Union Pacific 2012 Annual Report Download - page 77

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Credit Facilities – On December 31, 2012, we had $1.8 billion of credit available under our revolving
credit facility (the facility), which is designated for general corporate purposes and supports the issuance
of commercial paper. We did not draw on the facility during 2012. Commitment fees and interest rates
payable under the facility are similar to fees and rates available to comparably rated, investment-grade
borrowers. The facility allows for borrowings at floating rates based on London Interbank Offered Rates,
plus a spread, depending upon our senior unsecured debt ratings. The facility matures in 2015 under a
four year term and requires the Corporation to maintain a debt-to-net-worth coverage ratio as a condition
to making a borrowing. At December 31, 2012, and December 31, 2011 (and at all times during the year),
we were in compliance with this covenant.
The definition of debt used for purposes of calculating the debt-to-net-worth coverage ratio includes,
among other things, certain credit arrangements, capital leases, guarantees and unfunded and vested
pension benefits under Title IV of ERISA. At December 31, 2012, the debt-to-net-worth coverage ratio
allowed us to carry up to $39.8 billion of debt (as defined in the facility), and we had $9.6 billion of debt
(as defined in the facility) outstanding at that date. Under 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 triggers (other than rating-dependent pricing), or any other provision
that could require us to post collateral. The facility also includes a $75 million cross-default provision and
a change-of-control provision.
During 2012, we issued and repaid commercial paper of $50 million. At December 31, 2012 and 2011,
we had no commercial paper outstanding. Our revolving credit facility supports our outstanding
commercial paper balances, and, unless we change the terms of our commercial paper program, our
aggregate issuance of commercial paper will not exceed the amount of borrowings available under the
facility.
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 $15.1 billion
and $13.8 billion at December 31, 2012 and 2011, respectively.
Shelf Registration Statement and Significant New Borrowings – Under our current 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. 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.
During 2012, we issued the following unsecured, fixed-rate debt securities under our current shelf
registration:
Date Description of Securities
June 11, 2012 $300 million of 2.95% Notes due January 15, 2023
$300 million of 4.30% Notes due June 15, 2042
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We used the net proceeds from the offering for general corporate purposes, including the repurchase of
common stock pursuant to our share repurchase program. These debt securities include change-of-
control provisions. At December 31, 2012, we had remaining authority to issue up to $1.4 billion of debt
securities under our shelf registration.
On May 22, 2012, we borrowed $100 million under a 4-year-term loan (the loan). The loan has a floating
rate based on London Interbank Offered Rates, plus a spread, and is prepayable in whole or in part
without a premium prior to maturity. The agreement documenting the loan has provisions similar to our
revolving credit facility, including identical debt-to-net-worth covenant and change of control provisions
and similar customary default provisions. The agreement does not include any other financial restrictions,
credit rating triggers, or any other provision that would require us to post collateral.
During the third and fourth quarters of 2012, we acquired 343 locomotives by exercising early buy-out
rights in certain operating and capital lease agreements. Following the acquisition of the locomotives, we