Union Pacific 2012 Annual Report Download - page 71

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8. Earnings Per Share
The following table provides a reconciliation between basic and diluted earnings per share for the years
ended December 31:
Millions, Except Per Share Amounts 2012 2011 2010
Net income $ 3,943 $ 3,292 $ 2,780
Weighted-average number of shares outstanding:
Basic 473.1 485.7 498.2
Dilutive effect of stock options 1.8 2.6 3.3
Dilutive effect of retention shares and units 1.6 1.5 1.4
Diluted 476.5 489.8 502.9
Earnings per share – basic $ 8.33 $ 6.78 $ 5.58
Earnings per share – diluted $ 8.27 $ 6.72 $ 5.53
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Common stock options totaling 0.5 million, 0.6 million, and 0.3 million for 2012, 2011, and 2010,
respectively, were excluded from the computation of diluted earnings per share because the exercise
prices of these options exceeded the average market price of our common stock for the respective
periods, and the effect of their inclusion would be anti-dilutive.
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9. Accumulated Other Comprehensive Income/(Loss)
The after-tax components of accumulated other comprehensive loss were as follows:
Dec. 31, Dec. 31,
Millions 2012 2011
Defined benefit plans $ (1,149) $ (1,004)
Foreign currency translation (36) (48)
Derivatives (1) (2)
Total $ (1,186) $ (1,054)
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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. At December 31, 2012 and 2011, our accounts receivable were reduced by $4
million and $9 million, respectively. 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. At December 31, 2012 and 2011, receivables classified as other assets were reduced by
allowances of $33 million and $41 million, respectively.
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Receivables Securitization Facility – Under the receivables securitization facility, the Railroad sells
most of its accounts receivable to Union Pacific Receivables, Inc. (UPRI), a wholly-owned, bankruptcy-
remote subsidiary. UPRI may subsequently transfer, without recourse on a 364-day revolving basis, an
undivided interest in eligible accounts receivable to investors. The total capacity to transfer undivided
interests to investors under the facility was $600 million at December 31, 2012 and 2011, respectively.
The value of the outstanding undivided interest held by investors under the facility was $100 million at
both December 31, 2012 and 2011. The value of the undivided interest held by investors was supported
by $1.1 billion of accounts receivable at both December 31, 2012 and 2011. At both December 31, 2012
and 2011, the value of the interest retained by UPRI was $1.1 billion. This retained interest is included 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 default and dilution. If default or dilution ratios increase one percent, the value of the
outstanding undivided interest held by investors would not change as of December 31, 2012. Should our