EXHIBIT 12
Union Pacific Corporation and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
(In Thousands, Except Ratios)
(Unaudited)
The following table sets forth the consolidated Earnings to
Fixed Charges ratio of Union Pacific Corporation (the "Company" or
"UPC") for the year ended December 31, 1994 and as adjusted for the pro
forma effect of (i) the Company's acquisition of Chicago and North Western
Transportation Company ("CNW") and related borrowings and (ii) the
Company's acquisition of CNW and related borrowings and the proposed
issuance by the Company of $425 million of 7.60% Notes Due May 1, 2005
and $275 million of 8.35% Sinking Fund Debentures Due May 1, 2025, in
each case as if such transactions had occurred on December 31, 1994.
The following information was derived from the audited consolidated
historical financial statements of the Company and CNW for the year
ended December 31, 1994. This information is presented for
informational purposes only and does not purport to be indicative of
the financial condition that would have resulted if such transactions
had been consummated on December 31, 1994. The pro forma information
set forth below does not include the effects of any potential increase
in operating income created by operational efficiencies and new
business opportunities, or one-time costs to achieve such increases,
nor does it include a final allocation of purchase price to the assets
and liabilities of CNW based upon fair market value. The following table
should be read in conjunction with the audited consolidated historical
financial statements of the Company and CNW, including the notes thereto.
Twelve Months
Ended December 31, 1994
CNW
Acquisition
CNW and Securities
UPC Acquisition Offering
Actual Pro Forma Pro Forma
Earnings:
Income from continuing operations.... $ 958,654 $ 927,654 $ 932,064
Add (deduct) amount by which
distributions are greater (less)
than income of unconsolidated
affiliates....................... (50,479) (29,194) (29,194)
Total....................... 908,175 898,460 902,870
------- ------- -------
Income Taxes:
Federal, state and local............ 460,344 472,901 475,491
------- ------- -------
Fixed Charges:
Interest expense including
amortization of debt discount.... 336,012 538,546 531,546
Portion of rentals representing an
interest factor.................. 48,588 114,004 114,004
------ ------- -------
Total....................... 384,600 652,550 645,550
------- ------- -------
2
Earnings available for fixed charges... $1,753,119 $2,023,911 $2,023,911
---------- ---------- ----------
Fixed charges--as above................ $ 384,600 $ 652,550 $ 645,550
Interest capitalized................... 1,034 1,034 1,034
----- ----- -----
Total fixed charges......... $ 385,634 $ 653,584 $ 646,584
--------- ---------- ----------
Ratio of earnings to fixed charges..... 4.5 3.1 3.1
--- --- ---
The ratio of earnings to fixed charges has been computed on
a total enterprise basis. Earnings represent income from continuing
operations less equity in undistributed earnings of unconsolidated
affiliates, plus income taxes and fixed charges. The pro forma
calculation includes the effect of goodwill amortization created as
part of the CNW acquisition and interest on the initial acquisition
debt at an assumed interest rate of 9 percent per annum. Fixed charges
represent interest, amortization of debt discount and expense, and the
estimated interest portion of rental charges. The pro forma fixed
charges calculation also includes interest on the acquisition debt.