Union Pacific 2010 Annual Report Download - page 55

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Union Pacific Corporation and Subsidiary Companies
For purposes of this report, unless the context otherwise requires, all references herein to the
“Corporation”, “UPC”, “we”, “us”, and “our” mean Union Pacific Corporation and its subsidiaries, including
Union Pacific Railroad Company, which will be separately referred to herein as “UPRR” or the “Railroad”.
1. Nature of Operations
Operations and Segmentation – We are a Class I railroad that operates in the U.S. We have 31,953
route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and eastern U.S. gateways and
providing several corridors to key Mexican gateways. We serve the western two-thirds of the country and
maintain coordinated schedules with other rail carriers for the handling of freight to and from the Atlantic
Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. Export and import traffic is
moved through Gulf Coast and Pacific Coast ports and across the Mexican and Canadian borders.
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment.
Although revenues are analyzed by commodity group, we analyze the net financial results of the Railroad
as one segment due to the integrated nature of our rail network. The following table provides revenue by
commodity group:
Millions 2010 2009 2008
Agricultural $ 3,018 $ 2,666 $ 3,174
Automotive 1,271 854 1,344
Chemicals 2,425 2,102 2,494
Energy 3,489 3,118 3,810
Industrial Products 2,639 2,147 3,273
Intermodal 3,227 2,486 3,023
Total freight revenues $ 16,069 $ 13,373 $ 17,118
Other revenues 896 770 852
Total operating revenues $ 16,965 $ 14,143 $ 17,970
Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of
origination or destination for some products transported are outside the U.S.
Basis of Presentation – The Consolidated Financial Statements are presented in accordance with
accounting principles generally accepted in the U.S. (GAAP) as codified in the Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC).
2. Significant Accounting Policies
Principles of Consolidation – The Consolidated Financial Statements include the accounts of Union
Pacific Corporation and all of its subsidiaries. Investments in affiliated companies (20% to 50% owned)
are accounted for using the equity method of accounting. All intercompany transactions are eliminated.
We currently have no less than majority-owned investments that require consolidation under variable
interest entity requirements.
Cash and Cash Equivalents – Cash equivalents consist of investments with original maturities of three
months or less.
Accounts Receivable – Accounts receivable includes receivables reduced by an allowance for doubtful
accounts. The allowance is based upon historical losses, credit worthiness of customers, and current
economic conditions. Receivables not expected to be collected in one year and the associated
allowances are classified as other assets in our Consolidated Statements of Financial Position.
Investments – Investments represent our investments in affiliated companies (20% to 50% owned) that
are accounted for under the equity method of accounting and investments in companies (less than 20%
owned) accounted for under the cost method of accounting.