Union Pacific 2009 Annual Report Download - page 38

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38
have access to liquidity by issuing bonds to public or private investors based on our assessment of the
current condition of the credit markets.
At December 31, 2009, we had a working capital surplus of approximately $1.0 billion, which reflects our
decision to maintain additional cash reserves to enhance liquidity in response to difficult economic
conditions. At December 31, 2008, we had a working capital deficit of approximately $100 million.
Historically, we have had a working capital deficit, which is common in our industry and does not
indicate a lack of liquidity. We maintain adequate resources and, when necessary, have access to capital
to meet any daily and short-term cash requirements, and we have sufficient financial capacity to satisfy
our current liabilities.
Cash Flows
Millions of Dollars 2009 2008 2007
Cash provided by operating activities $ 3,234 $ 4,070 $ 3,277
Cash used in investing activities (2,175) (2,764) (2,426)
Cash used in financing activities (458) (935
)
(800)
Net change in cash and cash equivalents $ 601 $ 371 $ 51
Operating Activities
Lower net income in 2009, a reduction of $184 million in the outstanding balance of our accounts
receivable securitization program, higher pension contributions of $72 million, and changes to working
capital combined to decrease cash provided by operating activities compared to 2008. Higher net income
and changes in working capital combined to increase cash provided by operating activities in 2008
compared to 2007. In addition, accelerated tax deductions enacted in 2008 on certain new operating assets
resulted in lower income tax payments in 2008 versus 2007. Voluntary pension contributions in 2008
totaling $200 million and other pension contributions of $8 million partially offset the year-over-year
increase versus 2007.
Investing Activities
Lower capital investments and higher proceeds from asset sales drove the decrease in cash used in
investing activities in 2009 versus 2008. Increased capital investments and lower proceeds from asset
sales drove the increase in cash used in investing activities in 2008 compared to 2007.