.72 Earnings per share diluted $ 1.01 $ 0.72 Stock options excluded as their inclusion would be antidilutive 0.5 7.1 * Certain amounts have been adjusted for the retrospective change in accounting principle for rail grinding (See Note 3). |
Comprehensive Income
Comprehensive Income (Loss) | |
3 Months Ended
Mar. 31, 2010 | |
Comprehensive Income (Loss) Abstract | |
Comprehensive Income (Loss) | 10. Comprehensive Income/(Loss) Comprehensive income/(loss) was as follows: Millions, for the Three Months Ended March 31, 2010 2009 (Adjusted)* Net income $ 516 $ 362 Other comprehensive income/(loss): Defined benefit plans 3 (13) Foreign currency translation 2 (13) Derivatives 1 - Total other comprehensive income/(loss) [a] 6 (26) Total comprehensive income $ 522 $ 336 * Certain amounts have been adjusted for the retrospective change in accounting principle for rail grinding (See Note 3). [a] Net of deferred taxes of $1 million and $9 million during the three months ended March 31, 2010 and 2009, respectively. The after-tax components of accumulated other comprehensive loss were as follows: Mar. 31, Dec. 31, Millions 2010 2009 Defined benefit plans $ (612) $ (615) Foreign currency translation (33) (35) Derivatives (3) (4) Total $ (648) $ (654) |
Properties
Properties | |
3 Months Ended
Mar. 31, 2010 | |
Properties Abstract | |
Properties | 11. Properties The following table lists the major categories of property and equipment, as well as the average composite depreciation rate for each category: Millions, Except Percentages Accumulated Net Book Depreciation As of March 31, 2010 Cost Depreciation Value Rate for 2010 Land $ 4,900 $ N/A $ 4,900 N/A Road: Rail and other track material [a] 11,669 4,445 7,224 3.0% Ties 7,347 1,799 5,548 2.8% Ballast 3,882 888 2,994 3.0% Other [b] 13,005 2,250 10,755 2.5% Total road 35,903 9,382 26,521 2.8% Equipment: Locomotives 6,150 2,541 3,609 5.6% Freight cars 1,861 1,010 851 3.6% Work equipment and other 169 34 135 4.4% Total equipment 8,180 3,585 4,595 5.1% Technology and other 527 204 323 13.0% Construction in progress 962 - 962 N/A Total $ 50,472 $ 13,171 $ 37,301 N/A Millions, Except Percentages Accumulated Net Book Depreciation As of December 31, 2009 (Adjusted)* Cost Depreciation Value Rate for 2009 Land $ 4,891 $ N/A $ 4,891 N/A Road: Rail and other track material [a] 11,584 4,414 7,170 3.6% Ties 7,254 1,767 5,487 2.7% Ballast 3,841 869 2,972 2.9% Other [b] 12,988 2,237 10,751 2.4% Total road 35,667 9,287 26,380 2.9% Equipment: Locomotives 6,156 2,470 3,686 5.0% Freight cars 1,885 1,015 870 4.2% Work equipment and other 168 32 136 3.6% Total equipment 8,209 3,517 4,692 4.8% Technology and other 477 204 273 12.5% Construction in progress 966 - 966 N/A Total $ 50,210 $ 13,008 $ 37,202 N/A * Certain amounts have been adjusted for the retrospective change in accounting principle for rail grinding (See Note 3). [a] Depreciation rate includes a weighted-average composite rate for rail in high-density traffic corridors. [b] Other includes grading, bridges and tunnels, signals, buildings, and other road assets. |
Accounts Payable and Other Curr
Accounts Payable and Other Current Liabilities | |
3 Months Ended
Mar. 31, 2010 | |
Accounts Payable And Other Current Liabilities Abstract | |
Accounts Payable and Other Current Liabilities | 12. Accounts Payable and Other Current Liabilities Mar. 31, Dec. 31, Millions 2010 2009 Accounts payable $ 685 $ 612 Income and other taxes 447 224 Accrued casualty costs 373 379 Accrued wages and vacation 346 339 Dividends and interest 285 347 Equipment rents payable 88 89 Other 446 480 Total accounts payable and other current liabilities $ 2,670 $ 2,470 |
Financial Instruments
Financial Instruments | |
3 Months Ended
Mar. 31, 2010 | |
Financial Instruments Abstract | |
Financial Instruments | 13. Financial Instruments Strategy 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 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 March 31, 2010 and December 31, 2009, 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 debt's fair value attributable to the changes in interest rates. We account for swaps as fair value hedges using the short-cut method; therefore, we do not record any ineffectiveness within our Condensed Consolidated Financial Statements. The following is a summary of our interest rate derivatives qualifying as fair value hedges: Mar. 31, Dec. 31, Millions, Except Percentages 2010 2009 Amount of debt hed |
Debt
Debt | |
3 Months Ended
Mar. 31, 2010 | |
Debt Abstract | |
Debt | 14. Debt Credit Facilities On March 31, 2010, 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 three months ended March 31, 2010. 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 Union Pacific Corporation to maintain a debt-to-net-worth coverage ratio as a condition to making a borrowing. At March 31, 2010 and December 31, 2009 (and at all times during the first quarter), 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 March 31, 2010, the debt-to-net-worth coverage ratio allowed us to carry up to $34.4 billion of debt (as defined in the facility), and we had $10.3 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 March 31, 2010, 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 three months ended March 31, 2010, we did not issue or repay any commercial paper. Receivables Securitization Facility As discussed in Note 2, we adopted new accounting guidance on January 1, 2010. As a result, we no longer account for the value of the outstanding undivided interest held by investors under our receivables securitization facility as a sale. In addition, transfers of receivables occurring on or after January 1, 2010 are reflected as debt issued in our Condensed Consolidated Statements of Cash Flows, and the value of the outstanding undivided interest held by investors at March 31, 2010 is accounted for as a secured borrowing and is included in our Condensed Consolidated Statements of Financial Position as debt due after one year. Under the receivables securitization facility, the Railroad sel |
Commitments and Contingencies
Commitments and Contingencies | |
3 Months Ended
Mar. 31, 2010 | |
Commitments And Contingencies Abstract | |
Commitments and Contingencies | 15. Commitments and Contingencies Asserted 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 87% of the recorded liability related to asserted claims, and approximately 13% related to unasserted claims at March 31, 2010. Estimates can vary over time due to evolving trends in litigation. Our personal injury liability activity was as follows: Millions, for the Three Months Ended March 31, 2010 2009 Beginning balance $ 545 $ 621 Accruals 30 54 Payments (42) (40) Ending balance at March 31 $ 533 $ 635 Current portion, ending balance at March 31 $ 158 $ 186 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: Millions, for the Three Months Ended March 31, 2010 2009 Beginning balance $ 174 $ 213 Accruals 0 0 Payments (5) (3) Ending balance at March 31 $ 169 $ 210 Current portion, ending balance at March 31 $ 13 $ 12 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 March 31, 2010, and December 31, 2009. We believe that our estimates |
Share Repurchase Program
Share Repurchase Program | |
3 Months Ended
Mar. 31, 2010 | |
Share Repurchase Program Abstract | |
Share Repurchase Program | 16.Share Repurchase Program On May 1, 2008, our Board of Directors authorized the repurchase of 40 million common shares by March 31, 2011. Management's assessments of market conditions and other pertinent facts guide the timing and volume of all repurchases. If we elect to make repurchases of our common stock under this program in 2010, we expect to fund such repurchases through cash generated from operations, the sale or lease of various operating and non-operating properties, debt issuances, and cash on hand. During the three months ended March 31, 2010 and 2009, we did not repurchase shares under this program. Repurchased shares are recorded in treasury stock at cost, which includes any applicable commissions and fees. |