Union Pacific 2012 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, 2012
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 29, 2012, the aggregate market value of the registrant’s Common Stock held by non-affiliates (using the
New York Stock Exchange closing price) was $56.2 billion.
The number of shares outstanding of the registrant’s Common Stock as of February 1, 2013 was 469,298,732.

Table of contents

  • Page 1
    ....) (Address of principal executive offices) 1400 DOUGLAS STREET, OMAHA, NEBRASKA 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) ï,§ Name...

  • 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
    ... our Total Safety Culture and The UP Way infused throughout the Company, employee injuries hit a record low in 2012, capping more than a decade of significant improvement. Our capital investments play a critical role in meeting the long-term demand for freight transportation in the U.S. In 2012, we...

  • Page 4
    ... Financial Officer Union Pacific Corporation Gayla L. Thal Senior Vice President-Law and General Counsel Union Pacific Corporation Eric L. Butler Executive Vice PresidentMarketing and Sales Union Pacific Railroad Company Joseph E. O'Connor, Jr. Vice President-Purchasing Union Pacific Railroad...

  • Page 5
    ... reports and exhibits via a link to EDGAR on the SEC's Internet site at www.sec.gov. Additionally, our corporate governance materials, including By-Laws, Board Committee charters, governance guidelines and policies, and codes of conduct and ethics for directors, officers, and employees are available...

  • Page 6
    Operations - UPRR is a Class I railroad 2012 Freight Revenue operating in the U.S. We have 31,868 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...

  • Page 7
    ... to competition from other railroads, motor carriers, ship and barge operators, and pipelines. Our main rail competitor is Burlington Northern Santa Fe LLC. Its rail subsidiary, BNSF Railway Company (BNSF), operates parallel routes in many of our main traffic corridors. In addition, we operate in...

  • 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
    ... STB. The STB has jurisdiction over rates charged on certain regulated rail traffic; common carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of rail common carriers. In 2012, the STB continued its efforts to...

  • Page 10
    ...carriers, ships, barges, and pipelines. In addition to price competition, we face competition with respect to transit times and quality and reliability of service. While we must build or acquire and maintain our rail system, trucks and barges are able to use public rights-of-way maintained by public...

  • Page 11
    ...results of operations, financial condition, and liquidity. Strikes or Work Stoppages Could Adversely 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...

  • Page 12
    ... Legal Developments Involving Taxes - Taxes are a significant part of our expenses. We are subject to U.S. federal, state, and foreign income, payroll, property, sales and use, fuel, and other types of taxes. Changes in tax rates, enactment of new tax laws, revisions of tax regulations, and claims...

  • Page 13
    ... (one domestic and one international) that 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...

  • Page 14
    ... 1,000 Top 10 Classification Yards North Platte, Nebraska North Little Rock, Arkansas Englewood (Houston), Texas Fort Worth, Texas Proviso (Chicago), Illinois Livonia, Louisiana Pine Bluff, Arkansas Roseville, California West Colton, California Neff (Kansas City), Missouri 2012 2,300 1,600 1,500...

  • Page 15
    ... Our rail network requires significant annual capital investments for replacement, improvement, and expansion. These investments enhance safety, support the transportation needs of our customers, and improve our operational efficiency. Additionally, we add new locomotives and freight cars to...

  • Page 16
    ... at both December 31, 2012 and 2011 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...

  • 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
    ...of UPC and the Railroad Senior Vice President - Law and General Counsel of UPC and the Railroad Vice President and Controller of UPC and Chief Accounting Officer and Controller of the Railroad Executive Vice President - Operations of the Railroad Executive Vice President - Marketing and Sales of the...

  • Page 19
    ... in Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, Item 7.) We do not believe the restriction on retained earnings will affect our ability to pay dividends, and we currently expect to pay dividends in 2013. Comparison...

  • Page 20
    ... Securities - During 2012, we repurchased 13,804,709 shares of our common stock at an average price of $115.33. The following table presents common stock repurchases during each month for the fourth quarter of 2012: Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program...

  • Page 21
    ... to year 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.) Operating ratio is defined as...

  • Page 22
    ... net financial results of the Railroad as one segment due to the integrated nature of the rail network. EXECUTIVE SUMMARY 2012 Results ï,· Safety - Our employee safety results continued to improve in 2012. The employee injury incident rate per 200,000 employee hours declined 9% from 2011, to a new...

  • Page 23
    ... work. Resource agility allows us to respond quickly to changing market conditions and network disruptions from weather or other events. The Railroad continues to benefit from capital investments that allow us to build capacity for growth and harden our infrastructure to reduce failure. Fuel Prices...

  • Page 24
    ... We also expect that a new bonus depreciation program under federal tax laws will positively impact cash flows in 2013. ï,· RESULTS OF OPERATIONS Operating Revenues % Change 2012 v 2011 6% 18 7% % Change 2011 v 2010 15% 17 15% Millions Freight revenues Other revenues Total 2012 $ 19,686 1,240...

  • Page 25
    ... changes in freight revenues, revenue carloads, and ARC by commodity type: Freight Revenues Millions Agricultural Automotive Chemicals Coal Industrial Products Intermodal Total Revenue Carloads Thousands Agricultural Automotive Chemicals Coal Industrial Products Intermodal [a] Total % Change 2012...

  • Page 26
    ... parts along with core pricing gains and higher fuel surcharges improved automotive freight revenue from 2011 levels. Higher production and sales levels drove the volume growth. In addition, 2012 shipments compared favorably to 2011 due to lower shipments of international vehicles in 2011 following...

  • Page 27
    ... gas prices. 2012 Coal Carloads Core pricing gains, higher fuel surcharges, and increased volume grew coal freight revenue in 2011 versus 2010 levels. Shipments of coal from the SPRB were up 5% in 2011 compared to 2010, reflecting new business to Wisconsin facilities and the start-up of a new power...

  • Page 28
    ... truck to rail. 2012 Intermodal Carloads Fuel surcharge gains, including better contract provisions for fuel cost recovery, and pricing improvements, partially offset by lower volume, increased freight revenue from intermodal shipments in 2011 compared to 2010. Volume from international traffic...

  • Page 29
    Operating Expenses % Change 2012 v 2011 - % 1 7 9 3 1 3 % % Change 2011 v 2010 9 % 44 9 9 2 9 15 % Millions Compensation and benefits Fuel Purchased services and materials Depreciation Equipment and other rents Other Total $ 2012 4,685 3,608 2,143 1,760 1,197 788 $ 2011 4,681 3,581 2,005 1,617 ...

  • Page 30
    ... operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers; leased automobile maintenance expenses; and tools and supplies. Expenses for contract services increased $103 million in 2012...

  • Page 31
    ... 2010 (2)% 3% (1)% 5% 5% 0.1 pts 5% 3 pts 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 2012 26.5 26.2 269.1 959...

  • Page 32
    ...2012 versus 2011. Work related to the increase in capital investment, including positive train control, accounted for over half of the increase. Additionally, the shift in our traffic mix required more resources in the Southern region to support the growth in shale-related shipments. Employee levels...

  • Page 33
    ... bonds or other debt securities to public or private investors based on our assessment of the current condition of the credit markets. The Company's $1.8 billion revolving credit facility is intended to back Union Pacific's ability to issue commercial paper and is an emergency back-up source of...

  • Page 34
    ...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 35
    ..., to balance terminal capacity with more mainline capacity from our track expansion in the Southern region, we are constructing a rail facility at Santa Teresa, New Mexico, that initially will include a run-through and fueling facility and an intermodal ramp. We expect to fund our 2013 cash capital...

  • Page 36
    ... our current capital plans, we expect to continue to satisfy the debt-to-net-worth coverage ratio; however, many factors beyond our reasonable control could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating...

  • Page 37
    ..., except for the first quarter of 2011 which represent shares repurchased under the previous program. Number of Shares Purchased 2012 2011 3,917,369 2,636,178 3,770,528 3,576,399 3,098,812 4,681,535 2,033,750 3,885,658 12,820,459 14,779,770 Average Price Paid 2012 2011 $ 110.64 $ 94.10 110.02 100...

  • Page 38
    ... 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 39
    ... equipment, and real estate. Represents total obligations, including interest component of $593 million. Purchase obligations include locomotive maintenance contracts; purchase commitments for fuel purchases, locomotives, ties, ballast, and rail; and agreements to purchase other goods and services...

  • Page 40
    ... will have a material adverse effect on our consolidated financial condition, results of operations, or liquidity. OTHER MATTERS Labor Agreements - Approximately 86% of our 45,928 full-time-equivalent employees are represented by 14 major rail unions. During the year, we concluded the most recent...

  • Page 41
    ... of operations and financial condition. These hypothetical changes do not consider other factors that could impact actual results. At December 31, 2012, we had variable-rate debt representing approximately 3.4% of our total debt. If variable interest rates average one percentage point higher in 2013...

  • Page 42
    ... to reduce the impact of our operations on the environment, including investments 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...

  • Page 43
    ... and 2011. The amounts recorded for asbestos-related liabilities and related insurance recoveries were based on currently known facts. However, future events, such as the number of new claims filed each year, average settlement costs, and insurance coverage issues, could cause the actual costs and...

  • Page 44
    ... 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 45
    ... the weight of loaded and empty 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...

  • Page 46
    ... 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 current Pre-65 level in 2028 Sensitivities Millions 0.25% decrease in discount rate 0.25% increase in compensation scale 0.25...

  • Page 47
    ... over which management has little or no influence or control. The Risk Factors in Item 1A of this report could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in any forward-looking statements or information. To the...

  • Page 48
    ... to other forward-looking statements. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Information concerning market risk sensitive instruments is set forth under Management's Discussion and Analysis of Financial Condition and Results of Operations - Other Matters, Item 7 48

  • Page 49
    ... and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income For the Years Ended December 31, 2012, 2011, and 2010 ...Consolidated Statements of Comprehensive Income For the Years Ended December 31...

  • Page 50
    ...in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Corporation's internal control over financial reporting as of December 31, 2012, based on the criteria established...

  • Page 51
    ...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 and materials Depreciation Equipment and other rents Other Total operating...

  • Page 52
    ... 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 (Note 7) Other current assets Total current...

  • Page 53
    ... cash provided by operating activities: Depreciation Deferred income taxes and unrecognized tax benefits Other operating activities, net Changes in current assets and liabilities: Accounts receivable, net Materials and supplies Other current assets Accounts payable and other current liabilities Cash...

  • Page 54
    ... CHANGES IN COMMON SHAREHOLDERS' EQUITY Union Pacific Corporation and Subsidiary Companies Common Treasury Common Shares Shares Shares 553.5 (48.5) $ 1,384 0.4 553.9 2.8 (16.6) (62.3) 1 $ 1,385 1 $ 1,386 $ 1,386 Paid-inSurplus $ 3,968 17 $ 3,985 46 $ 4,031 82 $ 4,113 Retained Treasury Earnings Stock...

  • Page 55
    ... of the Railroad as one segment due to the integrated nature of our rail network. The following table provides freight revenue by commodity group: Millions Agricultural Automotive Chemicals Coal Industrial Products Intermodal Total freight revenues Other revenues Total operating revenues 2012 3,280...

  • Page 56
    ... data. Level 3: Unobservable inputs that are not corroborated by market data. We have applied fair value measurements to our pension plan assets and short- and long-term debt. Stock-Based Compensation - We have several stock-based compensation plans employees and non-employee directors receive stock...

  • Page 57
    ...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 assumptions used by us are based on our historical experience as well...

  • Page 58
    ...accumulated other comprehensive income. This ASU will be effective for the first interim reporting period in 2013. 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...

  • Page 59
    ... option pricing model. The table below shows the annual weighted-average assumptions used for valuation purposes: Weighted-Average Assumptions Risk-free interest rate Dividend yield Expected life (years) Volatility Weighted-average grant-date fair value of options granted $ 2012 0.8% 2.1% 5.3 36...

  • Page 60
    ...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 2012 were as follows: Shares (thous.) 2,556 451 (581) (71) 2,355 Weighted-Average Grant-Date Fair Value $ 63.20...

  • Page 61
    ...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 for eligible retirees. These benefits are funded as medical claims and life insurance...

  • Page 62
    ...113 $ $ 2012 42 18 (13) 47 $ $ OPEB 2011 10 14 34 (11) 47 $ $ 2010 (6) 16 45 (13) 42 Amounts included in accumulated other comprehensive income/(loss) expected to be amortized into net periodic cost (benefit) during 2013: Millions Prior service benefit Net actuarial loss Total Pension $ 106 $ 106...

  • Page 63
    ... 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 64
    ... 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 2013 supplemental pension...

  • Page 65
    ...share prices for these investments are published at the close of each business day. Holdings of real estate investments and non-U.S. stock investments are classified as Level 1 investments. The bond investments are not traded publicly, but the underlying assets (stocks and bonds) held in these funds...

  • Page 66
    ... both long and short positions in convertible securities, stocks, and fixed income securities. The underlying securities held by the fund are traded actively on exchanges and price quotes for these investments are readily available. Interest in the limited liability company is classified as a Level...

  • 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
    ...Under collective bargaining agreements, we participate in multiemployer 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 $62 million in 2012, $66 million in...

  • Page 69
    ... 31: Millions Deferred income tax liabilities: Property Other Total deferred income tax liabilities Deferred income tax assets: Accrued wages Accrued casualty costs Debt and leases Retiree benefits Credits Other Total deferred income tax assets Net deferred income tax liability Current portion of...

  • Page 70
    ... million and $10 million at December 31, 2012 and 2011, respectively. Total interest and penalties recognized as part of income tax expense (benefit) were $(4) million for 2012, $10 million for 2011, and $6 million for 2010. Internal Revenue Service (IRS) examinations have been completed and settled...

  • Page 71
    ... plans Foreign currency translation Derivatives Total 10. Accounts Receivable Accounts receivable includes freight and other receivables reduced by an allowance for doubtful accounts. The allowance is based upon historical losses, credit worthiness of customers, and current economic conditions...

  • Page 72
    ... of property and equipment, as well as the weighted-average composite depreciation rate for each category: Millions, Except Percentages As of December 31, 2012 Land Road: Rail and other track material [a] Ties Ballast Other [b] Total road Equipment: Locomotives Freight cars Work equipment and...

  • Page 73
    ...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 74
    ..., many of our assets are self-constructed. A large portion of our capital expenditures is for replacement of existing track assets and other road properties, which is typically performed by our employees, and for track line expansion and other capacity projects. Costs that are directly attributable...

  • Page 75
    ...pre-tax income 2012 2011 $ $ 2010 $ 2 $ 2 $ $ Fair Value of Financial Instruments - The fair value of our short- and long-term debt was estimated using a market value price model, which utilizes applicable U.S. Treasury rates along with current market quotes on comparable debt securities. All of...

  • Page 76
    ... at both December 31, 2012 and 2011 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...

  • Page 77
    ... our current capital plans, we expect to continue to satisfy the debt-to-net-worth coverage ratio; however, many factors beyond our reasonable control could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating...

  • Page 78
    ... 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 conditions...

  • Page 79
    ... benefits are not expected to be significant. We maintain and operate the assets based on contractual obligations within the lease arrangements, which set specific guidelines consistent within the railroad industry. As such, we have no control over activities that could materially impact the fair...

  • Page 80
    ... and 2011. The amounts recorded for asbestos-related liabilities and related insurance recoveries were based on currently known facts. However, future events, such as the number of new claims filed each year, average settlement costs, and insurance coverage issues, could cause the actual costs and...

  • Page 81
    ... 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 82
    ... Energy Partners, L.P.) currently are engaged in a proceeding to resolve the fair market rent payable to UPRR under a 10-year agreement commencing on January 1, 2004 for pipeline easements on UPRR rights-of-way (Union Pacific Railroad Company vs. Santa Fe Pacific Pipelines, Inc., SFPP, L.P., Kinder...

  • Page 83
    ... Corporation's management, including the Corporation's Chief Executive Officer (CEO) and Executive Vice President - Finance and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures pursuant to Exchange Act Rules 13a...

  • Page 84
    MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of Union Pacific Corporation and Subsidiary Companies (the Corporation) is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15...

  • Page 85
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Union Pacific Corporation: We have audited the internal control over financial reporting of Union Pacific Corporation and Subsidiary Companies (the Corporation) as of December 31, 2012, based on criteria...

  • Page 86
    ...Upon Termination or Change in Control and Director Compensation in Fiscal Year 2012 segments of the Proxy Statement and is incorporated herein by reference. Additional information regarding compensation of directors, including Board committee members, is set forth in the By-Laws of UPC and the Stock...

  • Page 87
    ... (a)) 32,168,520 32,168,520 Plan Category Equity compensation plans approved by security holders Total [1] [2] Number of securities to be issued upon Weighted-average exercise of exercise price of outstanding options, outstanding options, warrants and rights warrants and rights 5,892,817 5,892,817...

  • Page 88
    ...Statements and Supplementary Data, Item 8, on page 49. (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 therein is included in the...

  • Page 89
    ... of the Securities Exchange Act of 1934, this report has been signed below, th on this 8 day of February, 2013, by the following persons on behalf of the registrant and in the capacities indicated. PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR: /s/ John J. Koraleski John J. Koraleski, President and Chief...

  • Page 90
    SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Union Pacific Corporation and Subsidiary Companies Millions, for the Years Ended December 31, Allowance for doubtful accounts... in the Consolidated Statements of Financial Position as follows: Current Long-term Balance, end of period 2012 $ 50 (1) (12) ...

  • Page 91
    ... Stock Option Agreement for Executives dated February 7, 2013. Ratio of Earnings to Fixed Charges. List of the Corporation's significant subsidiaries and their respective states of incorporation. Independent Registered Public Accounting Firm's Consent. Powers of attorney executed by the directors...

  • Page 92
    ... herein by reference to Exhibit 10(d) to the Corporation's Annual Report on Form 10-K for the year ended December 31, 2008. Supplemental Pension Plan for Officers and Managers (409A Non-Grandfathered Component) of Union Pacific Corporation and Affiliates, as amended and restated in its entirety...

  • Page 93
    ... Exhibit 10(e) to the Corporation's Annual Report on Form 10-K for the year ended December 31, 2006. Amended and Restated Registration Rights Agreement, dated as of July 12, 1996, among UPC, UP Holding Company, Inc., Union Pacific Merger Co. and Southern Pacific Rail Corporation (SP) is incorporated...

  • Page 94
    ... 31, 2010. Form of 2012 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to the Corporation's Annual Report on Form 10-K for the year ended December 31, 2011. Form of Non-Qualified Stock Option Agreement for Directors is incorporated herein by reference...

  • Page 95
    ... 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 96
    Exhibit 21 SIGNIFICANT SUBSIDIARIES OF UNION PACIFIC CORPORATION Name of Corporation Union Pacific Railroad Company ...Southern Pacific Rail Corporation ...State of Incorporation Delaware Utah 96

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    ... 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, 2012. Omaha, Nebraska February 8, 2013 97

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    ... undersigned directors of Union Pacific Corporation, a Utah corporation (the Company), do hereby appoint each of John J. Koraleski, Barbara W. Schaefer, and James J. Theisen, Jr. his or her true and lawful attorney-in-fact and agent, to sign on his or her behalf the Company's Annual Report on Form...

  • Page 99
    ... 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 8, 2013 /s/ John J. Koraleski John J. Koraleski President and Chief Executive Officer...

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    ... and 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...

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    ... The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. By: /s/ John J. Koraleski John J. Koraleski President and Chief Executive Officer Union Pacific Corporation February 8, 2013 A signed original of...