Union Pacific 2005 Annual Report Download - page 37

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The table below details cash capital expenditures for the years ended December 31, 2005, 2004, and 2003,
including non-cash capital lease financings of $188 million in 2003. There were no non-cash capital lease
financings in 2005 or 2004.
Capital Expenditures
Millions of Dollars 2005 2004 2003
Track ............................................................... $1,472 $1,328 $1,224
Locomotives ......................................................... 89 114 373
Freight cars .......................................................... 9 11 13
Facilities and other .................................................... 599 423 330
Total................................................................ $2,169 $1,876 $1,940
In 2006, we expect our cash capital expenditures to be approximately $2.2 billion. Additionally, we expect to
enter into long-term operating leases for equipment with a net present value of approximately $500 million. These
expenditures will be used to maintain track and structures, continue capacity expansions on our main lines in
constrained corridors, remove bottlenecks, upgrade and augment equipment to better meet customer needs, build
and improve facilities and terminals, and develop and implement new technologies. We expect to fund our 2006
cash capital expenditures through cash generated from operations, the sale or lease of various operating and
non-operating properties, and cash on hand at December 31, 2005. We expect that these sources will continue to
provide sufficient funds to meet our expected capital requirements for 2006.
For the years ended December 31, 2005, 2004, and 2003, our ratio of earnings to fixed charges was 2.9, 2.1,
and 3.2, respectively. The ratio of earnings to fixed charges was computed on a consolidated basis. Earnings
represent income from continuing operations, less equity earnings net of distributions, plus fixed charges and
income taxes. Fixed charges represent interest charges, amortization of debt discount, and the estimated amount
representing the interest portion of rental charges.
Financing Activities
Credit Facilities – On December 31, 2005, we had $2 billion in revolving credit facilities available, including $1
billion under a five-year facility expiring in March 2010 and $1 billion under a five-year facility expiring in March
2009 (collectively, the “facilities”). The facilities are designated for general corporate purposes and support the
issuance of commercial paper. Neither of the facilities were drawn as of December 31, 2005. The five-year facility
expiring in March 2010 replaced a $1 billion 364-day revolving credit facility that expired in March 2005, while
the five-year facility expiring in March 2009 was put in place in 2004 to replace a five-year revolving credit facility
that was due to expire in March 2005. Commitment fees and interest rates payable under the facilities are similar
to fees and rates available to comparably rated investment-grade borrowers. These facilities allow for borrowings
at floating London Interbank Offered Rates (LIBOR)-based rates, plus a spread, depending upon our senior
unsecured debt ratings. The facilities require the maintenance of a minimum net worth and a debt to net worth
coverage ratio. At December 31, 2005, we were in compliance with these covenants. The facilities do not include
any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other
provision that could require the posting of collateral. In addition to our revolving credit facilities, we also had
$150 million in uncommitted lines of credit that were unused at December 31, 2005. We established two $75
million uncommitted lines of credit in May and July 2005, which will expire in May and July 2006, respectively.
At December 31, 2004, approximately $440 million of short-term borrowings that we intended to refinance
were reclassified as long-term debt. This reclassification reflected our ability and intent to refinance these short-
term borrowings and current maturities of long-term debt on a long-term basis. At December 31, 2005, we did
not reclassify any short-term debt to a long-term basis.
Dividend Restrictions – We are subject to certain restrictions related to the payment of cash dividends to our
shareholders due to minimum net worth requirements under our credit facilities. Retained earnings available for
31