0000100885 UNION PACIFIC CORP false --12-31 Q2 2023 2.50 2.50 1,400,000,000 1,400,000,000 1,112,878,694 1,112,623,886 609,398,738 612,393,321 1.30 1.30 2.48 2.60 1 1 0 1.8 3 3 6 3 11 July 31, 2025 1 4 May 20, 2027 0.50 0.50 68 Jennifer L. Hamann Executive Vice President and Chief Financial Officer August 23, 2023 January 31, 2024 Kenny G. Rocker Executive Vice President – Marketing and Sales August 23, 2023 January 31, 2024 AOCI = Accumulated Other Comprehensive Income/Loss (Note 8) Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets. Includes 7,012,232 shares repurchased in 2022 under accelerated share repurchase programs. Net of deferred taxes of ($3) million and ($11) million during the six months ended June 30, 2023 and 2022, respectively. Net of deferred taxes of ($3) million and ($6) million during the three months ended June 30, 2023 and 2022, respectively. The accumulated other comprehensive income/loss reclassification components are 1) prior service cost/credit and 2) net actuarial loss, which are both included in the computation of net periodic pension benefit/cost. See Note 4 Retirement Plans for additional details. In the period of the final settlement, the average price paid under the accelerated share repurchase programs is calculated based on the total program value less the value assigned to the initial delivery of shares. The average price of the completed 2022 accelerated share repurchase programs was $248.32. Includes 1,847,185 shares repurchased in 2022 under accelerated share repurchase programs. Prior periods have been reclassified to conform to the current period disclosure. ESPP = employee stock purchase plan (Note 3) 2023 includes a one-time $107 million transaction. 2022 includes a $79 million gain from a land sale to the Illinois State Toll Highway Authority. Related to interest rate swaps from equity method investments. 4.750 February 21, 2026 4.950 May 15, 2053 00001008852023-01-012023-06-30 xbrli:shares 00001008852023-07-21 iso4217:USD 0000100885us-gaap:CargoAndFreightMember2023-04-012023-06-30 0000100885us-gaap:CargoAndFreightMember2022-04-012022-06-30 0000100885us-gaap:ProductAndServiceOtherMember2023-04-012023-06-30 0000100885us-gaap:ProductAndServiceOtherMember2022-04-012022-06-30 00001008852023-04-012023-06-30 00001008852022-04-012022-06-30 iso4217:USDxbrli:shares 0000100885us-gaap:CargoAndFreightMember2023-01-012023-06-30 0000100885us-gaap:CargoAndFreightMember2022-01-012022-06-30 0000100885us-gaap:ProductAndServiceOtherMember2023-01-012023-06-30 0000100885us-gaap:ProductAndServiceOtherMember2022-01-012022-06-30 00001008852022-01-012022-06-30 00001008852023-06-30 00001008852022-12-31 00001008852021-12-31 00001008852022-06-30 0000100885us-gaap:OtherCurrentAssetsMember2023-06-30 0000100885us-gaap:OtherCurrentAssetsMember2022-06-30 0000100885us-gaap:OtherNoncurrentAssetsMember2023-06-30 0000100885us-gaap:OtherNoncurrentAssetsMember2022-06-30 0000100885us-gaap:CommonStockMember2022-03-31 0000100885us-gaap:TreasuryStockCommonMember2022-03-31 0000100885us-gaap:AdditionalPaidInCapitalMember2022-03-31 0000100885us-gaap:RetainedEarningsMember2022-03-31 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-31 00001008852022-03-31 0000100885us-gaap:CommonStockMember2022-04-012022-06-30 0000100885us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-30 0000100885us-gaap:RetainedEarningsMember2022-04-012022-06-30 0000100885us-gaap:TreasuryStockCommonMember2022-04-012022-06-30 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-30 0000100885us-gaap:CommonStockMember2022-06-30 0000100885us-gaap:TreasuryStockCommonMember2022-06-30 0000100885us-gaap:AdditionalPaidInCapitalMember2022-06-30 0000100885us-gaap:RetainedEarningsMember2022-06-30 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-30 0000100885us-gaap:CommonStockMember2023-03-31 0000100885us-gaap:TreasuryStockCommonMember2023-03-31 0000100885us-gaap:AdditionalPaidInCapitalMember2023-03-31 0000100885us-gaap:RetainedEarningsMember2023-03-31 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-31 00001008852023-03-31 0000100885us-gaap:CommonStockMember2023-04-012023-06-30 0000100885us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-30 0000100885us-gaap:RetainedEarningsMember2023-04-012023-06-30 0000100885us-gaap:TreasuryStockCommonMember2023-04-012023-06-30 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-30 0000100885us-gaap:CommonStockMember2023-06-30 0000100885us-gaap:TreasuryStockCommonMember2023-06-30 0000100885us-gaap:AdditionalPaidInCapitalMember2023-06-30 0000100885us-gaap:RetainedEarningsMember2023-06-30 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-30 0000100885us-gaap:CommonStockMember2021-12-31 0000100885us-gaap:TreasuryStockCommonMember2021-12-31 0000100885us-gaap:AdditionalPaidInCapitalMember2021-12-31 0000100885us-gaap:RetainedEarningsMember2021-12-31 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-31 0000100885us-gaap:CommonStockMember2022-01-012022-06-30 0000100885us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-30 0000100885us-gaap:RetainedEarningsMember2022-01-012022-06-30 0000100885us-gaap:TreasuryStockCommonMember2022-01-012022-06-30 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-30 0000100885us-gaap:CommonStockMember2022-12-31 0000100885us-gaap:TreasuryStockCommonMember2022-12-31 0000100885us-gaap:AdditionalPaidInCapitalMember2022-12-31 0000100885us-gaap:RetainedEarningsMember2022-12-31 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-31 0000100885us-gaap:CommonStockMember2023-01-012023-06-30 0000100885us-gaap:AdditionalPaidInCapitalMember2023-01-012023-06-30 0000100885us-gaap:RetainedEarningsMember2023-01-012023-06-30 0000100885us-gaap:TreasuryStockCommonMember2023-01-012023-06-30 0000100885us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-06-30 xbrli:pure 0000100885unp:BulkMember2023-04-012023-06-30 0000100885unp:BulkMember2022-04-012022-06-30 0000100885unp:BulkMember2023-01-012023-06-30 0000100885unp:BulkMember2022-01-012022-06-30 0000100885unp:IndustrialMember2023-04-012023-06-30 0000100885unp:IndustrialMember2022-04-012022-06-30 0000100885unp:IndustrialMember2023-01-012023-06-30 0000100885unp:IndustrialMember2022-01-012022-06-30 0000100885unp:PremiumMember2023-04-012023-06-30 0000100885unp:PremiumMember2022-04-012022-06-30 0000100885unp:PremiumMember2023-01-012023-06-30 0000100885unp:PremiumMember2022-01-012022-06-30 0000100885unp:OtherSubsidiaryRevenuesMember2023-04-012023-06-30 0000100885unp:OtherSubsidiaryRevenuesMember2022-04-012022-06-30 0000100885unp:OtherSubsidiaryRevenuesMember2023-01-012023-06-30 0000100885unp:OtherSubsidiaryRevenuesMember2022-01-012022-06-30 0000100885unp:AccessorialRevenuesMember2023-04-012023-06-30 0000100885unp:AccessorialRevenuesMember2022-04-012022-06-30 0000100885unp:AccessorialRevenuesMember2023-01-012023-06-30 0000100885unp:AccessorialRevenuesMember2022-01-012022-06-30 0000100885unp:OtherMiscellaneousProductAndServiceRevenuesMember2023-04-012023-06-30 0000100885unp:OtherMiscellaneousProductAndServiceRevenuesMember2022-04-012022-06-30 0000100885unp:OtherMiscellaneousProductAndServiceRevenuesMember2023-01-012023-06-30 0000100885unp:OtherMiscellaneousProductAndServiceRevenuesMember2022-01-012022-06-30 0000100885country:MX2023-04-012023-06-30 0000100885country:MX2022-04-012022-06-30 0000100885country:MX2023-01-012023-06-30 0000100885country:MX2022-01-012022-06-30 0000100885us-gaap:EmployeeStockMember2023-04-012023-06-30 0000100885us-gaap:EmployeeStockMember2022-04-012022-06-30 0000100885us-gaap:EmployeeStockMember2023-01-012023-06-30 0000100885us-gaap:EmployeeStockMember2022-01-012022-06-30 utr:Y 0000100885us-gaap:EmployeeStockOptionMember2023-01-012023-06-30 0000100885us-gaap:EmployeeStockOptionMember2023-06-30 0000100885us-gaap:EmployeeStockOptionMember2023-04-012023-06-30 0000100885us-gaap:EmployeeStockOptionMember2022-04-012022-06-30 00001008852022-01-012022-12-31 0000100885unp:RetentionAwardsMember2023-01-012023-06-30 0000100885unp:RetentionAwardsMember2022-12-31 0000100885unp:RetentionAwardsMember2023-06-30 utr:M 0000100885unp:PerformanceRetentionAwardsMember2023-01-012023-06-30 0000100885unp:PerformanceRetentionAwardsMember2022-12-31 0000100885unp:PerformanceRetentionAwardsMember2023-06-30 0000100885us-gaap:PensionPlansDefinedBenefitMember2023-04-012023-06-30 0000100885us-gaap:PensionPlansDefinedBenefitMember2022-04-012022-06-30 0000100885us-gaap:PensionPlansDefinedBenefitMember2023-01-012023-06-30 0000100885us-gaap:PensionPlansDefinedBenefitMember2022-01-012022-06-30 0000100885unp:RealEstateTransactionMember2023-01-012023-06-30 0000100885unp:IllinoisStateTollHighwayAuthorityMemberus-gaap:LandMember2022-01-012022-12-31 0000100885us-gaap:StateAndLocalJurisdictionMemberunp:NebraskaDepartmentOfRevenueMember2023-04-012023-06-30 0000100885us-gaap:StateAndLocalJurisdictionMemberunp:NebraskaDepartmentOfRevenueMember2022-04-012022-06-30 0000100885us-gaap:EmployeeStockOptionMember2022-01-012022-06-30 0000100885unp:RetentionAwardsMember2023-04-012023-06-30 0000100885unp:RetentionAwardsMember2022-04-012022-06-30 0000100885unp:RetentionAwardsMember2022-01-012022-06-30 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-03-31 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2023-03-31 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-03-31 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-04-012023-06-30 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2023-04-012023-06-30 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-04-012023-06-30 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-06-30 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2023-06-30 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-06-30 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-31 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2022-03-31 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-03-31 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-06-30 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2022-04-012022-06-30 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-04-012022-06-30 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-06-30 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2022-06-30 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-06-30 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-12-31 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2022-12-31 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-31 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-06-30 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-06-30 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-06-30 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-31 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2021-12-31 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-31 0000100885us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-012022-06-30 0000100885us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-06-30 0000100885us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-06-30 0000100885us-gaap:OtherAssetsMember2023-06-30 0000100885us-gaap:OtherAssetsMember2022-12-31 thunderdome:item 0000100885srt:MaximumMember2023-06-30 0000100885us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2023-01-012023-06-30 0000100885us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2023-04-012023-06-30 0000100885us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2022-04-012022-06-30 0000100885us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2022-01-012022-06-30 0000100885us-gaap:LandMember2023-06-30 0000100885unp:RoadrailAndOtherTrackMaterialMember2023-06-30 0000100885unp:RoadTiesMember2023-06-30 0000100885unp:RoadBallastMember2023-06-30 0000100885unp:RoadOtherMember2023-06-30 0000100885unp:RoadMember2023-06-30 0000100885unp:EquipmentLocomotivesMember2023-06-30 0000100885unp:EquipmentFreightCarsMember2023-06-30 0000100885unp:EquipmentWorkEquipmentAndOtherMember2023-06-30 0000100885us-gaap:EquipmentMember2023-06-30 0000100885us-gaap:TechnologyEquipmentMember2023-06-30 0000100885us-gaap:ConstructionInProgressMember2023-06-30 0000100885us-gaap:LandMember2022-12-31 0000100885unp:RoadrailAndOtherTrackMaterialMember2022-12-31 0000100885unp:RoadTiesMember2022-12-31 0000100885unp:RoadBallastMember2022-12-31 0000100885unp:RoadOtherMember2022-12-31 0000100885unp:RoadMember2022-12-31 0000100885unp:EquipmentLocomotivesMember2022-12-31 0000100885unp:EquipmentFreightCarsMember2022-12-31 0000100885unp:EquipmentWorkEquipmentAndOtherMember2022-12-31 0000100885us-gaap:EquipmentMember2022-12-31 0000100885us-gaap:TechnologyEquipmentMember2022-12-31 0000100885us-gaap:ConstructionInProgressMember2022-12-31 0000100885unp:AccountsPayableAndOtherCurrentLiabilitiesMember2023-06-30 0000100885unp:AccountsPayableAndOtherCurrentLiabilitiesMember2022-12-31 0000100885us-gaap:FairValueInputsLevel2Memberunp:BankTimeDepositsAndGovernmentAgencySecuritiesMember2023-06-30 0000100885us-gaap:FairValueInputsLevel2Memberunp:BankTimeDepositsAndGovernmentAgencySecuritiesMember2022-12-31 0000100885us-gaap:RevolvingCreditFacilityMember2023-06-30 0000100885us-gaap:RevolvingCreditFacilityMember2023-01-012023-06-30 utr:D 0000100885us-gaap:CommercialPaperMember2023-06-30 00001008852022-02-03 0000100885unp:The4750NotesDueFebruary212026Memberus-gaap:UnsecuredDebtMember2023-06-30 0000100885unp:The4950NotesDueMay152053Memberus-gaap:UnsecuredDebtMember2023-06-30 0000100885us-gaap:SecuredDebtMember2023-06-30 0000100885us-gaap:SecuredDebtMember2022-12-31 0000100885unp:PersonalInjuryMember2023-06-30 0000100885unp:PersonalInjuryMembersrt:MinimumMember2023-06-30 0000100885unp:PersonalInjuryMembersrt:MaximumMember2023-06-30 0000100885unp:PersonalInjuryMember2022-12-31 0000100885unp:PersonalInjuryMember2021-12-31 0000100885unp:PersonalInjuryMember2023-01-012023-06-30 0000100885unp:PersonalInjuryMember2022-01-012022-06-30 0000100885unp:PersonalInjuryMember2022-06-30 00001008852022-04-01 00001008852022-04-012023-06-30 00001008852019-04-012022-03-31 00001008852023-01-012023-03-31 00001008852022-01-012022-03-31 0000100885unp:AcceleratedShareRepurchaseProgramsASRSsMember2022-01-012022-06-30 0000100885unp:AcceleratedShareRepurchaseProgramsASRSsMember2022-01-012022-03-31 0000100885unp:AcceleratedShareRepurchaseProgramsASRSsMember2022-04-012022-06-30 0000100885unp:AcceleratedShareRepurchaseProgramsASRSsMember2022-02-182022-02-18 0000100885unp:UPRRMemberunp:TTXCompanyMember2023-06-30 0000100885unp:UPRRMemberunp:TTXCompanyMember2022-12-31 0000100885unp:UPRRMemberunp:CarHireExpensesMemberunp:TTXCompanyMember2023-04-012023-06-30 0000100885unp:UPRRMemberunp:CarHireExpensesMemberunp:TTXCompanyMember2022-04-012022-06-30 0000100885unp:UPRRMemberunp:CarHireExpensesMemberunp:TTXCompanyMember2023-01-012023-06-30 0000100885unp:UPRRMemberunp:CarHireExpensesMemberunp:TTXCompanyMember2022-01-012022-06-30 0000100885unp:UPRRMemberunp:TTXCompanyMember2023-06-30 0000100885unp:UPRRMemberunp:TTXCompanyMember2022-12-31 0000100885unp:ExecutiveVicePresidentAndChiefFinancialOfficerMember2023-05-222023-06-30 0000100885unp:ExecutiveVicePresidentAndChiefFinancialOfficerMember2023-05-222023-05-22 0000100885unp:ExecutiveVicePresidentOfMarketingAndSalesMember2023-05-222023-06-30 0000100885unp:ExecutiveVicePresidentOfMarketingAndSalesMember2023-05-222023-05-22 0000100885unp:The4750NotesDueFebruary212026Memberus-gaap:UnsecuredDebtMember2023-01-012023-06-30 0000100885unp:The4950NotesDueMay152053Memberus-gaap:UnsecuredDebtMember2023-01-012023-06-30
 

Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

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 incorporation or organization)

(I.R.S. Employer Identification No.)

 

1400 Douglas Street, Omaha, Nebraska68179
(Address of principal executive offices)(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

Trading Symbol

Name of each exchange on which registered

Common Stock (Par Value $2.50 per share)

UNP

New York Stock Exchange

 

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 every Interactive Data File required to be submitted 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 such files).

Yes     ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer 

 

Accelerated Filer 

Non-Accelerated Filer

 

Smaller Reporting Company 

 

Emerging Growth Company

  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     ☒ No

As of July 21, 2023, there were 609,456,215 shares of the Registrant's Common Stock outstanding.



 

 

TABLE OF CONTENTS

UNION PACIFIC CORPORATION

AND SUBSIDIARY COMPANIES

 

PART I. FINANCIAL INFORMATION
     

Item 1.

Condensed Consolidated Financial Statements:

 
 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 
 

For the Three Months Ended June 30, 2023 and 2022

3
     
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

 
 

For the Three Months Ended June 30, 2023 and 2022

3
     
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)  
  For the Six Months Ended June 30, 2023 and 2022 4
     
  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)  
  For the Six Months Ended June 30, 2023 and 2022 4
     
 

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

 
 

At June 30, 2023, and December 31, 2022

5
     
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 
 

For the Six Months Ended June 30, 2023 and 2022

6
     
 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS’ EQUITY (Unaudited)

 
 

For the Three and Six Months Ended June 30, 2023 and 2022

7
     
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

8
     

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

19
     

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29
     

Item 4.

Controls and Procedures

30
     
PART II. OTHER INFORMATION
     

Item 1.

Legal Proceedings

30
     

Item 1A.

Risk Factors

31
     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31
     

Item 3.

Defaults Upon Senior Securities

31
     

Item 4.

Mine Safety Disclosures

31
     

Item 5.

Other Information

31

     

Item 6.

Exhibits

32

   

Signatures

33

   

Certifications

34

 

2

 

PART I. FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements

 

Condensed Consolidated Statements of Income (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

Millions, Except Per Share Amounts, for the Three Months Ended June 30,

 

2023

   

2022

 

Operating revenues:

               

Freight revenues

  $ 5,569     $ 5,842  

Other revenues

    394       427  

Total operating revenues

    5,963       6,269  

Operating expenses:

               

Compensation and benefits

    1,269       1,092  

Fuel

    664       940  

Purchased services and materials

    650       622  

Depreciation

    577       559  

Equipment and other rents

    248       230  

Other

    351       331  

Total operating expenses

    3,759       3,774  

Operating income

    2,204       2,495  

Other income, net (Note 5)

    93       163  

Interest expense

    (339 )     (316 )

Income before income taxes

    1,958       2,342  

Income tax expense (Note 6)

    (389 )     (507 )

Net income

  $ 1,569     $ 1,835  

Share and Per Share (Note 7):

               

Earnings per share - basic

  $ 2.58     $ 2.93  

Earnings per share - diluted

  $ 2.57     $ 2.93  

Weighted average number of shares - basic

    608.7       625.6  

Weighted average number of shares - diluted

    609.5       626.8  
 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

Millions, for the Three Months Ended June 30,

 

2023

   

2022

 

Net income

  $ 1,569     $ 1,835  

Other comprehensive income/(loss):

               

Defined benefit plans

    6       14  

Foreign currency translation

    21       23  

Unrealized gain on derivative instruments

    16       -  

Total other comprehensive income/(loss) [a]

    43       37  

Comprehensive income

  $ 1,612     $ 1,872  

 

[a]

Net of deferred taxes of ($3) million and ($6) million during the three months ended June 30, 2023 and 2022, respectively.

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

3

 

Condensed Consolidated Statements of Income (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

Millions, Except Per Share Amounts, for the Six Months Ended June 30,

 

2023

   

2022

 

Operating revenues:

               

Freight revenues

  $ 11,225     $ 11,282  

Other revenues

    794       847  

Total operating revenues

    12,019       12,129  

Operating expenses:

               

Compensation and benefits

    2,448       2,193  

Fuel

    1,430       1,654  

Purchased services and materials

    1,303       1,183  

Depreciation

    1,149       1,114  

Equipment and other rents

    483       445  

Other

    708       668  

Total operating expenses

    7,521       7,257  

Operating income

    4,498       4,872  

Other income, net (Note 5)

    277       210  

Interest expense

    (675 )     (623 )

Income before income taxes

    4,100       4,459  

Income tax expense (Note 6)

    (901 )     (994 )

Net income

  $ 3,199     $ 3,465  

Share and Per Share (Note 7):

               

Earnings per share - basic

  $ 5.25     $ 5.51  

Earnings per share - diluted

  $ 5.24     $ 5.50  

Weighted average number of shares - basic

    609.6       628.9  

Weighted average number of shares - diluted

    610.5       630.2  
 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

Millions, for the Six Months Ended June 30,

 

2023

   

2022

 

Net income

  $ 3,199     $ 3,465  

Other comprehensive income/(loss):

               

Defined benefit plans

    5       29  

Foreign currency translation

    44       44  

Unrealized gain on derivative instruments

    16       -  

Total other comprehensive income/(loss) [a]

    65       73  

Comprehensive income

  $ 3,264     $ 3,538  

 

[a] Net of deferred taxes of ($3) million and ($11) million during the six months ended June 30, 2023 and 2022, respectively.

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

4

 

Condensed Consolidated Statements of Financial Position (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

  

Jun. 30,

  

Dec. 31,

 

Millions, Except Share and Per Share Amounts

 

2023

  

2022

 

Assets

        

Current assets:

        

Cash and cash equivalents

 $830  $973 

Short-term investments (Note 12)

  -   46 

Accounts receivable, net (Note 9)

  1,826   1,891 

Materials and supplies

  742   741 

Other current assets

  354   301 

Total current assets

  3,752   3,952 

Investments

  2,524   2,375 

Properties, net (Note 10)

  56,641   56,038 

Operating lease assets

  1,651   1,672 

Other assets

  1,465   1,412 

Total assets

 $66,033  $65,449 

Liabilities and Common Shareholders' Equity

        

Current liabilities:

        

Accounts payable and other current liabilities (Note 11)

 $3,504  $3,842 

Debt due within one year (Note 13)

  1,745   1,678 

Total current liabilities

  5,249   5,520 

Debt due after one year (Note 13)

  31,557   31,648 

Operating lease liabilities

  1,217   1,300 

Deferred income taxes

  13,069   13,033 

Other long-term liabilities

  1,747   1,785 

Commitments and contingencies (Note 14)

          

Total liabilities

  52,839   53,286 

Common shareholders' equity:

        

Common shares, $2.50 par value, 1,400,000,000 authorized; 1,112,878,694 and

        

1,112,623,886 issued; 609,398,738 and 612,393,321 outstanding, respectively

  2,782   2,782 

Paid-in-surplus

  5,128   5,080 

Retained earnings

  60,500   58,887 

Treasury stock

  (54,699)  (54,004)

Accumulated other comprehensive loss (Note 8)

  (517)  (582)

Total common shareholders' equity

  13,194   12,163 

Total liabilities and common shareholders' equity

 $66,033  $65,449 

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

Millions, for the Six Months Ended June 30,

 

2023

   

2022

 

Operating Activities

               

Net income

  $ 3,199     $ 3,465  

Adjustments to reconcile net income to cash provided by operating activities:

               

Depreciation

    1,149       1,114  

Deferred and other income taxes

    36       93  

Other operating activities, net

    (126 )     (52 )

Changes in current assets and liabilities:

               

Accounts receivable, net

    70       (330 )

Materials and supplies

    (1 )     (169 )

Other current assets

    (86 )     (39 )

Accounts payable and other current liabilities

    (340 )     203  

Income and other taxes

    (43 )     (118 )

Cash provided by operating activities

    3,858       4,167  

Investing Activities

               

Capital investments

    (1,607 )     (1,645 )

Maturities of short-term investments (Note 12)

    46       -  

Proceeds from asset sales

    45       120  

Other investing activities, net

    (158 )     (15 )

Cash used in investing activities

    (1,674 )     (1,540 )

Financing Activities

               

Debt repaid

    (1,664 )     (1,664 )

Debt issued (Note 13)

    1,599       4,090  

Dividends paid

    (1,588 )     (1,556 )

Share repurchase programs (Note 15)

    (705 )     (3,473 )

Net issued/(paid) commercial paper (Note 13)

    19       (151 )

Other financing activities, net

    11       (42 )

Cash used in financing activities

    (2,328 )     (2,796 )

Net change in cash, cash equivalents, and restricted cash

    (144 )     (169 )

Cash, cash equivalents, and restricted cash at beginning of year

    987       983  

Cash, cash equivalents, and restricted cash at end of period

  $ 843     $ 814  

Supplemental Cash Flow Information

               

Non-cash investing and financing activities:

               

Capital investments accrued but not yet paid

  $ 207     $ 241  

Common shares repurchased but not yet paid

    6       2  

Cash (paid for)/received from:

               

Income taxes, net of refunds

  $ (826 )   $ (1,033 )

Interest, net of amounts capitalized

    (628 )     (565 )

Reconciliation of cash, cash equivalents, and restricted cash

               

to the Condensed Consolidated Statement of Financial Position:

               

Cash and cash equivalents

  $ 830     $ 788  

Restricted cash equivalents in other current assets

    4       22  

Restricted cash equivalents in other assets

    9       4  

Total cash, cash equivalents and restricted cash equivalents per above

  $ 843     $ 814  

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

6

 

Condensed Consolidated Statements of Changes in Common Shareholders Equity (Unaudited)

Union Pacific Corporation and Subsidiary Companies

 

 

Millions

 

Common Shares

Treasury Shares

 

Common Shares

Paid-in-Surplus

Retained Earnings

Treasury Stock

AOCI [a]

Total

 

Balance at April 1, 2022

  1,112.6   (484.4) $2,782  $4,571  $55,937  $(50,515) $(878) $11,897 

Net income

          -   -   1,835   -   -   1,835 

Other comprehensive income/(loss)

          -   -   -   -   37   37 

Conversion, stock option exercises, forfeitures, ESPP, and other [b]

  -   -   (1)  31   -   7   -   37 

Share repurchase programs (Note 15)

  -   (3.1)  -   428   -   (710)  -   (282)

Dividends declared ($1.30 per share)

  -   -   -   -   (814)  -   -   (814)

Balance at June 30, 2022

  1,112.6   (487.5) $2,781  $5,030  $56,958  $(51,218) $(841) $12,710 
                                 

Balance at April 1, 2023

  1,112.9   (503.0) $2,782  $5,099  $59,724  $(54,591) $(560) $12,454 

Net income

          -   -   1,569   -   -   1,569 

Other comprehensive income/(loss)

          -   -   -   -   43   43 

Conversion, stock option exercises, forfeitures, ESPP, and other [b]

  -   0.1   -   29   -   13   -   42 

Share repurchase programs (Note 15)

  -   (0.6)  -   -   -   (121)  -   (121)

Dividends declared ($1.30 per share)

  -   -   -   -   (793)  -   -   (793)

Balance at June 30, 2023

  1,112.9   (503.5) $2,782  $5,128  $60,500  $(54,699) $(517) $13,194 

 

Millions

Common Shares

Treasury Shares

 

Common Shares

Paid-in-Surplus

Retained Earnings

Treasury Stock

AOCI [a]

Total

 

Balance at January 1, 2022

  1,112.4   (473.6) $2,781  $4,979  $55,049  $(47,734) $(914) $14,161 

Net income

          -   -   3,465   -   -   3,465 

Other comprehensive income/(loss)

          -   -   -   -   73   73 

Conversion, stock option exercises, forfeitures, ESPP, and other [b]

  0.2   0.2   -   63   -   (21)  -   42 

Share repurchase programs (Note 15)

  -   (14.1)  -   (12)  -   (3,463)  -   (3,475)

Dividends declared ($2.48 per share)

  -   -   -   -   (1,556)  -   -   (1,556)

Balance at June 30, 2022

  1,112.6   (487.5) $2,781  $5,030  $56,958  $(51,218) $(841) $12,710 
                                 

Balance at January 1, 2023

  1,112.6   (500.2) $2,782  $5,080  $58,887  $(54,004) $(582) $12,163 

Net income

          -   -   3,199   -   -   3,199 

Other comprehensive income/(loss)

          -   -   -   -   65   65 

Conversion, stock option exercises, forfeitures, ESPP, and other [b]

  0.3   0.2   -   48   -   17   -   65 

Share repurchase programs (Note 15)

  -   (3.5)  -   -   -   (712)  -   (712)

Dividends declared ($2.60 per share)

  -   -   -   -   (1,586)  -   -   (1,586)

Balance at June 30, 2023

  1,112.9   (503.5) $2,782  $5,128  $60,500  $(54,699) $(517) $13,194 

 

[a]

AOCI = Accumulated Other Comprehensive Income/Loss (Note 8)

[b] ESPP = employee stock purchase plan

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

 

7

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(Unaudited)

 

For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “Corporation”, “Company”, “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. Basis of Presentation

 

Our Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting of normal and recurring adjustments) that are, in the opinion of management, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (GAAP). Pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and notes thereto contained in our 2022 Annual Report on Form 10-K. Our Consolidated Statement of Financial Position at December 31, 2022, is derived from audited financial statements. The results of operations for the six months ended June 30, 2023, are not necessarily indicative of the results for the entire year ending December 31, 2023.

 

The Condensed Consolidated Financial Statements are presented in accordance with GAAP as codified in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).

 

2. Operations and Segmentation

 

The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network. Our operating revenues are primarily derived from contracts with customers for the transportation of freight from origin to destination.

 

The following table represents a disaggregation of our freight and other revenues:

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

Millions

 

2023

  

2022

  

2023

  

2022

 

Bulk

 $1,757  $1,813  $3,654  $3,645 

Industrial

  2,086   2,091   4,103   4,012 

Premium

  1,726   1,938   3,468   3,625 

Total freight revenues

 $5,569  $5,842  $11,225  $11,282 

Other subsidiary revenues

  220   233   455   438 

Accessorial revenues

  149   183   300   384 

Other

  25   11   39   25 

Total operating revenues

 $5,963  $6,269  $12,019  $12,129 

 

Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of origination or destination for some products we transport are outside the U.S. Each of our commodity groups includes revenues from shipments to and from Mexico. Included in the above table are revenues from our Mexico business, which amounted to $689 million and $681 million for the three months ended June 30, 2023 and 2022, respectively, and $1.4 billion and $1.3 billion for the six months ended June 30, 2023 and 2022, respectively.

 

3. Stock-Based Compensation

 

We have several stock-based compensation plans where employees receive nonvested stock options, nonvested retention shares, and nonvested stock units. We refer to the nonvested shares and stock units collectively as “retention awards”. Employees also are able to participate in our employee stock purchase plan (ESPP). 

 

8

 

Information regarding stock-based compensation appears in the table below:

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

Millions

 

2023

  

2022

  

2023

  

2022

 

Stock-based compensation, before tax:

                

Stock options

 $4  $3  $8  $7 

Retention awards

  15   19   33   41 

ESPP

  5   4   11   8 

Total stock-based compensation, before tax

 $24  $26  $52  $56 

Excess income tax benefits from equity compensation plans

 $1  $1  $7  $18 

 

Stock Options – Stock options are granted at the closing price on the date of grant, have 10-year contractual terms, and vest no later than 3 years from the date of grant. None of the stock options outstanding at June 30, 2023, are subject to performance or market-based vesting conditions.

 

The table below shows the annual weighted-average assumptions used for Black-Scholes valuation purposes:

 

Weighted-Average Assumptions

 

2023

  

2022

 

Risk-free interest rate

  3.9%  1.6%

Dividend yield

  2.6%  1.9%

Expected life (years)

  4.5   4.4 

Volatility

  29.3%  28.7%

Weighted-average grant-date fair value of options granted

 $48.31  $51.92 

 

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the expected 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 behavior; and expected volatility is based on the historical volatility of our stock price over the expected life of the stock option.

 

A summary of stock option activity during the six months ended June 30, 2023, is presented below:

 

 

Options (thous.)

Weighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (in years)Aggregate Intrinsic Value (millions) 

Outstanding at January 1, 2023

  1,974  $169.64   6.0  $86 

Granted

  351   202.81   N/A   N/A 

Exercised

  (72)  107.65   N/A   N/A 

Forfeited or expired

  (5)  224.05   N/A   N/A 

Outstanding at June 30, 2023

  2,248  $176.68   6.3  $75 

Vested or expected to vest at June 30, 2023

  2,228  $176.31   6.3  $75 

Options exercisable at June 30, 2023

  1,580  $160.07   5.2  $75 

 

At June 30, 2023, there was $25 million of unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.5 years. Additional information regarding stock option exercises appears in the following table:

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

Millions

 

2023

  

2022

  

2023

  

2022

 

Intrinsic value of stock options exercised

 $3  $2  $7  $44 

Cash received from option exercises

  4   2   8   17 

Treasury shares repurchased for employee payroll taxes

  (1)  -   (2)  (5)

Income tax benefit realized from option exercises

  1   1   2   6 

Aggregate grant-date fair value of stock options vested

  -   -   14   13 

 

Retention Awards – Retention awards are granted at no cost to the employee, vest over periods lasting up to 4 years, and dividends and dividend equivalents are paid to participants during the vesting periods.

 

9

 

Changes in our retention awards during the six months ended June 30, 2023, were as follows:

 

 

Shares (thous.)

Weighted-Average Grant-Date Fair Value 

Nonvested at January 1, 2023

  1,069  $196.47 

Granted

  295   202.72 

Vested

  (300)  162.65 

Forfeited

  (25)  205.20 

Nonvested at June 30, 2023

  1,039  $207.80 

 

At June 30, 2023, there was $114 million of total unrecognized compensation expense related to nonvested retention awards, which is expected to be recognized over a weighted-average period of 1.8 years.

 

Performance Retention Awards – In February 2023, our Board of Directors approved performance stock unit grants. The basic terms of these performance stock units are identical to those granted in February 2022, including the annual return on invested capital (ROIC) and operating income growth (OIG) performance targets. The OIG performance targets compare to companies in the S&P 100 Industrials Index plus the Class I railroads. We define ROIC as net operating profit adjusted for interest expense (including interest on average operating lease liabilities) and taxes on interest divided by average invested capital adjusted for average operating lease liabilities.

 

The February 2023 stock units awarded to selected employees are subject to continued employment for 37 months, the attainment of certain levels of ROIC, and the relative three-year OIG. We expense two-thirds of the fair value of the units that are probable of being earned based on our forecasted ROIC over the three-year performance period, and with respect to the third year of the plan, the remaining one-third of the fair value is subject to the relative three-year OIG. We measure the fair value of performance stock units based upon the closing price of the underlying common stock as of the date of grant. Dividend equivalents are accumulated during the service period and paid to participants only after the units are earned. 
 

Changes in our performance retention awards during the six months ended June 30, 2023, were as follows:

 

 

Shares (thous.)

Weighted-Average Grant-Date Fair Value

 

Nonvested at January 1, 2023

  594  $199.82 

Granted

  251   202.81 

Vested

  (73)  186.67 

Unearned

  (127)  186.11 

Forfeited

  (4)  222.66 

Nonvested at June 30, 2023

  641  $205.06 

 

At June 30, 2023, there was $26 million of total unrecognized compensation expense related to nonvested performance retention awards, which is expected to be recognized over a weighted-average period of 1.6 years. This expense is subject to achievement of the performance measures established for the performance stock unit grants.

 

4. Retirement Plans

 

We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) 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. Non-union employees hired on or after January 1, 2018, are no longer eligible for pension benefits, but are eligible for an enhanced 401(k) plan.

 

Expense

 

Pension expense is determined based upon the 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 in fair value over a 5-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately but are deferred in accumulated other comprehensive income/loss and, if necessary, amortized as pension expense.

 

10

 

The components of our net periodic pension benefit/cost were as follows:

 

  Three Months Ended  Six Months Ended 
  June 30,  June 30, 

Millions

 

2023

  

2022

  

2023

  

2022

 

Service cost

 $12  $26  $25  $52 

Interest cost

  46   31   92   62 

Expected return on plan assets

  (62)  (73)  (124)  (146)

Amortization of actuarial loss

  2   21   4   43 

Net periodic pension (benefit)/cost

 $(2) $5  $(3) $11 

 

Cash Contributions

 

For the six months ended June 30, 2023, cash contributions totaled $0 to the qualified pension plans. Any contributions made during 2023 will be based on cash generated from operations and financial market considerations. Our policy with respect to funding the qualified pension plans is to fund at least the minimum required by law and not more than the maximum amount deductible for tax purposes. At June 30, 2023, we do not have minimum cash funding requirements for 2023.

 

5. Other Income

 

Other income included the following:

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

Millions

 

2023

  

2022

  

2023

  

2022

 

Real estate income [a] [b]

 $69  $146  $245  $206 

Net periodic pension benefit/(costs)

  14   21   28   41 

Environmental remediation and restoration

  (3)  (5)  (22)  (31)

Other [a]

  13   1   26   (6)

Total

 $93  $163  $277  $210 

 

[a]Prior periods have been reclassified to conform to the current period disclosure.
[b]2023 includes a one-time $107 million transaction. 2022 includes a $79 million gain from a land sale to the Illinois State Toll Highway Authority.
 

6. Income Taxes

 

In the second quarter of 2023, the state of Nebraska enacted legislation to reduce its corporate income tax rate for future years resulting in a $73 million reduction of our deferred tax expense.

 

In the second quarter of 2022, the state of Nebraska enacted legislation to reduce its corporate income tax rate for future years resulting in a $55 million reduction of our deferred tax expense.

 

7. Earnings Per Share

 

The following table provides a reconciliation between basic and diluted earnings per share:

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

Millions, Except Per Share Amounts

 

2023

  

2022

  

2023

  

2022

 

Net income

 $1,569  $1,835  $3,199  $3,465 

Weighted-average number of shares outstanding:

                

Basic

  608.7   625.6   609.6   628.9 

Dilutive effect of stock options

  0.3   0.6   0.4   0.7 

Dilutive effect of retention shares and units

  0.5   0.6   0.5   0.6 

Diluted

  609.5   626.8   610.5   630.2 

Earnings per share – basic

 $2.58  $2.93  $5.25  $5.51 

Earnings per share – diluted

 $2.57  $2.93  $5.24  $5.50 

Stock options excluded as their inclusion would be anti-dilutive

  1.0   0.3   0.9   0.3 
 

 

11

 

8. Accumulated Other Comprehensive Income/Loss

 

Reclassifications out of accumulated other comprehensive income/loss were as follows (net of tax):

 

Millions

Defined benefit plans Foreign currency translation 

Unrealized gain on derivative instruments [a]

  

Total

 

Balance at April 1, 2023

 $(379) $(181) $-  $(560)

Other comprehensive income/(loss) before reclassifications

  6   21   16   43 

Amounts reclassified from accumulated other comprehensive income/(loss) [b]

  -   -   -   - 

Net quarter-to-date other comprehensive income/(loss), net of taxes of ($3) million

  6   21   16   43 

Balance at June 30, 2023

 $(373) $(160) $16  $(517)
                 

Balance at April 1, 2022

 $(643) $(235) $-  $(878)

Other comprehensive income/(loss) before reclassifications

  -   23   -   23 

Amounts reclassified from accumulated other comprehensive income/(loss) [b]

  14   -   -   14 

Net quarter-to-date other comprehensive income/(loss), net of taxes of ($6) million

  14   23   -   37 

Balance at June 30, 2022

 $(629) $(212) $-  $(841)

 

Millions

Defined benefit plans Foreign currency translation 

Unrealized gain on derivative instruments [a]

  

Total

 

Balance at January 1, 2023

 $(378) $(204) $-  $(582)

Other comprehensive income/(loss) before reclassifications

  6   44   16   66 

Amounts reclassified from accumulated other comprehensive income/(loss) [b]

  (1)  -   -   (1)

Net year-to-date other comprehensive income/(loss), net of taxes of ($3) million

  5   44   16   65 

Balance at June 30, 2023

 $(373) $(160) $16  $(517)
                 

Balance at January 1, 2022

 $(658) $(256) $-  $(914)

Other comprehensive income/(loss) before reclassifications

  -   44   -   44 

Amounts reclassified from accumulated other comprehensive income/(loss) [b]

  29   -   -   29 

Net year-to-date other comprehensive income/(loss), net of taxes of ($11) million

  29   44   -   73 

Balance at June 30, 2022

 $(629) $(212) $-  $(841)

 

[a]Related to interest rate swaps from equity method investments.
[b]The accumulated other comprehensive income/loss reclassification components are 1) prior service cost/credit and 2) net actuarial loss, which are both included in the computation of net periodic pension benefit/cost. See Note 4 Retirement Plans for additional details.
 

 

12

 

9. Accounts Receivable

 

Accounts receivable includes freight and other receivables reduced by an allowance for doubtful accounts. At  June 30, 2023, and December 31, 2022, our accounts receivables were reduced by $11 million and $10 million, respectively. Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Condensed Consolidated Statements of Financial Position. At  June 30, 2023, and December 31, 2022, receivables classified as other assets were reduced by allowances of $67 million and $58 million, respectively.

 

Receivables Securitization Facility – The Railroad maintains an $800 million, 3-year receivables securitization facility (the Receivables Facility) maturing in July 2025Under the Receivables Facility, the Railroad sells most of its eligible third-party receivables to Union Pacific Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in accounts receivable to investors. The investors have no recourse to the Railroad’s other assets except for customary warranty and indemnity claims. Creditors of the Railroad do not have recourse to the assets of UPRI.

 

The amount recorded under the Receivables Facility was $400 million and $100 million at June 30, 2023, and December 31, 2022, respectively. The Receivables Facility was supported by $1.5 billion and $1.6 billion of accounts receivable as collateral at June 30, 2023, and December 31, 2022, respectively, which, as a retained interest, is included in accounts receivable, net in our Condensed Consolidated Statements of Financial Position.

 

The outstanding amount the Railroad maintains under the Receivables Facility may fluctuate based on current cash needs. The maximum allowed under the Receivables Facility is $800 million with availability directly impacted by eligible receivables, business volumes, and credit risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the Receivables Facility would not materially change.

 

The costs of the Receivables Facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unused commitment availability. The costs of the Receivables Facility are included in interest expense and were $1 million and $3 million for the three months ended  June 30, 2023 and 2022 , respectively, and $4 million for both of the six months ended June 30, 2023 and 2022 .
 

 

13

 

10. Properties

 

The following tables list the major categories of property and equipment, as well as the weighted-average estimated useful life for each category (in years):

 

Millions, Except Estimated Useful Life

     

Accumulated

  

Net Book

  

Estimated

 

As of June 30, 2023

 

Cost

  

Depreciation

  

Value

  

Useful Life

 

Land

 $5,365  $N/A  $5,365   N/A 

Road:

                

Rail and other track material

  18,633   7,222   11,411   42 

Ties

  11,845   3,799   8,046   34 

Ballast

  6,285   2,004   4,281   34 

Other roadway [a]

  22,721   5,173   17,548   47 

Total road

  59,484   18,198   41,286   N/A 

Equipment:

                

Locomotives

  9,319   3,690   5,629   18 

Freight cars

  2,628   935   1,693   23 

Work equipment and other

  1,301   508   793   17 

Total equipment

  13,248   5,133   8,115   N/A 

Technology and other

  1,280   539   741   12 

Construction in progress

  1,134   -   1,134   N/A 

Total

 $80,511  $23,870  $56,641   N/A 

 

Millions, Except Estimated Useful Life

     

Accumulated

  

Net Book

  

Estimated

 

As of December 31, 2022

 

Cost

  

Depreciation

  

Value

  

Useful Life

 

Land

 $5,344  $N/A  $5,344   N/A 

Road:

                

Rail and other track material