Union Pacific 2006 Annual Report Download - page 37

The table below details cash capital investments for the years ended December 31, 2006, 2005, and 2004.
Millions of Dollars 2006 2005 2004
Track ............................................................... $1,487 $1,472 $1,328
Capacity and commercial facilities ........................................ 510 509 347
Locomotives and freight cars ............................................ 135 98 125
Other ............................................................... 110 90 76
Total ................................................................ $2,242 $2,169 $1,876
In 2007, we expect our total capital investments to be approximately $3.2 billion, which may include long-
term leases. These investments 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
designed these investments to maintain infrastructure for safety, enhance customer service, promote growth, and
improve operational fluidity. We expect to fund our 2007 cash capital investments through cash generated from
operations, the sale or lease of various operating and non-operating properties, and cash on hand at December 31,
2006. We expect that these sources will continue to provide sufficient funds to meet our expected capital
requirements for 2007.
For the years ended December 31, 2006, 2005, and 2004, our ratio of earnings to fixed charges was 4.4, 2.9,
and 2.1, respectively. The increases in 2006 and 2005 were driven by higher net income. 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. See
Exhibit 12 for the calculation of the ratio of earnings to fixed charges.
Financing Activities
Credit Facilities – On December 31, 2006, we had $2 billion in revolving credit facilities available, including $1
billion under a five-year facility expiring in March 2009 and $1 billion under a five-year facility expiring in March
2010 (collectively, the "facilities"). The facilities are designated for general corporate purposes and support the
issuance of commercial paper. Neither of the facilities were drawn on in 2006. 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 rates based on London Interbank Offered 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, 2006, 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 had $150 million in uncommitted lines of credit available,
including $75 million that expires in March 2007 and $75 million expiring in May 2007. Neither of these lines of
credit were used as of December 31, 2006. We must have equivalent credit available under our five-year facilities
to draw on these $75 million lines.
Dividends – On January 30, 2007, we increased the quarterly dividend to $0.35 per share, payable beginning on
April 2, 2007, to shareholders of record on February 28, 2007. We expect to fund the increase in the quarterly
dividend through cash generated from operations, the sale or lease of various operating and non-operating
properties, and cash on hand at December 31, 2006.
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
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