Union Pacific 2009 Annual Report Download - page 41

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Common Shareholders’ Equity
Dividend Restrictions – Our revolving credit facility includes a debt-to-net worth covenant that, under
certain circumstances, restricts the payment of cash dividends to our shareholders. The amount of retained
earnings available for dividends was $11.7 billion and $10.5 billion at December 31, 2009 and 2008,
respectively.
Stock Split – On May 28, 2008, we completed a two-for-one stock split, effected in the form of a 100%
stock dividend. The stock split entitled all shareholders of record at the close of business on May 12,
2008, to receive one additional share of our common stock, par value $2.50 per share, for each share of
common stock held on that date.
Share Repurchase Program – On January 30, 2007, our Board of Directors authorized the repurchase of
up to 40 million shares of Union Pacific Corporation common stock through the end of 2009. On May 1,
2008, our Board of Directors authorized the repurchase of an additional 40 million common shares by
March 31, 2011. Management’ s assessments of market conditions and other pertinent facts guide the
timing and volume of all repurchases. During 2009, we did not repurchase shares under this program. In
2008, we repurchased approximately 22 million shares at an aggregate purchase price of approximately
$1.5 billion. These shares were recorded in treasury stock at cost, which includes any applicable
commissions and fees. If we elect to make repurchases of our common stock under this program in 2010,
we expect to fund such repurchases through cash generated from operations, the sale or lease of various
operating and non-operating properties, debt issuances, and cash on hand.
Shelf Registration Statement and Significant New Borrowings – Under our current shelf registration
statement, we may issue, from time to time, any combination of debt securities, preferred stock, common
stock, or warrants for debt securities or preferred stock in one or more offerings. In July 2008, our Board
of Directors authorized the issuance of an additional $3 billion of debt securities under our shelf
registration. At December 31, 2009, we had remaining authority to issue up to $2.25 billion of debt
securities.
During 2009, we issued the following unsecured, fixed-rate debt securities under our current shelf
registration:
Date Description of Securities
February 20, 2009 $350 million of 5.125% Notes due February 15, 2014
February 20, 2009 $400 million of 6.125% Notes due February 15, 2020
The net proceeds from these offerings were for general corporate purposes, including the repurchase of
common stock pursuant to our share repurchase program. These debt securities include change-of-control
provisions.
We have no immediate plans to issue equity securities; however, we will continue to explore
opportunities to replace existing debt or access capital through issuances of debt securities under our shelf
registration, and, therefore, we may issue additional debt securities at any time.
During the second quarter of 2009, we restructured lease agreements for 813 locomotives resulting in a
change in lease classification from operating to capital. As part of the restructuring arrangements, we
received $87 million in cash consideration. We recorded capital lease assets of approximately $742
million and related capital lease obligations totaling approximately $843 million. Included in our capital
lease obligations is the $87 million in cash consideration and $14 million of accrued operating lease