Union Pacific 2005 Annual Report Download - page 67

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Equity Adjustment
An additional minimum pension liability adjustment is required when our accumulated benefit obligation
exceeds the fair value of our plan assets, and that difference exceeds the net pension liability recognized in the
Consolidated Statements of Financial Position. The liability was recorded as a $211 million and $212 million
after-tax reduction to common shareholders’ equity as part of accumulated other comprehensive loss in 2005 and
2004, respectively.
The equity reduction may be restored to the balance sheet in future periods if the fair value of plan assets
exceeds the accumulated benefit obligations. This reduction to equity does not affect net income or cash flow and
has no impact on compliance with debt covenants.
Cash Contributions
The following table details our cash contributions for the years ended December 31, 2005 and 2004, and the
expected contributions for 2006:
Pension
Millions of Dollars Funded Unfunded OPEB
2004 ............................. $100 $ 8 $40
2005 ............................. - 9 34
2006 ............................. 50 10 32
Our policy with respect to funding the qualified plans is to fund at least the minimum required by the
Employee Retirement Income Security Act of 1974, as amended, and not more than the maximum amount
deductible for tax purposes. We do not currently have minimum funding requirements under applicable
employee benefit and tax laws. All contributions made to the funded pension plans for 2004 were voluntary and
were made with cash generated from operations. In January 2006, we made a $50 million voluntary contribution
to the funded pension plan. No further contributions are expected during 2006.
All benefit payments for other postretirement benefits are voluntary, as the postretirement plans are not
funded, and are not subject to any minimum regulatory funding requirements. Benefit payments for each year
represent claims paid for medical and life insurance, and we anticipate our 2006 OPEB payments will be made
from cash generated from operations.
Benefit Payments
The following table details expected benefit payments for the years 2006 though 2015:
Millions of Dollars Pension OPEB
2006 ....................................................................... $117 $ 32
2007 ....................................................................... 119 34
2008 ....................................................................... 121 35
2009 ....................................................................... 125 37
2010 ....................................................................... 129 38
Years 2011 – 2015 ............................................................ 724 192
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