1、 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON,D.C.20549 FORM 10-K(Mark One)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2012 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE AC
2、T 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(I.R.S.Employer incorporation or organization)Identification No.)1400 DOUGLAS STREET,OMAHA,NEBRAS
3、KA(Address of principal executive offices)68179(Zip Code)(402)544-5000(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each Class Common Stock(Par Value$2.50 per share)Name of each exchange on which registered New York Stock Exchang
4、e,Inc.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes?No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.?Yes No Indicate by check mark whether the reg
5、istrant(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.Y
6、es?No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorte
7、r period that the registrant was required to submit and post such files).Yes?No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(229.405 of this chapter)is not contained herein,and will not be contained,to the best of the registrants knowledge,in defin
8、itive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See the definitions
9、of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer?Non-accelerated filer?Smaller reporting company?Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Ac
10、t).?Yes No As of June 29,2012,the aggregate market value of the registrants Common Stock held by non-affiliates(using the New York Stock Exchange closing price)was$56.2 billion.The number of shares outstanding of the registrants Common Stock as of February 1,2013 was 469,298,732.2 Documents Incorpor
11、ated by Reference Portions of the registrants definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 16,2013,are incorporated by reference into Part III of this report.The registrants Proxy Statement will be filed with the Securities and Exchange Commission pursuant to R
12、egulation 14A.UNION PACIFIC CORPORATION TABLE OF CONTENTS CEOs Letter.3 Directors and Senior Management.4 PART I Item 1.Business.5 Item 1A.Risk Factors.10 Item 1B.Unresolved Staff Comments.13 Item 2.Properties.13 Item 3.Legal Proceedings.16 Item 4.Mine Safety Disclosures.18 Executive Officers of the
13、 Registrant and Principal Executive Officers of Subsidiaries.18 PART II Item 5.Market for the Registrants Common Equity,Related Stockholder Matters,and Issuer Purchases of Equity Securities .19 Item 6.Selected Financial Data.21 Item 7.Managements Discussion and Analysis of Financial Condition and Re
14、sults of Operations.22 Critical Accounting Policies.42 Cautionary Information.47 Item 7A.Quantitative and Qualitative Disclosures About Market Risk.48 Item 8.Financial Statements and Supplementary Data.49 Report of Independent Registered Public Accounting Firm.50 Item 9.Changes in and Disagreements
15、with Accountants on Accounting and Financial Disclosure.83 Item 9A.Controls and Procedures.83 Managements Annual Report on Internal Control Over Financial Reporting.84 Report of Independent Registered Public Accounting Firm.85 Item 9B.Other Information.86 PART III Item 10.Directors,Executive Officer
16、s,and Corporate Governance.86 Item 11.Executive Compensation.86 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.87 Item 13.Certain Relationships and Related Transactions and Director Independence.87 Item 14.Principal Accountant Fees and Services
17、.87 PART IV Item 15.Exhibits,Financial Statement Schedules.88 Signatures.89 Certifications.99 3 February 8,2013 Fellow Shareholders:Last year was a historic milestone for Union Pacific,marking 150 years of building America.It was our most profitable year on record,leading the U.S.rail industry in ov
18、erall financial performance.Our 2012 results are a testament to the strength and diversity of our franchise and the dedication and commitment of our employees.For the first time,we achieved a sub-70 operating ratio of 67.8 percent,contributing to record earnings per share of$8.27,and a best-ever ret
19、urn on invested capital of 14.0 percent.Shareholders were rewarded with increased financial returns,including a 29 percent increase in dividends declared per share compared to 2011 and$1.5 billion in share repurchases.UPs stock price reached new highs in 2012,increasing 19 percent and outpaced the S
20、&P 500 by 5 points.Despite a challenging economic environment and a significantly weaker coal market,our diverse portfolio of business,including shale-related crude oil and frac sand moves,automotive shipments,chemicals,and domestic intermodal traffic,offset the 14 percent decline in coal volumes.Op
21、erationally,we successfully managed the shifts in business mix,improved network efficiency and fluidity,and operated a safer railroad.We achieved these record results by following a very straightforward strategy-an unrelenting focus on creating value for our customers by providing safe,efficient,and
22、 reliable service.In turn,customers rewarded us with record satisfaction ratings,clearly valuing our service offerings and the efficiencies we provide as part of their total supply chain.In addition,with our Total Safety Culture and The UP Way infused throughout the Company,employee injuries hit a r
23、ecord low in 2012,capping more than a decade of significant improvement.Our capital investments play a critical role in meeting the long-term demand for freight transportation in the U.S.In 2012,we invested a record$3.7 billion across our network,supported by our best-ever financial returns.Over hal
24、f was spent on replacing and hardening our infrastructure to further enhance safety and reliability.The balance was invested to increase customer value,support business growth,and advance efforts on Positive Train Control(PTC)implementation,a federally mandated program.Through 2012,we have invested
25、nearly$750 million dollars of our estimated$2 billion spend on PTC.A significant portion of our growth capital investment in 2012 was targeted to the southern region of our network to meet growing demand for new business,particularly in the shale-related energy arena.The increasing development of oi
26、l production in various domestic shale formations is providing an emerging market opportunity for rail with shipments of inbound frac sand and pipe,and outbound crude oil.In 2012,the impact was substantial-our crude oil shipments grew more than three fold compared to 2011.Going forward,we anticipate
27、 continued opportunities for growth in this market driven by our proven ability to provide an efficient and flexible transportation solution for growing demand.In an evolving marketplace,our franchise diversity remains an absolute core strength of Union Pacific.An increasing U.S.population base will
28、 stimulate long-term growth for many of the goods we carry.To meet this growing demand,we anticipate continued opportunities to convert freight from the highway,supported by our integrated network,competitive service offerings,and environmental advantages.We also play a vital role in the global supp
29、ly chain,with international trade currently representing more than 30 percent of our revenue base.In particular,as the only railroad to serve all six major gateways to Mexico,we are in an excellent position to benefit from economic growth in that country.The men and women of Union Pacific are proud
30、of the Companys 150-year history,but were squarely focused on the opportunities the future presents,as well as its challenges.The results achieved in 2012 demonstrate the power and potential of our franchise as we continue to run an even safer railroad,help our country grow,create value for our cust
31、omers,and increase financial returns for our shareholders.Our future is bright as we see even greater prospects in the years to come.President&Chief Executive Officer 4 DIRECTORS AND SENIOR MANAGEMENT BOARD OF DIRECTORS Andrew H.Card,Jr.Acting Dean The Bush School of Government&Public Service,Texas
32、A&M University Board Committees:Audit,Finance Erroll B.Davis,Jr.Superintendent Atlanta Public Schools Board Committees:Compensation and Benefits(Chair),Corporate Governance and Nominating Thomas J.Donohue President and Chief Executive Officer U.S.Chamber of Commerce Board Committees:Compensation and
33、 Benefits,Corporate Governance and Nominating Archie W.Dunham Retired Chairman ConocoPhillips Board Committees:Corporate Governance and Nominating,Finance Judith Richards Hope Distinguished Visitor from Practice and Professor of Law Georgetown University Law Center Board Committees:Audit(Chair),Fina
34、nce John J.Koraleski President and Chief Executive Officer Union Pacific Corporation and Union Pacific Railroad Company Charles C.Krulak General,USMC,Ret.President Birmingham Southern College Board Committees:Audit,Finance Michael R.McCarthy Chairman McCarthy Group,LLC Board Committees:Audit,Finance
35、 Michael W.McConnell General Partner Brown Brothers Harriman&Co.Board Committees:Audit,Finance(Chair)Thomas F.McLarty III President McLarty Associates Board Committees:Compensation and Benefits,Corporate Governance and Nominating Steven R.Rogel Retired Chairman Weyerhaeuser Company Lead Independent
36、Director Board Committees:Compensation and Benefits,Corporate Governance and Nominating(Chair)Jose H.Villarreal Advisor Akin,Gump,Strauss,Hauer&Feld,LLP Board Committees:Compensation and Benefits,Corporate Governance and Nominating James R.Young Chairman Union Pacific Corporation and Union Pacific R
37、ailroad Company SENIOR MANAGEMENT James R.Young Chairman Union Pacific Corporation and Union Pacific Railroad Company John J.Koraleski President and Chief Executive Officer Union Pacific Corporation and Union Pacific Railroad Company Eric L.Butler Executive Vice President-Marketing and Sales Union P
38、acific Railroad Company Diane K.Duren Executive Vice President Union Pacific Corporation Charles R.Eisele Senior Vice PresidentStrategic Planning Union Pacific Corporation Lance M.Fritz Executive Vice PresidentOperations Union Pacific Railroad Company Mary Sanders Jones Vice President and Treasurer
39、Union Pacific Corporation D.Lynn Kelley Vice PresidentContinuous Improvement Union Pacific Railroad Company Robert M.Knight,Jr.Executive Vice PresidentFinance and Chief Financial Officer Union Pacific Corporation Joseph E.OConnor,Jr.Vice PresidentPurchasing Union Pacific Railroad Company Patrick J.O
40、Malley Vice PresidentTaxes and General Tax Counsel Union Pacific Corporation Michael A.Rock Vice PresidentExternal Relations Union Pacific Corporation Barbara W.Schaefer Senior Vice PresidentHuman Resources and Secretary Union Pacific Corporation Lynden L.Tennison Senior Vice President and Chief Inf
41、ormation Officer Union Pacific Corporation Gayla L.Thal Senior Vice PresidentLaw and General Counsel Union Pacific Corporation Jeffrey P.Totusek Vice President and Controller Union Pacific Corporation Robert W.Turner Senior Vice President Corporate Relations Union Pacific Corporation William R.Turne
42、r Vice PresidentLabor Relations Union Pacific Railroad Company 5 PART I Item 1.Business GENERAL Union Pacific Railroad is the principal operating company of Union Pacific Corporation.One of Americas most recognized companies,Union Pacific Railroad links 23 states in the western two-thirds of the cou
43、ntry by rail,providing a critical link in the global supply chain.The Railroads diversified business mix includes Agricultural Products,Automotive,Chemicals,Coal,Industrial Products and Intermodal.Union Pacific serves many of the fastest-growing U.S.population centers,operates from all major West Co
44、ast and Gulf Coast ports to eastern gateways,connects with Canadas rail systems and is the only railroad serving all six major Mexico gateways.Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe,reliable,fuel-efficient and environmentally responsible manner.
45、Union Pacific Corporation was incorporated in Utah in 1969 and maintains its principal executive offices at 1400 Douglas Street,Omaha,NE 68179.The telephone number at that address is(402)544-5000.The common stock of Union Pacific Corporation is listed on the New York Stock Exchange(NYSE)under the sy
46、mbol“UNP”.For purposes of this report,unless the context otherwise requires,all references herein to“UPC”,“Corporation”,“we”,“us”,and“our”shall mean Union Pacific Corporation and its subsidiaries,including Union Pacific Railroad Company,which we separately refer to as“UPRR”or the“Railroad”.Available
47、 Information Our Internet website is .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;eXtensible Business Reporting Language(XBRL)documents;our current reports on Form 8-K;our proxy statements;Forms 3
48、,4,and 5,filed on behalf of directors and executive officers;and amendments to 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 Securitie
49、s and Exchange Commission(SEC).We also make available on our website previously filed SEC reports and exhibits via a link to EDGAR on the SECs Internet site at www.sec.gov.Additionally,our corporate governance materials,including By-Laws,Board Committee charters,governance guidelines and policies,an
50、d 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 NYSE or as desirable to promote the effective and efficient g
51、overnance 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:Secretary,Union Pacific Corporation,1400 Douglas Street,Omaha,NE 68179.We have included the Chief Executive Officer(CEO)a
52、nd Chief Financial Officer(CFO)certifications regarding our public disclosure required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits 31(a)and(b)to this report.References to our website address in this report,including references in Managements Discussion and Analysis of Financial Cond
53、ition and Results of Operations,Item 7,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.OPERATIONS The Ra
54、ilroad,along with its subsidiaries and rail affiliates,is our one reportable operating segment.Although we provide revenue by commodity group,we analyze the net financial results of the Railroad as one segment due to the integrated nature of our rail network.Additional information regarding our busi
55、ness and operations,including revenue and financial information and data and other information regarding environmental matters,is presented in Risk Factors,Item 1A;Legal Proceedings,Item 3;Selected Financial Data,Item 6;Managements Discussion and Analysis of Financial Condition and Results of Operat
56、ions,Item 7;and the Financial Statements and Supplementary Data,Item 8(which include information regarding revenues,statements of income,and total assets).6 Operations UPRR is a Class I railroad operating in the U.S.We have 31,868 route miles,linking Pacific Coast and Gulf Coast ports with the Midwe
57、st and eastern U.S.gateways and providing several corridors to key Mexican gateways.We serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers to move freight to and from the Atlantic Coast,the Pacific Coast,the Southeast,the Southwest,Canada,and Mexic
58、o.Export and import traffic moves through Gulf Coast and Pacific Coast ports and across the Mexican and Canadian borders.Our freight traffic consists of bulk,manifest,and premium business.Bulk traffic is primarily coal,grain,rock,or soda ash in unit trains trains transporting a single commodity from
59、 one source to one destination.Manifest traffic is individual carload or less than train-load business and includes commodities such as lumber,steel,paper,food and chemicals.The transportation of finished vehicles,intermodal containers and truck trailers is part of our premium business.In 2012,we ge
60、nerated freight revenues totaling$19.7 billion from the following six commodity groups:Agricultural Transportation of grains,commodities produced from these grains,and food and beverage products generated 17%of the Railroads 2012 freight revenue.The Company accesses most major grain markets,linking
61、the Midwest and western producing areas to export terminals in the Pacific Northwest and Gulf Coast ports,as well as Mexico.We also serve significant domestic markets,including grain processors,animal feeders and ethanol producers in the Midwest,West,South and Rocky Mountain states.Unit trains,which
62、 transport a single commodity between producers and export terminals or domestic markets,represent approximately 35%of agricultural shipments.Automotive We are the largest automotive carrier west of the Mississippi River and operate or access over 40 vehicle distribution centers.The Railroads extens
63、ive franchise serves vehicle assembly plants and connects to West Coast ports and the Port of Houston to accommodate both import and export shipments.In addition to transporting finished vehicles,UP provides expedited handling of automotive parts in both boxcars and intermodal containers destined fo
64、r Mexico,the U.S.and Canada.The automotive group generated 9%of Union Pacifics freight revenue in 2012.Chemicals Transporting chemicals generated 16%of our freight revenue in 2012.The Railroads unique franchise serves the chemical producing areas along the Gulf Coast,where roughly two-thirds of the
65、Companys chemical business originates,terminates or travels.Our chemical franchise also accesses chemical producers in the Rocky Mountains and on the West Coast.The Companys chemical shipments include three broad categories:Petrochemicals,Fertilizer and Soda Ash.Petrochemicals include industrial che
66、micals,plastics and petroleum products,including crude oil and liquid petroleum gases.The petroleum products primarily originate from the Bakken shale formation in North Dakota and the Permian and Eagle Ford shale formations in Texas,which we also deliver to the Gulf Coast area.Fertilizer movements
67、originate in the Gulf Coast region,the western part of the U.S.and Canada for delivery to major agricultural users in the Midwest,western U.S.and abroad.Soda ash originates in southwestern Wyoming and California,destined for chemical and glass producing markets in North America and abroad.Coal Shipm
68、ents of coal and petroleum coke accounted for 20%of our freight revenue in 2012.The Railroads network supports the transportation of coal and petroleum coke to utilities and industrial facilities throughout the U.S.Through interchange gateways and ports,UPs reach extends to eastern U.S.utilities,Mex
69、ico,Europe and Asia.Water terminals allow the Railroad to move western U.S.coal east via the Mississippi and Ohio Rivers,as well as the Great Lakes.Export coal moves through West Coast ports to Asia and through Mississippi River and Gulf Coast terminals to Europe.Coal traffic originating in the Sout
70、hern Powder River Basin(SPRB)area of Wyoming is the largest segment of UPs coal business.Industrial Products Our extensive network facilitates the movement of numerous commodities between thousands of origin and destination points throughout North America.The Industrial Products commodity group cons
71、ists of several categories,including construction products,metals,minerals,paper,consumer 2012 Freight Revenue 7 goods,lumber and other miscellaneous products.In 2012,this group generated 18%of Union Pacifics total freight revenue.Commercial and highway construction drives shipments of steel and con
72、struction products,consisting of rock,cement and roofing materials.Oil and gas drilling generates demand for raw steel,finished pipe,frac sand and drilling fluid products.Industrial manufacturing plants receive nonferrous metals and industrial minerals.Paper and consumer goods,including furniture an
73、d appliances,move to major metropolitan areas for consumers.Lumber shipments originate primarily in the Pacific Northwest and Canada and move throughout the U.S.for use in new home construction and repair and remodeling.Intermodal Our Intermodal business includes two shipment categories:internationa
74、l and domestic.International business consists of imported and exported container traffic that mainly passes through West Coast ports served by UPs extensive terminal network.Domestic business includes container and trailer traffic picked up and delivered within North America for intermodal marketin
75、g companies(primarily shipper agents and logistics companies),as well as truckload carriers.Less-than-truckload and package carriers with time-sensitive business requirements are also an important part of these domestic shipments.Together,international and domestic business generated 20%of UPs 2012
76、freight revenue.Seasonality Some of the commodities we carry have peak shipping seasons,reflecting either or both the nature of the commodity,such as certain agricultural and food products that have specific growing and harvesting seasons,and the demand cycle for the commodity,such as intermodal tra
77、ffic,which generally has a peak shipping season during the third quarter to meet holiday-related demand for consumer goods during the fourth quarter.The peak shipping seasons for these commodities can vary considerably from year to year depending upon various factors,including the strength of domest
78、ic and international economies and currencies and the strength of harvests and market prices for agricultural products.In response to an annual request delivered by the Surface Transportation Board(STB)of the U.S.Department of Transportation(DOT)to all of the Class I railroads operating in the U.S.,
79、we issue a publicly available letter during the third quarter detailing our plans for handling traffic during the third and fourth quarters and providing other information requested by the STB.Working Capital At December 31,2012 and 2011,we had a working capital surplus.This reflects a strong cash p
80、osition,which provides enhanced liquidity in an uncertain economic environment.In addition,we believe we have adequate access to capital markets to meet any foreseeable cash requirements,and we have sufficient financial capacity to satisfy our current liabilities.Competition We are subject to compet
81、ition from other railroads,motor carriers,ship and barge operators,and pipelines.Our main rail competitor is Burlington Northern Santa Fe LLC.Its rail subsidiary,BNSF Railway Company(BNSF),operates parallel routes in many of our main traffic corridors.In addition,we operate in corridors served by ot
82、her railroads and motor carriers.Motor carrier competition exists for five of our six commodity groups(excluding coal).Because of the proximity of our routes to major inland and Gulf Coast waterways,barges can be particularly competitive,especially for grain and bulk commodities.In addition to price
83、 competition,we face competition with respect to transit times and quality and reliability of service.While we must build or acquire and maintain our rail system,trucks and barges are able to use public rights-of-way maintained by public entities.Any future improvements or expenditures materially in
84、creasing the quality or reducing the costs of these alternative modes of transportation,or legislation releasing motor carriers from their size or weight limitations,could have a material adverse effect on our business.Key Suppliers We depend on two key domestic suppliers of high horsepower locomoti
85、ves.Due to the capital intensive nature of the locomotive manufacturing business and sophistication of this equipment,potential new suppliers face high barriers of entry into this industry.Therefore,if one of these domestic suppliers discontinues manufacturing locomotives for any reason,including in
86、solvency or bankruptcy,we could experience a significant cost increase and risk reduced availability of the locomotives that are necessary to our operations.Additionally,for a high percentage of our rail purchases,we utilize two suppliers(one domestic and one international)that meet our specificatio
87、ns.Rail is critical for both maintenance of our network and replacement and improvement or expansion of our network and facilities.Rail manufacturing also has high barriers of entry,and,if one of those suppliers discontinues operations for any reason,including insolvency or bankruptcy,we could exper
88、ience cost increases and difficulty obtaining rail.Employees Approximately 86%of our 45,928 full-time-equivalent employees are represented by 14 major rail unions.During the year,we concluded the most recent round of negotiations,which began in 8 2010,with the ratification of new agreements by sever
89、al unions that continued negotiating into 2012.All of the unions executed similar multi-year agreements that provide for higher employee cost sharing of employee health and welfare benefits and higher wages.The current agreements will remain in effect until renegotiated under provisions of the Railw
90、ay Labor Act.The next round of negotiations will begin in early 2015.Railroad Security Our security efforts rely upon a wide variety of measures including employee training,cooperation with our customers,training of emergency responders,and partnerships with numerous federal,state,and local governme
91、nt agencies.While federal law requires us to protect the confidentiality of our security plans designed to safeguard against terrorism and other security incidents,the following provides a general overview of our security initiatives.UPRR Security Measures We maintain a comprehensive security plan d
92、esigned to both deter and to respond to any potential or actual threats as they arise.The plan includes four levels of alert status,each with its own set of countermeasures.We employ our own police force,consisting of more than 200 commissioned and highly-trained officers.Our employees also undergo
93、recurrent security and preparedness training,as well as federally-mandated hazardous materials and security training.We regularly review the sufficiency of our employee training programs.We maintain the capability to move critical operations to back-up facilities in different locations.We have an em
94、ergency response management center,which operates 24 hours a day.The center receives reports of emergencies,dangerous or potentially dangerous conditions,and other safety and security issues from our employees,the public,and law enforcement and other government officials.In cooperation with governme
95、nt officials,we monitor both threats and public events,and,as necessary,we may alter rail traffic flow at times of concern to minimize risk to communities and our operations.We comply with the hazardous materials routing rules and other requirements imposed by federal law.We also design our operatin
96、g plan to expedite the movement of hazardous material shipments to minimize the time rail cars remain idle at yards and terminals located in or near major population centers.Additionally,in compliance with Transportation Security Agency regulations,we deployed information systems and instructed empl
97、oyees in tracking and documenting the handoff of Rail Security Sensitive Material with customers and interchange partners.We also have established a number of our own innovative safety and security-oriented initiatives ranging from various investments in technology to The Officer on the Train progra
98、m,which provides local law enforcement officers with the opportunity to ride with train crews to enhance their understanding of railroad operations and risks.Our staff of information security professionals continually assesses cyber security risks and implements mitigation programs that evolve with
99、the changing technology threat environment.Cooperation with Federal,State,and Local Government Agencies We work closely on physical and cyber security initiatives with government agencies that include the DOT and the Department of Homeland Security(DHS),as well as local police departments,fire depar
100、tments,and other first responders.In conjunction with DOT,DHS,and other railroads,we sponsor Operation Respond,which provides first responders with secure links to electronic railroad resources,including mapping systems,shipment records,and other essential information required by emergency personnel
101、 to respond to accidents and other situations.We also participate in the National Joint Terrorism Task Force,a multi-agency effort established by the U.S.Department of Justice and the Federal Bureau of Investigation to combat and prevent terrorism.We work with the Coast Guard,U.S.Customs and Border
102、Protection(CBP),and the Military Transport Management Command,which monitor shipments entering the UPRR rail network at U.S.border crossings and ports.We were the first railroad in the U.S.to be named a partner in CBPs Customs-Trade Partnership Against Terrorism,a partnership designed to develop,enh
103、ance,and maintain effective security processes throughout the global supply chain.Cooperation with Customers and Trade Associations Along with other railroads,we work with the American Chemistry Council to train approximately 200,000 emergency responders annually.We work with many of our chemical sh
104、ippers to establish plant security plans,and we continue to take steps to more closely monitor and track hazardous materials shipments.In cooperation with the Federal Railroad Administration(FRA)and other interested groups,we are also working to develop additional improvements to tank car design tha
105、t will further limit the risk of releases of hazardous materials.9 GOVERNMENTAL AND ENVIRONMENTAL REGULATION Governmental Regulation Our operations are subject to a variety of federal,state,and local regulations,generally applicable to all businesses.(See also the discussion of certain regulatory pr
106、oceedings in Legal Proceedings,Item 3.)The operations of the Railroad are also subject to the regulatory jurisdiction of the STB.The STB has jurisdiction over rates charged on certain regulated rail traffic;common carrier service of regulated traffic;freight car compensation;transfer,extension,or ab
107、andonment of rail lines;and acquisition of control of rail common carriers.In 2012,the STB continued its efforts to explore whether to expand rail regulation.The STB has requested parties to submit studies that describe and quantify the potential impact of expanded reciprocal switching or trackage r
108、ights arrangements on railroads.Although several bills involving railroad regulation expired during the last session of Congress,we continually monitor any legislative activity involving rail and transportation regulation.The operations of the Railroad also are subject to the regulations of the FRA
109、and other federal and state agencies.On January 12,2010,the FRA issued initial rules governing installation of Positive Train Control(PTC)by the end of 2015.The final regulation is still forthcoming.Although still under development,PTC is a collision avoidance technology intended to override locomot
110、ive controls and stop a train before an accident.Following the issuance of the initial rules,the FRA acknowledged that projected costs will exceed projected benefits by a ratio of at least 22 to one,and we estimate that our costs will be higher than those assumed by the FRA.In August 2012,the FRA pr
111、ovided Congress with a status report regarding implementation of PTC.This report indicated that the rail industry will likely achieve only partial deployment of PTC by the current deadline due to significant technical and other issues.Through 2012,we have invested nearly$750 million in the developme
112、nt of PTC.DOT,the Occupational Safety and Health Administration,and DHS,along with other federal agencies,have jurisdiction over certain aspects of safety,movement of hazardous materials and hazardous waste,emissions requirements,and equipment standards.The Rail Safety Improvement Act of 2008,among
113、other things,revised hours of service rules for train and certain other railroad employees,mandated implementation of PTC,imposed passenger service requirements,addressed safety at rail crossings,increased the number of safety related employees of the FRA,and increased fines that may be levied again
114、st railroads for safety violations.Additionally,various state and local agencies have jurisdiction over disposal of hazardous waste and seek to regulate movement of hazardous materials in ways not preempted by federal law.Environmental Regulation We are subject to extensive federal and state environ
115、mental statutes and regulations pertaining to public health and the environment.The statutes and regulations are administered and monitored by the Environmental Protection Agency(EPA)and by various state environmental agencies.The primary laws affecting our operations are the Resource Conservation a
116、nd Recovery Act,regulating the management and disposal of solid and hazardous wastes;the Comprehensive Environmental Response,Compensation,and Liability Act,regulating the cleanup of contaminated properties;the Clean Air Act,regulating air emissions;and the Clean Water Act,regulating waste water dis
117、charges.Information concerning environmental claims and contingencies and estimated remediation costs is set forth in Managements Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Environmental,Item 7 and Note 17 to the Consolidated Financial State
118、ments in Item 8,Financial Statements and Supplementary Data.10 Item 1A.Risk Factors The information set forth in this Item 1A should be read in conjunction with the rest of the information included in this report,including Managements Discussion and Analysis of Financial Condition and Results of Ope
119、rations,Item 7,and Financial Statements and Supplementary Data,Item 8.We Must Manage Fluctuating Demand for Our Services and Network Capacity If there is significant demand for our services that exceeds the designed capacity of our network,we may experience network difficulties,including congestion
120、and reduced velocity,that could compromise the level of service we provide to our customers.This level of demand may also compound the impact of weather and weather-related events on our operations and velocity.Although we continue to improve our transportation plan,add capacity,improve operations a
121、t our yards and other facilities,and improve our ability to address surges in demand for any reason with adequate resources,we cannot be sure that these measures will fully or adequately address any service shortcomings resulting from demand exceeding our planned capacity.We may experience other ope
122、rational or service difficulties related to network capacity,dramatic and unplanned increases or decreases of demand for rail service with respect to one or more of our commodity groups or operating regions,or other events that could have a negative impact on our operational efficiency,any of which
123、could have a material adverse effect on our results of operations,financial condition,and liquidity.In the event that we experience significant reductions of demand for rail services with respect to one or more of our commodity groups,we may experience increased costs associated with resizing our op
124、erations,including higher unit operating costs and costs for the storage of locomotives,rail cars,and other equipment;work-force adjustments;and other related activities,which could have a material adverse effect on our results of operations,financial condition,and liquidity.We May Be Affected by Ge
125、neral Economic Conditions Prolonged severe adverse domestic and global economic conditions or disruptions of financial and credit markets,including the availability of short-and long-term debt financing,may affect the producers and consumers of the commodities we carry and may have a material advers
126、e effect on our access to liquidity and our results of operations and financial condition.We Are Required to Transport Hazardous Materials Federal laws require railroads,including us,to transport certain hazardous materials regardless of risk or potential exposure to loss.Any rail accident or other
127、incident or accident on our network,at our facilities,or at the facilities of our customers involving the release of hazardous materials,including toxic inhalation hazard(or TIH)materials such as chlorine,could involve significant costs and claims for personal injury,property damage,and environmenta
128、l penalties and remediation,which could have a material adverse effect on our results of operations,financial condition,and liquidity.We Face Competition from Other Railroads and Other Transportation Providers We face competition from other railroads,motor carriers,ships,barges,and pipelines.In addi
129、tion to price competition,we face competition with respect to transit times and quality and reliability of service.While we must build or acquire and maintain our rail system,trucks and barges are able to use public rights-of-way maintained by public entities.Any future improvements or expenditures
130、materially increasing the quality or reducing the cost of alternative modes of transportation,or legislation releasing motor carriers from their size or weight limitations,could have a material adverse effect on our results of operations,financial condition,and liquidity.Additionally,any future cons
131、olidation of the rail industry could materially affect the competitive environment in which we operate.We Are Subject to Significant Governmental Regulation We are subject to governmental regulation by a significant number of federal,state,and local authorities covering a variety of health,safety,la
132、bor,environmental,economic(as discussed below),and other matters.Many laws and regulations require us to obtain and maintain various licenses,permits,and other authorizations,and we cannot guarantee that we will continue to be able to do so.Our failure to comply with applicable laws and regulations
133、could have a material adverse effect on us.Governments or regulators may change the legislative or regulatory frameworks within which we operate without providing us any recourse to address any adverse effects on our business,including,without limitation,regulatory determinations or rules regarding
134、dispute resolution,business relationships with other railroads,calculation of our cost of capital or other inputs relevant to computing our revenue adequacy,the prices we charge,and costs and expenses.Significant legislative activity in Congress or regulatory activity by the STB could expand regulat
135、ion of railroad operations and prices for rail services,which could reduce capital spending on our rail network,facilities and equipment and have a material adverse effect on our results of operations,financial condition,and liquidity.As part 11 of the Rail Safety Improvement Act of 2008,rail carrie
136、rs must currently implement PTC by the end of 2015,which could have a material adverse effect on our ability to make other capital investments.Rail carriers may not meet the mandatory deadline for PTC implementation.One or more consolidations of Class I railroads could also lead to increased regulat
137、ion of the rail industry.We Rely on Technology and Technology Improvements in Our Business Operations We rely on information technology in all aspects of our business.If we do not have sufficient capital to acquire new technology or if we are unable to develop or implement new technology such as PTC
138、 or the latest version of our transportation control systems,we may suffer a competitive disadvantage within the rail industry and with companies providing other modes of transportation service,which could have a material adverse effect on our results of operations,financial condition,and liquidity.
139、Additionally,if a cyber attack or other event causes significant disruption or failure of one or more of our information technology systems,including computer hardware,software,and communications equipment,we could suffer a significant service interruption,safety failure,security breach,or other ope
140、rational difficulties,which could have a material adverse impact on our results of operations,financial condition,and liquidity.Strikes or Work Stoppages Could Adversely Affect Our Operations as the Majority of Our Employees Belong to Labor Unions and Labor Agreements The U.S.Class I railroads are p
141、arty to collective bargaining agreements with various labor unions.Disputes with regard to the terms of these agreements or our potential inability to negotiate acceptable contracts with these unions could result in,among other things,strikes,work stoppages,slowdowns,or lockouts,which could cause a
142、significant disruption of our operations and have a material adverse effect on our results of operations,financial condition,and liquidity.Additionally,future national labor agreements,or renegotiation of labor agreements or provisions of labor agreements,could compromise our service reliability or
143、significantly increase our costs for health care,wages,and other benefits,which could have a material adverse impact on our results of operations,financial condition,and liquidity.Severe Weather Could Result in Significant Business Interruptions and Expenditures As a railroad with a vast network,we
144、are exposed to severe weather conditions and other natural phenomena,including earthquakes,hurricanes,fires,floods,mudslides or landslides,extreme temperatures,and significant precipitation that may cause business interruptions,including line outages on our rail network,that can adversely affect our
145、 entire rail network and result in increased costs,increased liabilities,and decreased revenue,which could have a material adverse effect on our results of operations,financial condition,and liquidity.We May Be Subject to Various Claims and Lawsuits That Could Result in Significant Expenditures As a
146、 railroad with operations in densely populated urban areas and other cities and a vast rail network,we are exposed to the potential for various claims and litigation related to labor and employment,personal injury,property damage,environmental liability,and other matters.Any material changes to liti
147、gation trends or a catastrophic rail accident or series of accidents involving any or all of property damage,personal injury,and environmental liability could have a material adverse effect on our results of operations,financial condition,and liquidity.We Are Subject to Significant Environmental Law
148、s and Regulations Due to the nature of the railroad business,our operations are subject to extensive federal,state,and local environmental laws and regulations concerning,among other things,emissions to the air;discharges to waters;handling,storage,transportation,and disposal of waste and other mate
149、rials;and hazardous material or petroleum releases.We generate and transport hazardous and non-hazardous waste in our operations,and we did so in our former operations.Environmental liability can extend to previously owned or operated properties,leased properties,and properties owned by third partie
150、s,as well as to properties we currently own.Environmental liabilities have arisen and may also arise from claims asserted by adjacent landowners or other third parties in toxic tort litigation.We have been and may be subject to allegations or findings that we have violated,or are strictly liable und
151、er,these laws or regulations.We could incur significant costs as a result of any of the foregoing,and we may be required to incur significant expenses to investigate and remediate known,unknown,or future environmental contamination,which could have a material adverse effect on our results of operati
152、ons,financial condition,and liquidity.We May Be Affected by Climate Change and Market or Regulatory Responses to Climate Change Climate change,including the impact of global warming,could have a material adverse effect on our results of operations,financial condition,and liquidity.Restrictions,caps,
153、taxes,or other controls on emissions of greenhouse gasses,including diesel exhaust,could significantly increase our operating 12 costs.Restrictions on emissions could also affect our customers that(a)use commodities that we carry to produce energy,(b)use significant amounts of energy in producing or
154、 delivering the commodities we carry,or(c)manufacture or produce goods that consume significant amounts of energy or burn fossil fuels,including chemical producers,farmers and food producers,and automakers and other manufacturers.Significant cost increases,government regulation,or changes of consume
155、r preferences for goods or services relating to alternative sources of energy or emissions reductions could materially affect the markets for the commodities we carry,which in turn could have a material adverse effect on our results of operations,financial condition,and liquidity.Government incentiv
156、es encouraging the use of alternative sources of energy could also affect certain of our customers and the markets for certain of the commodities we carry in an unpredictable manner that could alter our traffic patterns,including,for example,the impacts of ethanol incentives on farming and ethanol p
157、roducers.Finally,we could face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change.Any of these factors,individually or in operation with one or more of the other factors,or other un
158、foreseen impacts of climate change could reduce the amount of traffic we handle and have a material adverse effect on our results of operations,financial condition,and liquidity.The Availability of Qualified Personnel Could Adversely Affect Our Operations Changes in demographics,training requirement
159、s,and the availability of qualified personnel could negatively affect our ability to meet demand for rail service.Unpredictable increases in demand for rail services and a lack of network fluidity may exacerbate such risks,which could have a negative impact on our operational efficiency and otherwis
160、e have a material adverse effect on our results of operations,financial condition,and liquidity.Rising or Elevated Fuel Costs and Whether We Are Able to Mitigate These Costs with Fuel Surcharges Could Materially and Adversely Affect Our Business Fuel costs constitute a significant portion of our tra
161、nsportation expenses.Diesel fuel prices are subject to dramatic fluctuations,and significant price increases could have a material adverse effect on our operating results.Although we currently are able to recover a significant amount of our increased fuel expenses through revenue from fuel surcharge
162、s,we cannot be certain that we will always be able to mitigate rising or elevated fuel costs through surcharges.Future market conditions or legislative or regulatory activities could adversely affect our ability to apply fuel surcharges or adequately recover increased fuel costs through fuel surchar
163、ges.International,political,and economic circumstances affect fuel prices and supplies.Weather can also affect fuel supplies and limit domestic refining capacity.If a fuel supply shortage were to arise,higher fuel prices could,despite our fuel surcharge programs,have a material adverse effect on our
164、 results of operations,financial condition,and liquidity.We Utilize Capital Markets Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad,we rely on the capital markets to provide some of our capital requirements.We utilize long-term debt instrume
165、nts,bank financing and commercial paper from time-to-time,and we pledge certain of our receivables.Significant instability or disruptions of the capital markets,including the credit markets,or deterioration of our financial condition due to internal or external factors could restrict or prohibit our
166、 access to,and significantly increase the cost of,commercial paper and other financing sources,including bank credit facilities and the issuance of long-term debt,including corporate bonds.A deterioration of our financial condition could result in a reduction of our credit rating to below investment
167、 grade,which could prohibit or restrict us from utilizing our current receivables securitization facility or accessing external sources of short-and long-term debt financing and significantly increase the costs associated with utilizing the receivables securitization facility and issuing both commer
168、cial paper and long-term debt.We Are Subject to Legislative,Regulatory,and Legal Developments Involving Taxes Taxes are a significant part of our expenses.We are subject to U.S.federal,state,and foreign income,payroll,property,sales and use,fuel,and other types of taxes.Changes in tax rates,enactmen
169、t of new tax laws,revisions of tax regulations,and claims or litigation with taxing authorities could result in substantially higher taxes and,therefore,could have a material adverse effect on our results of operations,financial condition,and liquidity.We Are Dependent on Certain Key Suppliers of Lo
170、comotives and Rail Due to the capital intensive nature and sophistication of locomotive equipment,potential new suppliers face high barriers to entry.Therefore,if one of the domestic suppliers of high horsepower locomotives discontinues manufacturing locomotives for any reason,including bankruptcy o
171、r insolvency,we could experience significant cost 13 increases and reduced availability of the locomotives that are necessary for our operations.Additionally,for a high percentage of our rail purchases,we utilize two suppliers(one domestic and one international)that meet our specifications.Rail is c
172、ritical to our operations for rail replacement programs,maintenance,and for adding additional network capacity,new rail and storage yards,and expansions of existing facilities.This industry similarly has high barriers to entry,and if one of these suppliers discontinues operations for any reason,incl
173、uding bankruptcy or insolvency,we could experience both significant cost increases for rail purchases and difficulty obtaining sufficient rail for maintenance and other projects.We May Be Affected by Acts of Terrorism,War,or Risk of War Our rail lines,facilities,and equipment,including rail cars car
174、rying hazardous materials,could be direct targets or indirect casualties of terrorist attacks.Terrorist attacks,or other similar events,any government response thereto,and war or risk of war may adversely affect our results of operations,financial condition,and liquidity.In addition,insurance premiu
175、ms for some or all of our current coverages could increase dramatically,or certain coverages may not be available to us in the future.Item 1B.Unresolved Staff Comments None.Item 2.Properties We employ a variety of assets in the management and operation of our rail business.Our rail network covers 23
176、 states in the western two-thirds of the U.S.14 TRACK Our rail network includes 31,868 route miles.We own 26,020 miles and operate on the remainder pursuant to trackage rights or leases.The following table describes track miles at December 31,2012 and 2011.2012 2011 Route 31,868 31,898 Other main li
177、ne 6,715 6,644 Passing lines and turnouts 3,124 3,112 Switching and classification yard lines 9,046 8,999 Total miles 50,753 50,653 HEADQUARTERS BUILDING We maintain our headquarters in Omaha,Nebraska.The facility has 1.2 million square feet of space for approximately 4,000 employees and is subject
178、to a financing arrangement.HARRIMAN DISPATCHING CENTER The Harriman Dispatching Center(HDC),located in Omaha,Nebraska,is our primary dispatching facility.It is linked to regional dispatching and locomotive management facilities at various locations along our network.HDC employees coordinate moves of
179、 locomotives and trains,manage traffic and train crews on our network,and coordinate interchanges with other railroads.Over 900 employees currently work on-site in the facility.In the event of a disruption of operations at HDC due to a cyber attack,flooding or severe weather or other event,we mainta
180、in the capability to conduct critical operations at back-up facilities in different locations.RAIL FACILITIES In addition to our track structure,we operate numerous facilities,including terminals for intermodal and other freight;rail yards for train-building(classification yards),switching,storage-i
181、n-transit(the temporary storage of customer goods in rail cars prior to shipment)and other activities;offices to administer and manage our operations;dispatching centers to direct traffic on our rail network;crew quarters to house train crews along our network;and shops and other facilities for fuel
182、ing,maintenance,and repair of locomotives and repair and maintenance of rail cars and other equipment.The following tables include the major yards and terminals on our system:Avg.Daily Car Volume Top 10 Classification Yards 2012 2011 North Platte,Nebraska 2,300 2,200 North Little Rock,Arkansas 1,600
183、 1,600 Englewood(Houston),Texas 1,500 1,400 Fort Worth,Texas 1,400 1,300 Proviso(Chicago),Illinois 1,300 1,400 Livonia,Louisiana 1,300 1,300 Pine Bluff,Arkansas 1,200 1,200 Roseville,California 1,200 1,200 West Colton,California 1,100 1,100 Neff(Kansas City),Missouri 1,000 1,000 15 Annual Lifts Top
184、10 Intermodal Terminals 2012 2011 ICTF(Los Angeles),California 448,000 432,000 East Los Angeles,California 427,000 428,000 Global 4(Joliet),Illinois 347,000 298,000 Dallas,Texas 310,000 261,000 Global I(Chicago),Illinois 306,000 295,000 Yard Center(Chicago),Illinois 273,000 277,000 Marion(Memphis),T
185、ennessee 271,000 283,000 Global II(Chicago),Illinois 253,000 273,000 Mesquite,Texas 236,000 232,000 LATC(Los Angeles),California 230,000 226,000 RAIL EQUIPMENT Our equipment includes owned and leased locomotives and rail cars;heavy maintenance equipment and machinery;other equipment and tools in our
186、 shops,offices,and facilities;and vehicles for maintenance,transportation of crews,and other activities.As of December 31,2012,we owned or leased the following units of equipment:Average Age(yrs.)Locomotives Owned Leased Total Multiple purpose 5,468 2,365 7,833 17.3 Switching 400 24 424 32.9 Other 7
187、7 57 134 32.8 Total locomotives 5,945 2,446 8,391 N/A Average Age(yrs.)Freight cars Owned Leased Total Covered hoppers 13,008 17,946 30,954 19.6 Open hoppers 9,484 3,998 13,482 27.8 Gondolas 6,341 5,168 11,509 23.0 Boxcars 4,621 1,603 6,224 27.5 Refrigerated cars 2,438 4,263 6,701 25.1 Flat cars 2,7
188、42 684 3,426 30.6 Other 104 375 479 N/A Total freight cars 38,738 34,037 72,775 N/A Average Age(yrs.)Highway revenue equipment Owned Leased Total Containers 17,207 36,714 53,921 6.6 Chassis 9,245 27,748 36,993 7.6 Total highway revenue equipment 26,452 64,462 90,914 N/ACAPITAL EXPENDITURES Our rail
189、network requires significant annual capital investments for replacement,improvement,and expansion.These investments enhance safety,support the transportation needs of our customers,and improve our operational efficiency.Additionally,we add new locomotives and freight cars to our fleet to replace old
190、er,less efficient equipment,to support growth and customer demand,and to reduce our impact on the environment through the acquisition of more fuel efficient and low-emission locomotives.2012 Capital Expenditures During 2012,we made capital investments totaling$3.7 billion.(See the capital expenditur
191、es table in Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Financial Condition,Item 7.)16 2013 Capital Expenditures In 2013,we expect to make capital investments of approximately$3.6 billion,including expenditures for PTC of appro
192、ximately$450 million.We may revise our 2013 capital plan if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on these investments.(See discussion of our 2013 capital plan in Managements Discussion and Analysis of Financial Condition and Resu
193、lts of Operations 2013 Outlook,Item 7.)OTHER Equipment Encumbrances Equipment with a carrying value of approximately$2.9 billion at both December 31,2012 and 2011 served as collateral for capital leases and other types of equipment obligations in accordance with the secured financing arrangements ut
194、ilized to acquire such railroad equipment.As a result of the merger of Missouri Pacific Railroad Company(MPRR)with and into UPRR on January 1,1997,and pursuant to the underlying indentures for the MPRR mortgage bonds,UPRR must maintain the same value of assets after the merger in order to comply wit
195、h the security requirements of the mortgage bonds.As of the merger date,the value of the MPRR assets that secured the mortgage bonds was approximately$6.0 billion.In accordance with the terms of the indentures,this collateral value must be maintained during the entire term of the mortgage bonds irre
196、spective of the outstanding balance of such bonds.Environmental Matters Certain of our properties are subject to federal,state,and local laws and regulations governing the protection of the environment.(See discussion of environmental issues in Business Governmental and Environmental Regulation,Item
197、 1,and Managements Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Environmental,Item 7.)Item 3.Legal Proceedings From time to time,we are involved in legal proceedings,claims,and litigation that occur in connection with our business.We routinely
198、 assess our liabilities and contingencies in connection with these matters based upon the latest available information and,when necessary,we seek input from our third-party advisors when making these assessments.Consistent with SEC rules and requirements,we describe below material pending legal proc
199、eedings(other than ordinary routine litigation incidental to our business),material proceedings known to be contemplated by governmental authorities,other proceedings arising under federal,state,or local environmental laws and regulations(including governmental proceedings involving potential fines,
200、penalties,or other monetary sanctions in excess of$100,000),and such other pending matters that we may determine to be appropriate.ENVIRONMENTAL MATTERS On January 14,2013,the Illinois Attorney Generals Office notified UPRR that it will seek a penalty against the Railroad for environmental condition
201、s caused by its predecessor at a former locomotive fueling facility in South Pekin,Illinois.This former CNW facility discontinued fueling operations in the early 1980s.Subsequent environmental investigation revealed evidence of fuel releases to soil and groundwater.In January 2007,the State rejected
202、 UPRRs proposed compliance commitment agreement and responded with a notice of intent to pursue legal action.UPRR continued to perform remedial investigations under the supervision of the Illinois EPA.In June 2012,the Illinois EPA approved UPRRs proposed remedial action plan for the contaminated gro
203、undwater.Although no further action is required for the contamination,the State is now seeking to recover a penalty.The State has offered to settle the matter prior to litigation for payment of a$240,000 penalty.If we are unable to reach an agreement,the state will pursue legal action for a penalty,
204、which we expect will exceed$100,000.We received notices from the EPA and state environmental agencies alleging that we are or may be liable under federal or state environmental laws for remediation costs at various sites throughout the U.S.,including sites on the Superfund National Priorities List o
205、r state superfund lists.We cannot predict the ultimate impact of these proceedings and suits because of the number of potentially responsible parties involved,the degree of contamination by various wastes,the scarcity and quality of volumetric data related to many of the sites,and the speculative na
206、ture of remediation costs.17 Information concerning environmental claims and contingencies and estimated remediation costs is set forth in Managements Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Environmental,Item 7.OTHER MATTERS Antitrust Li
207、tigation-As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30,2007,20 small rail shippers(many of whom are represented by the same law firms)filed virtually identical antitrust lawsuits in various federal district courts against us and four other Class I railroads in the
208、 U.S.(one railroad was eventually dropped from the lawsuit).The original plaintiff filed the first of these claims in the U.S.District Court in New Jersey on May 14,2007,and the additional plaintiffs filed claims in district courts in various states,including Florida,Illinois,Alabama,Pennsylvania,an
209、d the District of Columbia.These suits allege that the named railroads engaged in price-fixing by establishing common fuel surcharges for certain rail traffic.We received additional complaints following the initial claim,increasing the total number of complaints to 30.In addition to suits filed by d
210、irect purchasers of rail transportation,a few of the suits involved plaintiffs alleging that they are or were indirect purchasers of rail transportation and seeking to represent a purported class of indirect purchasers of rail transportation that paid fuel surcharges.These complaints added allegatio
211、ns under state antitrust and consumer protection laws.On November 6,2007,the Judicial Panel on Multidistrict Litigation ordered that all of the rail fuel surcharge cases be transferred to Judge Paul Friedman of the U.S.District Court in the District of Columbia for coordinated or consolidated pretri
212、al proceedings.Subsequently,the direct purchaser plaintiffs and the indirect purchaser plaintiffs filed Consolidated Amended Class Action Complaints against UPRR and three other Class I railroads.One additional shipper filed a separate antitrust suit during 2008.Subsequently,the shipper voluntarily
213、dismissed the action without prejudice.On October 10,2008,Judge Friedman heard oral arguments with respect to the defendant railroads motions to dismiss.In a ruling on November 7,2008,Judge Friedman denied the motion with respect to the direct purchasers complaint,and pretrial proceedings are underw
214、ay in that case,the status of which is described below.On December 31,2008,Judge Friedman dismissed the complaints of the indirect purchasers based upon state antitrust,consumer protection,and unjust enrichment laws.He also ruled,however,that these plaintiffs could proceed with their claim for injun
215、ctive relief under the federal antitrust laws,which is identical to a claim by the direct purchaser plaintiffs.The indirect purchasers appealed Judge Friedmans ruling to the U.S.Court of Appeals for the District of Columbia.On April 16,2010,the U.S.Court of Appeals for the District of Columbia affir
216、med Judge Friedmans ruling dismissing the indirect purchasers claims based on various state laws.With respect to the direct purchasers complaint,Judge Friedman conducted a two-day hearing on October 6 and 7,2010,on the class certification issue and the railroad defendants motion to exclude evidence
217、of interline communications.On April 7,2011,Judge Friedman issued an order deferring any decision on class certification until the Supreme Court issued its decision in the Wal-Mart employment discrimination case.On June 21,2012,Judge Friedman issued his decision certifying a class of plaintiffs to b
218、e represented by the eight named plaintiffs.The class includes all shippers that paid a rate-based fuel surcharge to any one of the defendant railroads for rate-unregulated rail transportation from July 1,2003 through December 1,2008.This is a procedural ruling,which does not affirm any of the claim
219、s asserted by the plaintiffs and does not affect the ability of the railroad defendants to disprove the allegations made by the plaintiffs.On July 5,2012,the defendant railroads filed a petition with the U.S.Court of Appeals for the District of Columbia requesting that the court review the class cer
220、tification ruling.On August 28,2012,a panel of the Circuit Court of the District of Columbia referred the petition to a merits panel of the court to address the issues in the petition and to address whether the district court properly granted class certification.We deny the allegations that our fuel
221、 surcharge programs violate the antitrust laws or any other laws.We believe that these lawsuits are without merit,and we will vigorously defend our actions.Therefore,we currently believe that these matters will not have a material adverse effect on any of our results of operations,financial conditio
222、n and liquidity.18 Item 4.Mine Safety Disclosures Not applicable.Executive Officers of the Registrant and Principal Executive Officers of Subsidiaries The Board of Directors typically elects and designates our executive officers on an annual basis at the board meeting held in conjunction with the An
223、nual Meeting of Shareholders,and they hold office until their successors are elected.Executive officers also may be elected and designated throughout the year,as the Board of Directors considers appropriate.There are no family relationships among the officers,nor any arrangement or understanding bet
224、ween any officer and any other person pursuant to which the officer was selected.The following table sets forth certain information current as of February 8,2013,relating to the executive officers.Business Experience DuringName Position Age Past Five Years James R.Young Chairman of UPC and the Railr
225、oad 60 1 John J.Koraleski President and Chief Executive Officer of UPC and the Railroad 62 2 Robert M.Knight,Jr.Executive Vice President Finance and Chief Financial Officer of UPC and the Railroad 55 Current Position Diane K.Duren Executive Vice President of UPC and the Railroad 53 3 Barbara W.Schae
226、fer Senior Vice President Human Resources and Secretary of UPC and the Railroad 59 4 Gayla L.Thal Senior Vice President Law and General Counsel of UPC and the Railroad 56 5 Jeffrey P.Totusek Vice President and Controller of UPC and Chief Accounting Officer and Controller of the Railroad 54 Current P
227、osition Lance M.Fritz Executive Vice President Operations of the Railroad 50 6 Eric L.Butler Executive Vice President Marketing and Sales of the Railroad 52 7 1 On March 2,2012,Mr.Young stepped down from his duties as President and Chief Executive Officer of UPC and theRailroad due to a health condi
228、tion.He remains Chairman of the Board.2 Mr.Koraleski was elected Chief Executive Officer and President of UPC and the Railroad effective March 2,2012.Hepreviously was Executive Vice President-Marketing and Sales of the Railroad effective March 1,1999.3 Ms.Duren was elected to her current position ef
229、fective October 1,2012.She previously was Vice President and GeneralManager-Chemicals effective August 1,2006.In addition,Ms.Duren was elected Corporate Secretary,which will becomeeffective March 1,2013,upon Ms.Schaefers retirement.4 Ms.Schaefer is retiring from UPC and the Railroad effective March
230、1,2013.5 Ms.Thal was elected to her current position effective March 15,2012.She previously was Vice President-Law and Chief Compliance Officer effective December 1,2005.6 Mr.Fritz was elected to his current position effective September 1,2010.He previously was Vice President Operations of the Railr
231、oad,effective January 1,2010.Mr.Fritz previously served as Vice President Labor Relations effective March 1,2008.7 Mr.Butler was elected to his current position effective March 15,2012.He previously was Vice President and GeneralManager-Industrial Products effective April 14,2005.19 PART II Item 5.M
232、arket for the Registrants Common Equity,Related Stockholder Matters,and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange(NYSE)under the symbol“UNP”.The following table presents the dividends declared and the high and low prices of our common stock for e
233、ach of the indicated quarters.2012-Dollars Per Share Q1 Q2 Q3 Q4 Dividends$0.60$0.60$0.60$0.69 Common stock price:High 117.40 119.82 129.27 128.38 Low 104.77 104.08 115.38 116.06 2011-Dollars Per Share Q1 Q2 Q3 Q4 Dividends$0.38$0.475$0.475$0.60 Common stock price:High 99.50 105.60 107.89 106.60 Low
234、 90.66 92.80 79.58 77.73 At February 1,2013,there were 469,298,732 shares of common stock outstanding and 32,519 common shareholders of record.On that date,the closing price of the common stock on the NYSE was$133.96.We have paid dividends to our common shareholders during each of the past 113 years
235、.We declared dividends totaling$1,180 million in 2012 and$938 million in 2011.On November 15,2012,we increased the quarterly dividend to$0.69 per share,payable beginning on January 2,2013,to shareholders of record on November 30,2012.We are subject to certain restrictions regarding retained earnings
236、 with respect to the payment of cash dividends to our shareholders.The amount of retained earnings available for dividends increased to$15.1 billion at December 31,2012,from$13.8 billion at December 31,2011.(See discussion of this restriction in Managements Discussion and Analysis of Financial Condi
237、tion and Results of Operations Liquidity and Capital Resources,Item 7.)We do not believe the restriction on retained earnings will affect our ability to pay dividends,and we currently expect to pay dividends in 2013.Comparison Over One-and Three-Year Periods The following table presents the cumulati
238、ve total shareholder returns,assuming reinvestment of dividends,over one-and three-year periods for the Corporation(UNP),a peer group index(comprised of CSX Corporation and Norfolk Southern Corporation),the Dow Jones Transportation Index(DJ Trans),and the Standard&Poors 500 Stock Index(S&P 500).Peri
239、od UNP Peer Group DJ Trans S&P 500 1 Year(2012)21.2%(8.6)%7.5%16.0%3 Year(2010-2012)108.6 28.7 36.3 36.3 20 Five-Year Performance Comparison The following graph provides an indicator of cumulative total shareholder returns for the Corporation as compared to the peer group index(described above),the
240、DJ Trans,and the S&P 500.The graph assumes that$100 was invested in the common stock of Union Pacific Corporation and each index on December 31,2007 and that all dividends were reinvested.Purchases of Equity Securities During 2012,we repurchased 13,804,709 shares of our common stock at an average pr
241、ice of$115.33.The following table presents common stock repurchases during each month for the fourth quarter of 2012:Period Total Number of Shares Purchased aAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of a Publicly Announced Plan or Program bMaximum Number of Shares That Ma
242、y Yet Be Purchased Under the Plan or Program b Oct.1 through Oct.31 1,068,414 121.70 1,028,300 16,041,399 Nov.1 through Nov.30 659,631 120.84 655,000 15,386,399 Dec.1 through Dec.31 411,683 124.58 350,450 15,035,949 Total 2,139,728$121.99 2,033,750 N/Aa Total number of shares purchased during the qu
243、arter includes approximately 105,978 shares delivered or attested to UPC by employees to pay stock option exercise prices,satisfy excess tax withholding obligations for stock option exercises or vesting of retention units,and pay withholding obligations for vesting of retention shares.b On April 1,2
244、011,our Board of Directors authorized the repurchase of up to 40 million shares of our common stock by March 31,2014.These repurchases may be made on the open market or through other transactions.Our management has sole discretion with respect to determining the timing and amount of these transactio
245、ns.21 Item 6.Selected Financial Data The following table presents as of,and for the years ended,December 31,our selected financial data for each of the last five years.The selected financial data should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Result
246、s of Operations,Item 7,and with the Financial Statements and Supplementary Data,Item 8.The information below is not necessarily indicative of future financial condition or results of operations.Millions,Except per Share Amounts,Carloads,Employee Statistics,and Ratios 2012 2011 2010 2009 2008 For the
247、 Year Ended December 31 Operating revenues a$20,926$19,557$16,965$14,143$17,970 Operating income 6,745 5,724 4,981 3,379 4,070 Net income 3,943 3,292 2,780 1,890 2,335 Earnings per share-basic 8.33 6.78 5.58 3.76 4.57 Earnings per share-diluted 8.27 6.72 5.53 3.74 4.53 Dividends declared per share 2
248、.49 1.93 1.31 1.08 0.98 Cash provided by operating activities 6,161 5,873 4,105 3,204 4,044 Cash used in investing activities (3,633)(3,119)(2,488)(2,145)(2,738)Cash used in financing activities (2,682)(2,623)(2,381)(458)(935)Cash used for common share repurchases (1,474)(1,418)(1,249)-(1,609)At Dec
249、ember 31 Total assets$47,153$45,096$43,088$42,184$39,509 Long-term obligations 24,157 23,201 22,373 22,701 21,314 Debt due after one year 8,801 8,697 9,003 9,636 8,607 Common shareholders equity 19,877 18,578 17,763 16,801 15,315 Additional Data Freight revenues a$19,686$18,508$16,069$13,373$17,118
250、Revenue carloads(units)(000)9,048 9,072 8,815 7,786 9,261 Operating ratio(%)b 67.8 70.7 70.6 76.1 77.4 Average employees(000)45.9 44.9 42.9 43.5 48.2 Financial Ratios(%)Debt to capital c 31.2 32.4 34.2 37.0 36.8 Return on average common shareholders equity d 20.5 18.1 16.1 11.8 15.2 a Includes fuel
251、surcharge revenue of$2.6 billion,$2.2 billion,$1.2 billion,$0.6 billion,and$2.3 billion for 2012,2011,2010,2009,and 2008,respectively,which partially offsets increased operating expenses for fuel.Fuel surcharge revenue is not comparable from year to year due to implementation of new mileage-based fu
252、el surcharge programs in each respective year.(See further discussion in Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Operating Revenues,Item 7.)b Operating ratio is defined as operating expenses divided by operating revenues.c Debt to ca
253、pital is determined as follows:total debt divided by total debt plus common shareholders equity.d Return on average common shareholders equity is determined as follows:Net income divided by average commonshareholders equity.22 Item 7.Managements Discussion and Analysis of Financial Condition and Res
254、ults of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements and applicable notes to the Financial Statements and Supplementary Data,Item 8,and other information in this report,including Risk Factors set forth in Item 1A and Critical Accounting
255、 Policies and Cautionary Information at the end of this Item 7.The Railroad,along with its subsidiaries and rail affiliates,is our one reportable business segment.Although revenue is analyzed by commodity,we analyze the net financial results of the Railroad as one segment due to the integrated natur
256、e of the rail network.EXECUTIVE SUMMARY 2012 Results Safety Our employee safety results continued to improve in 2012.The employee injury incident rate per 200,000 employee hours declined 9%from 2011,to a new record low.These results reflect employee training,the move to standard work,and extensive e
257、fforts to identify and eliminate risk.Our use of technologies such as laser,ultrasound,and acoustic vibration monitoring,which help identify potential rail,wheel and axle failures before they occur contributed to the reduction of our equipment incident rate to 9.38 per million train miles,another be
258、st ever result.With respect to public safety,we closed 237 grade crossings in 2012 to reduce our exposure to incidents and continued use of video cameras on our locomotives to analyze public safety incidents.We now have camera-equipped locomotives in the lead position on over 97%of our through-freig
259、ht trains.Despite our efforts during 2012,the rate of grade crossing incidents per million train miles increased 13%from 2011.Overall,our 2012 safety results reflect our structured approach to reduce risk and eliminate incidents for our employees,our customers and the public.Financial Performance We
260、 produced another record-setting year in 2012,generating operating income of$6.7 billion,an 18%increase over 2011.Despite flat volume,core pricing gains of 4.5%and higher fuel surcharge recoveries more than offset inflation and higher depreciation expense to drive the increase.Our operating ratio fo
261、r 2012 of 67.8%was an all-time best,improving from last years operating ratio of 70.7%.Net income of$3.9 billion surpassed our previous milestone set in 2011,translating into earnings of$8.27 per diluted share for 2012.Freight Revenues Our freight revenues grew 6%year-over-year to$19.7 billion.Freig
262、ht revenues for four of the six commodity groups increased despite flat volume.Volume declines in Coal and Agricultural Products offset double digit volume increases in Automotive and Chemicals.Core pricing gains and higher fuel surcharges drove the growth in freight revenue in 2012 compared to 2011
263、.Fuel surcharges increased due to higher fuel prices,the lag effect of our programs(surcharges trail fluctuations in fuel price by approximately two months)and new fuel surcharge provisions in renegotiated contracts.Network Operations In 2012,our business mix changed significantly both geographicall
264、y and by commodity.Nevertheless,by adjusting resources to match market and network requirements,we continued operating an efficient and fluid network.As reported to the Association of American Railroads(AAR),average train speed increased 4%in 2012 compared to 2011,reflecting more efficient operation
265、s and relatively mild weather conditions compared to 2011,which included severe winter weather,flooding,and extreme heat and drought that affected various parts of our network during the year.Average terminal dwell time remained flat despite a shift in business mix to more manifest traffic,which req
266、uires more switching,resulting in more terminal dwell time.Average rail car inventory decreased slightly,reflecting productivity improvements and ongoing initiatives designed to reduce the number of cars in our fleet.These operational improvements resulted in a record customer satisfaction index in
267、2012.Fuel Prices Despite consistent average crude oil barrel prices in 2011 and 2012,our price per gallon of diesel fuel consumed increased 3%due to higher crude oil to diesel conversion spreads.The higher spreads increased operating expenses by$105 million(excluding any impact from year-over-year v
268、olume).A 2%decline in gross-ton miles partially offset the higher expenses.Our fuel consumption rate did not change in 2012 from the rate in 2011.23 Free Cash Flow Cash generated by operating activities totaled$6.2 billion,reduced by$3.6 billion for cash used in investing activities and a 37%increas
269、e in dividends paid,yielding free cash flow of$1.4 billion.Free cash flow is defined as cash provided by operating activities(adjusted for the reclassification of our receivables securitization facility),less cash used in investing activities and dividends paid.Free cash flow is not considered a fin
270、ancial measure under accounting principles generally accepted in the U.S.(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 is important to management and investors in evaluating our financ
271、ial performance and measures our ability to generate cash without additional external financings.Free cash flow should be considered in addition to,rather than as a substitute for,cash provided by operating activities.The following table reconciles cash provided by operating activities(GAAP measure)
272、to free cash flow(non-GAAP measure):Millions 2012 2011 2010 Cash provided by operating activities$6,161$5,873$4,105 Receivables securitization facility a -400 Cash provided by operating activities adjusted for the receivables securitization facility 6,161 5,873 4,505 Cash used in investing activitie
273、s (3,633)(3,119)(2,488)Dividends paid (1,146)(837)(602)Free cash flow$1,382$1,917$1,415 a Effective January 1,2010,a new accounting standard required us to account for receivables transferred under our receivablessecuritization facility as secured borrowings in our Consolidated Statements of Financi
274、al Position and as financing activities in our Consolidated Statements of Cash Flows.The receivables securitization facility is included in our free cash flow calculation to adjust cash provided by operating activities as though our receivables securitization facility had been accounted for underthe
275、 new accounting standard for all periods presented.2013 Outlook Safety Operating a safe railroad benefits our employees,our customers,our shareholders,and the communities we serve.We will continue using a multi-faceted approach to safety,utilizing technology,risk assessment,quality control,training
276、and employee engagement,and targeted capital investments.We will continue using and expanding the deployment of Total Safety Culture throughout our operations,which allows us to identify and implement best practices for employee and operational safety.Derailment prevention and the reduction of grade
277、 crossing incidents are critical aspects of our safety programs.We will continue our efforts to increase rail defect detection;improve or close crossings;and educate the public and law enforcement agencies about crossing safety through a combination of our own programs(including risk assessment stra
278、tegies),various industry programs and local community activities across our network.Network Operations We will continue focusing on our six critical initiatives to improve safety,service and productivity during 2013.We are seeing solid contributions from reducing variability,continuous improvements,
279、and standard work.Resource agility allows us to respond quickly to changing market conditions and network disruptions from weather or other events.The Railroad continues to benefit from capital investments that allow us to build capacity for growth and harden our infrastructure to reduce failure.Fue
280、l Prices Uncertainty about the economy makes projections of fuel prices difficult.We again could see volatile fuel prices during the year,as they are sensitive to global and U.S.domestic demand,refining capacity,geopolitical events,weather conditions and other factors.To reduce the impact of fuel pr
281、ice on earnings,we will continue seeking cost recovery from our customers through our fuel surcharge programs and expanding our fuel conservation efforts.Capital Plan In 2013,we plan to make total capital investments of approximately$3.6 billion,including expenditures for Positive Train Control(PTC)
282、,which may be revised if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on these investments.(See further discussion in this Item 7 under Liquidity and Capital Resources Capital Plan.)24 Positive Train Control In response to a legislative
283、mandate to implement PTC,we expect to spend approximately$450 million during 2013 on developing and deploying PTC.We currently estimate that PTC,in accordance with implementing rules issued by the Federal Rail Administration(FRA),will cost us approximately$2 billion by the end of the project.This in
284、cludes costs for installing the new system along our tracks,upgrading locomotives to work with the new system,and adding digital data communication equipment to integrate the components of the system.Financial Expectations We are cautious about the economic environment but if industrial production g
285、rows approximately 2%as projected,volume should exceed 2012 levels.Even with no volume growth,we expect earnings to exceed 2012 earnings,generated by real core pricing gains,on-going network improvements and operational productivity initiatives.We also expect that a new bonus depreciation program un
286、der federal tax laws will positively impact cash flows in 2013.RESULTS OF OPERATIONS Operating Revenues Millions 2012 2011 2010%Change 2012 v 2011%Change 2011 v 2010 Freight revenues$19,686$18,508$16,069 6%15%Other revenues 1,240 1,049 896 18 17 Total$20,926$19,557$16,965 7%15%We generate freight re
287、venues by transporting freight or other materials from our six commodity groups.Freight revenues vary with volume(carloads)and average revenue per car(ARC).Changes in price,traffic mix and fuel surcharges drive ARC.We provide some of our customers with contractual incentives for meeting or exceeding
288、 specified cumulative volumes or shipping to and from specific locations,which we record as reductions to freight revenues based on the actual or projected future shipments.We recognize freight revenues as shipments move from origin to destination.We allocate freight revenues between reporting perio
289、ds based on the relative transit time in each reporting period and recognize expenses as we incur them.Other revenues include revenues earned by our subsidiaries,revenues from our commuter rail operations,and accessorial revenues,which we earn when customers retain equipment owned or controlled by u
290、s or when we perform additional services such as switching or storage.We recognize other revenues as we perform services or meet contractual obligations.Freight revenues from four of our six commodity groups increased during 2012 compared to 2011.Revenues from coal and agricultural products declined
291、 during the year.Our franchise diversity allowed us to take advantage of growth from shale-related markets(crude oil,frac sand and pipe)and strong automotive manufacturing,which offset volume declines from coal and agricultural products.ARC increased 7%,driven by core pricing gains and higher fuel c
292、ost recoveries.Improved fuel recovery provisions and higher fuel prices,including the lag effect of our programs(surcharges trail fluctuations in fuel price by approximately two months),combined to increase revenues from fuel surcharges.Freight revenues for all six commodity groups increased during
293、2011 compared to 2010,while volume increased in all commodity groups except intermodal.Increased demand in many market sectors,with particularly strong growth in chemicals,industrial products,and automotive shipments for the year,generated the increases.ARC increased 12%,driven by higher fuel cost r
294、ecoveries and core pricing gains.Fuel cost recoveries include fuel surcharge revenue and the impact of resetting the base fuel price for certain traffic.Higher fuel prices,volume growth,and new fuel surcharge provisions in renegotiated contracts all combined to increase revenues from fuel surcharges
295、.Our fuel surcharge programs(excluding index-based contract escalators that contain some provision for fuel)generated freight revenues of$2.6 billion,$2.2 billion,and$1.2 billion in 2012,2011,and 2010,respectively.Ongoing rising fuel prices and increased fuel surcharge coverage drove the increases.A
296、dditionally,fuel surcharge revenue is not entirely comparable to prior periods as we continue to convert portions of our non-regulated traffic to mileage-based fuel surcharge programs.25 In 2012,other revenues increased from 2011 due primarily to higher revenues at our subsidiaries that broker inter
297、modal and automotive services.Assessorial revenues also increased in 2012 due to container revenue related to an increase in intermodal shipments.In 2011,other revenues increased from 2010 due primarily to higher revenues at our subsidiaries that broker intermodal and automotive services.The followi
298、ng tables summarize the year-over-year changes in freight revenues,revenue carloads,and ARC by commodity type:Freight Revenues%Change%Change Millions 2012 2011 2010 2012 v 2011 2011 v 2010 Agricultural$3,280$3,324$3,018 (1)%10%Automotive 1,807 1,510 1,271 20 19 Chemicals 3,238 2,815 2,425 15 16 Coal
299、 3,912 4,084 3,489 (4)17 Industrial Products 3,494 3,166 2,639 10 20 Intermodal 3,955 3,609 3,227 10 12 Total$19,686$18,508$16,069 6%15%Revenue Carloads%Change%ChangeThousands 2012 2011 2010 2012 v 2011 2011 v 2010 Agricultural 900 934 918 (4)%2%Automotive 738 653 611 13 7 Chemicals 1,042 921 844 13
300、 9 Coal 1,871 2,164 2,056 (14)5 Industrial Products 1,185 1,146 1,073 3 7 Intermodal a 3,312 3,254 3,313 2 (2)Total 9,048 9,072 8,815 -%3%Average Revenue per Car 2012 2011 2010%Change 2012 v 2011%Change 2011 v 2010 Agricultural$3,644$3,561$3,286 2%8%Automotive 2,448 2,311 2,082 6 11 Chemicals 3,107
301、3,055 2,874 2 6 Coal 2,092 1,888 1,697 11 11 Industrial Products 2,947 2,762 2,461 7 12 Intermodal a 1,194 1,109 974 8 14 Average$2,176$2,040$1,823 7%12%a Each intermodal container or trailer equals one carload.26 Agricultural Products Lower volume more than offset core pricing gains and increased f
302、uel surcharges as agricultural freight revenue decreased in 2012 versus 2011.Weak export demand for U.S.wheat drove a 19%decrease in wheat shipments year over year,as the foreign wheat market improved significantly from the weather affected crop in 2011.In addition,corn shipments declined 11%for the
303、 year,with more significant declines in the fourth quarter,reflecting the impact of the severe drought across the U.S.Lower gasoline demand,reduced exports and higher corn prices decreased ethanol shipments during the second half of the year.Growth in imported beer from Mexico and a strong domestic
304、harvest of fresh potatoes partially offset these declines.Fuel surcharges,price improvements and modest volume growth increased agricultural freight revenue in 2011 versus 2010.The federal mandate for higher levels of ethanol in the nations fuel supply and new business increased shipments of ethanol
305、 by 10%in 2011 versus 2010.Strong export demand for U.S.wheat via Gulf ports in the first half of 2011 was the primary driver of a 6%increase in wheat and food grains shipments for 2011 compared to 2010,despite a 19%decrease in shipments in the second half of 2011 when U.S.grain exports declined.Poo
306、r wheat production in some foreign markets drove the export demand during the first six months of the year.Automotive Increased shipments of finished vehicles and automotive parts along with core pricing gains and higher fuel surcharges improved automotive freight revenue from 2011 levels.Higher pro
307、duction and sales levels drove the volume growth.In addition,2012 shipments compared favorably to 2011 due to lower shipments of international vehicles in 2011 following the disaster in Japan.Higher volume,core pricing gains and fuel surcharges improved automotive freight revenue in 2011,from 2010 l
308、evels.Although higher production and sales levels during 2011 contributed to volume growth,the disaster in Japan partially offset the increase in shipments.The disruption caused by this event reduced parts shipments in the second quarter and shipments of international vehicles in the second and thir
309、d quarters.Finished autos shipments were up 7%in 2011 from 2010,aided by a 14%increase in the fourth quarter as the U.S.light-vehicle sales rate was the highest since the second quarter of 2008.Chemicals Higher volume,core price improvements and fuel surcharges increased freight revenue from chemica
310、ls in 2012.Shipments of crude oil primarily from the Bakken,Permian and Eagle Ford Shale formations to the Gulf area increased over three fold,driving the improvement in chemicals shipments.In addition,plastics and industrial chemicals shipments increased as low natural gas prices have made U.S.chem
311、icals more cost competitive globally.Declines in potash due to temporary shutdowns and reduced production at several mines partially offset the increases in chemical shipments during the year.2012 Agricultural Carloads 2012 Automotive Carloads 2012 Chemicals Carloads 27 Volume gains,fuel surcharges
312、and price improvements increased freight revenue from chemicals in 2011 versus 2010.In mid-2010,we began moving crude oil shipments from the Bakken formation in North Dakota to facilities in Louisiana.This new business,along with shipments from the Eagle Ford shale formation in south Texas,contribut
313、ed to a 37%increase in shipments of petroleum products during 2011.Strong domestic demand and robust spring planting increased fertilizer shipments by 9%versus 2010.Additionally,improving market conditions increased demand for industrial chemicals during 2011,driving volume levels up versus 2010.Coa
314、l Lower volume,partially offset by core pricing gains and fuel surcharge recoveries reduced freight revenue from coal shipments in 2012 compared to 2011.Shipments of coal from the Southern Powder River Basin(SPRB)mines decreased 15%from 2011.Above average coal stockpiles due to an unseasonably warm
315、winter and low natural gas prices,which caused some displacement of coal in electricity production,led to the volume declines.In addition,the loss of two contracts to a competitor contributed to lower volumes from the SPRB.Coal shipments from the Colorado and Utah mines increased 2%versus 2011.Incre
316、ased export shipments of Colorado and Utah coal in 2012 offset the domestic declines due to higher stockpiles and low natural gas prices.Core pricing gains,higher fuel surcharges,and increased volume grew coal freight revenue in 2011 versus 2010 levels.Shipments of coal from the SPRB were up 5%in 20
317、11 compared to 2010,reflecting new business to Wisconsin facilities and the start-up of a new power plant near Waco,Texas.Completion of a year-long equipment relocation process at one of the mines in the third quarter of 2011 and minimal production problems elsewhere improved shipments from Colorado
318、 and Utah by 3%in 2011 versus 2010.These gains,along with increased exports to Europe and Asia,offset first half production problems and weak demand from eastern coal utilities.Industrial Products Core pricing improvement,higher volume and additional fuel surcharges increased freight revenue from in
319、dustrial products in 2012 versus 2011.Shipments of non-metallic minerals(primarily frac sand),grew in response to increased horizontal drilling activity for energy products.More construction activity during a relatively mild winter led to higher demand for shipments of lumber,cement and stone compar
320、ed to 2011.The growth in housing starts throughout 2012 also increased lumber shipments,up 12%from 2011.Steel shipments finished slightly down from 2011 levels as lower demand for export scrap and mine production issues in the second half of the year offset increases in the first half due to higher
321、demand for steel coils and plate for pipe and auto production.Increased volume,fuel surcharges,and core pricing improvement increased freight revenue from industrial products in 2011 versus 2010.Shipments of non-metallic minerals(primarily frac sand)grew in response to a dramatic rise in horizontal
322、drilling activity for natural gas and oil,while steel shipments increased due to higher demand for steel coils and plate for automotive and pipe production.In addition,an increase in iron ore export business to China also drove volume growth.Conversely,lower commercial construction activity reduced
323、stone,sand and gravel shipments in 2011 compared to 2010.2012 Coal Carloads 2012 Industrial Products Carloads 28 Intermodal Higher fuel surcharges,including improved fuel recovery provisions,core pricing gains and volume growth increased freight revenue from intermodal shipments in 2012.Volume level
324、s from international traffic remained flat year-over-year as the loss of a customer contract in the first half of the year offset modest West Coast import growth.Domestic traffic increased 3%versus 2011 due to better market conditions and continued conversion of traffic from truck to rail.Fuel surch
325、arge gains,including better contract provisions for fuel cost recovery,and pricing improvements,partially offset by lower volume,increased freight revenue from intermodal shipments in 2011 compared to 2010.Volume from international traffic decreased 5%in 2011 versus 2010,driven by softer economic co
326、nditions,reflected in a muted international peak shipping season,which usually starts in the third quarter,and the loss of a customer contract.Conversely,conversions from truck to rail and recovering consumer demand offset competition for domestic shipments,resulting in a 2%volume increase in domest
327、ic shipments during 2011.Mexico Business Each of our commodity groups includes revenue from shipments to and from Mexico.Revenue from Mexico business increased 8%to$1.9 billion in 2012 versus 2011.Volume levels for four of the six commodity groups(industrial products and agricultural products declin
328、ed),were up 5%in aggregate versus 2011,with particularly strong growth in automotive and intermodal shipments.Revenue from Mexico business increased 16%to$1.8 billion in 2011 versus 2010.Volume levels increased 9%in aggregate versus 2010,with particularly strong growth in automotive and industrial p
329、roducts.Coal was the one commodity group that declined as one of our customers conducted a supplier contract renewal during the year,shifting transportation modes from rail to truck during the process.2012 Intermodal Carloads 29 Operating Expenses Millions 2012 2011 2010%Change 2012 v 2011%Change 20
330、11 v 2010 Compensation and benefits$4,685$4,681$4,314-%9%Fuel 3,608 3,581 2,486 1 44 Purchased services and materials 2,143 2,005 1,836 7 9 Depreciation 1,760 1,617 1,487 9 9 Equipment and other rents 1,197 1,167 1,142 3 2 Other 788 782 719 1 9 Total$14,181$13,833$11,984 3%15%Operating expenses incr
331、eased$348 million in 2012 versus 2011.Depreciation,wage and benefit inflation,higher fuel prices and volume-related trucking services purchased by our logistics subsidiaries,contributed to higher expenses during the year.Efficiency gains,volume related fuel savings(2%fewer gallons of fuel consumed)a
332、nd$38 million of weather related expenses in 2011,which favorably affects the comparison,partially offset the cost increase.Operating expenses increased$1.8 billion in 2011 versus 2010.Our fuel price per gallon rose 36%during 2011,accounting for$922 million of the increase.Wage and benefit inflation
333、,volume-related costs,depreciation,and property taxes also contributed to higher expenses.Expenses increased$20 million for costs related to the flooding in the Midwest and$18 million due to the impact of severe heat and drought in the South,primarily Texas.Cost savings from productivity improvements and better resource utilization partially offset these increases.A$45 million one-time payment rel
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