UNION PACIFIC CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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UNION PACIFIC CORPORATION AND SUBSIDIARIES

                             RESULTS OF OPERATIONS



                 Three Months Ended March 31, 2022, Compared to

                       Three Months Ended March 31, 2021


For the purposes of this report, unless the context otherwise requires, all references herein to “UPC”, “Company”, “Company”, “we”, “us” and “our” mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Companywhich we separately call “UPRR” or “Railroad”.



The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and applicable notes to the Condensed
Consolidated Financial Statements, Item 1, and other information included in
this report. Our Condensed Consolidated Financial Statements are unaudited and
reflect all adjustments (consisting only 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).


The railroad, together with its subsidiaries and affiliates, is our only line of business to feature. Although we provide and analyze revenues by commodity group, we treat railroad financial results as one segment due to the integrated nature of our rail network.


Critical Accounting Estimates



We base our discussion and analysis of our financial condition and results of
operations upon our Condensed Consolidated Financial Statements. The preparation
of these financial statements requires estimation and judgment that affect the
reported amounts of revenues, expenses, assets, and liabilities. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. If these estimates differ
materially from actual results, the impact on the Condensed Consolidated
Financial Statements may be material. Our critical accounting estimates are
available in Item 7 of our 2021 Annual Report on Form 10-K. There have not been
any significant changes with respect to these policies during the first three
months of 2022.



RESULTS OF OPERATIONS



Quarterly Summary



The Company reported earnings of $2.57 per diluted share on net income of $1.6
billion and an operating ratio of 59.4% in the first quarter of 2022 compared to
earnings of $2.00 per diluted share on net income of $1.3 billion and an
operating ratio of 60.1% for the first quarter of 2021. Freight revenues
increased 17% in the quarter compared to the same period in 2021 driven by
increases in average revenue per car (ARC) and volume of 12% and 4%,
respectively. The ARC increase was due to higher fuel surcharge revenue, core
pricing gains, and positive mix of traffic (for example, a relative increase in
industrial shipments, which have a higher ARC). As the economy strengthened in
the first quarter of 2022, volume growth was seen in all commodity groups except
the energy and specialized markets, driven by lower petroleum shipments, and
intermodal, due to the on-going supply chain disruptions. Weather events did not
have a significant impact on our operations in the first quarter 2022. Revenues
and costs improved year-over-year due to the impact of Winter Storm Uri on first
quarter 2021, which reduced carloads and increased operating costs.



With the onset of the Russia-Ukraine conflict (the conflict) in late February
2022, crude oil prices rose to over $100 a barrel driving a 59% increase in our
average fuel price for the quarter. In addition, in response to the conflict and
ensuing Office of Foreign Assets Controls (OFAC) sanctions we evaluated our
customer and supplier relationships to safeguard the Company against violations
of these sanctions. If any of our business partners with known Russian ties
become sanctioned or if we take proactive steps in light of the ongoing
conflict, we do not expect such actions to have a material adverse effect on our
results of operations, financial condition, and liquidity. Along with the higher
cost of fuel, costs increased due to inflation, volume, and the reduced fluidity
of our network. These increased costs only partially offset the higher revenue,
resulting in a 19% increase in operating income in the first quarter compared to
the same period in 2021.



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Operating Revenues



Millions, for the Three Months Ended March 31,      2022        2021      Change %
Freight revenues                                 $ 5,440     $ 4,649          17 %
Other subsidiary revenues                            205         177          16
Accessorial revenues                                 201         161          25
Other                                                 14          14           -
Total                                            $ 5,860     $ 5,001          17 %




We generate freight revenues by transporting products from our three commodity
groups. Freight revenues vary with volume (carloads) and ARC. Changes in price,
traffic mix, and fuel surcharges drive ARC. Customer incentives, which are
primarily provided for shipping to/from specific locations or based on
cumulative volumes, are recorded as a reduction to operating revenues. Customer
incentives that include variable consideration based on cumulative volumes are
estimated using the expected value method, which is based on available
historical, current, and forecasted volumes, and recognized as the related
performance obligation is satisfied. We recognize freight revenues over time as
shipments move from origin to destination. The allocation of revenues between
reporting periods is based on the relative transit time in each reporting period
with expenses recognized as incurred.



Other subsidiary revenues (primarily logistics and commuter rail operations) are
generally recognized over time as shipments move from origin to destination. The
allocation of revenues between reporting periods is based on the relative
transit time in each reporting period with expenses recognized as incurred.
Accessorial revenues are recognized at a point in time as performance
obligations are satisfied.



Freight revenues increased 17% during the first quarter of 2022 compared to
2021, resulting from higher fuel surcharges, a 4% volume increase, core pricing
gains, and positive mix of traffic. Volume growth in coal, metals and minerals,
industrial chemicals and plastics, and automotive parts were partially offset by
declines in international intermodal and petroleum shipments.



Each of our commodity groups includes revenues from fuel surcharges. Freight
revenues from fuel surcharge programs increased to $635 million in the first
quarter of 2022 compared to $260 million in the same period of 2021 due to
higher fuel prices.



Other subsidiary revenues increased in the first quarter compared to 2021
primarily driven by revenues at our subsidiary that brokers intermodal and
transload logistics services as a result of the recovery of automotive parts
shipments and contract wins. Accessorial revenue increased in the first quarter
compared to 2021 driven by increased intermodal accessorial charges resulting
from the ongoing global supply chain disruptions.



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The following tables summarize the year-over-year changes in freight revenue, revenue loadings and ARC by commodity type:



Freight Revenues
Millions, for the Three Months Ended March 31,      2022        2021      Change %
Grain & grain products                           $   877     $   766          14 %
Fertilizer                                           180         170           6
Food & refrigerated                                  267         235          14
Coal & renewables                                    508         341          49
Bulk                                               1,832       1,512          21
Industrial chemicals & plastics                      520         435          20
Metals & minerals                                    485         375          29
Forest products                                      364         316          15
Energy & specialized markets                         552         530           4
Industrial                                         1,921       1,656          16
Automotive                                           501         447          12
Intermodal                                         1,186       1,034          15
Premium                                            1,687       1,481          14
Total                                            $ 5,440     $ 4,649          17 %




Revenue Carloads
Thousands, for the Three Months Ended March 31,      2022        2021      Change %
Grain & grain products                                205         203           1 %
Fertilizer                                             45          44           2
Food & refrigerated                                    47          45           4
Coal & renewables                                     225         174          29
Bulk                                                  522         466          12
Industrial chemicals & plastics                       160         140          14
Metals & minerals                                     182         146          25
Forest products                                        64          60           7
Energy & specialized markets                          131         139          (6 )
Industrial                                            537         485          11
Automotive                                            190         180           6
Intermodal [a]                                        757         796          (5 )
Premium                                               947         976          (3 )
Total                                               2,006       1,927           4 %




Average Revenue per Car
for the Three Months Ended March 31,      2022        2021      Change %
Grain & grain products                 $ 4,269     $ 3,782          13 %
Fertilizer                               4,016       3,852           4
Food & refrigerated                      5,637       5,234           8
Coal & renewables                        2,262       1,958          16
Bulk                                     3,508       3,246           8
Industrial chemicals & plastics          3,247       3,113           4
Metals & minerals                        2,660       2,563           4
Forest products                          5,672       5,244           8
Energy & specialized markets             4,219       3,828          10
Industrial                               3,574       3,417           5
Automotive                               2,640       2,485           6
Intermodal [a]                           1,566       1,299          21
Premium                                  1,782       1,517          17
Average                                $ 2,711     $ 2,413          12 %



[a] For intermodal shipments, each container or trailer equals a full load.

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Bulk - Bulk includes shipments of grain and grain products, fertilizer, food and
refrigerated goods, and coal and renewables. Freight revenues from bulk
shipments increased in the first quarter of 2022 compared to 2021 due to 12%
higher volume, higher fuel surcharge revenue, and core pricing gains, partially
offset by a negative mix of traffic (increased coal shipments). Coal and
renewable carloads were up 29% in the first quarter of 2022 compared to 2021
because of higher natural gas prices and contract wins.



Industrial - Industrial includes shipments of industrial chemicals and plastics,
metals and minerals, forest products, and energy and specialized markets.
Freight revenues from industrial shipments increased in the first quarter of
2022 compared to the same period in 2021 due to 11% higher volume, higher fuel
surcharge revenue, and core pricing gains, partially offset by negative mix of
traffic (increased short haul rock shipments). In the first quarter of 2021,
many of our customers in the Gulf Coast experienced Winter Storm
Uri interruptions for an extended period causing a significant impact on the
industrial chemicals and plastics and metals and minerals industries. Last
year's weather event coupled with strong demand drove the year-over-year
increase for the impacted commodities. Petroleum shipments declined due to
unfavorable regional crude oil pricing spreads and regulatory challenges in
Mexico markets.



Premium - Premium includes shipments of finished automobiles, automotive parts,
and merchandise in intermodal containers, both domestic and international.
Premium freight revenues increased in the first quarter of 2022 compared to 2021
due to higher fuel surcharge, core pricing gains, positive mix of traffic (lower
international intermodal shipments), partially offset by a 3% decline in volume.
Intermodal shipments declined 5% driven primarily by ongoing international
supply chain disruptions, partially offset by domestic contract wins, tight
truck capacity, and strength in e-commerce parcel shipments. Automotive
shipments increased 6% compared to first quarter 2021 driven by an increase in
automotive parts shipments as the automotive industry slowly recovers from the
shortage of semiconductors and last year's weather disruptions.



Mexico Business - Each of our commodity groups includes revenues from shipments
to and from Mexico. Revenues from Mexico business increased 16% to $654 million
in the first quarter of 2022 compared to 2021 driven by higher fuel surcharge
revenues, positive business mix (lower intermodal shipments), a 1% volume
increase, and core pricing gains. The volume increase was driven by shipments of
automotive parts, steel, and coal, partially offset by intermodal and petroleum.



Operating Expenses



Millions, for the Three Months Ended March 31,      2022        2021      Change %
Compensation and benefits                        $ 1,101     $ 1,026           7 %
Fuel                                                 714         411          74
Purchased services and materials                     561         490          14
Depreciation                                         555         549           1
Equipment and other rents                            215         212           1
Other                                                337         320           5
Total                                            $ 3,483     $ 3,008          16 %




Operating expenses increased $475 million in the first quarter of 2022 compared
to 2021 driven by higher fuel prices, inflation, and volume-related
costs. Partially offsetting these increases were lower weather-related expenses
compared to 2021.



Compensation and Benefits - Compensation and benefits include wages, payroll
taxes, health and welfare costs, pension costs, and incentive costs. For the
first quarter, expenses increased 7% compared to 2021 due to wage inflation,
excess network costs, and an increase in carload volumes resulting in a 1%
increase in employee levels, partially offset by last year's weather-related
expenses.



Fuel - Fuel includes locomotive fuel and gasoline for highway and non-highway
vehicles and heavy equipment. Fuel expense increased in the first quarter of
2022 compared to the same period in 2021 driven by a 59% increase in locomotive
diesel fuel prices, which averaged $2.95 and $1.85 per gallon (including taxes
and transportation costs) in the first quarter of 2022 and 2021, respectively. A
9% increase in gross ton-miles also contributed to the higher expense. Fuel
consumption rate, computed as gallons of fuel consumed divided by gross ton-mile
in thousands, improved slightly.



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Purchased Services and Materials - Expense for purchased services and materials
includes the costs of services purchased from outside contractors and other
service providers (including equipment maintenance and contract expenses
incurred by our subsidiaries for external transportation services); materials
used to maintain the Railroad's lines, structures, and equipment; costs of
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. Purchased services and materials increased 14% in the first quarter of
2022 compared to 2021 primarily due to inflation, increased drayage costs
incurred by one of our subsidiaries, and higher locomotive and freight car
maintenance expenses due to a larger active fleet, partially offset by last
year's weather-related expenses.



Depreciation - The majority of depreciation relates to road property, including
rail, ties, ballast, and other track material. Depreciation expense was up 1%
for the first quarter of 2022 compared to 2021.



Equipment and Other Rents - Equipment and other rents expense primarily includes
rental expense that the Railroad pays for freight cars owned by other railroads
or private companies; freight car, intermodal, and locomotive leases; and office
and other rentals. Equipment and other rents expense increased 1% in the first
quarter of 2022 compared to 2021 driven by lower equity income from our
investment in TTX Company.



Other - Other expenses include state and local taxes; freight, equipment, and
property damage; utilities; insurance; personal injury; environmental
remediation; employee travel; telephone and cellular; computer software; bad
debt; and other general expenses. Other costs increased 5% in the first quarter
of 2022 driven by higher state and local taxes; casualty expenses, including
environmental remediation, damaged freight, and destroyed equipment; and
increased business travel, partially offset by lower bad debt expense, higher
equity income from our investment in Grupo Ferroviaro Mexicano, and lower
personal injury expense.



Non-Operating Items



Millions, for the Three Months Ended March 31,     2022       2021      Change %
Other income, net                                $   47     $   51          (8 )%
Interest expense                                   (307 )     (290 )         6
Income taxes                                       (487 )     (413 )        18



Other income, net – Other income decreased in the first quarter of 2022 compared to 2021 due to an increase in environmental remediation expenditures at non-operating sites.

Interest expense – Interest expense increased in the first quarter of 2022 compared to 2021 due to an increase in the weighted average debt level of $31.1 billion in 2022 compared to $26.7 billion in 2021, partially offset by a decrease in the effective interest rate of 4.0% in 2022 compared to 4.2% in 2021.



Income Taxes - Income taxes increased in the first quarter of 2022 compared to
2021 due to higher pre-tax income. Our effective tax rates for the first quarter
of 2022 and 2021 were 23.0% and 23.5%, respectively.



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OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS

We report a number of key performance measures to the Surface Transportation Board (STB). We provide this data on our website at www.up.com/investor/aar-stb_reports/index.htm.

Operation/performance statistics

Management continually measures these key operational metrics to assess our operational efficiency and asset utilization with the goal of providing a consistent and reliable service product to our customers.

Railway performance measures are included in the table below:



For the Three Months Ended March 31,                    2022         2021       Change %
Gross ton-miles (GTMs) (billions)                      209.7        193.1            9 %
Revenue ton-miles (billions)                           107.2         97.4   

ten

Freight car velocity (daily miles per car)               198          209           (5 )
Average train speed (miles per hour) [a]                24.1         25.2           (4 )
Average terminal dwell time (hours) [a]                 24.0         23.5   

2

Locomotive productivity (GTM per horsepower-day) 130,138

         (6 )
Train length (feet)                                    9,205        9,247   

Intermodal car trip plan compliance (%)                   71           77          (6) pts
Manifest/Automotive car trip plan compliance (%)          62           68          (6) pts
Workforce productivity (car miles per employee)        1,056        1,002            5
Total employees (average)                             30,189       29,755            1
Operating ratio                                         59.4         60.1        (0.7) pts



[a] As reported to the STB.




Gross and Revenue Ton-Miles - Gross ton-miles are calculated by multiplying the
weight of loaded and empty freight cars by the number of miles hauled. Revenue
ton-miles are calculated by multiplying the weight of freight by the number of
tariff miles. Gross ton-miles and revenue ton-miles increased 9% and 10%,
respectively, during the first quarter of 2022 compared to 2021, driven by a 4%
increase in carloadings. Changes in commodity mix drove the variance in
year-over-year increases between gross ton-miles, revenue ton-miles, and
carloads.



Freight Car Velocity - Freight car velocity measures the average daily miles per
car on our network. The two key drivers of this metric are the speed of the
train between terminals (average train speed) and the time a rail car spends at
the terminals (average terminal dwell time). As freight car velocity, average
train speed, and average terminal dwell deteriorated, operating car inventory
levels increased and further congested the network compared to the same period
in 2021.



Locomotive Productivity - Locomotive productivity is gross ton-miles per average
daily locomotive horsepower available. Locomotive productivity decreased in the
first quarter of 2022 compared to the same period in 2021 driven by an increase
in our average active fleet size as resources were deployed to handle increased
volume and help alleviate network congestion.



Train Length – Train length is the average maximum train length on a route, measured in feet. Our train lengths remained flat in the first quarter of 2022 compared to the same period in 2021, primarily due to train length improvement initiatives offset by lower international intermodal shipments.



Car Trip Plan Compliance - Car trip plan compliance is the percentage of cars
delivered on time in accordance with our original trip plan. Our network trip
plan compliance is broken into the intermodal and manifest/automotive products.
Both intermodal trip plan compliance and manifest/automotive car trip compliance
deteriorated 6 points in the first quarter of 2022 compared to 2021, as a result
of network congestion.



Workforce Productivity - Workforce productivity is average daily car miles per
employee. Workforce productivity improved 5% in the first quarter of 2022, as
average daily car miles increased 7% while employees increased 1% compared to
2021. Higher volume drove the increase in average daily car miles. The 1%
increase in employee levels was driven by an increase in train, engine, and yard
employees to handle the additional volume.



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Operating Report – The operating ratio is our operating expenses expressed as a percentage of operating revenues. Our operating ratio of 59.4% improved by 0.7 points compared to 2021, mainly due to a positive traffic mix, base price gains and lower related expenses. to weather conditions, partially offset by higher fuel prices, inflation and other cost increases.

Adjusted debt / adjusted EBITDA



Millions, Except Ratios                                        Mar. 31,     Dec. 31,
for the Trailing Twelve Months Ended [a]                           2022         2021
Net income                                                     $  6,812     $  6,523
Add:
Income tax expense/(benefit)                                      2,029        1,955
Depreciation                                                      2,214        2,208
Interest expense                                                  1,174        1,157
EBITDA                                                         $ 12,229     $ 11,843
Adjustments:
Other income, net                                                  (293 )       (297 )
Interest on operating lease liabilities [b]                          51           56
Adjusted EBITDA                                                $ 11,987     $ 11,602
Debt                                                           $ 32,239     $ 29,729
Operating lease liabilities                                       1,596     

1,759

Unfunded/(funded) pension plan and other post-employment benefits, (92 )

      (72 )
net of tax cost/(benefit) of ($28) and ($21)
Adjusted debt                                                  $ 33,743     $ 31,416
Adjusted debt / Adjusted EBITDA                                     2.8          2.7



[a] Income statement information for the last twelve months ended March 31, 2022,

is recalculated taking the twelve months ended December 31, 2021,

by subtracting the three months ended March 31, 2021and adding the three

    months ended March 31, 2022.
[b] Represents the hypothetical interest expense we would incur (using the

incremental borrowing rate) if the property under our operating leases was

    owned or accounted for as finance leases.




Adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, and adjustments for other income and interest on present value of
operating leases) is considered a non-GAAP financial measure by SEC Regulation G
and Item 10 of SEC Regulation S-K and may not be defined and calculated by other
companies in the same manner. We believe this measure is important to management
and investors in evaluating the Company's ability to sustain given debt levels
(including leases) with the cash generated from operations. In addition, a
comparable measure is used by rating agencies when reviewing the Company's
credit rating. Adjusted debt to adjusted EBITDA should be considered in addition
to, rather than as a substitute for, net income. The table above provides
reconciliations from net income to adjusted debt to adjusted EBITDA. At
both March 31, 2022, and December 31, 2021, the incremental borrowing rate on
operating leases was 3.2%.


CASH AND CAPITAL RESOURCES


Financial Condition



Cash Flows
Millions, for the Three Months Ended March 31,                 2022         

2021

Cash provided by operating activities                      $  2,236     $  

1,958

Cash used in investing activities                              (836 )       (505 )
Cash used in financing activities                            (1,453 )     

(2,073) Net change in cash, cash equivalents and restricted cash $ (53 ) $ (620 )




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Operating Activities


Cash flow from operating activities increased in the first three months of 2022 compared to the same period of 2021 due to higher net income.


Investing Activities



Cash used in investing activities increased in the first three months of 2022
compared to the same period of 2021 driven by increased capital investment in
all asset categories.


The table below details cash capital investments:

Million, for the three months ended March 31, 2022 2021 Rail and other track material

                    $ 113     $ 101
Ties                                               111        92
Ballast                                             44        43
Other [a]                                          113        93

Total road infrastructure replacements [b] 381 329 Line extension and other capacity projects 70 48 Commercial facilities

                               28        11
Total capacity and commercial facilities            98        59
Locomotives and freight cars [c]                   239        75
Technology and other                               130        73
Total cash capital investments                   $ 848     $ 536




[a] Other includes bridges and tunnels, signals, other road assets and road works

equipment.

[b] Weather-related damage for the three months ended March 31, 2022 and 2021

are intangible.
[c] Locomotives and freight cars include buyouts of $46 million in 2022 and

    $23 million in 2021.




Capital Plan



In 2022, we expect our capital expenditures to be approximately $3.3 billion, up
10% from 2021, as we make investments to support our growth strategy. We will
continue to harden our infrastructure, replace older assets, and improve the
safety and resilience of the network. In addition, the plan includes targeted
freight car acquisitions, investments in growth-related projects to drive more
carloads to the network, certain ramps to efficiently handle volumes from new
and existing intermodal customers, continued modernization of our locomotive
fleet, and projects intended to improve operational efficiency. The capital plan
may be revised if business conditions warrant or if new laws or regulations
affect our ability to generate sufficient returns on these investments.



Financing Activities


Cash flow used in financing activities decreased in the first three months of 2022 compared to the same period of 2021, due to an increase in debt issued, partially offset by an increase in share buybacks and repaid debt.



See Note 13 of the Condensed Consolidated Financial Statements for a description
of all our outstanding financing arrangements and significant new borrowings and
Note 15 of the Condensed Consolidated Financial Statements for a description of
our share repurchase programs.



Free cash flow – Free cash flow is defined as cash flow generated by operating activities less cash flow used in investing activities and dividends paid. The cash flow conversion rate is cash flow generated from operating activities less cash flow used for capital investments as a ratio of net income.



Free cash flow and cash flow conversion rate are not considered financial
measures under GAAP by SEC Regulation G and Item 10 of SEC Regulation S-K and
may not be defined and calculated by other companies in the same manner. We
believe free cash flow and cash flow conversion rate are important to management
and investors in evaluating our financial performance and measures our ability
to generate cash without additional external financing. Free cash flow and cash
flow conversion rate should be considered in addition to, rather than as a
substitute for, cash provided by operating activities.



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The following table reconciles cash flow from operating activities (GAAP measure) to free cash flow (non-GAAP measure):

Million, for the three months ended March 31, 2022 2021 Cash flow from operating activities

            $ 2,236     $ 1,958
Cash used in investing activities                   (836 )      (505 )
Dividends paid                                      (743 )      (650 )
Free cash flow                                   $   657     $   803



The following table reconciles cash flow from operating activities (GAAP measure) to cash flow conversion rate (non-GAAP measure):

Million, for the three months ended March 31, 2022 2021 Cash flow from operating activities

            $ 2,236     $ 1,958
Cash used in capital investments                    (848 )      (536 )
Total (a)                                        $ 1,388     $ 1,422
Net income (b)                                   $ 1,630     $ 1,341
Cash flow conversion rate (a/b)                       85 %       106 %




Current Liquidity Status



We are continually evaluating our financial condition and liquidity. We analyze
a wide range of economic scenarios and the impact on our ability to generate
cash. These analyses inform our liquidity plans and activities outlined below
and indicate we have sufficient borrowing capacity to sustain an extended period
of lower volumes.



During the first quarter, we generated $2.2 billion of cash provided by
operating activities, paid our quarterly dividend, and repurchased $2.7 billion
under our share repurchase program, including entering into accelerated share
repurchase programs for $2.2 billion ($1.8 billion assigned to the initial
delivery of shares). On March 31, 2022, we had $909 million of cash and cash
equivalents, $2.0 billion of credit available under our revolving credit
facility, and up to $800 million undrawn on the Receivables Facility. In the
first quarter, we repaid the $300 million outstanding on the Receivables
Facility. In April 2022, we drew $600 million on the Receivables Facility and
redeemed all $750 million of outstanding 4.163% notes due July 15, 2022. We have
been, and we expect to continue to be, in compliance with our debt covenants.



As described in the notes to the Condensed Consolidated Financial Statements and
as referenced in the table below, we have contractual obligations that may
affect our financial condition. However, based on our assessment of the
underlying provisions and circumstances of our contractual obligations,
including material sources of off-balance sheet and structured finance
arrangements, there is no known trend, demand, commitment, event, or uncertainty
that is reasonably likely to occur that would have a material adverse effect on
our consolidated results of operations, financial condition, or liquidity. In
addition, our commercial obligations, financings, and commitments are customary
transactions that are like those of other comparable corporations, particularly
within the transportation industry.



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The following table identifies material obligations as of March 31, 2022:



                                                                               Payments Due by Dec. 31,
Contractual Obligations                  Apr. 1 through                                                             After
Millions                     Total        Dec. 31, 2022         2023         2024         2025         2026          2026
Debt [a]                  $ 59,173          $     1,954      $ 2,452      $ 2,471      $ 2,451      $ 1,990      $ 47,855
Purchase obligations
[b]                          2,420                  629          394          389          347          269           392
Operating leases [c]         1,790                  151          295          282          286          218           558
Other post retirement
benefits [d]                   389                   34           44           40           39           39           193
Finance lease
obligations [e]                304                   45           76           63           44           35            41
Total contractual
obligations               $ 64,076          $     2,813      $ 3,261      $ 3,245      $ 3,167      $ 2,551      $ 49,039



[a] Excluding finance lease obligations of $272 million as well as unamortized

discount and deferred issue costs of ($1,787) million. Includes a

    interest component of $25,419 million.
[b] Purchase obligations include locomotive maintenance contracts; purchase

commitments for purchases of fuel, sleepers, ballast and rails; and agreements of

purchase other goods and services.
[c] Includes leases of locomotives, freight cars, other equipment and real estate

domain. Includes an interest component of $194 million.
[d] Includes estimate of other post-retirement, medical and life insurance

payments and payments made under unfunded pension plans for the next ten

years.

[e] Represents total obligations, including interest component $32 million.




OTHER MATTERS



Accounting pronouncements – See note 2 to the condensed consolidated financial statements.

Claimed and unclaimed receivables – See note 14 to the condensed consolidated financial statements.

Indemnities – See note 14 to the condensed consolidated financial statements.



CAUTIONARY INFORMATION



Statements in this Form 10-Q/filing, including forward-looking statements, speak
only as of and are based on information we have learned as of April 21, 2022. We
assume no obligation to update any such information to reflect subsequent
developments, changes in assumptions, or changes in other factors affecting
forward-looking information. If we do update one or more of these statements, no
inference should be drawn that we will make additional updates with respect
thereto or with respect to other statements.



Certain statements in this report, and statements in other reports or
information filed or to be filed with the SEC (as well as information included
in oral statements or other written statements made or to be made by us), are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements and
information also include any other statements or information in this report
regarding: potential impacts of the COVID-19 pandemic and the Russia-Ukraine
conflict on our business operations, financial results, liquidity, and financial
position, and on the world economy (including our customers and supply chains),
including as a result of decreased volume and carloadings; closing of customer
manufacturing, distribution or production facilities; expectations as to
operational or service improvements; expectations regarding the effectiveness of
steps taken or to be taken to improve operations, service, infrastructure
improvements, and transportation plan modifications (including those in response
to increased traffic); expectations as to cost savings, revenue growth, and
earnings; the time by which goals, targets, or objectives will be achieved;
projections, predictions, expectations, estimates, or forecasts as to our
business, financial, and operational results, future economic performance, and
general economic conditions; proposed new products and services; estimates of
costs relating to environmental remediation and restoration; estimates and
expectations regarding tax matters, expectations that claims, litigation,
environmental costs, commitments, contingent liabilities, labor negotiations or
agreements, or other matters will not have a material adverse effect on our
consolidated results of operations, financial condition, or liquidity and any
other similar expressions concerning matters that are not historical facts.



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Contents



Forward-looking statements and information reflect the good faith consideration
by management of currently available information, and may be based on underlying
assumptions believed to be reasonable under the circumstances. However, such
information and assumptions (and, therefore, such forward-looking statements and
information) are or may be subject to risks and uncertainties over which
management has little or no influence or control. The Risk Factors in Item 1A of
our 2021 Annual Report on Form 10-K, filed February 4, 2022, could affect our
future results and could cause those results or other outcomes to differ
materially from those expressed or implied in the forward-looking statements,
and this report, including this Item 2, should be read in conjunction with these
Risk Factors. Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate indications
of the times that, or by which, such performance or results will be achieved.
Forward-looking information is subject to risks and uncertainties that could
cause actual performance or results to differ materially from those expressed in
the statements.



AVAILABLE INFORMATION



Our Internet website is www.up.com. We make available free of charge on our
website (under the "Investors" caption link) our Annual Reports on Form 10-K;
our Quarterly Reports on Form 10-Q; our current reports on Form 8-K; our proxy
statements; Forms 3, 4, and 5, filed on behalf of directors and executive
officers; and amendments to any such reports filed or furnished pursuant to the
Securities Exchange Act of 1934, as amended (the Exchange Act), as soon as
reasonably practicable after such material is electronically filed with, or
furnished to, the SEC. We also make available on our website previously filed
SEC reports and exhibits via a link to EDGAR on the SEC's Internet site at
www.sec.gov. We provide these previously filed reports as a convenience and
their contents reflect only information that was true and correct as of the date
of the report. We assume no obligation to update this historical information.
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 on our website. From
time to time, the corporate governance materials on our website may be updated
as necessary to comply with rules issued by the SEC and the New York Stock
Exchange or as desirable to promote the effective and efficient governance of
our company. Any security holder wishing to receive, without charge, a copy of
any of our SEC filings or corporate governance materials should send a written
request to: Corporate Secretary, Union Pacific Corporation, 1400 Douglas Street,
Omaha, NE 68179.



References to our website address in this report, including references in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Item 2, are provided as a convenience and do not constitute, and
should not be deemed, an incorporation by reference of the information contained
on, or available through, the website. Therefore, such information should not be
considered part of this report.

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