Union Pacific 2002 Annual Report Download - page 85

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11. Other Income
Other income included the following:
Millions of Dollars 2002 2001 2000
Net gain on non-operating asset dispositions............................................... $ 288 $ 133 $ 88
Rental income.................................................................................................. 60 89 75
Interest income................................................................................................ 14 12 11
Fuel swaptions ................................................................................................. 5 (18) -
Other, net ......................................................................................................... (42) (54) (44)
Total.................................................................................................................. $ 325 $ 162 $ 130
Included in the 2002 gain on non-operating asset dispositions is a pre-tax gain of $141 million related to the sale of land,
track, operating rights and facilities to the Utah Transit Authority (UTA) for $185 million, which included approximately
175 miles of track that stretches from Brigham City, Utah, through Salt Lake City, Utah, south to Payson, Utah. The
transaction contributed $88 million to the Corporation’s earnings on an after-tax basis. An additional $16 million of the pre-
tax gain has been deferred pending successful completion of arrangements for the relocation of various existing facilities.
Also included in the 2002 gain on non-operating asset dispositions is a pre-tax gain of $73 million related to the sale of
land and track to the Santa Clara Valley Transportation Authority (VTA) for $80 million, which included approximately 15
miles of track that stretches from William Street in San Jose, California, north to Paseo Padre Parkway in Fremont,
California. The transaction contributed $45 million to the Corporation’s earnings on an after-tax basis.
12. Accounting Pronouncements
In August 2001, the FASB issued Statement No. 143, “Accounting for Asset Retirement Obligations” (FAS 143). FAS 143 is
effective for the Corporation beginning January 1, 2003. FAS 143 requires that the Corporation record a liability for the fair
value of an asset retirement obligation when the Corporation has a legal obligation to remove the asset. The standard will
affect the way the Corporation accounts for track structure removal costs, but will have no impact on liquidity. The
Corporation is currently evaluating the impact of this statement on the Corporation's Consolidated Financial Statements.
Any impact resulting from the adoption of this statement will be recorded as a cumulative effect of a change in accounting
principle in the first quarter of 2003.
In June 2002, the FASB issued Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (FAS
146). FAS 146 requires that a liability for a cost associated with an exit or disposal activity is recognized at fair value when
the liability is incurred and is effective for exit or disposal activities that are initiated after December 31, 2002. Management
believes that FAS 146 will not have a material impact on the Corporation’s Consolidated Financial Statements.
In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Guarantees of Indebtedness of Others” (FIN 45). FIN 45 is effective for guarantees issued or modified
after December 31, 2002. The disclosure requirements were effective for the year ending December 31, 2002, which expand
the disclosures required by a guarantor about its obligations under a guarantee. FIN 45 also requires the Corporation to
recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in the issuance of the
guarantee. Management does not believe that FIN 45 will have a material impact on the Corporation’s Consolidated
Financial Statements.
In December 2002, the FASB issued Statement No. 148, “Accounting for Stock-Based Compensation – Transition and
Disclosure” (FAS 148). FAS 148 provides alternative methods of transition for voluntary changes to the fair value based
method of accounting for stock-based employee compensation, and amends the disclosure requirements including a
requirement for interim disclosures. The Corporation currently discloses the effects of stock-based employee compensation
and does not intend to voluntarily change to the alternative accounting principle.
In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46
requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss
from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46
also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a