Union Pacific 2010 Annual Report Download - page 38

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Ratio of Earnings to Fixed Charges
For each of the years ended December 31, 2010, 2009, and 2008, our ratio of earnings to fixed charges
was 6.9, 4.9, and 5.9, respectively. The ratio of earnings to fixed charges was computed on a
consolidated basis. Earnings represent income from continuing operations, less equity earnings net of
distributions, plus fixed charges and income taxes. Fixed charges represent interest charges,
amortization of debt discount, and the estimated amount representing the interest portion of rental
charges. (See Exhibit 12 to this report for the calculation of the ratio of earnings to fixed charges.)
Common Shareholders’ Equity
Dividend Restrictions – Our revolving credit facility includes a debt-to-net worth covenant (discussed in
the Credit Facilities section above) that, under certain circumstances, restricts the payment of cash
dividends to our shareholders. The amount of retained earnings available for dividends was $12.9 billion
and $11.6 billion at December 31, 2010 and 2009, respectively.
Share Repurchase Program – On May 1, 2008, our Board of Directors authorized the repurchase of 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. Any share repurchases under this program
are expected to be funded through cash generated from operations, the sale or lease of various operating
and non-operating properties, debt issuances, and cash on hand. Repurchased shares are recorded in
treasury stock at cost, which includes any applicable commissions and fees.
Number of Shares Purchase
d
A
verage Price Pai
d
2010 2009 2010 2009
First quarter - - $- $-
Second quarter 6,496,400 - 71.74 -
Third quarter 7,643,400 - 73.19 -
Fourth quarter 2,500,596 - 89.39 -
Total 16,640,396 - $ 75.06 $-
Remaining number of shares that may yet be repurchased 15,936,694
On February 3, 2011, our Board of Directors authorized us to repurchase up to 40 million additional
shares of our common stock under a new program effective from April 1, 2011 through March 31, 2014.
Shelf Registration Statement and Significant New Borrowings – We filed a shelf registration
statement, which became effective upon filing on February 10, 2010. Our Board of Directors authorized
the issuance of up to $3 billion of debt securities, replacing the $2.25 billion of authority remaining under
our shelf registration filed in March 2007. Under the shelf registration, 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.
During 2010, we issued the following unsecured, fixed-rate debt securities under our current shelf
registration:
Date Description of Securities
August 2, 2010 $500 million of 4.00% Notes due February 1, 2021
The net proceeds from the offering were used 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. At December 31, 2010, we had
remaining authority to issue up to $2.5 billion of debt securities under our shelf registration.