Union Pacific 2002 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”.
A copy of this Annual Report on Form 10-K, as well as the Corporation’s Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and any amendments to such reports are available, free of charge, on the Internet at the Corporation’s
website www.up.com/investors. The reference to the Corporation’s website address does not constitute incorporation by
reference of the information contained on the website and should not be considered part of this document.
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, which includes Overnite Transportation Company
(OTC) and Motor Cargo Industries, Inc. (Motor Cargo) as of November 30, 2001, both operating as separate and distinct
subsidiaries of Overnite Corporation (Overnite), an indirect wholly owned subsidiary of UPC. 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. 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 OTC and Motor Cargo operating as separate and distinct companies
under Overnite. Under the purchase method of accounting, the purchase price was approximately $90 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 OTC and Motor Cargo, as of November 30, 2001, both operating as separate and
distinct subsidiaries of Overnite. The Corporation’s other product lines are comprised of the corporate holding company
(which largely supports the Railroad), self-insurance activities, technology companies and all appropriate consolidating
entries (see note 1 to the Consolidated Financial Statements, Item 8).