Union Pacific Corp. Reports Operating Results (10-K)
Union Pacific Corp. has a market cap of $30.77 billion; its shares were traded at around $60.98 with a P/E ratio of 16.9 and P/S ratio of 2.1. The dividend yield of Union Pacific Corp. stocks is 1.8%. Union Pacific Corp. had an annual average earning growth of 1.7% over the past 10 years.UNP is in the portfolios of Tweedy Browne of Tweedy Browne CO LLC, David Williams of Columbia Value and Restructuring Fund, Murray Stahl of Horizon Asset Management, Chris Shumway of Shumway Capital Partners LLC, NWQ Managers of NWQ Investment Management Co, Warren Buffett of Berkshire Hathaway, Richard Aster Jr of Meridian Fund, Bruce Kovner of Caxton Associates, PRIMECAP Management, Kenneth Fisher of Fisher Asset Management, LLC, John Buckingham of Al Frank Asset Management, Inc., John Keeley of Keeley Fund Management, Dodge & Cox, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: 2009 Capital Expenditures During 2009, we made capital investments totaling $2.5 billion, which included cash spending of $2.4 billion (see the capital expenditures table in Managements Discussion
and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Financial Condition, Item 7). Our capital plan included the acquisition of 127 locomotives at a cost of $287 million. We financed 44 of the 127 locomotives with a value of $100 million through a capital lease financing.
Equipment Encumbrance Equipment with a carrying value of approximately $3.4 billion and $2.7 billion at December 31, 2009 and 2008, respectively, serves 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 we reported in our Annual Report on Form 10-K for 2005, the EPA considers the Railroad a potentially responsible party for the Omaha Lead Site. The Omaha Lead Site consists of approximately 25 square miles of residential property in the eastern part of Omaha, Nebraska, allegedly impacted by air emissions from two former lead smelters/refineries. One refinery was operated by ASARCO. The EPA identified the Railroad as a potentially responsible party because more than 60 years ago the Railroad owned land that was leased to ASARCO. The Railroad disputes both the legal and technical basis of the EPAs allegations. It has nonetheless engaged in extensive negotiations with the EPA. These negotiations reached an apparent impasse. The EPA issued a Unilateral Administrative Order with an effective date of December 16, 2005, directing the Railroad to implement an interim remedy at the site at an estimated cost of $50 million. Failure to comply with the order without just cause could subject the Railroad to penalties of up to $32,500 per day and triple the EPAs costs in performing the work. The Railroad believes it has just cause not to comply with the order, but it offered to perform some of the work specified in the order as a compromise. On August 5, 2009, the Railroad received a Special Notice Letter from EPA directing us to perform environmental remediation at approximately 9,000 residential yards in Omaha and to take other remedial measures as part of a final remedy. The Railroad continues to contest its purported liability for these costs but has submitted an offer to the EPA to attempt to negotiate a resolution of the matter. To date, the EPA has rejected all of the Railroads offers to settle or resolve this matter.
As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, the Railroad received notice from the United States Department of Justice on May 8, 2008, indicating its intent to file suit for civil penalties in connection with a March 6, 2005 derailment near Kamela, Oregon. The derailment resulted in the release of approximately 900 gallons of diesel fuel from ruptured fuel tanks of derailed refrigerator cars. Some of this fuel entered Dry Creek, a tributary to the Grande Ronde River. While the amount of the ultimate penalty is uncertain, it could exceed $100,000. Additionally, on June 9, 2009, the Oregon Department of Environmental Quality notified the Railroad that it would be seeking $40,000 in civil penalties from the Railroad under state law in connection with this incident.
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