Union Pacific 2001 Annual Report Download - page 29

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3
PART I
Item 1. Business
CORPORATE STRUCTURE
Union Pacific Corporation (UPC or the Corporation) was incorporated in Utah in 1969. The Corporation's principal
executive offices are located at 1416 Dodge Street, Room 1230, Omaha, NE 68179. The telephone number at that
address is (402) 271-5777. The Corporation's common stock is listed on the New York Stock Exchange under the symbol
"UNP". The Corporation operates primarily in the areas of rail transportation, through its indirect wholly owned
subsidiary Union Pacific Railroad Company (UPRR or the Railroad), and trucking, through its indirect wholly owned
subsidiaries Overnite Transportation Company (Overnite) and, subsequent to November 30, 2001, Motor Cargo
Industries, Inc. (Motor Cargo). The details of strategic transactions in recent years are as follows:
Southern Pacific – During 2001, UPC completed its integration of Southern Pacific’s rail operations (see notes 1 and 2
to the Consolidated Financial Statements, Item 8). UPC consummated the acquisition of Southern Pacific in September
1996 for $4.1 billion. Sixty percent of the outstanding Southern Pacific common shares was converted into UPC common
stock and the remaining 40% of the outstanding shares was acquired for cash. UPC initially funded the cash portion of
the acquisition with credit facility borrowings, all of which have been subsequently refinanced with other borrowings.
The acquisition of Southern Pacific has been accounted for using the purchase method of accounting and was fully
consolidated into UPC results beginning October 1996.
Mexican Railway Concession – During 1997, the Railroad and a consortium of partners were granted a 50-year
concession to operate the Pacific-North and Chihuahua Pacific lines in Mexico and a 25% stake in the Mexico City
Terminal Company at a price of $525 million. The consortium assumed operational control of both lines in 1998. In
March 1999, the Railroad purchased an additional 13% ownership interest for $87 million from one of its partners. The
Railroad currently holds a 26% ownership share in the consortium. This investment is accounted for using the equity
method of accounting.
Motor Cargo – The Corporation entered into an Agreement and Plan of Merger, dated October 15, 2001 (the
Agreement), with Motor Cargo, a Utah corporation, and Motor Merger Co., a Utah corporation and wholly owned
subsidiary of UPC, pursuant to which, the Corporation agreed to offer to exchange for each share of Motor Cargo
common stock, no par value (Motor Cargo Stock), at the election of the holder, either 0.26 of a share of common stock,
par value $2.50 per share, of the Corporation or $12.10 in cash. As a result of the exchange offer, UPC acquired 99.7%
of Motor Cargo Stock as of November 30, 2001, and therefore, Motor Cargo's results of operations were consolidated
with the Corporation subsequent to November 30, 2001. The Corporation utilized approximately 1.7 million shares of
UPC common stock in the exchange. In February 2002, the Corporation completed the acquisition of the remaining
shares of Motor Cargo Stock, and Motor Merger Co. was merged with Motor Cargo leaving Motor Cargo as the surviving
corporation. After completion of the merger, the trucking segment of the Corporation now includes Overnite and Motor
Cargo operating as separate and distinct companies under Overnite Corporation, a newly formed holding company.
Under the purchase method of accounting, the purchase price was approximately $85 million, including assumed
liabilities.
OPERATIONS
Union Pacific Corporation consists of two reportable segments, rail and trucking, as well as UPC’s other product lines
(Other). The rail segment includes the operations of UPRR and UPRR’s subsidiaries and rail affiliates (collectively, the
Railroad). The trucking segment includes the operations of Overnite and, subsequent to November 30, 2001, Motor
Cargo. The Corporation's other product lines are comprised of the corporate holding company (which largely supports
the Railroad), Fenix LLC and affiliated technology companies (Fenix), self-insurance activities and all appropriate
consolidating entries (see note 1 to the Consolidated Financial Statements, Item 8).