Union Pacific 2006 Annual Report Download - page 38

for dividends increased to $7.8 billion at December 31, 2006, from $6.2 billion at December 31, 2005. We do not
expect that these restrictions will have a material adverse effect on our consolidated results of operations, financial
condition, or liquidity.
Common Stock Repurchases – On January 30, 2007, our Board of Directors authorized us to repurchase up to
20 million shares of our common stock through December 31, 2009. We may make these repurchases on the open
market or through other transactions. Our management will have sole discretion with respect to determining the
timing and amount of these transactions. We expect to fund our common stock repurchases through cash
generated from operations, the sale or lease of various operating and non-operating properties, and cash on hand
at December 31, 2006.
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, 2006, 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, 2006, our contractual obligations for operating leases totaled approximately $5.5 billion.
Discounted at 8%, the present value of this obligation was approximately $3.5 billion. The Railroad, as lessee,
entered into long-term operating lease arrangements during 2006 to finance the majority of its new equipment
acquisitions. In 2006, the lessors under these lease arrangements purchased 200 locomotives and 2,100 freight cars
from the Corporation through various financing transactions with a total equipment cost of approximately $523
million and a present value of $427 million. These new lease arrangements provide for minimum total rental
payments of approximately $777 million and are reflected in the contractual obligations table as of December 31,
2006.
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 various types of 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 does not exercise any such options, the equipment will be returned to the lessors at the end of the
lease term.
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 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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