Union Pacific 2011 Annual Report Download

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission File Number 1-6075
UNION PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
UTAH 13-2626465
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 DOUGLAS STREET, OMAHA, NEBRASKA
(Address of principal executive offices)
68179
(Zip Code)
(402) 544-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
Common Stock (Par Value $2.50 per share)
Name of each exchange on which registered
New York Stock Exchange, Inc.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.  Yes  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website,
if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes  No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer  Non-accelerated filer  Smaller reporting company 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
 Yes No
As of June 30, 2011, the aggregate market value of the registrant’s Common Stock held by non-affiliates (using the
New York Stock Exchange closing price) was $50.7 billion.
The number of shares outstanding of the registrant’s Common Stock as of January 27, 2012 was 480,067,865.

Table of contents

  • Page 1
    ... in Rule 12b-2 of the Act). Yes  No As of June 30, 2011, the aggregate market value of the registrant's Common Stock held by non-affiliates (using the New York Stock Exchange closing price) was $50.7 billion. The number of shares outstanding of the registrant's Common Stock as of January 27, 2012...

  • Page 2
    ...'s Annual Report on Internal Control Over Financial Reporting...Report of Independent Registered Public Accounting Firm ...Other Information ...PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers, and Corporate Governance ...Executive Compensation ...Security...

  • Page 3
    ...generating increasing financial returns, providing fuel efficient and environmentally responsible transportation, and creating solid, well-paying jobs. The bar has been raised for Union Pacific in 2012 and our prospects have never been better. We pay tribute to our 45,000 employees, whose innovation...

  • Page 4
    ... Vice President-Finance and Chief Financial Officer Union Pacific Corporation Michael A. Rock Vice President-External Relations Union Pacific Corporation Barbara W. Schaefer John J. Koraleski Executive Vice President- Marketing and Sales Union Pacific Railroad Company Senior Vice President-Human...

  • Page 5
    ...the only railroad serving all six major gateways to Mexico, making it North America's premier rail franchise. Union Pacific Corporation was incorporated in Utah in 1969 and maintains its principal executive offices at 1400 Douglas Street, Omaha, NE 68179. The telephone number at that address is (402...

  • Page 6
    ... California, destined for chemical and glass producing markets in North America and abroad. Energy - Coal and petroleum coke transportation accounted for the largest share of our freight revenue, 22% in 2011. The Railroad's network supports the transportation of coal and petroleum coke to utilities...

  • Page 7
    ... - Approximately 86% of our 44,861 full-time-equivalent employees are represented by 14 major rail unions. In January 2010, the nation's largest freight railroads began the current round of negotiations with the labor unions. Generally, contract negotiations with the various unions take place 7

  • Page 8
    ... an emergency response management center, which operates 24 hours a day. The center receives reports of emergencies, dangerous or potentially dangerous conditions, and other safety and security issues from our employees, the public, and law enforcement and other government officials. In cooperation...

  • Page 9
    ... equipment standards. The Rail Safety Improvement Act of 2008, among other things, revised hours of service rules for train and certain other railroad employees, mandated implementation of PTC, imposed passenger service requirements, addressed safety at rail crossings, increased the number of safety...

  • Page 10
    ... prices for rail services, which could reduce capital spending on our rail network, facilities and equipment and have a material adverse effect on our results of operations, financial condition, and liquidity. As part of the Rail Safety Improvement Act of 2008, railroad carriers must implement PTC...

  • Page 11
    ... Affect Our Operations as the Majority of Our Employees Belong to Labor Unions and Labor Agreements - The U.S. Class I railroads are party to collective bargaining agreements with various labor unions. Disputes with regard to the terms of these agreements or our potential inability to negotiate...

  • Page 12
    ... results of operations, financial condition, and liquidity. The Availability of Qualified Personnel Could Adversely Affect Our Operations - Changes in demographics, training requirements, and the availability of qualified personnel could negatively affect our ability to meet demand for rail service...

  • Page 13
    ... meet our specifications. Rail is critical to our operations for rail replacement programs, maintenance, and for adding additional network capacity, new rail and storage yards, and expansions of existing facilities. This industry similarly has high barriers to entry, and if one of these suppliers...

  • Page 14
    ...freight; rail yards for train-building (classification yards), switching, storage-in-transit (the temporary storage of customer goods in rail cars prior to shipment) and other activities; offices to administer and manage our operations; dispatching centers to direct traffic on our rail network; crew...

  • Page 15
    ... Joliet (Global 4), Illinois [a] Global I (Chicago), Illinois Marion (Memphis), Tennessee Yard Center (Chicago), Illinois Global II (Chicago), Illinois Dallas, Texas Mesquite, Texas LATC (Los Angeles), California [a] New terminal completed in August 2010 with an annual capacity of 500,000 intermodal...

  • Page 16
    ..., 2011 and 2010, respectively, served as collateral for capital leases and other types of equipment obligations in accordance with the secured financing arrangements utilized to acquire such railroad equipment. As a result of the merger of Missouri Pacific Railroad Company (MPRR) with and into UPRR...

  • Page 17
    ... the named railroads engaged in price-fixing by establishing common fuel surcharges for certain rail traffic. We received additional complaints following the initial claim, increasing the total number of complaints to 30. In addition to suits filed by direct purchasers of rail transportation, a few...

  • Page 18
    .... On July 22, 2011, the Railroad and the Acting Commissioner of CBP signed an agreement under which the Railroad does not pay any fines but commits to participate in, and provide $50 million to fund, a major initiative to enhance border and supply chain security for rail shipments transiting the...

  • Page 19
    ... Lance M. Fritz John J. Koraleski Position Chairman, President and Chief Executive Officer of UPC and the Railroad Executive Vice President - Finance and Chief Financial Officer of UPC and the Railroad Senior Vice President - Law and General Counsel of UPC and the Railroad Senior Vice President...

  • Page 20
    ... Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol "UNP". The following table presents the dividends declared and the high and low closing prices of our common stock for each of the indicated quarters. 2011 - Dollars Per Share Dividends...

  • Page 21
    ... Total [a] Total Number of Shares Purchased [a] 379,488 1,748,964 1,787,343 3,915,795 Average Price Paid Per Share 87.46 98.41 100.26 $ 98.19 [b] Total number of shares purchased during the quarter includes approximately 30,137 shares delivered or attested to UPC by employees to pay stock option...

  • Page 22
    ... due to implementation of new mileage-based fuel surcharge programs in each respective year. (See further discussion in Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Operating Revenues, Item 7.) Earnings per share and dividends have...

  • Page 23
    ...our through-freight trains. During 2011, the rate of grade crossing incidents per million train miles decreased 9% from 2010, matching our record low for this measure. Overall, our 2011 safety results reflect our continued focus on the safety of our employees, our customers and the public. Financial...

  • Page 24
    ...and asset utilization. We plan to adjust manpower and our locomotive and rail car fleets to meet customer needs and put us in a position to handle demand changes. We also will continue utilizing industrial engineering techniques to improve productivity and network fluidity. Fuel Prices - Uncertainty...

  • Page 25
    ... revenue per car (ARC). Changes in price, traffic mix and fuel surcharges drive ARC. We provide some of our customers with contractual incentives for meeting or exceeding specified cumulative volumes or shipping to and from specific locations, which we record as reductions to freight revenues based...

  • Page 26
    ... tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type: Freight Revenues Millions Agricultural Automotive Chemicals Energy Industrial Products Intermodal Total % Change 2011 v 2010 10% 19 16 17 20 12 15% % Change 2010 v 2009 13% 49 15 12...

  • Page 27
    ...year. Chemicals - Volume gains, fuel surcharges and price improvements increased freight revenue from chemicals in 2011 versus 2010. In mid-2010, we began moving crude oil shipments from the Bakken formation in North Dakota to facilities in Louisiana. This new business, along with shipments from the...

  • Page 28
    ... inventories at some utility customer locations. Industrial Products - Increased volume, fuel surcharges, and core pricing improvement increased freight revenue from industrial products in 2011 versus 2010. Shipments of non-metallic minerals (primarily frac sand) grew in response to a dramatic rise...

  • Page 29
    ... during 2011. 2011 Intermodal Revenue Increased volume, higher fuel surcharges (including new recovery provisions in contracts renegotiated in 2010), and pricing gains drove the increase in freight revenue from intermodal shipments in 2010 compared to 2009. Domestic and international traffic...

  • Page 30
    Operating Expenses % Change 2011 v 2010 9% 44 9 9 2 9 15% % Change 2010 v 2009 6% 41 12 4 (3) 5 11% Millions Compensation and benefits Fuel Purchased services and materials Depreciation Equipment and other rents Other Total $ 2011 4,681 3,581 2,005 1,617 1,167 782 $ 2010 4,314 2,486 1,836 1,487...

  • Page 31
    ... for external transportation services); materials used to maintain the Railroad's lines, structures, and equipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers...

  • Page 32
    ... % Change 2010 v 2009 (4)% 2% (3)% 10 % 9% (5.5) pt (1)% 1 pt Average train speed (miles per hour) Average terminal dwell time (hours) Average rail car inventory (thousands) Gross ton-miles (billions) Revenue ton-miles (billions) Operating ratio Employees (average) Customer satisfaction index 2011...

  • Page 33
    ...Average terminal dwell time is the average time that a rail car spends at our terminals. Lower average terminal dwell time improves asset utilization and service. Average terminal dwell time increased 3% in 2011 compared to 2010. Additional volume, weather challenges, track replacement programs, and...

  • Page 34
    ... obligations, which we generally incur in connection with financing the acquisition of locomotives and freight cars and certain facilities. Operating leases were discounted using 6.2% at December 31, 2011 and December 31, 2010. The discount rate reflects current interest rates and financing costs...

  • Page 35
    ...used to pay income taxes that were previously deferred. In addition, the adoption of a new accounting standard in January of 2010 changed the accounting treatment for our receivables securitization facility from a sale of undivided interests (recorded as an operating activity) to a secured borrowing...

  • Page 36
    ..., other road assets, and road work equipment. Track miles of rail replaced Track miles of rail capacity expansion New ties installed (thousands) Miles of track surfaced 2011 895 69 3,785 11,284 2010 795 46 4,334 10,883 2009 841 62 4,814 15,128 Capital Plan - In 2012, we expect our total capital...

  • Page 37
    ... the Risk Factors in Item 1A of this report) could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post...

  • Page 38
    ..., and fourth quarters of 2011, shown in the table below, were purchased under the new program. As of December 31, 2011, we repurchased a total of $5.7 billion of our common stock since the commencement of purchases under our repurchase programs. Number of Shares Purchased 2011 2010 2,636,178 3,576...

  • Page 39
    ... in accounts receivable, net in our Consolidated Statements of Financial Position. The value of the outstanding undivided interest held by investors could fluctuate based upon the availability of eligible receivables and is directly affected by changing business volumes and credit risks, including...

  • Page 40
    ...for locomotives, freight cars, other equipment, and real estate. Represents total obligations, including interest component of $685 million. Purchase obligations include locomotive maintenance contracts; purchase commitments for fuel purchases, locomotives, ties, ballast, and rail; and agreements to...

  • Page 41
    ...'s largest freight railroads began the current round of negotiations with the labor unions. Generally, contract negotiations with the various unions take place over an extended period of time. This round of negotiations was no exception. In September 2011, the rail industry reached agreements with...

  • Page 42
    ... hedges outstanding. Recently Issued Accounting Pronouncements - In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (ASU 2011-05). ASU 2011-05 will require companies to present the components of net income and...

  • Page 43
    ... in new technologies, using training programs to reduce fuel consumption, and changing our operations to increase fuel efficiency. CRITICAL ACCOUNTING POLICIES Our Consolidated Financial Statements have been prepared in accordance with GAAP. The preparation of these financial statements requires...

  • Page 44
    ...3,151 2009 4,079 3,012 (3,591) 3,500 Open claims, beginning balance New claims Settled or dismissed claims Open claims, ending balance at December 31 Asbestos - We are a defendant in a number of lawsuits in which current and former employees and other parties allege exposure to asbestos. We assess...

  • Page 45
    ... on information available for each site, financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharing...

  • Page 46
    ... freight cars, locomotives and maintenance of way equipment transported over the rail) by the estimated service lives of the rail measured in millions of gross tons per mile. Rail in high-density traffic corridors accounts for approximately 70 percent of the historical cost of rail and other track...

  • Page 47
    ...to measure net periodic pension and OPEB cost/(benefit) for 2011 and the estimated impact on 2011 net periodic pension and OPEB cost/(benefit) relative to a change in those assumptions: Assumptions Discount rate Expected return on plan assets Compensation increase Health care cost trend rate: Pre-65...

  • Page 48
    ... in discount rate 0.25% increase in compensation scale 0.25% decrease in expected return on plan assets 1% increase in health care cost trend rate Increase in Expense Pension OPEB $ $ $ 7 3 6 N/A $ N/A N/A 2 $ The following table presents the net periodic pension and OPEB cost/(benefit) for...

  • Page 49
    ... was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If we do update one or more forward-looking statements, no inference should be drawn that we will make...

  • Page 50
    ... to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income For the Years Ended December 31, 2011, 2010, and 2009 ...Consolidated Statements of Financial Position At December 31, 2011 and 2010 ...Consolidated Statements of Cash...

  • Page 51
    ... responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and...

  • Page 52
    CONSOLIDATED STATEMENTS OF INCOME Union Pacific Corporation and Subsidiary Companies Millions, Except Per Share Amounts, for the Years Ended December 31, Operating revenues: Freight revenues Other revenues Total operating revenues Operating expenses: Compensation and benefits Fuel Purchased services...

  • Page 53
    CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Union Pacific Corporation and Subsidiary Companies Millions, Except Share and Per Share Amounts as of December 31, Assets Current assets: Cash and cash equivalents Accounts receivable, net (Note 10) Materials and supplies Current deferred income taxes (...

  • Page 54
    ... STATEMENTS OF CASH FLOWS Union Pacific Corporation and Subsidiary Companies Millions, for the Years Ended December 31, Operating Activities Net income Adjustments to reconcile net income to cash provided by operating activities: Depreciation Deferred income taxes and unrecognized tax benefits Net...

  • Page 55
    CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY Union Pacific Corporation and Subsidiary Companies Common Treasury Common Shares Shares Shares 552.8 (49.6) $ 1,382 Paid-in- Retained Treasury Surplus Earnings Stock $ 3,949 $ 13,681 $ (2,993) 1,890 AOCI [a] Total $ (704) $ 15,315 50 ...

  • Page 56
    ... key Mexican gateways. We own 26,027 miles and operate on the remainder pursuant to trackage rights or leases. 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...

  • Page 57
    ... expense for all stock-based awards made to employees and directors, including stock options. Compensation expense is based on the calculated fair value of the awards as measured at the grant date and is expensed ratably over the service period of the awards (generally the vesting period). The...

  • Page 58
    ... with these benefits, we must make various assumptions including discount rates used to value certain liabilities, expected return on plan assets used to fund these expenses, compensation increases, employee turnover rates, anticipated mortality rates, and expected future health care costs. The...

  • Page 59
    ... financial condition, results of operations or cash flows. 4. Stock Options and Other Stock Plans There are 7,140 restricted shares outstanding under the 1992 Restricted Stock Plan for Non-Employee Directors of Union Pacific Corporation. We no longer grant awards of restricted shares under this plan...

  • Page 60
    ... 31.3% 11.33 The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected exercise...

  • Page 61
    Retention Awards - The fair value of retention awards is based on the closing price of the stock on the grant date. Dividends and dividend equivalents are paid to participants during the vesting periods. Changes in our retention awards during 2011 were as follows: Shares (thous.) 2,638 528 (532) (78...

  • Page 62
    ...) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements. Other Postretirement Benefits (OPEB) - We provide medical and life insurance benefits...

  • Page 63
    ...062) $ (1,098) Other pre-tax changes recognized in other comprehensive income during 2011, 2010 and 2009 were as follows: Pension Millions Prior service cost/(credit) Net actuarial (gain)/loss Amortization of: Prior service cost/(credit) Actuarial loss Total $ 2011 515 (2) (71) $ 442 $ $ 2010 165...

  • Page 64
    ... annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes...

  • Page 65
    ... operations. The non-qualified pension and OPEB plans are not funded and are not subject to any minimum regulatory funding requirements. Benefit payments for each year represent supplemental pension payments and claims paid for medical and life insurance. We anticipate our 2012 supplemental pension...

  • Page 66
    ...and bond investments registered with the Securities and Exchange Commission. The real estate investments and non-U.S. stock investments are traded actively on public exchanges. The share prices for these investments are published at the close of each business day. Holdings of real estate investments...

  • Page 67
    ... Registered investment companies U.S. government securities Corporate bonds & debentures Corporate stock Venture capital and buyout partnerships Real estate partnerships and funds Common trust and other funds Other investments Total plan assets at fair value Other assets [a] Total plan assets...

  • Page 68
    ... Registered investment companies U.S. government securities Corporate bonds & debentures Corporate stock Venture capital and buyout partnerships Real estate partnerships and funds Common trust and other funds Other investments Total plan assets at fair value Other assets [a] Total plan assets...

  • Page 69
    ... benefit plans that provide certain postretirement health care and life insurance benefits for eligible union employees. Premiums paid under these plans are expensed as incurred and amounted to $66 million in 2011, $60 million in 2010, and $48 million in 2009. 6. Other Income Other income...

  • Page 70
    ... the tax bases and financial reporting amounts of our land and depreciable property, due to accelerated tax depreciation (including bonus depreciation), revaluation of assets in purchase accounting transactions, and differences in capitalization methods. Deferred income tax (liabilities)/assets were...

  • Page 71
    ...million and $19 million at December 31, 2011 and 2010, respectively. Total interest and penalties recognized as part of income tax expense (benefit) were $10 million for 2011, $6 million for 2010, and $(11) million for 2009. Internal Revenue Service (IRS) examinations have been completed and settled...

  • Page 72
    ... December 31: Millions, Except Per Share Amounts Net income Weighted-average number of shares outstanding: Basic Dilutive effect of stock options Dilutive effect of retention shares and units Diluted Earnings per share - basic Earnings per share - diluted $ $ $ 2011 3,292 485.7 2.6 1.5 489.8 6.78...

  • Page 73
    ... in accounts receivable, net in our Consolidated Statements of Financial Position. The value of the outstanding undivided interest held by investors could fluctuate based upon the availability of eligible receivables and is directly affected by changing business volumes and credit risks, including...

  • Page 74
    ... the major categories of property and equipment, as well as the weighted-average composite depreciation rate for each category: Millions, Except Percentages As of December 31, 2011 Land Road: Rail and other track material [a] Ties Ballast Other [b] Total road Equipment: Locomotives Freight cars Work...

  • Page 75
    ...estimated service lives. For rail in high-density traffic corridors, we calculate depreciation rates annually by dividing the number of gross ton-miles carried over the rail (i.e., the weight of loaded and empty freight cars, locomotives and maintenance of way equipment transported over the rail) by...

  • Page 76
    ... interest rates and fuel prices; however, the use of these derivative financial instruments may limit future benefits from favorable interest rate and fuel price movements. Market and Credit Risk - We address market risk related to derivative financial instruments by selecting instruments with value...

  • Page 77
    ... Increase in pre-tax income 2011 2010 $ 2 $ 2 2009 $ 8 $ 8 $ $ Fair Value of Financial Instruments - The fair value of our short- and long-term debt was estimated using quoted market prices, where available, or current borrowing rates. At December 31, 2011, the fair value of total debt was $10...

  • Page 78
    ..., 2011 and 2010, respectively, served as collateral for capital leases and other types of equipment obligations in accordance with the secured financing arrangements utilized to acquire such railroad equipment. As a result of the merger of Missouri Pacific Railroad Company (MPRR) with and into UPRR...

  • Page 79
    ...Notes due September 15, 2041 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-ofcontrol provisions. At December 31, 2011, we had remaining authority to...

  • Page 80
    ... involving railroad equipment and facilities, including our headquarters building) and have no other activities, assets or liabilities outside of the lease transactions. Within these lease arrangements, we have the right to purchase some or all of the assets at fixed prices. Depending on market...

  • Page 81
    ...out-of-court settlements. We offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work. Our personal injury liability is discounted to present value using applicable U.S. Treasury rates. Approximately 89% of the recorded liability related to asserted...

  • Page 82
    ... on information available for each site, financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharing...

  • Page 83
    ...on UPRR rights-of-way (Union Pacific Railroad Company vs. Santa Fe Pacific Pipelines, Inc., SFPP, L.P., Kinder Morgan Operating L.P. "D" Kinder Morgan G.P., Inc., et al., Superior Court of the State of California for the County of Los Angeles, filed July 28, 2004). In February 2007, a trial began to...

  • Page 84
    ... decisions regarding required disclosure. Additionally, the CEO and CFO determined that there were no changes to the Corporation's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, or are...

  • Page 85
    ...is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The Corporation's internal control system was designed to provide reasonable assurance to the Corporation's management and Board of Directors...

  • Page 86
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2011 of the Corporation and our report dated February 3, 2012 expressed an unqualified opinion...

  • Page 87
    ... the Securities Exchange Act of 1934 is set forth in the Section 16(a) Beneficial Ownership Reporting Compliance segment of the Proxy Statement and is incorporated herein by reference. (d) Code of Ethics for Chief Executive Officer and Senior Financial Officers of Registrant. The Board of Directors...

  • Page 88
    ... or available from, other parties on an arm's-length basis. Information regarding the independence of our directors is set forth in the Director Independence segment of the Proxy Statement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information concerning...

  • Page 89
    ...the index to the Financial Statements and Supplementary Data, Item 8, on page 50. (2) Financial Statement Schedules Schedule II - Valuation and Qualifying Accounts Schedules not listed above have been omitted because they are not applicable or not required or the information required to be set forth...

  • Page 90
    ...thereunto duly authorized, on rd this 3 day of February, 2012. UNION PACIFIC CORPORATION By /s/ James R. Young James R. Young, Chairman, President, Chief Executive Officer, and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, rd on this...

  • Page 91
    ...: Balance, beginning of period Charges/(reduction) to expense Net recoveries/(write-offs) Balance, end of period Allowance for doubtful accounts are presented in the Consolidated Statements of Financial Position as follows: Current Long-term Balance, end of period Accrued casualty costs: Balance...

  • Page 92
    ...). The following financial and related information from Union Pacific Corporation's Annual Report on Form 10-K for the year ended December 31, 2011 (filed with the SEC on February 3, 2012), is formatted in XBRL and submitted electronically herewith: (i) Consolidated Statements of Income for the...

  • Page 93
    ... herein by reference to Exhibit 10 to the Corporation's Annual Report on Form 10Q for the quarter ended September 30, 2011. Supplemental Pension Plan for Officers and Managers (409A Grandfathered Component) of Union Pacific Corporation and Affiliates, as amended and restated in its entirety...

  • Page 94
    ... No. 2 to UPC's Registration Statement on Form S-4 (No. 33-64707). Agreement, dated September 25, 1995, among UPC, UPRR, Missouri Pacific Railroad Company (MPRR), SP, Southern Pacific Transportation Company (SPT), The Denver & Rio Grande Western Railroad Company (D&RGW), St. Louis Southwestern...

  • Page 95
    ... Incentive Plan (2005) - Deferred Compensation Program, dated December 21, 2005 is incorporated herein by reference to Exhibit 10(g) to the Corporation's Annual Report on Form 10-K for the year ended December 31, 2005. U.S. $1,800,000,000 4-year revolving credit agreement, dated as of May 25, 2011...

  • Page 96
    ... TO FIXED CHARGES Union Pacific Corporation and Subsidiary Companies Millions, Except for Ratios Fixed charges: Interest expense including amortization of debt discount Portion of rentals representing an interest factor Total fixed charges Earnings available for fixed charges: Net income Equity...

  • Page 97
    Exhibit 21 SIGNIFICANT SUBSIDIARIES OF UNION PACIFIC CORPORATION Name of Corporation Union Pacific Railroad Company ...Southern Pacific Rail Corporation ...State of Incorporation Delaware Utah 97

  • Page 98
    ... Subsidiary Companies (the Corporation) and the effectiveness of the Corporation's internal control over financial reporting, appearing in this Annual Report on Form 10-K of Union Pacific Corporation and Subsidiary Companies for the year ended December 31, 2011. Omaha, Nebraska February 3, 2012 98

  • Page 99
    Exhibit 24 UNION PACIFIC CORPORATION Powers of Attorney Each of the undersigned directors of Union Pacific Corporation, a Utah corporation (the Company), do hereby appoint each of James R. Young, Barbara W. Schaefer, and James J. Theisen, Jr. his or her true and lawful attorney-in-fact and agent, ...

  • Page 100
    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 3, 2012 /s/ James R. Young James R. Young Chairman, President and Chief Executive Officer...

  • Page 101
    ...the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant...

  • Page 102
    ...of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. By: /s/ James R. Young James R. Young Chairman, President and Chief Executive Officer Union Pacific...