Union Pacific 2002 Annual Report Download - page 78

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6. Leases
The Corporation leases certain locomotives, freight cars, trailers and other property. Future minimum lease payments for
operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of December 31,
2002 were as follows:
Operating Capital
Millions of Dollars Leases Leases
2003........................................................................................................................................... $ 444 $ 210
2004........................................................................................................................................... 398 214
2005........................................................................................................................................... 363 193
2006........................................................................................................................................... 320 190
2007........................................................................................................................................... 257 170
Later Years................................................................................................................................. 1,519 1,469
Total minimum lease payments .............................................................................................. $ 3,301 2,446
Amount representing interest.................................................................................................. (988)
Present value of minimum lease payments ............................................................................ $ 1,458
Rent expense for operating leases with terms exceeding one month was $605 million in 2002, $590 million in 2001 and
$569 million in 2000. Contingent rentals and sub-rentals are not significant.
7. Retirement Plans
Thrift Plan – The Corporation provides a defined contribution plan (thrift plan) to eligible non-union employees. The
Corporation’s contributions into the thrift plan are based on 50% of the participant’s contribution, limited to 3% of the
participant’s base salary. Corporation thrift plan contributions were $21 million, $21 million and $20 million for the years
ended December 31, 2002, 2001, and 2000, respectively.
Railroad Retirement System – All Railroad employees are covered by the Railroad Retirement System (the System). On
December 21, 2001, The Railroad Retirement and Survivors’ Improvement Act of 2001 (the Act) was signed into law. The Act
was a result of historic cooperation between rail management and labor, and provides improved railroad retirement benefits
for employees and reduced payroll taxes for employers. Contributions made to the System are expensed as incurred and
amounted to approximately $595 million in 2002, $607 million in 2001 and $611 million in 2000.
Other Postretirement Benefits – All non-union and certain of the Corporation’s union employees participate in defined
contribution medical and life insurance programs for retirees. The Corporation also provides medical and life insurance
benefits on a cost sharing basis for qualifying employees. These costs are funded as incurred.
Pension Plans – The Corporation provides defined benefit retirement income to eligible non-union employees through
qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years
of service and the highest compensation during the latest years of employment. The qualified plans are funded based on the
Projected Unit Credit actuarial funding method and are funded at not less than the minimum funding standards set forth
in the Employee Retirement Income Security Act of 1974, as amended and not more than the maximum amount deductible
for tax purposes. The Corporation has settled a portion of the non-qualified unfunded supplemental plan’s accumulated
benefit obligation by purchasing annuities.