Union Pacific 2005 Annual Report Download - page 38

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dividends increased to $6.2 billion at December 31, 2005, from $5.2 billion at December 31, 2004. We do not
expect that these restrictions will have a material adverse effect on our consolidated financial condition, results of
operations, or liquidity.
Shelf Registration Statement – Under a current shelf registration statement, we may issue any combination of
debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one or more
offerings. At December 31, 2005, we had $500 million remaining for issuance under the current shelf registration
statement. We have no immediate plans to issue any securities; however, we routinely consider and evaluate
opportunities to replace existing debt or access capital through issuances of debt securities under this shelf
registration, and, therefore, we may issue debt securities at any time.
Operating Lease Activities
As of December 31, 2005, our contractual obligations for operating leases totaled approximately $4.9 billion.
Discounted at 8%, the present value of this obligation was approximately $3.2 billion. The Railroad entered into
lease arrangements during 2005 to finance its new equipment acquisition program. In 2005, the Railroad, as
lessee, entered into long-term operating lease arrangements covering 317 locomotives and approximately 2,900
freight cars. The lessors under these lease arrangements purchased the locomotives and freight cars from the
Corporation through various financing transactions that totaled approximately $838 million, with a present value
of $690 million. These new lease arrangements provide for minimum total rental payments of approximately $1.2
billion, which are reflected in the contractual obligations table as of December 31, 2005.
The lessors financed the purchase of the locomotives and freight cars, in part, by the issuance of equipment
notes that are non-recourse to the Railroad and are secured by an assignment of the underlying leases and a
security interest in the equipment. Neither the Railroad nor UPC guarantees payment of the equipment notes.
The Railroad’s obligations to make operating lease payments under the leases are recourse obligations and are not
recorded in the Consolidated Statements of Financial Position.
The Railroad has certain renewal and purchase options with respect to the locomotives and freight cars. If
the Railroad elects not to exercise any such options, the equipment will be returned to the lessors at the end of the
lease term.
On July 8, 2005, the Railroad completed the acquisition of its partner’s interest in Bay Pacific Financial
L.L.C., a joint venture established to assist in the acquisition of containers and chassis for use by the Railroad in
intermodal service, for a purchase price of $51 million. As a result of the acquisition, the Railroad owns 100% of
the joint venture. Total minimum rental payments for operating leases acquired in the acquisition were $202
million at the time of acquisition.
Off-Balance Sheet Arrangements, Contractual Obligations, and Commitments
As described in the notes to the Financial Statements and Supplementary Data, Item 8, and as referenced in the
tables below, we have contractual obligations and commercial commitments that may affect our financial
condition. However, based on our assessment of the underlying provisions and circumstances of our material
contractual obligations and commercial commitments, including material sources of off-balance sheet and
structured finance arrangements, there is no known trend, demand, commitment, event, or uncertainty that is
reasonably likely to occur that would have a material adverse effect on our consolidated results of operations,
financial condition, or liquidity. In addition, the commercial obligations, financings, and commitments made by
us are customary transactions that are similar to those of other comparable corporations, particularly within the
transportation industry.
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