Union Pacific 2005 Annual Report Download - page 72

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8. Earnings Per Share
The following table provides a reconciliation between basic and diluted earnings per share for the years ended
December 31:
Millions, Except Per Share Amounts 2005 2004 2003
Income statement data:
Income from continuing operations .................................... $1,026 $ 604 $1,056
Income from discontinued operations ................................... - - 255
Cumulative effect of accounting change ................................. - - 274
Net income available to common shareholders – basic ........................ $1,026 $ 604 $1,585
Dilutive effect of interest associated with the Convertible Preferred Securities ..... - - 34
Net income available to common shareholders – diluted ...................... $1,026 $ 604 $1,619
Weighted-average number of shares outstanding:
Basic .............................................................. 263.4 259.1 254.4
Dilutive effect of stock options ......................................... 1.5 1.2 1.5
Dilutive effect of retention shares, stock units and restricted shares ............ 1.6 1.9 1.8
Dilutive effect of Convertible Preferred Securities .......................... - - 10.3
Diluted .............................................................. 266.5 262.2 268.0
Earnings per share – basic:
Income from continuing operations .................................... $ 3.89 $ 2.33 $ 4.15
Income from discontinued operations ................................... - - 1.00
Cumulative effect of accounting change ................................. - - 1.08
Net income ........................................................ $ 3.89 $ 2.33 $ 6.23
Earnings per share – diluted:
Income from continuing operations .................................... $ 3.85 $ 2.30 $ 4.07
Income from discontinued operations ................................... - - 0.95
Cumulative effect of accounting change ................................. - - 1.02
Net income ........................................................ $ 3.85 $ 2.30 $ 6.04
Common stock options totaling 1.4 million and 3.3 million for 2005 and 2004, respectively, were excluded
from the computation of diluted earnings per share because the exercise prices of these options exceeded the
average market price of our common stock for the respective periods, and the effect of their inclusion would be
anti-dilutive. All stock options were dilutive for 2003.
9. Commitments and Contingencies
Unasserted Claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. It is not
possible at this time for us to determine fully the effect of all unasserted claims on our consolidated financial
condition, results of operations or liquidity; however, to the extent possible, where unasserted claims can be
estimated and where such claims are considered probable, 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 financial condition, results of operations, or liquidity after taking into
account liabilities 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
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