Union Pacific Corporation (UNP) 2022年年度報告「NYSE」.pdf

1、TableofContentsUNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWASHINGTON,D.C.20549FORM10-K(MarkOne)ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthefiscalyearendedDecember31,2022ORTRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934Forthetransitionperiodf

2、rom_to_CommissionFileNumber1-6075UNIONPACIFICCORPORATION(Exactnameofregistrantasspecifiedinitscharter)Utah13-2626465(Stateorotherjurisdictionofincorporationororganization)(I.R.S.EmployerIdentificationNo.)1400DouglasStreet,Omaha,Nebraska68179(Addressofprincipalexecutiveoffices)(ZipCode)Registrantstel

3、ephonenumber,includingareacode:(402)544-5000SecuritiesregisteredpursuanttoSection12(b)oftheAct:TitleofeachClassTradingSymbolNameofeachexchangeonwhichregisteredCommonStock(ParValue$2.50pershare)UNPNewYorkStockExchangeIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405ofth

4、eSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesNoIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterper

5、iodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12

6、months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“

7、smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct.LargeAcceleratedFilerAcceleratedFilerNon-AcceleratedFilerSmallerReportingCompanyEmergingGrowthCompanyIfanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwit

8、hanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.IndicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagementsassessmentoftheeffectivenessofitsinternalcontroloverfinancialreportingunderSection404(b)oftheSarbanes-OxleyAct(15U.S.C.7262

9、(b)bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.IfsecuritiesareregisteredpursuanttoSection12(b)oftheAct,indicatebycheckmarkwhetherthefinancialstatementsoftheregistrantincludedinthefilingreflectthecorrectionofanerrortopreviouslyissuedfinancialstatements.Indicatebycheckmarkwhe

10、theranyofthoseerrorcorrectionsarerestatementsthatrequiredarecoveryanalysisofincentive-basedcompensationreceivedbyanyoftheregistrantsexecutiveofficersduringtherelevantrecoveryperiodpursuantto240.10D-1(b).Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheAct).YesNoAsofJun

11、e30,2022,theaggregatemarketvalueoftheregistrantsCommonStockheldbynon-affiliates(usingtheNewYorkStockExchangeclosingprice)was$131.5billion.ThenumberofsharesoutstandingoftheregistrantsCommonStockasofFebruary3,2023,was611,872,981.TableofContentsDocumentsIncorporatedbyReferencePortionsoftheregistrantsde

12、finitiveProxyStatementfortheAnnualMeetingofShareholderstobeheldonMay18,2023,areincorporatedbyreferenceintoPartIIIofthisreport.TheregistrantsProxyStatementwillbefiledwiththeSecuritiesandExchangeCommission(SEC)within120daysaftertheendofthefiscalyearthatthisreportrelatespursuanttoRegulation14A.UNIONPAC

13、IFICCORPORATIONTABLEOFCONTENTSChairmansLetter3DirectorsandSeniorManagement5PARTIItem1.Business6Item1A.RiskFactors12Item1B.UnresolvedStaffComments18Item2.Properties18Item3.LegalProceedings21Item4.MineSafetyDisclosures22ExecutiveOfficersoftheRegistrantandPrincipalExecutiveOfficersofSubsidiaries22PARTI

14、IItem5.MarketfortheRegistrantsCommonEquity,RelatedStockholderMatters,andIssuerPurchasesofEquitySecurities23Item6.Reserved24Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations24CriticalAccountingEstimates24CautionaryInformation40Item7A.QuantitativeandQualitativeDisclosure

15、sAboutMarketRisk40Item8.FinancialStatementsandSupplementaryData41ReportofIndependentRegisteredPublicAccountingFirm42Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure73Item9A.ControlsandProcedures73ManagementsAnnualReportonInternalControlOverFinancialReporting73Reportof

16、IndependentRegisteredPublicAccountingFirm74Item9B.OtherInformation75Item9C.DisclosureRegardingForeignJurisdictionsthatPreventInspections75PARTIIIItem10.Directors,ExecutiveOfficers,andCorporateGovernance75Item11.ExecutiveCompensation75Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandR

17、elatedStockholderMatters75Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence76Item14.PrincipalAccountantFeesandServices76PARTIVItem15.ExhibitandFinancialStatementSchedules76Item16.Form10-KSummary80Signatures81Certifications822TableofContentsFebruary10,2023FellowShareholders:20

18、22wasafoundationalyearforUnionPacific,buildingandexecutingonourlong-termgrowthstrategy.Fromnumerouscustomerwins,topreparingforandonboardingalargeintermodalcustomer,tostrategicinvestmentsinourintermodalnetworkandtransloadbusiness,wetookactiontocreatelong-termvalue.Thosesuccesses,however,weremetwithso

19、mesignificantshort-termbarrierscontinuedglobalsupplychaindisruptions,anelevatedinflationaryenvironment,recordfuelprices,challenginglabormarkets,andanextendedlabornegotiation.Allofthosefactorshadarealimpactonourabilitytodeliveraconsistentandreliableserviceproducttoourcustomersin2022.Theyalsocontribut

20、edtounevenfinancialresultsfortheyear.In2022,wereportedrecordearningspershareof$11.21,a13%increaseversus2021.Totalvolumesincreased2%versus2021,drivenbystrengthinindustrialandbulkmarketsoffsettingcontinuedsupplychainchallengesinourpremiummarkets.Ouroperatingratiowasa60.1%,a290-basispointdeteriorationv

21、ersus2021drivenbyinflation,operationalinefficiency,andhigherfuelprices.Forthefullyear,ouraveragefuelpricepergallonincreased64%.Alsonotable,wasa$92millionone-timechargerecordedinthethirdquarterfornewlaboragreements.SuccessatUnionPacificbeginswithsafety.In2022,wemadeprogressonourpersonalinjurysafetyme

22、trics,improving18%toafive-yearlowandleadtheindustryinemployeesafety.Wewillbuilduponthisimprovementbyenhancingtrainingprogramsandsolidifyingoursafetyculturethroughownershipandpersonalaccountabilityonthepathtoachievingourgoalofworld-classsafetyperformance.Weneedtoexpandourprogressfrompersonalinjuriest

23、oderailments,wherewehaveopportunityforimprovement.Theultimategoalremainsreturningeachemployeehomesafelyattheendoftheday.In2021,werolledoutastrategicplanwecall,“Serve,Grow,WinTogether.”Andoverthepasttwoyears,wehavebeenexecutingonthatlong-termstrategy.Whileour2022progresswasmixed,weadvancedourposition

24、towardslong-termsustainablegrowththroughtargetedcapitalinvestments,emissionsreductionprograms,andbyleveragingtechnologytoimproveourcustomersexperience.EverythingwedostartswithServeanddeliveringcustomer-centeredoperationalexcellence.In2022,ourserviceproductdidnotmeetexpectations.Constrainedcrewbasesi

25、ncriticallocations,elevatedfreightcarinventorylevels,andcontinuedsupplychaindisruptionsallplayedaroleandimpactedourabilitytosupportcustomersandtheirneeds.In2022,freightcarvelocitydeteriorated6%versus2021,loweringtripplancomplianceforintermodal6pointsandmanifest/automotive4points.Similarly,ourefficie

26、ncymeasureswereimpactedaslocomotiveproductivitydeclined6%andworkforceproductivityandtrainlengthwereflat.Toaddressconstrainedcrewbases,wehiredandtrainedover1,300newtransportationemployeesin2022andhavealmost600moreinthetrainingpipelineasweenter2023.Wealsoamplifiedourcustomercommunicationstoprovideclea

27、rexpectationsandleveragedcontinuousimprovementeffortstoaddressdiscreteserviceissues.Akeylong-terminitiativeforUnionPacificistoreduceourcarbonfootprintforthebenefitofallstakeholders.Forthefourthconsecutiveyear,weachievedabest-everfuelconsumptionrate,improving1%versus2021.Inaddition,weincreasedourbiod

28、ieselblendtoover4.5%,ontracktowardour2030targetof20%.Theseeffortshelpedourcustomerseliminateover23millionmetrictonsofgreenhousegasemissionsbychoosingUnionPacificversustruck.Wecontinuetomakesignificantinvestmentsinourinfrastructuretosupportourserviceproduct.In2022,ourcapitalprogramofapproximately$3.4

29、billionincludedcompleting24sidingprojects,finishingtheTwinCities,MN,intermodalterminal,furtherexpandingtheWestColton,CA,intermodalterminal,modernizingover130locomotives,andhardeningourinfrastructure.TheseinvestmentssupportthenexttenetofourstrategyGrow.WehavethebestrailfranchiseinNorthAmerica.Ourgrow

30、thispoweredbyprovidingproductsandservicesthatmeetourcustomersneeds.Thisincludesprovidingnewservicesforourcustomersandexpandingourreachthroughnewtransloadfacilitiesandintermodalterminals,whichourteamtranslatedintonewbusinesswinsin2022.Andthosebusinessdevelopmentwinswillprovideatailwindin2023aswenavig

31、ateanuncertaineconomy.3TableofContentsGrowthisalsodependentonacustomerexperiencethatconstantlyimprovesandevolves.Technologyplaysakeyrole.Wereintegratingdeeperinourcustomerssystemsandsupplychainsbybeingtheindustryleaderinprovidingapplicationprogramminginterfaces(API),withover70servicesavailablebeingc

32、alledonover600,000timesaday.Successfulexecutionofourplansto“Serve”and“Grow”leadstoWin.Forourshareholders,winningmeansgeneratingstrongcashreturns.In2022,wepaiddividendsof$3.2billion,whichincludeda10%dividendincreaseinthesecondquarter.Inaddition,werepurchased27millionUnionPacificshares,decreasingourfu

33、ll-yearaveragesharecount5%.Combiningdividendsandsharerepurchases,UnionPacificreturned$9.4billiontoourshareholdersin2022.“Winning”extendstoallUPsstakeholders,andthevaluewecreateforeachofthem,whichisthefinalpieceofourstrategyTogether.WecontinuetoevolveourcomprehensiveapproachtoEnvironmental,Social,and

34、Governanceissuesaslaidoutin“BuildingaSustainableFuture2030”.Ultimately,wedemonstrateourcommitmenttothisthroughactions.In2022,weannouncedourplanstopurchasebatteryelectriclocomotivesforuseinyardoperations,executedathree-yeardealtomodernize600additionallocomotivesstartingin2023,issued$600millioningreen

35、bonds,andbecamethefirstU.S.railroadtoformallysupporttheTaskForceonClimate-relatedFinancialDisclosures(TCFD).LateintheyearwewereaddedtotheDowJonesSustainabilityIndexandincludedintheJUSTCapital100.Ourmomentumonsustainabilityisrealanddemonstratesourpositionastherailleaderinthespace.TheentireUnionPacifi

36、cteamrecognizesthatwefellshortofexpectationsin2022.But,thankstothehardworkofourexceptionalworkforce,weareentering2023positionedforsuccess.Whiletheyearaheadhassomerealchallengesanuncertaineconomy,highercoststructure,andstakeholdertrusttorebuildtheUnionPacificteamisagainreadytorisetotheoccasion.Ourfun

37、damentalsforlong-termsuccesshavenotchanged.Poweredbyourbest-in-industryemployeesandfranchise,astrategybuiltforprofitablegrowth,andamoreefficientandreliableserviceproduct,UnionPacificispoisedtodogreatthingsin2023.Wecantwaittoproveittoyou.Chairman,President,andChiefExecutiveOfficer4TableofContentsDIRE

38、CTORSANDSENIORMANAGEMENTBOARDOFDIRECTORSWilliamJ.DeLaneyFormerChiefExecutiveOfficerSyscoCorporationBoardCommittees:AuditCompensationandBenefits(Chair)DavidB.DillonFormerChairmanandCEOTheKrogerCompanyBoardCommittees:Audit(Chair)CompensationandBenefitsSheriH.EdisonFormerExecutiveVicePresidentandGenera

39、lCounselAmcorplcBoardCommittees:CompensationandBenefitsCorporateGovernance,Nominating,andSustainabilityTeresaM.FinleyFormerChiefMarketingandBusinessServicesOfficerUnitedParcelService,Inc.BoardCommittees:CompensationandBenefitsFinanceLanceM.FritzChairman,President,andChiefExecutiveOfficerUnionPacific

40、CorporationandUnionPacificRailroadCompanyDeborahC.HopkinsFormerChiefExecutiveOfficerCitiVenturesandFormerChiefInnovationOfficerCitiBoardCommittees:AuditFinance(Chair)JaneH.LuteStrategicAdvisorSICPA,NorthAmericaBoardCommittees:AuditCorporateGovernance,Nominating,andSustainabilityMichaelR.McCarthyChai

41、rmanMcCarthyGroup,LLCCo-ChairmanBridgesTrustCompanyLeadIndependentDirectorBoardCommittees:CorporateGovernance,Nominating,andSustainability(Chair)FinanceJoseH.VillarrealRetiredAdvisorAkin,Gump,Strauss,Hauer,&Feld,LLPBoardCommittees:CompensationandBenefitsCorporateGovernance,Nominating,andSustainabili

42、tyChristopherJ.WilliamsChairmanSiebertWilliamsShank&Co.BoardCommittees:AuditFinanceSENIORMANAGEMENT*LanceM.FritzChairman,President,andChiefExecutiveOfficerPrentissW.Bolin,Jr.VicePresidentExternalRelationsBryanL.ClarkVicePresidentTaxEricJ.GehringerExecutiveVicePresidentOperationsJenniferL.HamannExecu

43、tiveVicePresidentandChiefFinancialOfficerRahulJalaliSeniorVicePresidentInformationTechnologiesandChiefInformationOfficerMichaelV.MillerVicePresidentandTreasurerScottD.MooreSeniorVicePresidentCorporateRelationsandChiefAdministrativeOfficerClarkJ.PonthierSeniorVicePresidentSupplyChainandContinuousImpr

44、ovementCraigV.RichardsonExecutiveVicePresident,ChiefLegalOfficer,andCorporateSecretaryKennyG.RockerExecutiveVicePresidentMarketingandSalesToddM.RynaskiSeniorVicePresidentandChiefAccounting,Risk,andComplianceOfficerElizabethF.WhitedExecutiveVicePresidentSustainabilityandStrategy*Seniormanagementareel

45、ectedofficersofbothUnionPacificCorporationandUnionPacificRailroadCompany,exceptMessrs.Gehringer,Ponthier,andRockerareelectedofficersforUnionPacificRailroadCompany.5TableofContentsPARTIItem1.BusinessGENERALUnionPacificRailroadCompanyistheprincipaloperatingcompanyofUnionPacificCorporation.OneofAmerica

46、smostrecognizedcompanies,UnionPacificRailroadCompanyconnects23statesinthewesterntwo-thirdsofthecountrybyrail,providingacriticallinkintheglobalsupplychain.TheRailroadsdiversifiedbusinessmixincludesBulk,Industrial,andPremium.UnionPacificservesmanyofthefastest-growingU.S.populationcenters,operatesfroma

47、llmajorWestCoastandGulfCoastportstoEasterngateways,connectswithCanadasrailsystems,andistheonlyrailroadservingallsixmajorMexicogateways.UnionPacificprovidesvaluetoitsroughly10,000customersbydeliveringproductsinasafe,reliable,fuel-efficient,andenvironmentallyresponsiblemanner.UnionPacificCorporationwa

48、sincorporatedinUtahin1969andmaintainsitsprincipalexecutiveofficesat1400DouglasStreet,Omaha,NE68179.Thetelephonenumberatthataddressis(402)544-5000.ThecommonstockofUnionPacificCorporationislistedontheNewYorkStockExchange(NYSE)underthesymbol“UNP”.Forpurposesofthisreport,unlessthecontextotherwiserequire

49、s,allreferenceshereintoUnionPacific,“UPC”,“Corporation”,“Company”,“we”,“us”,and“our”shallmeanUnionPacificCorporationanditssubsidiaries,includingUnionPacificRailroadCompany,whichweseparatelyrefertoas“UPRR”orthe“Railroad”.STRATEGYTheCompanysgrowthstrategyfocusesongrowingcustomervaluethroughinnovatives

50、upplychainsolutionsandaspiringtoServe,Grow,WinTogether.Serve:Drivingoperationalexcellencetocreateasafer,morereliable,andefficientserviceproduct.Precisionscheduledrailroading(PSR)isthefoundationfordeliveringcustomer-centeredoperationalexcellenceby:1.Shiftingthefocusofoperationsfrommovingtrainstomovin

51、gcars.2.Minimizingcardwell,carclassificationevents,andlocomotivepowerrequirements.3.Utilizinggeneral-purposetrainsbyblendingexistingtrainservice.4.Balancingtrainmovementstoimprovetheutilizationofresources.Weaimtomovecarsfasterandreducethenumberoftimeseachcaristouched,resultinginterminalconsolidation

52、opportunities,improvedassetutilization,andfewercarclassifications,whichinturnleadstoproductsgettingtothemarketquickerandmorereliably.Theresultisabettercustomerexperience,whichenablesustogrowourmarketshare.Grow:Byharnessingthepotentialofthebestrailfranchiseintheindustry,weexpecttogenerategrowthinthre

53、ewaysincreasingprofitablecarloadsthatfitournetworkandtransportationplan,providingmoreproductsandservicestocreatevalueforourcustomers,andincreasingthegeographicreachofourfranchisethroughinnovativesupplychainsolutions.Win:Drivingstrongfinancialperformanceresultinginsignificantshareholderreturns.Execut

54、ionofourplanstobothserveandgrow,leadstohigherrevenueswithimprovedmarginsandgreatercashgeneration,creatinglongtermenterprisevalue.Together:EngagingourfourstakeholdergroupsCommunities,Customers,Employees,andShareholders.OurcomprehensiveapproachtoEnvironmental,Social,andGovernanceissues,“BuildingaSusta

55、inableFuture2030,”isdesignedtoaddresstheevolvinginterestsofourstakeholdersandisbuiltonfiveareasofconcentrationBuildingResponsibleFoundations,InvestinginourWorkforce,DrivingSustainableSolutions,ChampioningEnvironmentalStewardship,andStrengtheningourCommunities.Webelievethatoperationalexcellenceandane

56、ngagedworkforcewithdeepmarketknowledgeandstrongcustomerrelationshipssupportsbest-in-classsafety,acustomerexperiencethatdrivesgrowth,andshareholderreturns.Asweworktotransformourrailroadintothesafest,mostreliable,andmostefficientinNorthAmerica,ourvaluescontinueguidingus.Ourpassionforperformancewillhel

57、puswinourhighethicalstandardswillleadustowininawaythatsupportsallofourstakeholdersandourteamworkwillmakesurewewintogether.6TableofContentsOPERATIONSTheRailroad,alongwithitssubsidiariesandrailaffiliates,isouronereportableoperatingsegment.Althoughweproviderevenuesbycommoditygroup,weanalyzethenetfinanc

58、ialresultsoftheRailroadasonesegmentduetotheintegratednatureofourrailnetwork.Additionalinformationregardingourbusinessandoperations,includingrevenues,financialinformationanddata,andotherinformationregardingenvironmentalmatters,ispresentedinRiskFactors,Item1ALegalProceedings,Item3ManagementsDiscussion

59、andAnalysisofFinancialConditionandResultsofOperations,Item7andtheFinancialStatementsandSupplementaryData,Item8(whichincludeinformationregardingrevenues,statementsofincome,andtotalassets).OperationsUPRRisaClassIrailroadoperatingintheU.S.Wehave 32,534routemiles,connectingPacificCoastandGulfCoastportsw

60、iththeMidwestandEasternU.S.gatewaysandprovidingseveralcorridorstokeyMexicangateways.Weservethewesterntwo-thirdsofthecountryandmaintaincoordinatedscheduleswithotherrailcarrierstomovefreighttoandfromtheAtlanticCoast,thePacificCoast,theSoutheast,theSouthwest,Canada,andMexico.Exportandimporttrafficmoves

61、throughGulfCoast,PacificCoast,andEastCoastportsandacrosstheMexicanandCanadianborders.In2022,wegeneratedfreightrevenuestotaling$23.2 billionfromthefollowingthreecommoditygroups:2022FreightRevenuesBulkTheCompanysBulkshipmentsconsistofgrainandgrainproducts,fertilizer,foodandrefrigerated,andcoalandrenew

62、ables.In2022,thisgroupgenerated33%ofourfreightrevenues.Weaccessmostmajorgrainmarkets,connectingtheMidwestandWesternU.S.producingareastoexportterminalsinthePacificNorthwestandGulfCoastportsaswellasMexico.Wealsoservesignificantdomesticmarkets,includinggrainprocessors,animalfeeders,andethanolproducersi

63、ntheMidwestandWest.FertilizermovementsoriginateintheGulfCoastregion,Midwest,WesternU.S.,andCanada(throughinterlineaccess)fordeliverytomajoragriculturalusersinthoseareasaswellasabroad.TheRailroadsnetworksupportsthetransportationofcoalshipmentstoindependentandregulatedpowercompaniesandindustrialfacili

64、tiesthroughouttheU.S.Throughinterchangegatewaysandports,UPRRsreachextendstoEasternU.S.utilitiesaswellastoMexicoandotherinternationaldestinations.CoaltrafficoriginatinginthePowderRiverBasin(PRB)areaofWyomingisthelargestportionoftheRailroadscoalbusiness.Renewableshipmentsforcustomerscommittedtosustain

65、abilityconsistprimarilyofbiomassexportsandwindturbinecomponents.IndustrialOurextensivenetworkfacilitatesthemovementofnumerouscommoditiesbetweenthousandsoforiginanddestinationpointsthroughoutNorthAmerica.TheIndustrialgroupconsistsofseveralcategories,includingconstruction,industrialchemicals,plastics,

66、forestproducts,specializedproducts(primarilywaste,salt,androofing),metalsandores,petroleum,liquidpetroleumgases(LPG),sodaash,andsand.Transportationoftheseproductsaccountedfor35%ofourfreightrevenuesin 2022.Commercial,residential,andgovernmentalinfrastructureinvestmentsdriveshipmentsofsteel,aggregates

67、,cement,andwoodproducts.Industrialandlightmanufacturingplantsreceivesteel,nonferrousmaterials,minerals,andotherrawmaterials.Theindustrialchemicalsmarketconsistsofavastnumberofchemicalcompoundsthatsupportthemanufacturingofmorecomplexchemicals.Plasticsshipmentssupportautomotive,housing,andthedurablean

68、ddisposableconsumergoodsmarkets.Forestproductshipmentsincludelumberandpapercommodities.LumbershipmentsoriginateprimarilyinthePacificNorthwestorWesternCanadaandmovethroughouttheU.S.foruseinnewhomeconstructionandrepairsandremodeling.Papershipmentsprimarilysupportpackagingneeds.Oilandgasdrillinggenerat

69、esdemandforrawsteel,finishedpipe,stone,anddrillingfluidcommodities.TheCompanyspetroleumandLPGshipmentsareprimarilyimpactedbyrefineryutilizationrates,regionalcrudepricingdifferentials,pipelinecapacity,andtheuseofasphaltforroadprograms.SodaashoriginatesinsouthwesternWyomingandCalifornia,destinedforche

70、micalandglassproducingmarketsinNorthAmericaandabroad.7TableofContentsPremiumIn2022,Premiumshipmentsgenerated32%ofUnionPacificstotalfreightrevenues.Premiumincludesfinishedautomobiles,automotiveparts,andmerchandiseinintermodalcontainers,bothdomesticandinternational.Internationalbusinessconsistsofimpor

71、tandexporttrafficmovingin20or40-footshippingcontainers,thatmainlypassthroughWestCoastports,destinedforoneoftheCompanysmanyinlandintermodalterminals.DomesticbusinessincludescontainerandtrailertrafficpickedupanddeliveredwithinNorthAmericaforintermodalmarketingcompanies(primarilyshipperagentsandlogisti

72、cscompanies)aswellastruckloadcarriers.WearethelargestautomotivecarrierwestoftheMississippiRiverandoperateoraccess39vehicledistributioncenters.TheRailroadsextensivefranchiseaccessessixvehicleassemblyplantsandconnectstoWestCoastports,allsixmajorMexicogateways,andthePortofHoustontoaccommodatebothimport

73、andexportshipments.Inadditiontotransportingfinishedvehicles,theCompanyprovidesexpeditedhandlingofautomotivepartsinbothboxcarsandintermodalcontainersdestinedforMexico,theU.S.,andCanada.SeasonalitySomeofthecommoditieswecarryhavepeakshippingseasons,reflectingeitherorboththenatureofthecommodity(suchasce

74、rtainagriculturalandfoodproductsthathavespecificgrowingandharvestingseasons)andthedemandcycleforthecommodity(suchasintermodaltrafficthatgenerallypeaksduringthethirdquartertomeetback-to-schoolandholiday-relateddemandforconsumergoodsduringthefourthquarter).Thepeakshippingseasonsforthesecommoditiescanv

75、aryconsiderablyeachyeardependinguponvariousfactors,includingthestrengthofdomesticandinternationaleconomiesandcurrenciesconsumerdemandthestrengthofharvests,whichcanbeadverselyaffectedbysevereweathermarketpricesforagriculturalproductsandsupplychaindisruptions.Proud&EngagedWorkforceOuremployeesarecentr

76、altoourServe,Grow,WinTogetherstrategy,andInvestinginourWorkforceisoneofthefiveareasofconcentrationinourBuildingaSustainableFuture2030strategy.OurPeople:Ouraward-winning,multigenerationalworkforceincludestalentedpeoplefromallwalksoflife,inmanystagesoflife.Madeupofmanagementandcraftprofessionals,weare

77、focusedonattracting,retaining,anddevelopingtalentacrossourentiresystem.Asof December31,2022,theCompanyemployed33,179employees.OurworkforceincludesfivegenerationsfromTraditionalists(bornbefore1946)toGenerationZ(bornafter1998).Theaverageageis46.5withaveragetenureof15.8years.UnionPacificworkswith13majo

78、rrailunions,representingapproximately83%ofourworkforce.Mostcraftprofessionalsandmorethan45railroadsparticipateinnegotiationsonanationalmulti-employerbasis.TheNationalCarriersConferenceCommitteeoftheNationalRailwayLaborConference,consistingofthetoplaborofficersinmostClassIrailroads,isthebargainingcom

79、mitteefortheindustry.RailroadsaregovernedbytheRailwayLaborAct(RLA),afederalstatuteenactedin1926tobringtherailroadsandunionstoagreementwithoutdisruptionstorailtransportation.TheRLAincludesnumeroussafeguardstohelpovercomebargainingstalemates.Therecentroundoflabornegotiationsrelatedtoyears2020-2024conc

80、ludedinDecember2022.SeeManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsOtherMattersLaborAgreements,Item7,ofthisreportforinformationabouttheconclusionofthe2020-2024negotiations.ThenextroundofnegotiationsbeginsonJanuary1,2025,relatedtoyears2025-2029.OurCulture:Weincorporateou

81、rcommitmenttosafety,highethicalstandards,passionforperformance,andteamworkintoourday-to-dayoperationsasweserviceourcustomers.SafetyiscentraltoeverythingwedoatUnionPacific.Together,wearecommittedtocultivatingasafety-focusedculture,soouremployeesreturnhomesafelyeveryday.Toachievethis,ouremployeesident

82、ifyrisks,initiateactiontomitigatethoserisks,andhavethecouragetocaretokeepeachothersafe.8TableofContentsOursuccessismeasuredbyourpersonalinjuryrate(thenumberofreportableinjuriesforevery200,000employee-hoursworked),andourderailmentincidentrate(thenumberofreportablederailmentincidentspermilliontrainmil

83、es).Reportablepersonalinjuriesaredefinedasondutyincidentsoroccupationalillnessesthatresultinemployeeslosingtimeawayfromwork,modifyingorrestrictingtheirnormalduties,orreceivinganymedicaltreatmentaboveandbeyondfirstaid.Reportablederailmentincidentsaredefinedasanyoccurrencewhereawheelofalocomotiveorrai

84、lcarfallsoffthetrackthatcausesdamagetotrack,equipment,orstructuresabovetheFederalRailroadAdministration(FRA)reportingthreshold,regardlessofownership($11,300for2022and$11,500for2023).ThepersonalinjuriesandderailmentincidentsthatmeetreportablecriteriaarereportedtotheFRA.Our2022personalinjuryrateof0.80

85、improved18%whileourderailmentincidentrateof2.88increased8%versus2021.(SeefurtherdiscussioninManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,Item7,ofthisreport.)Diversity,Equity,andInclusion:UnionPacificscommitmenttodiversityandinclusionisbasedonourdesiretocreateanenvironme

86、ntwherepeoplecanbetheirbest,personallyandprofessionally.Fromanemployeesperspective,adiversecultureincreasesengagement,improvesmorale,andsupportssafety.Fromabusinessperspective,diversityimprovestheCompanysdecision-making,problem-solving,andstrategicthinking,whichtranslatesintoacompetitiveadvantagewit

87、hbottom-lineresults.UnionPacificscommitment,todayandforthefuture,istofurtherimproveandstrengthenperformancethroughaninclusiveworkforcethatreflectsthediversemarketsandcommunitiesweserve,whereeveryoneistreatedfairly,anddifferencesarevalued.Tothatend,UnionPacificestablishedagoaltoreach40%peopleofcolora

88、nddoubleourfemalerepresentationto11%inourworkforceby2030.AsofDecember31,2022,workforcerepresentationofpeopleofcolorandfemaleswasapproximately32.8%and5.5%,respectively.TheEmployeeJourney:Fromrecruitmenttoretirementandmilestonesinbetween,wearerelentlesslyfocusedonsupportingandengagingemployeesthrougho

89、uttheirUnionPacificjourney.Weviewitasimperativetoinvestinouremployeeswithmeaningfulbenefitofferings,developmentalexperiences,andcareeropportunities.Theprocessbeginswithrecruitment,wherewestrivetoattractthemosttalentedanddiverseemployeestojoinourteam.Then,wefocusontraininganddevelopment,whichincludes

90、programsdesignedtorecognizepotentialandtohelpouremployeesgrowintonewrolessothatwecanretainourworkforceovertime.Providingcompetitivecompensationandmeaningfulbenefitsiskeytoattractingandretainingtalentedemployees.UnionPacificiscommittedtocontinuouslyreviewingitscompensationprogramsandcomprehensivebene

91、fitsprogramstopromoteprogramsthatarefairandcompetitive.BotharekeytoenhancingthevalueofworkingforUnionPacificanddemonstratingtheCompanyscommitmenttothehealthandwealthofemployeesduringtheircareer.Benefitsvarybasedontheapplicablecollectivebargainingagreementoranemployeesmanagementstatus.Thefinalstageof

92、theemployeejourneyisafulfillingretirement,whichisenabledduringtheirUPcareerthroughourcompensationandbenefitprograms,particularlycontributionsto401(k)plansandtheemployeestockpurchaseplan(ESPP).OurBoardofDirectorsevaluatesournon-unioncompensationplansandreviewsrecommendationsfromtheCompensationandBene

93、fitsCommittee,whilecollectivebargainingagreementsgoverncompensationforourunionemployees.ThemedianannualcompensationforallemployeesemployedasofDecember31,2022,was$86,778(excludingtheCEO).Talentiscriticalourabilitytorecruitandretainemployeesisdirectlytiedtoourrailroadsfluidity.Withoutteammemberstodisp

94、atchoroperatetrains,ournetworkstrugglestoprovidecustomersefficient,reliableservice.Weacceleratedrecruitmenteffortsin2022,requiringustoevolveourhiringpracticesandincorporateinnovativestrategies.Fromvirtualcareerfairstopre-recordedvideointerviews,weimplementedrobustrecruitingtoolstomeetcandidateswhere

95、theyareandprovideanefficient,user-friendlyexperiencethrougheveryphaseoftherecruitmentprocess.9TableofContentsWevealsobeenaggressiveinhowwecompetetoattracttalentinthemarketplace.Inparticularlyhard-to-filljobsandlocations,weofferedhiringincentives.Theseincentivesareamixoftravelallowancesandrelocationb

96、onuses,aswellaslocalhiringbonusestoattractapplicantsalreadyresidinginthecommunitiesweserve.Wecontinuedrivinginclusivityintoourhiringprocess.Wereremovingbiasbyusingsoftwaretoolstoconfirmgender-neutrallanguageinjobpostings,aswellasprovidingvideodemonstrationsandvisualcuesduringphysicalabilitiestests.P

97、re-recordedvideointerviewsallowapplicantstoparticipateatatimethatworksbestfortheirschedule,accommodatingthosewhomayhavenontraditionalschedules.Andfinally,tappingintothosewhoknowusbestemployeereferralsplayedanimportantpartinbuildingourteam.The“GreatPeopleKnowGreatPeople”employeereferralprogramoffersa

98、nincentiveforeachreferralhired.In2022,wehiredmorethan1,250referredemployees.Furtherdiscussioncanbefoundinour“WeAreOne”reportavailableonourwebsite.RailroadSecurityOursecurityeffortsconsistofawidevarietyofmeasures,includingemployeetraining,engagementwithourcustomers,trainingofemergencyresponders,andpa

99、rtnershipswithnumerousfederal,state,andlocalgovernmentagencies.Whilefederallawrequiresustoprotecttheconfidentialityofoursecurityplansdesignedtosafeguardagainstterrorismandothersecurityincidents,thefollowingprovidesageneraloverviewofoursecurityinitiatives.UPRRSecurityMeasuresWemaintainacomprehensives

100、ecurityplandesignedtobothdeterandrespondtoanypotentialoractualthreatsastheyarise.Theplanincludesfourlevelsofalertstatus,eachwithitsownsetofcountermeasures.Weemployourownpoliceforce,consistingofcommissionedandhighly-trainedofficers.Thepolicearecertifiedstatelawenforcementofficerswithinvestigativeanda

101、rrestpowers.TheUnionPacificPoliceDepartmenthasachievedaccreditationundertheCommissiononAccreditationforLawEnforcementAgencies,Inc.(CALEA)forcomplyingwiththehighestlawenforcementstandards.Ouremployeesundergorecurrentsecurityandpreparednesstrainingaswellasfederallymandatedhazardousmaterialsandsecurity

102、training.Weregularlyreviewthesufficiencyofouremployeetrainingprograms.Wemaintainthecapabilitytomovecriticaloperationstoback-upfacilitiesindifferentlocations.Weoperateanemergencyresponsemanagementcenter24hoursaday.Thecenterreceivesreportsofemergencies,dangerousorpotentiallydangerousconditions,andothe

103、rsafetyandsecurityissuesfromouremployees,thepublic,lawenforcement,andothergovernmentofficials.Incooperationwithgovernmentofficials,wemonitorboththreatsandpublicevents,and,asnecessary,wemayalterrailtrafficflowattimesofconcerntominimizerisktocommunitiesandouroperations.Wecomplywiththehazardousmaterial

104、sroutingrulesandotherrequirementsimposedbyfederallaw.Wedesignouroperatingplantoexpeditethemovementofhazardousmaterialshipmentstominimizethetimerailcarsremainidleatyardsandterminalslocatedinornearmajorpopulationcenters.Additionally,incompliancewithTransportationSecurityAdministration(TSA)regulations,

105、wedeployedinformationsystemsandinstructedemployeesintrackinganddocumentingthehandoffofRailSecuritySensitiveMaterialswithcustomersandinterchangepartners.Weestablishedanumberofourowninnovativesafetyandsecurity-orientedinitiativesrangingfromvariousinvestmentsintechnologytoTheOfficeronTrainprogram,which

106、provideslocallawenforcementofficerswiththeopportunitytoridewithtraincrewstoenhancetheirunderstandingofrailroadoperationsandrisks.Ourstaffofinformationsecurityprofessionalscontinuallyassesscybersecurityrisksandimplementmitigationprogramsthatevolvewiththechangingtechnologythreatenvironment.Todate,weha

107、venotexperiencedanymaterialdisruptionofouroperationsduetoacyberthreatorattackdirectedatus.10TableofContentsCooperationwithFederal,State,andLocalGovernmentAgenciesWeworkcloselyonphysicalandcybersecurityinitiativeswithgovernmentagencies,includingtheU.S.DepartmentofTransportation(DOT)theDepartmentofHom

108、elandSecurity(DHS),alongwithitsCybersecurity&InfrastructureSecurityAgency(CISA)andTSAaswellaslocalpolicedepartments,firedepartments,andotherfirstresponders.InconnectionwithnewguidancefromtheTSA,effectiveJanuary1,2022,wewererequiredtoreportcyberincidentstoCISA.Additionally,during2022,asrequiredbytheT

109、SAguidance,weperformedacybervulnerabilityself-assessment,submittedtheresultstotheTSA,assembledandadoptedacyberincidentresponseplan,andappointedcybersecuritycoordinators.During2023,wearerequiredtocomplywiththeseconddirectivefromtheTSA,effectiveOctober18,2022.ByFebruary21,2023,wearerequiredtodevelopan

110、dimplementacybersecurityimplementationplan.AfterwardsweneedtoestablishacybersecurityassessmentplanthatdescribeshowtheCompanywillproactivelyandregularlyassesstheeffectivenessofcybersecuritymeasuresaswellasidentifyandresolvedevice,network,andsystemvulnerabilities.InconjunctionwiththeAssociationofAmeri

111、canRailroads(AAR),wesponsorAskRail,amobileapplicationthatprovidesfirstresponderswithsecurelinkstoelectronicinformation,includingcommodityandemergencyresponseinformationrequiredbyemergencypersonneltorespondtoaccidentsandothersituations.WealsoparticipateintheNationalJointTerrorismTaskForce,amulti-agen

112、cyeffortestablishedbytheU.S.DepartmentofJusticeandtheFederalBureauofInvestigationtocombatandpreventterrorism.WeworkwiththeCoastGuard,U.S.CustomsandBorderProtection(CBP),andtheMilitaryTransportManagementCommand,whichmonitorshipmentsenteringtheUPRRrailnetworkatU.S.bordercrossingsandports.Wewerethefirs

113、trailroadintheU.S.tobenamedapartnerinCBPsCustoms-TradePartnershipAgainstTerrorism,apartnershipdesignedtodevelop,enhance,andmaintaineffectivesecurityprocessesthroughouttheglobalsupplychain.CooperationwithCustomersandTradeAssociations ThroughTransCAER(TransportationCommunityAwarenessandEmergencyRespon

114、se),weworkwiththeAAR,theAmericanChemistryCouncil,theAmericanPetroleumInstitute,andotherchemicaltradegroupstoprovidecommunitieswithpreparednesstools,includingthetrainingofemergencyresponders.IncooperationwiththeFRAandotherinterestedgroups,wearealsoworkingtodevelopadditionalimprovementstotankcardesign

115、thatwillfurtherlimittheriskofreleasesofhazardousmaterials.SustainableFutureUnionPacificbelievesitisimportantthatweactasenvironmentalstewards,reducingemissionsandsupportingthetransitiontoamoresustainablefuture.Whileweworktofurtherreduceourenvironmentalfootprint,itisimportanttonotethatrailroadsalready

116、areoneofthemostfuel-efficientmeansoftransportation.AccordingtotheAAR,movingfreightbyrailinsteadoftruckreducesgreenhousegas(GHG)emissionsbyupto75%.Buildingonrailsrelativeemissionsbenefitsoverothermodesoftransportation,wearetakingadditionalactionstoreduceouremissions.TheseactionsaredescribedinourClima

117、teActionPlanonourwebsite.Competitionsee“WeFaceCompetitionfromOtherRailroadsandOtherTransportationProviders”intheRiskFactorsinItem1Aofthisreport.KeySupplierssee“WeAreDependentonCertainKeySuppliersofLocomotivesandRail”intheRiskFactorsinItem1Aofthisreport.AvailableInformationOurI.Wemakeavailablefreeofc

118、hargeonourwebsite(underthe“Investors”captionlink)ourAnnualReportsonForm10-KourQuarterlyReportsonForm10-QourcurrentreportsonForm8-KourproxystatementsForms3,4,and5,filedonbehalfofourdirectorsandcertainexecutiveofficersandamendmentstosuchreportsfiledorfurnishedpursuanttotheSecuritiesExchangeActof1934,a

119、samended(theExchangeAct).Weprovidethesereportsandstatementsassoonasreasonablypracticableaftersuchmaterialiselectronicallyfiledwith,orfurnishedto,theSEC.WealsomakeavailableonourwebsitepreviouslyfiledSECreportsandexhibitsviaalinktoEDGARontheSECsInternetsiteatwww.sec.gov.Additionally,ourcorporategovern

120、ancematerials,includingBy-Laws,BoardCommitteecharters,governanceguidelinesandpolicies,andcodesofconductandethicsfordirectors,officers,andemployeesareavailableonourwebsite.Fromtimetotime,thecorporategovernancematerialsonourwebsitemaybeupdatedasnecessarytocomplywithrulesissuedbytheSECandtheNYSEorasdes

121、irabletopromotetheeffectiveandefficientgovernanceofourCompany.Anysecurityholderwishingtoreceive,withoutcharge,acopyofanyofourSECfilingsorcorporategovernancematerialsshouldsendawrittenrequestto:Secretary,UnionPacificCorporation,1400DouglasStreet,Omaha,NE68179.11TableofContentsReferencestoourwebsitead

122、dress,theWeAreOnereport,andtheClimateActionPlan,inthisreport,includingreferencesinManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,Item7,areprovidedasaconvenienceanddonotconstitute,andshouldnotbedeemed,anincorporationbyreferenceoftheinformationcontainedon,oravailablethrough

123、,thewebsite.Therefore,suchinformationshouldnotbeconsideredpartofthisreport.GOVERNMENTALANDENVIRONMENTALREGULATIONGovernmentalRegulationOuroperationsaresubjecttoavarietyoffederal,state,andlocalregulations,generallyapplicabletoallbusinesses.(SeealsothediscussionofcertainregulatoryproceedingsinLegalPro

124、ceedings,Item3.)TheoperationsoftheRailroadaresubjecttotheregulationsoftheFRAandotherfederalandstateagenciesaswellastheregulatoryjurisdictionoftheSurfaceTransportationBoard(STB).TheSTBhasjurisdictionoverrateschargedoncertainregulatedrailtrafficcommoncarrierserviceofregulatedtrafficfreightcarcompensat

125、iontransfer,extension,orabandonmentofraillinesandacquisitionofcontrolofrailcommoncarriers.TheSTBcontinuesitseffortstoexploreexpandingrailregulationandisreviewingproposedrulemakinginvariousareas,includingreciprocalswitchingandcommodityexemptions,andhasfinalizedrulescreatingnewproceduresforsmallerrate

126、complaintsthatarebeingreviewedinappellatecourts.TheSTBalsocontinuestoexplorechangestothemethodologyfordeterminingrailroadrevenueadequacyandthepossibleusesofrevenueadequacyinregulatingrailroadrates.TheSTBpostsquarterlyreportsonratereasonablenesscases,maintainsadatabaseonservicecomplaints,andhastheaut

127、horitytoinitiateinvestigations,amongotherthings.DOT,theOccupationalSafetyandHealthAdministration,thePipelineandHazardousMaterialsSafetyAdministration,andDHS,alongwithotherfederalagencies,havejurisdictionovercertainaspectsofsafety,movementofhazardousmaterialsandhazardouswaste,emissionsrequirements,an

128、dequipmentstandards.Additionally,variousstateandlocalagencieshavejurisdictionoverdisposalofhazardouswasteandseektoregulatemovementofhazardousmaterialsinwaysnotpreemptedbyfederallaw.EnvironmentalRegulation Wearesubjecttoextensivefederalandstateenvironmentalstatutesandregulationspertainingtopublicheal

129、thandtheenvironment.ThestatutesandregulationsareadministeredandmonitoredbytheEnvironmentalProtectionAgency(EPA)andbyvariousstateenvironmentalagencies.TheprimarylawsaffectingouroperationsaretheResourceConservationandRecoveryAct,regulatingthemanagementanddisposalofsolidandhazardouswastestheComprehensi

130、veEnvironmentalResponse,Compensation,andLiabilityAct,regulatingthecleanupofcontaminatedpropertiestheCleanAirAct,regulatingairemissionsandtheCleanWaterAct,regulatingwastewaterdischarges.InformationconcerningenvironmentalclaimsandcontingenciesandestimatedremediationcostsissetforthinManagementsDiscussi

131、onandAnalysisofFinancialConditionandResultsofOperationsCriticalAccountingEstimatesEnvironmental,Item7,andNote17totheFinancialStatementsandSupplementaryData,Item8.Item1A.RiskFactorsThefollowingdiscussionaddressessignificantfactors,events,anduncertaintiesthatmakeaninvestmentinoursecuritiesriskyandprov

132、idesimportantinformationfortheunderstandingofour“forward-lookingstatements,”whicharediscussedimmediatelyprecedingItem7AofthisForm10-Kandelsewhere.TheriskfactorssetforthinthisItem1Ashouldbereadinconjunctionwiththerestoftheinformationincludedinthisreport,includingManagementsDiscussionandAnalysisofFina

133、ncialConditionandResultsofOperations,Item7,andFinancialStatementsandSupplementaryData,Item8.WeurgeyoutoconsidercarefullythefactorsdescribedbelowandtherisksthattheypresentforouroperationsaswellastherisksaddressedinotherreportsandmaterialsthatwefilewiththeSECandtheotherinformationincludedorincorporate

134、dbyreferenceinthisForm10-K.Whenthefactors,events,andcontingenciesdescribedbeloworelsewhereinthisForm10-Kmaterialize,ourbusiness,reputation,financialcondition,resultsofoperations,cashflows,orprospectscanbemateriallyadverselyaffected.Insuchcase,thetradingpriceofourcommonstockcoulddeclineandyoucouldlos

135、epartorallofyourinvestment.Additionalrisksanduncertaintiesnotcurrentlyknowntousorthatwecurrentlydeemimmaterialmayalsomateriallyadverselyaffectourbusiness,reputation,financialcondition,resultsofoperations,cashflows,andprospects.12TableofContentsStrategicandOperationalRisksWeMustManageFluctuatingDeman

136、dforOurServicesandNetworkCapacitySignificantreductionsindemandforrailserviceswithrespecttooneormorecommoditiesorchangesinconsumerpreferencesthataffectthebusinessesofourcustomerscanleadtoincreasedcostsassociatedwithresizingouroperations,includinghigherunitoperatingcostsandcostsforthestorageoflocomoti

137、ves,railcars,andotherequipmentworkforceadjustmentsandotherrelatedactivities,whichcouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.Ifthereissignificantdemandforourservicesthatexceedsthedesignedcapacityofournetworkorshiftsintrafficflowthatarecontrarytothedesigned

138、capacityofournetwork,wemayexperiencenetworkdifficulties,includingcongestionandreducedvelocity,thatcouldcompromisethelevelofserviceweprovidetoourcustomers.Thislevelofdemandmayalsocompoundtheimpactofweatherandweather-relatedeventsonouroperationsandvelocity.Althoughwecontinuetoworktoimproveourtransport

139、ationplan,addcapacity,improveoperationsatouryardsandotherfacilities,andimproveourabilitytoaddresssurgesindemandforanyreasonwithadequateresources,wecannotbesurethatthesemeasureswillfullyoradequatelyaddressanyserviceshortcomingsresultingfromdemandexceedingourplannedcapacity.Wemayexperienceotheroperati

140、onalorservicedifficultiesrelatedtonetworkcapacity,dramaticandunplannedfluctuationsinourcustomersdemandforrailservicewithrespecttooneormorecommoditiesoroperatingregions,orothereventsthatcouldnegativelyimpactouroperationalefficiency,whichcouldallhaveamaterialadverseeffectonourresultsofoperations,finan

141、cialcondition,andliquidity.WeTransportHazardousMaterialsWetransportcertainhazardousmaterialsandothermaterials,includingcrudeoil,ethanol,andtoxicinhalationhazard(TIH)materials,suchaschlorine,thatposecertainrisksintheeventofareleaseorcombustion.Additionally,U.S.lawsimposecommoncarrierobligationsonrail

142、roadsthatrequireustotransportcertainhazardousmaterialsregardlessofriskorpotentialexposuretoloss.Arailaccidentorotherincidentoraccidentonournetwork,atourfacilities,oratthefacilitiesofourcustomersinvolvingthereleaseorcombustionofhazardousmaterialscouldinvolvesignificantcostsandclaimsforpersonalinjury,

143、propertydamage,andenvironmentalpenaltiesandremediationinexcessofourinsurancecoveragefortheserisks,whichcouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.WeRelyonTechnologyandTechnologyImprovementsinOurBusinessOperationsWerelyoninformationtechnologyinallaspectsof

144、ourbusiness,includingtechnologysystemsoperatedbyusorundercontrolofthird-parties.Ifwedonothavesufficientcapitalordonotdeploysufficientcapitalinatimelymannertoacquire,develop,orimplementnewtechnologyormaintainorupgradecurrentsystems,suchasPositiveTrainControl(PTC)orthelatestversionofourtransportationc

145、ontrolsystems,wemaysufferarailserviceoutageorcompetitivedisadvantagewithintherailindustryandwithcompaniesprovidingothermodesoftransportationservice,whichcouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.WeAreSubjecttoCybersecurityRisksWerelyoninformationtechnolo

146、gyinallaspectsofourbusiness,includingtechnologysystemsoperatedbyus(whethercreatedbyusorpurchased),undercontrolofthird-parties,andopen-sourcesoftware.Althoughwedevotesignificantresourcestoprotectourtechnologysystemsandproprietarydata,wehaveexperiencedandwilllikelycontinuetoexperiencevaryingdegreesofc

147、yberincidentsinthenormalcourseofbusiness.Therecanbenoassurancethatthesystemswehavedesignedtoidentify,prevent,orlimittheeffectsofcyberincidentsorattackswillbesufficienttopreventordetectsuchincidentsorattacks,ortoavoidamaterialadverseimpactonoursystemsaftersuchincidentsorattacksdooccur.Furthermore,due

148、totherisingnumbersandincreasingsophisticationofcyber-attacks,anincreasinglycomplexinformationtechnologysupplychain,andthenatureofzero-dayexploits,wemaybeunabletoanticipateorimplementadequatepreventativemeasurestopreventasecuritybreach,includingbyransomware,humanerror,orothercyber-attackmethods,fromm

149、ateriallydisruptingoursystemsorthesystemsofthird-partiesuponwhichwerely.Asuccessfulcyber-attackthatresultsinsignificantserviceinterruptionsafetyfailureotheroperationaldifficultiesunauthorizedaccessto(orthelossofaccessto)competitivelysensitive,confidential,orothercriticaldataorsystemslossofcustomersf

150、inanciallossesregulatoryfinesandmisuseorcorruptionofcriticaldataandproprietaryinformation,couldhaveamaterialadverseimpactonourresultsofoperations,financialcondition,andliquidity.Wemayexperiencesecuritybreachesthatcouldremainundetectedforanextendedperiodand,therefore,haveagreaterimpactontheserviceswe

151、offer.Additionally,wemaybeexposedtoincreasedcybersecurityriskbecauseweareacomponentofthecriticalU.S.infrastructure.13TableofContentsSevereWeatherCouldResultinSignificantBusinessInterruptionsandExpendituresAsarailroadwithavastnetwork,weareexposedtosevereweatherconditionsandothernaturalphenomena,inclu

152、dingearthquakes,hurricanes,fires,floods,mudslidesorlandslides,extremetemperatures,avalanches,andsignificantprecipitation,andclimatechangemaycauseorcontributetotheseverityorfrequencyofsuchweatherconditions.Lineoutagesandotherinterruptionscausedbytheseconditionscanadverselyaffectourentirerailnetwork,p

153、otentiallynegativelyaffectingrevenues,costs,andliabilities,despiteeffortsweundertaketoplanfortheseevents.Ourrevenuescanalsobeadverselyaffectedbysevereweatherthatcausesdamageanddisruptionstoourcustomers.Theseimpactscausedbysevereweathercouldhaveamaterialadverseeffectonourresultsofoperations,financial

154、condition,andliquidity.ASignificantPortionofOurRevenuesInvolvesTransportationofCommoditiestoandfromInternationalMarketsAlthoughrevenuesfromouroperationsareattributabletotransportationservicesprovidedintheU.S.,asignificantportionofourrevenuesinvolvesthetransportationofcommoditiestoandfrominternationa

155、lmarkets,includingMexico,Canada,andSoutheastAsia,byvariouscarriersand,attimes,variousmodesoftransportation.SignificantandsustainedinterruptionsoftradewithMexico,Canada,orcountriesinSoutheastAsia,includingChina,couldadverselyaffectcustomersandotherentitiesthat,directlyorindirectly,purchaseorrelyonrai

156、ltransportationservicesintheU.S.aspartoftheiroperations,andanysuchinterruptionscouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.AnyoneormoreofthefollowingcouldcauseasignificantandsustainedinterruptionoftradewithMexico,Canada,orcountriesinSoutheastAsia:(a)adeter

157、iorationofsecurityforinternationaltradeandbusinesses(b)theadverseimpactofnewlaws,rules,andregulationsortheinterpretationoflaws,rules,andregulationsbygovernmententities,courts,orregulatorybodies,includingtheUnitedStates-Mexico-CanadaAgreement(USMCA)anda“PhaseOne”tradeagreementwithChina(c)actionsoftax

158、ingauthoritiesthataffectourcustomersdoingbusinessinforeigncountries(d)anysignificantadverseeconomicdevelopments,suchasextendedperiodsofhighinflation,materialdisruptionsinthebankingsectororinthecapitalmarketsoftheseforeigncountries,andsignificantchangesinthevaluationofthecurrenciesoftheseforeigncount

159、riesthatcouldmateriallyaffectthecostorvalueofimportsorexports(e)shiftsinpatternsofinternationaltradethatadverselyaffectimportandexportmarkets(f)amaterialreductioninforeigndirectinvestmentinthesecountriesand(g)publichealthcrises,includingtheoutbreakofpandemicorcontagiousdisease,suchasthecoronavirusan

160、ditsvariantstrains(COVID).WeAreDependentonCertainKeySuppliersofLocomotivesandRailDuetothecapital-intensivenatureandsophisticationoflocomotiveequipment,parts,andmaintenance,potentialnewsuppliersfacehighbarrierstoentry.Therefore,ifoneofthedomesticsuppliersoflocomotivesdiscontinuesmanufacturinglocomoti

161、ves,supplyingparts,orprovidingmaintenanceforanyreason,includingbankruptcyorinsolvencyortheinabilitytomanufacturelocomotivesthatmeetefficiencyorregulatoryemissionsstandards,wecouldexperiencesignificantcostincreasesandreducedavailabilityofthelocomotivesthatarenecessaryforouroperations.Additionally,weu

162、tilizealimitednumberofsteelproducersthatmeetourspecifications.Railiscriticaltoouroperationsforrailreplacementprograms,maintenance,andforaddingadditionalnetworkcapacity,newrailandstorageyards,andexpansionsofexistingfacilities.Thisindustrysimilarlyhashighbarrierstoentry,andifoneofthesesuppliersdiscont

163、inuesoperationsforanyreason,includingbankruptcyorinsolvency,wecouldexperiencebothsignificantcostincreasesforrailpurchasesanddifficultyobtainingsufficientrailformaintenanceandotherprojects.ChangestotradeagreementsorpoliciesthatresultinincreasedtariffsongoodsimportedintotheUnitedStatescouldalsoresulti

164、nsignificantcostincreasesforrailpurchasesanddifficultyobtainingsufficientrail.WorkforceRisksStrikesorWorkStoppagesCouldAdverselyAffectOurOperationsTheU.S.ClassIrailroadsarepartytocollectivebargainingagreementswithvariouslaborunions.Themajorityofouremployeesbelongtolaborunionsandaresubjecttotheseagre

165、ements.Disputesoverthetermsoftheseagreementsorourpotentialinabilitytonegotiateacceptablecontractswiththeseunionscanleadto,amongotherthings,strikes,workstoppages,slowdowns,orlockouts,whichcouldcauseasignificantdisruptionofouroperationsandhaveamaterialadverseeffectonourresultsofoperations,financialcon

166、dition,andliquidity.Additionally,futurenationallaboragreements,orrenegotiationoflaboragreementsorprovisionsoflaboragreements,couldcompromiseourservicereliabilityorsignificantlyincreaseourcostsforhealthcare,wages,andotherbenefits,whichcouldhaveamaterialadverseimpactonourresultsofoperations,financialc

167、ondition,andliquidity.Labordisputes,workstoppages,slowdowns,orlockoutsatloading/unloadingfacilities,ports,orothertransportaccesspointscouldcompromiseourservicereliabilityandhaveamaterialadverseimpactonourresultsofoperations,financialcondition,andliquidity.Labordisputes,workstoppages,slowdowns,orlock

168、outsbyemployeesofourcustomersoroursupplierscouldcompromiseourservicereliabilityandhaveamaterialadverseimpactonourresultsofoperations,financialcondition,andliquidity.14TableofContentsTheAvailabilityofQualifiedPersonnelCouldAdverselyAffectOurOperations Changesindemographics,trainingrequirements,andpan

169、demicillnessesorrestrictionscouldnegativelyaffecttheavailabilityofqualifiedpersonnelforus,ourcustomers,andthroughoutthesupplychain.Ourabilitytoquicklyreacttootherfactorsthataffectourabilitytoattractandretainemployeesmayberestrictedduetolimitedflexibilitytomakeunilateralchangestocollectivebargaininga

170、greements,whichcoverthemajorityofourworkforce.Unpredictableincreasesindemandforrailservicesandalackofnetworkfluiditymayexacerbateourrisks,whichcouldhaveanegativeimpactonouroperationalefficiencyandotherwisehaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.LegalandRegu

171、latoryRisksWeAreSubjecttoSignificantGovernmentalRegulationWearesubjecttogovernmentalregulationbyasignificantnumberoffederal,state,andlocalauthoritiescoveringavarietyofhealth,safety,labor,environmental,economic(asdiscussedbelow),tax,andothermatters.Manylawsandregulationsrequireustoobtainandmaintainva

172、riouslicenses,permits,andotherauthorizations,andwecannotguaranteethatwewillcontinuetobeabletodoso.Ourfailuretocomplywithapplicablelawsandregulationscouldhaveamaterialadverseeffectonus.Governmentsorregulatorsmaychangethelegislativeorregulatoryframeworksthatweoperateinwithoutprovidingusanyrecoursetoad

173、dressanyadverseeffectsonourbusiness,including,withoutlimitation,regulatorydeterminationsorrulesregardingdisputeresolution,increasingtheamountofourtrafficsubjecttocommoncarrierregulation,businessrelationshipswithotherrailroads,useofembargoes,calculationofourcostofcapitalorotherinputsrelevanttocomputi

174、ngourrevenueadequacy,thepriceswecharge,changesintaxrates,enactmentofnewtaxlaws,andrevisionintaxregulations.SignificantlegislativeactivityinCongressorregulatoryactivitybytheSTBcouldexpandregulationofrailroadoperationsandpricingforrailservices,whichcouldreducecapitalspendingonourrailnetwork,facilities

175、,andequipment,andhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.WeMayBeSubjecttoVariousClaimsandLawsuitsThatCouldResultinSignificantExpendituresAsarailroadwithoperationsindenselypopulatedurbanareasandavastrailnetwork,weareexposedtothepotentialforvariousclaimsandli

176、tigationrelatedtolaborandemployment,personalinjury,propertydamage,environmentalliability,andothermatters.Anymaterialchangestolitigationtrendsoracatastrophicrailaccidentorseriesofaccidentsinvolvinganyorallofpropertydamage,personalinjury,andenvironmentalliabilitythatexceedourinsurancecoverageforsuchri

177、skscouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.WeAreSubjecttoSignificantEnvironmentalLawsandRegulationsDuetothenatureoftherailroadbusiness,ouroperationsaresubjecttoextensivefederal,state,andlocalenvironmentallawsandregulationsconcerning,amongotherthings,em

178、issionstotheairdischargestowatershandling,storage,transportation,anddisposalofwasteandothermaterialsandhazardousmaterialorpetroleumreleases.Wegenerateandtransporthazardousandnon-hazardouswasteinouroperations.Environmentalliabilitycanextendtopreviouslyownedoroperatedproperties,leasedproperties,proper

179、tiesownedbythird-parties,aswellaspropertieswecurrentlyown.Environmentalliabilitieshavearisenandmayalsoarisefromclaimsassertedbyadjacentlandownersorotherthird-partiesintoxictortlitigation.Wehavebeenandmaybesubjecttoallegationsorfindingsthatwehaveviolated,orarestrictlyliableunder,theselawsorregulation

180、s.Wecurrentlyhavecertainobligationsatexistingsitesforinvestigation,remediation,andmonitoring,andwelikelywillhaveobligationsatothersitesinthefuture.Wemaintainadequatereservesforliabilitiesfortheseobligations,butfluctuationsofpotentialcostsaffectourestimatesbasedonourexperienceand,asnecessary,theadvic

181、eandassistanceofourconsultants.However,actualcostsmayvaryfromourestimatesduetoanyorallofseveralfactors,includingchangestoenvironmentallawsorinterpretationsofsuchlaws,technologicalchangesaffectinginvestigationsandremediation,theparticipationandfinancialviabilityofotherpartiesresponsibleforanysuchliab

182、ility,andthecorrectiveactionorchangetocorrectiveactionsrequiredtoremediateanyexistingorfuturesites.Wecouldincursignificantcostsasaresultofanyoftheforegoing,andwemayberequiredtoincursignificantexpensestoinvestigateandremediateknown,unknown,orfutureenvironmentalcontamination,whichcouldhaveamaterialadv

183、erseeffectonourresultsofoperations,financialcondition,andliquidity.15TableofContentsMacroeconomicandIndustryRisksWeFaceCompetitionfromOtherRailroadsandOtherTransportationProvidersWefacecompetitionfromotherrailroads,motorcarriers,ships,barges,andpipelines.OurmainrailroadcompetitorisBurlingtonNorthern

184、SantaFeLLC.Itsprimarysubsidiary,BNSFRailwayCompany(BNSF),operatesparallelroutesinmanyofourmaintrafficcorridors.Inaddition,weoperateincorridorsservedbyotherrailroadsandmotorcarriers.Motorcarriercompetitionexistsinallthreeofourcommoditygroups.BecauseoftheproximityofourroutestomajorinlandandGulfCoastwa

185、terways,bargescanbeparticularlycompetitive,especiallyforgrainandbulkcommoditiesincertainareaswhereweoperate.Inadditiontopricecompetition,wefacecompetitionwithrespecttotransittimes,quality,andreliabilityofservicefrommotorcarriersandotherrailroads.Motorcarriersinparticularcanhaveanadvantageoverrailroa

186、dswithrespecttotransittimesandtimelinessofservice.However,railroadsaremuchmorefuel-efficientthantrucks,whichreducestheimpactoftransportinggoodsontheenvironmentandpublicinfrastructure,andwehavebeenmakingeffortstoconverttrucktraffictorail.Additionally,wemustbuildoracquireandmaintainourrailsystem,while

187、trucks,barges,andmaritimeoperatorsareabletousepublicrights-of-waymaintainedbypublicentities.Anyofthefollowingcouldalsoaffectthecompetitivenessofourtransportationservicesforsomeorallofourcommodities,whichcouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity:(a)improv

188、ementsorexpendituresmateriallyincreasingthequalityorreducingthecostsofthesealternativemodesoftransportation,suchasautonomousormorefuelefficienttrucks,(b)legislationthateliminatesorsignificantlyincreasesthesizeorweightlimitationsappliedtomotorcarriers,or(c)legislationorregulatorychangesthatimposeoper

189、atingrestrictionsonrailroadsorthatadverselyaffecttheprofitabilityofsomeorallrailroadtraffic.Manymovementsfaceproductorgeographiccompetitionwhereourcustomerscanusedifferentproducts(e.g.,naturalgasinsteadofcoal,sorghuminsteadofcorn)orcommoditiesfromdifferentlocations(e.g.,grainfromstatesorcountriestha

190、twedonotserve,crudeoilfromdifferentregions).Sourcingdifferentcommoditiesordifferentlocationsallowsshipperstosubstitutedifferentcarriersandsuchcompetitionmayreduceourvolumeorconstrainprices.Additionally,anyfutureconsolidationoftherailindustrycouldmateriallyaffectourcompetitiveenvironment.WeMayBeAffec

191、tedbyClimateChangeandMarketorRegulatoryResponsestoClimateChangeClimatechange,includingtheimpactofglobalwarmingandtransitionrisksinvolvingpolicy,legalrisks,andmarketrisks,couldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidityoverbothalong-termandnear-termbasis.Restric

192、tions,caps,taxes,orothercontrolsonemissionsofGHGs,includingdieselexhaust,couldsignificantlyincreaseouroperatingcosts.Restrictionsonemissionscouldalsoaffectourcustomersthat(a)usecommoditiesthatwecarrytoproduceenergy,(b)usesignificantamountsofenergyinproducingordeliveringthecommoditieswecarry,or(c)man

193、ufactureorproducegoodsthatconsumesignificantamountsofenergyorburnfossilfuels,includingchemicalproducers,farmersandfoodproducers,andautomakersandothermanufacturers.Significantcostincreases,governmentregulation,orchangesofconsumerpreferencesforgoodsorservicesrelatingtoalternativesourcesofenergy,emissi

194、onsreductions,andGHGemissionscouldmateriallyaffectthemarketsforthecommoditieswecarryanddemandforourservices,whichinturncouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.Governmentincentivesencouragingtheuseofalternativesourcesofenergyalsocouldaffectcertainofourc

195、ustomersandthemarketsforcertainofthecommoditieswecarryinanunpredictablemannerthatcouldalterourtrafficpatterns,including,forexample,increasingroyaltieschargedtoproducersofPRBcoalbytheU.S.DepartmentofInteriorandtheimpactsofethanolincentivesonfarmingandethanolproducers.Wecouldfaceincreasedcostsrelatedt

196、odefendingandresolvinglegalclaimsandotherlitigationrelatedtoclimatechangeandtheallegedimpactofouroperationsonclimatechange.Violentweathercausedbyclimatechange,includinghurricanes,fires,floods,extremetemperatures,avalanches,andsignificantprecipitationcouldcauselineoutagesandotherinterruptionstoourinf

197、rastructure.Anyofthesefactors,individuallyorinoperationwithoneormoreoftheotherfactors,orotherunpredictableimpactsofclimatechangecouldreducetheamountoftrafficwehandleandhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.WhileweworktoimplementourClimateActionPlan,oureff

198、ortstoachieveemissionreductiontargetscouldsignificantlyincreaseouroperationalcostsandcapitalexpenditures.16TableofContentsOurBusiness,FinancialCondition,andResultsofOperationshavebeenAdverselyAffected,andintheFuture,CouldbeMateriallyAdverselyAffectedbyPandemicsorOtherPublicHealthCrisesPandemics,epid

199、emics,andotheroutbreaksofdiseasecanhavesignificantandwidespreadimpacts.AswesawduringthepeaksoftheCOVIDpandemic,outbreaksofdiseasecancauseaglobalslowdownofeconomicactivity(includingthedecreaseindemandforabroadvarietyofgoods),disruptionsinglobalsupplychains,andsignificantvolatilityanddisruptionoffinan

200、cialmarkets,resultingfurtherinadverseeffectsonworkforces,customers,andregionalandlocaleconomies.Theimpactofpandemicsorpublichealthcrisesonourresultsofoperationsandfinancialconditionmaydependonnumerousevolvingfactors,including,butnotlimitedto:governmental,business,andindividualsactionsthathavebeenand

201、continuetobetakeninresponsetoaglobalpandemicorotherpublichealthcrises(includingrestrictionsontravelandtransport,workforcepressures,socialdistancing,andshelter-in-placeorders)theeffectofapandemicorotherpublichealthcrisesoneconomicactivityandactionstakeninresponsetheeffectonourcustomersandtheirdemandf

202、orourservicestheeffectofapandemicorotherpublichealthcrisesonthecredit-worthinessofourcustomersnationalorglobalsupplychainchallengesordisruptionfacilityclosurescommoditycostvolatilitygeneralmacroeconomicuncertaintyinkeyglobalmarketsandfinancialmarketvolatilityglobaleconomicconditionsandlevelsofeconom

203、icgrowthandthepaceofrecoveryasthepandemicsubsidesaswellasresponsetoapotentialreoccurrence.Further,apandemicorotherpublichealthcrises,andthevolatileregionalandglobaleconomicconditionsstemmingfromsuchanevent,couldalsoprecipitateandaggravatetheotherriskfactorsthatweidentify,whichcouldmateriallyadversel

204、yaffectourbusiness,financialcondition,resultsofoperations(includingrevenuesandprofitability),and/orstockprice.Additionally,apandemicorotherpublichealthcrisesalsomayaffectouroperatingandfinancialresultsinamannerthatisnotpresentlyknowntousorthatwecurrentlydonotconsidertopresentsignificantriskstoourope

205、rations.FinancialRisksWeAreAffectedByFluctuatingFuelPricesFuelcostsconstituteasignificantportionofourtransportationexpenses.Dieselfuelpricescanbesubjecttodramaticfluctuations,andsignificantpriceincreasescouldhaveamaterialadverseeffectonouroperatingresults.Althoughwecurrentlyareabletorecoverasignific

206、antamountofourfuelexpensesfromourcustomersthroughrevenuesfromfuelsurcharges,wecannotbecertainthatwewillalwaysbeabletomitigaterisingorelevatedfuelcoststhroughourfuelsurcharges.Additionally,futuremarketconditionsorlegislativeorregulatoryactivitiescouldadverselyaffectourabilitytoapplyfuelsurchargesorad

207、equatelyrecoverincreasedfuelcoststhroughfuelsurcharges.Asfuelpricesfluctuate,ourfuelsurchargeprogramstrailsuchfluctuationsinfuelpricebyapproximatelytwomonths,andmaybeasignificantsourceofquarter-over-quarterandyear-over-yearvolatility,particularlyinperiodsofrapidlychangingprices.International,politic

208、al,andeconomicfactors,eventsandconditions,includingthestartoftheRussian-UkraineconflictinlateFebruary2022,affectthevolatilityoffuelpricesandsupplies.Weathercanalsoaffectfuelsuppliesandlimitdomesticrefiningcapacity.Asevereshortageof,ordisruptionto,domesticfuelsuppliescouldhaveamaterialadverseeffecton

209、ourresultsofoperations,financialcondition,andliquidity.Alternatively,lowerfuelpricescouldhaveapositiveimpactontheeconomybyincreasingconsumerdiscretionaryspendingthatpotentiallycouldincreasedemandforvariousconsumerproductswetransport.However,lowerfuelpricescouldhaveanegativeimpactonothercommoditieswe

210、transport,suchascoalanddomesticdrilling-relatedshipments,whichcouldhaveamaterialadverseeffectonourresultsofoperations,financialcondition,andliquidity.WeRelyonCapitalMarketsDuetothesignificantcapitalexpendituresrequiredtooperateandmaintainasafeandefficientrailroad,werelyonthecapitalmarketstoprovideso

211、meofourcapitalrequirements.Weutilizelong-termdebtinstruments,bankfinancing,andcommercialpaper,andwepledgecertainamountofourreceivablesascollateralforcredit.Significantinstabilityordisruptionsofthecapitalmarkets,including,amongotherthings,currentrisinginterestratesinthecreditmarkets,ordeteriorationof

212、ourfinancialconditionduetointernalorexternalfactorscouldrestrictorprohibitouraccessto,andsignificantlyincreasethecostof,commercialpaperandotherfinancingsources,includingbankcreditfacilitiesandtheissuanceoflong-termdebt,includingcorporatebonds.Asignificantdeteriorationofourfinancialconditioncouldresu

213、ltinareductionofourcreditratingtobelowinvestmentgrade,whichcouldrestrictusfromutilizingourcurrentreceivablessecuritizationfacility(ReceivablesFacility).Thismayalsolimitouraccesstoexternalsourcesofcapitalandsignificantlyincreasethecostsofshortandlong-termdebtfinancing.17TableofContentsGeneralRiskFact

214、orsWeAreAffectedbyGeneralEconomicConditions Prolonged,severeadversedomesticandglobalmacroeconomicconditionsordisruptionsoffinancialandcreditmarkets,including,forexample,therecessionaryfearsandhighinflationweareseeinginthecurrenteconomicenvironment,mayaffecttheproducersandconsumersofthecommoditieswec

215、arryandmayhaveamaterialadverseeffectonouraccesstoliquidity,resultsofoperations,andfinancialcondition.WeMayBeAffectedbyActsofTerrorism,War,orRiskofWarOurraillines,facilities,andequipment,includingrailcarscarryinghazardousmaterials,couldbedirecttargetsorindirectcasualtiesofterroristattacks.Terroristat

216、tacks,orothersimilarevents,anygovernmentresponsethereto,andwarorriskofwarmayadverselyaffectourresultsofoperations,financialcondition,andliquidity.Inaddition,insurancepremiumsforsomeorallofourcurrentcoveragescouldincreasedramatically,orcertaincoveragesmaynotbeavailabletousinthefuture.Item1B.Unresolve

217、dStaffCommentsNone.Item2.PropertiesWeemployavarietyofassetsinthemanagementandoperationofourrailbusiness.Ourrailnetworkcovers23statesinthewesterntwo-thirdsoftheU.S.18TableofContentsTRACKOurrailnetworkincludes32,534routemiles.Weown26,121milesandoperateontheremainderpursuanttotrackagerightsorleases.The

218、followingtabledescribestrackmiles:AsofDecember31,2022 2021Route 32,534 32,452Othermainline 7,113 7,093Passinglinesandturnouts 3,454 3,412Switchingandclassificationyardlines 8,853 8,887Totalmiles 51,954 51,844HEADQUARTERSBUILDINGWeownourheadquartersbuildinginOmaha,Nebraska.Thefacilityhas1.2millionsqu

219、arefeetofspacethatcanaccommodateapproximately4,000employees.HARRIMANDISPATCHINGCENTERTheHarrimanDispatchingCenter(HDC),locatedinOmaha,Nebraska,isourprimarydispatchingfacility.Itislinkedtoregionaldispatchingandlocomotivemanagementfacilitiesatvariouslocationsalongournetwork.HDCemployeescoordinatemoves

220、oflocomotivesandtrains,managetrafficandtraincrewsonournetwork,andcoordinateinterchangeswithotherrailroads.Generally,around500employeesworkon-siteinthefacility.IntheeventofadisruptionofoperationsatHDCduetoacyber-attack,floodingorsevereweather,pandemicoutbreak,orotherevent,wemaintainthecapabilitytocon

221、ductcriticaloperationsatback-upfacilitiesindifferentlocations.RAILFACILITIESInadditiontoourtrackstructure,weoperatenumerousfacilities,includingterminalsforintermodalandotherfreightrailyardsforbuildingtrains(classificationyards),switching,storage-in-transit(thetemporarystorageofcustomergoodsinrailcar

222、spriortoshipment),andotheractivitiesofficestoadministerandmanageouroperationsdispatchingcenterstodirecttrafficonourrailnetworkcrewondutylocationsfortraincrewsalongournetworkandshopsandotherfacilitiesforfueling,maintenance,andrepairoflocomotivesandrepairandmaintenanceofrailcarsandotherequipment.Thefo

223、llowingtableincludesthemajoryardsandterminalsonoursystem:MajorClassificationYardsMajorIntermodalTerminalsNorthPlatte,NebraskaJoliet(Global4),IllinoisEnglewood(Houston),TexasGlobalII(Chicago),IllinoisNorthLittleRock,ArkansasEastLosAngeles,CaliforniaLivonia,LouisianaMesquite,TexasWestColton,California

224、Lathrop,CaliforniaFortWorth,TexasLATC(LosAngeles),CaliforniaHouston,TexasICTF(LosAngeles),CaliforniaRoseville,CaliforniaMarion,ArkansasRAILEQUIPMENTOurequipmentincludesownedandleasedlocomotivesandrailcarsheavymaintenanceequipmentandmachineryotherequipmentandtoolsinourshops,offices,andfacilitiesandve

225、hiclesformaintenance,transportationofcrews,andotheractivities.AsofDecember31,2022,weownedorleasedthefollowingunitsofequipment:AverageLocomotivesOwned Leased Total Age(yrs.)Multiplepurpose 6,083 1,038 7,121 23.4Switching 149 -149 42.7Other 15 53 68 42.5Totallocomotives 6,247 1,091 7,338 N/A19TableofC

226、ontents AverageFreightcarsOwned Leased Total Age(yrs.)Coveredhoppers 13,360 9,714 23,074 22.1Openhoppers 4,926 779 5,705 35.8Gondolas 6,188 4,060 10,248 24.2Boxcars 2,598 6,877 9,475 38.2Refrigeratedcars 2,496 1,371 3,867 22.4Flatcars 2,248 1,450 3,698 32.4Other-312 312 31.4Totalfreightcars 31,816 2

227、4,563 56,379 N/A AverageHighwayrevenueequipmentOwned Leased Total Age(yrs.)Containers 48,180 1,356 49,536 11.4Chassis 29,703 19,616 49,319 12.0Totalhighwayrevenueequipment 77,883 20,972 98,855 N/AWecontinuouslyassessourneedforequipmenttorunanefficientandreliablenetwork.Manyfactorscauseustoadjustthes

228、izeofouractivefleets,includingchangesincarloadvolume,weatherevents,seasonality,customerpreferences,andoperationalefficiencyinitiatives.Assomeofthesefactorsaredifficulttoassessorcanchangerapidly,wemaintainasurgefleettoremainagile.Withoutthesurgefleet,ourabilitytoreactquicklyishinderedasequipmentsuppl

229、iersarelimitedandleadtimestoacquireequipmentarelongandmaybeinexcessofayear.Webelieveourlocomotiveandfreightcarfleetsareappropriatelysizedtomeetourcurrentandfuturebusinessrequirements.Thesefleetsserveasthemostreliableandefficientequipmenttofacilitategrowthwithoutadditionalacquisitions.Locomotiveandfr

230、eightcarinserviceutilizationpercentagesfortheyearendedDecember31,2022,were70%and78%,respectively.CAPITALEXPENDITURESOurrailnetworkrequiressignificantannualcapitalinvestmentsforreplacement,improvement,andexpansion.Theseinvestmentsenhancesafety,supportthetransportationneedsofourcustomers,improveourope

231、rationalefficiency,andsupportemissionreductioninitiativesoutlinedinourClimateActionPlan.Additionally,weaddnewequipmenttoourfleettoreplaceolderequipmentandtosupportgrowthandcustomerdemand.2022CapitalProgramDuring 2022,ourcapitalprogramtotaledapproximately$3.4billion.(Seethecashcapitalinvestmentstable

232、inManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsLiquidityandCapitalResources,Item7,ofthisreport.)2023CapitalPlanIn2023,weexpectourcapitalplantobeapproximately$3.6billion,up6%from2022.(Seefurtherdiscussionofour 2023capitalplaninManagementsDiscussionandAnalysisofFinancialCo

233、nditionandResultsofOperationsLiquidityandCapitalResources,Item7,ofthisreport.)OTHEREquipmentEncumbrancesEquipmentwithacarryingvalueofapproximately$903millionand$1.2billionatDecember31,2022and2021,respectively,servedascollateralforfinanceleasesandothertypesofequipmentobligationsinaccordancewiththesec

234、uredfinancingarrangementsutilizedtoacquireorrefinancesuchrailroadequipment.EnvironmentalMattersCertainofourpropertiesaresubjecttofederal,state,andlocallawsandregulationsgoverningtheprotectionoftheenvironment.(SeediscussionwithinthisreportofenvironmentalissuesinBusinessGovernmentalandEnvironmentalReg

235、ulation,Item1ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsCriticalAccountingEstimatesEnvironmental,Item7andNote17totheFinancialStatementsandSupplementaryData,Item8.)20TableofContentsItem3.LegalProceedingsFromtimetotime,weareinvolvedinlegalproceedings,claims,andlitigation

236、thatoccurinconnectionwithourbusiness.Weroutinelyassessourliabilitiesandcontingenciesinconnectionwiththesemattersbaseduponthelatestavailableinformationand,whennecessary,weseekinputfromourthird-partyadvisorswhenmakingtheseassessments.ConsistentwithSECrulesandrequirements,wedescribebelowmaterialpending

237、legalproceedings(otherthanordinaryroutinelitigationincidentaltoourbusiness),materialproceedingsknowntobecontemplatedbygovernmentalauthorities,otherproceedingsarisingunderfederal,state,orlocalenvironmentallawsandregulations(includinggovernmentalproceedingsinvolvingpotentialfines,penalties,orothermone

238、tarysanctionsinexcessof$1,000,000),andsuchotherpendingmattersthatwemaydeterminetobeappropriate.ENVIRONMENTALMATTERSWereceivenoticesfromtheEPAandstateenvironmentalagenciesallegingthatweareormaybeliableunderfederalorstateenvironmentallawsforremediationcostsatvarioussitesthroughouttheU.S.,includingsite

239、sontheSuperfundNationalPrioritiesListorstatesuperfundlists.Wecannotpredicttheultimateimpactoftheseproceedingsandsuitsbecauseofthenumberofpotentiallyresponsiblepartiesinvolved,thedegreeofcontaminationbyvariouswastes,thescarcityandqualityofvolumetricdatarelatedtomanyofthesites,andthespeculativenatureo

240、fremediationcosts.InformationconcerningenvironmentalclaimsandcontingenciesandestimatedremediationcostsissetforthinthisreportinManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsCriticalAccountingEstimatesEnvironmental,Item7,andNote17totheFinancialStatementsandSupplementaryData

241、,Item8.OTHERMATTERSAntitrustLitigationAswereportedinourQuarterlyReportonForm10-QforthequarterendedJune30,2007,20railshippers(manyofwhomwererepresentedbythesamelawfirms)filedvirtuallyidenticalantitrustlawsuitsinvariousfederaldistrictcourtsagainstusandfourotherClassIrailroadsintheU.S.Currently,UPRRand

242、threeotherClassIrailroadsarethenameddefendantsinthelawsuits.TheoriginalplaintifffiledthefirstoftheseclaimsintheU.S.DistrictCourtinNewJerseyonMay14,2007.Thesesuitsallegedthatthenamedrailroadsengagedinprice-fixingbyestablishingcommonfuelsurchargesforcertainrailtraffic.OnAugust16,2019,theU.S.CourtofApp

243、ealsfortheDistrictofColumbiaCircuit(D.C.Circuit)affirmedthedecisionofU.S.DistrictCourtfortheDistrictofColumbia(U.S.DistrictCourt)denyingclasscertification(theCertificationDenial).Onlyfiveplaintiffsremaininthismultidistrictlitigation(MDL)originallyfiledin2007,whichremainspending.Theyareproceedingonac

244、onsolidatedbasisintheU.S.DistrictCourtbeforetheHonorablePaulL.Friedman(MDLI).SincetheCertificationDenial,approximately111lawsuitshavebeenfiledinfederalcourtbasedonclaimsidenticaltothoseallegedintheclasscertificationcase.TheJudicialPanelonMultidistrictLitigationconsolidatedthesesuitsforpretrialprocee

245、dingsintheU.S.DistrictCourtbeforetheHonorableBerylA.Howell(MDLII).OnFebruary19,2021,thecourtdeniedourmotiontoexcludeplaintiffsallegedevidenceofconspiracyunderafederalstatutedesignedtoincentandprotectrailroadcommunicationsmadetofurtherinterlineservice(i.e.,wheretworailroadsareintheroute).OnMay17,2022

246、,theDCCircuitreversedthetrialcourtandlargelyadoptedtherailroadsinterpretationofthestatute,althoughnoindividualevidentiaryrulingsweremade.WealsofiledamotionforsummaryjudgmentonMay14,2021,intheMDLIproceedings,andthebriefingwascompletedinSeptember2021.Ahearinghasnotbeenscheduledonthemotion.Aswereported

247、inourCurrentReportonForm8-K,filedonJune10,2011,theRailroadreceivedacomplaintfiledintheU.S.DistrictCourtfortheDistrictofColumbiaonJune7,2011,byOxbowCarbon&MineralsLLCandrelatedentities(Oxbow).JustasitdidintheMDLproceedings,UnionPacificfiledamotionforsummaryjudgmentonMay14,2021,andnohearinghasbeensche

248、duled.Wecontinuetodenytheallegationsthatourfuelsurchargeprogramsviolatetheantitrustlawsoranyotherlaws.Webelievethattheselawsuitsarewithoutmerit,andwewillvigorouslydefendouractions.Therefore,wecurrentlybelievethatthesematterswillnothaveamaterialadverseeffectonanyofourresultsofoperations,financialcond

249、ition,andliquidity.21TableofContentsItem4.MineSafetyDisclosuresNotapplicable.InformationAboutOurExecutiveOfficersandPrincipalExecutiveOfficersofOurSubsidiariesTheBoardofDirectorstypicallyelectsanddesignatesourexecutiveofficersonanannualbasisattheboardmeetingheldinconjunctionwiththeAnnualMeetingofSha

250、reholders,andtheyholdofficeuntiltheirsuccessorsareelected.Executiveofficersalsomaybeelectedanddesignatedthroughouttheyear,astheBoardofDirectorsconsidersappropriate.Therearenofamilyrelationshipsamongtheofficers,noristhereanyarrangementorunderstandingbetweenanyofficerandanyotherpersonpursuanttoofficer

251、selection.ThefollowingtablesetsforthcertaininformationcurrentasofFebruary10,2023,relatingtotheexecutiveofficers.BusinessExperienceDuringNamePositionAgePastFiveYearsLanceM.FritzChairman,President,andChiefExecutiveOfficerofUPCandtheRailroad60CurrentPositionJenniferL.HamannExecutiveVicePresidentandChie

252、fFinancialOfficerofUPCandtheRailroad551CraigV.RichardsonExecutiveVicePresident,ChiefLegalOfficer,andCorporateSecretaryofUPCandtheRailroad612KennyG.RockerExecutiveVicePresidentMarketingandSalesoftheRailroad513ToddM.RynaskiSeniorVicePresidentandChiefAccounting,Risk,andComplianceOfficerofUPCandtheRailr

253、oad524EricJ.GehringerExecutiveVicePresidentOperationsoftheRailroad435ElizabethF.WhitedExecutiveVicePresidentSustainabilityandStrategyofUPCandtheRailroad5761Ms.HamannwaselectedExecutiveVicePresidentandChiefFinancialOfficerofUPCandtheRailroadeffectiveJanuary1,2020.ShepreviouslyservedasSeniorVicePresid

254、entFinance(April2019December2019)andVicePresidentPlanning&Analysis(October2017March2019).2Mr.RichardsonwaselectedExecutiveVicePresident,ChiefLegalOfficer,andCorporateSecretaryofUPCandtheRailroadeffectiveDecember8,2020.HemostrecentlyservedasVicePresidentCommercialandRegulatoryLawsince2015.3Mr.Rockerw

255、aselectedExecutiveVicePresidentMarketingandSalesoftheRailroadeffectiveAugust15,2018.Mr.RockerpreviouslyservedattheRailroadasVicePresidentMarketingandSalesIndustrialteam(October2016August2018).4Mr.RynaskiwaselectedSeniorVicePresidentandChiefAccounting,Risk,andComplianceOfficerofUPCandtheRailroadeffec

256、tiveJuly1,2022.Mr.RynaskipreviouslyservedasVicePresidentandController(September2015June2022).5Mr.GehringerwaselectedExecutiveVicePresident OperationsoftheRailroadeffectiveJanuary1,2021.Mr.GehringerpreviouslyservedasSeniorVicePresidentTransportation(July2020December2020),VicePresidentMechanicalandEng

257、ineering(January2020 July2020),VicePresident Engineering(March2018 January2020),andAssistantVicePresidentEngineering(September2016March2018).6Ms.WhitedwaselectedExecutiveVicePresidentSustainabilityandStrategyofUPCandtheRailroadeffectiveFebruary3,2022.ShepreviouslyservedasExecutiveVicePresidentandChi

258、efHumanResourcesOfficer(August2018February2022)andExecutiveVicePresidentandChiefMarketingOfficer(December2016August2018).22TableofContentsPARTIIItem5.MarketfortheRegistrantsCommonEquity,RelatedStockholderMatters,andIssuerPurchasesofEquitySecuritiesOurcommonstockistradedontheNYSEunderthesymbol“UNP”.A

259、tFebruary3,2023,therewere611,872,981sharesofcommonstockoutstandingand28,959commonshareholdersofrecord.Onthatdate,theclosingpriceofthecommonstockontheNYSEwas$210.29.Wepaiddividendstoourcommonshareholdersduringeachofthepast123years.ComparisonOverOne-andThree-YearPeriodsThefollowingtablepresentsthecumu

260、lativetotalshareholderreturns,assumingreinvestmentofdividends,overone-andthree-yearperiodsfortheCorporation(UNP),apeergroupindex(comprisedofCSXCorporationandNorfolkSouthernCorporation),theDowJonesTransportationIndex(DJTrans),andtheStandard&Poors500StockIndex(S&P500).PeriodUNPPeerGroupDJTransS&P5001Y

261、ear(2022)(15.9)%(16.1)%(17.6)%(18.1)%3Year(2020-2022)22.0 33.6 27.9 24.7Five-YearPerformanceComparisonThefollowinggraphprovidesanindicatorofcumulativetotalshareholderreturnsfortheCorporationascomparedtothepeergroupindex(describedabove),theDJTrans,andtheS&P500.Thegraphassumesthat$100wasinvestedinthec

262、ommonstockofUnionPacificCorporationandeachindexonDecember31,2017,andthatalldividendswerereinvested.Theinformationbelowishistoricalinnatureandisnotnecessarilyindicativeoffutureperformance.23TableofContentsPurchasesofEquitySecuritiesDuring2022,werepurchased27,374,826sharesofourcommonstockatanaveragepr

263、iceof$231.51.Thefollowingtablepresentscommonstockrepurchasesduringeachmonthforthefourthquarterof2022:PeriodTotalNumberofSharesPurchaseda AveragePricePaidPerShare TotalNumberofSharesPurchasedasPartofaPubliclyAnnouncedPlanorProgram MaximumNumberofSharesRemainingUnderthePlanorProgrambOct.1throughOct.31

264、 1,985,868$196.40 1,985,704 85,423,274Nov.1throughNov.30 1,235,296 206.48 1,234,889 84,188,385Dec.1throughDec.31 281,092 213.45 281,074 83,907,311Total 3,502,256$201.32 3,501,667 N/AaTotalnumberofsharespurchasedduringthequarterincludesapproximately589sharesdeliveredorattestedtoUPCbyemployeestopaysto

265、ckoptionexerciseprices,satisfyexcesstaxwithholdingobligationsforstockoptionexercisesorvestingofretentionunits,andpaywithholdingobligationsforvestingofretentionshares.bEffectiveApril1,2022,ourBoardofDirectorsauthorizedtherepurchaseofupto100millionsharesofourcommonstockbyMarch31,2025,replacingourprevi

266、ousrepurchaseprogram.Theserepurchasesmaybemadeontheopenmarketorthroughothertransactions.Ourmanagementhassolediscretionwithrespecttodeterminingthetimingandamountofthesetransactions.Item6.ReservedItem7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsThefollowingdiscussionshou

267、ldbereadinconjunctionwiththeConsolidatedFinancialStatementsandapplicablenotestotheFinancialStatementsandSupplementaryData,Item8,andotherinformationinthisreport,includingRiskFactorssetforthinItem1AandCriticalAccountingEstimatesandCautionaryInformationattheendofthisItem7.Thefollowingsectiongenerallydi

268、scusses2022and2021itemsandyear-to-yearcomparisonsbetween2022and2021.Discussionsof2020itemsandyear-to-yearcomparisonsbetween 2021and 2020thatarenotincludedinthisForm10-Kcanbefoundin“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations”inPartII,Item7,oftheCompanysAnnualReportonFo

269、rm10-KforthefiscalyearendedDecember31,2021.TheRailroad,alongwithitssubsidiariesandrailaffiliates,isouronereportablebusinesssegment.Althoughrevenuesareanalyzedbycommodity,weanalyzethenetfinancialresultsoftheRailroadasonesegmentduetotheintegratednatureoftherailnetwork.EXECUTIVESUMMARY2022ResultsSafety

270、UnionPacificisdedicatedtomaintainingasafeandhealthyworkplace.Throughout2022,wecontinuedtouseourTotalSafetyCulture,CouragetoCare,COMMIT(Coaching,Observing,Mentoring,andMotivatingwithIntegrityandTrust),andPeertoPeerprogramsthroughoutouroperationstoenhanceemployeesafetyandengagement.Inaddition,basedont

271、heevaluationofathird-partyexpertontheeffectivenessoftheseprogramscompletedin2021,weareimplementingengagementimprovementstoenhanceoursafetyculture.Theseinitiativesincludedefiningandsettingstandardsforemployeeinteractions,correctiveactionsandfollowup,androotcauseanalysis.Asaresultoftheseefforts,ourrep

272、ortablepersonalinjuryincidentsrateper200,000employee-hoursof0.80decreased18%from2021.WealsocontinuedtoadapttotheevolvingenvironmentduetoCOVIDandotherillnesses.SafetyproceduresandpoliciesarerefinedbasedonCentersforDiseaseControlandPrevention(CDC)guidelines.24TableofContentsWecontinuedtorefineourpropr

273、ietarysoftwaretoevaluatetrainandroutecharacteristicstoenableproactiveinterventionbyourOperatingPracticesCommandCentertopreventderailments.Inaddition,weincreasedthereplacementoffreightcarwheelsandtookstepstoaddresshumanfactoryardderailmentsrelatedtoswitchalignment.Despitetheseefforts,ourreportableder

274、ailmentincidentratepermilliontrainmilesincreased8%year-over-year.NetworkOperationsThroughout2022,ournetworkwascongestedinseveralkeycorridors,whichhinderedourabilitytohandleallofthedemandinseveralmarkets.Toaddressthiscongestion,weaggressivelyhiredandgraduated1,302newtrain,engine,andyardemployeestempo

275、rarilyrelocatedtrain,engine,andyardemployeestoareaswiththegreatestneedaddedlocomotivestothefleetinselectlocationsandreducedfreightcarinventory,relativetocarloads,fromournetwork.Duetothiscongestion,ouroperatingmetricsdeterioratedyear-over-year.Freightcarvelocitydecreasedduetoincreasedterminaldwelland

276、higheroperatingcarinventorylevels,whichdrovelowertrainspeeds.AdditionaldetailsonthesemetricsarediscussedinOtherOperating/PerformanceandFinancialStatisticsofthisItem7.FreightRevenuesFreightrevenuesincreased14%year-over-yearto$23.2billiondrivenbyhigherfuelsurchargerevenues,corepricinggains,anda2%incre

277、aseinvolume.Volumeincreasesweredrivenbystrongproductionandinventoryreplenishmentintheautomotiveindustry,increaseddemandforcoalduetohighernaturalgasprices,andcontinuedstrengthintheindustrialmarketsdrivenbyrock,sand,andplastics.Thesegainswerepartiallyoffsetbydeclinesininternationalintermodal,parcel,gr

278、ain,andpetroleumproducts.FinancialResultsHigherfuelprices,operationalchallenges,inflation,increasedvolume-relatedcosts,andaone-timechargeforthelaboragreementsreachedwithourlaborunions(SeeLaborAgreementsinOtherMattersinthisItem7ofPartII),drovea20%increaseinoperatingexpenses.Partiallyoffsettingthesein

279、creaseswerelowerweather-relatedexpensesin2022comparedto2021,whenweincurredadditionalcostsassociatedwithWinterStormUriandwildfiresinCalifornia.Increasedrevenues,duetohigherfuelsurchargerevenues,improvedpricing,additionalvolume,andintermodalaccessorialcharges,morethanoffsettheincreasedexpensesproducin

280、goperatingincomeof$9.9billion,a6%increaseover2021.Ouroperatingratiowas60.1%,deteriorating2.9pointsfrom2021.Netincomeof$7.0billiontranslatedintoearningsof$11.21perdilutedshare,up13%from2021.FuelPricesTheonsetoftheRussia-UkraineconflictinlateFebruary2022drovecrudeoilpricesabove$100abarrel,whereitremai

281、nedelevateduntilmid-2022,drivinganincreaseinouraveragefuelprice.Whileouraveragefuelpricedeclined8%inthefourthquarterfromthesecondquarterhighof$4.03,ouraveragepriceinthefourthquarterwas46%higherthanthefourthquarterof2021.Ouraveragepriceofdieselfuelforthefullyearof2022was$3.65pergallon,anincreaseof64%

282、from2021.Thehigherpriceresultedinincreasedoperatingexpensesof$1.3billion(excludinganyimpactfromyear-over-yearvolumeincreases).Grosston-milesincreased3%,whichalsodrovehigherfuelexpense.Partiallyoffsettingtheseincreaseswasa1%improvementinourfuelconsumptionratetoanewfullyearrecordlow.LiquidityWearecont

283、inuallyevaluatingourfinancialconditionandliquidity.OnDecember31,2022,wehad$973millionofcashandcashequivalents.Despitethechallengingyear,wegenerated$9.4billionofcashprovidedbyoperatingactivities,yieldingfreecashflowof$2.7billionafterreductionsof$3.5billionforcashusedininvestingactivitiesand$3.2billio

284、nindividends.Werepurchased$6.3billionofourshares.Wehavebeen,andweexpecttocontinuetobe,incompliancewithourdebtcovenants.Wehave$2.0billionofcreditavailableunderourrevolvingcreditfacilityandupto$700millionundrawnonourReceivablesFacility.AsofDecember31,2022,noneoftherevolvingcreditfacilitywasdrawn.Addit

285、ionaldetailsarediscussedinLiquidityandCapitalResourcesofthisItem7.25TableofContentsFreecashflowisdefinedascashprovidedbyoperatingactivitieslesscashusedininvestingactivitiesanddividendspaid.FreecashflowisnotconsideredafinancialmeasureunderGAAPbySECRegulationGandItem10ofSECRegulationS-Kandmaynotbedefi

286、nedandcalculatedbyothercompaniesinthesamemanner.Webelievefreecashflowisimportanttomanagementandinvestorsinevaluatingourfinancialperformanceandmeasuresourabilitytogeneratecashwithoutadditionalexternalfinancing.Freecashflowshouldbeconsideredinadditionto,ratherthanasasubstitutefor,cashprovidedbyoperati

287、ngactivities.Thefollowingtablereconcilescashprovidedbyoperatingactivities(GAAPmeasure)tofreecashflow(non-GAAPmeasure):Millions2022 2021 2020Cashprovidedbyoperatingactivities$9,362$9,032$8,540Cashusedininvestingactivities(3,471)(2,709)(2,676)Dividendspaid(3,159)(2,800)(2,626)Freecashflow$2,732$3,523$

288、3,2382023OutlookSafetyOperatingasaferailroadbenefitsallourconstituents:employees,customers,shareholders,andthecommunitiesweserve.Wewillcontinueusingacomprehensivesafetymanagementsystemapproachutilizingtechnology,hazardidentificationandriskassessments,employeeengagement,training,qualitycontrol,andtar

289、getedcapitalinvestments.WewillcontinuallyevaluateandadjustdeploymentofTotalSafetyCulture,CouragetoCare,COMMIT,andPeertoPeerresourcesthroughoutouroperations,whichallowsustoidentifyandimplementbestpracticesforemployeeandoperationalsafety.Inaddition,ourOperatingPracticesCommandCenterwillcontinuetheimpl

290、ementationofpredictivetechnologytoreducevariabilitybyseekingtoidentifycausesofmainlineserviceinterruptionsanddevelopsolutions,inadditiontoassistingemployeeswithunderstandingbestpracticesforhandlingtrains.Wewillcontinueoureffortstoutilizedatatoidentifyandmitigateexposuretorisk,detectraildefects,impro

291、veorclosecrossings,andeducatethepublicandlawenforcementagenciesaboutcrossingsafetythroughacombinationofourownprograms(includingriskassessmentstrategies),industryprograms,andlocalcommunityactivitiesacrossthenetwork.WealsoarededicatedtomaintainingahealthyworkplaceandcontinuemonitoringtheCOVIDcaselevel

292、s,modifyingourpoliciesasneededtoprotectemployeesandminimizetheriskofworkplacetransmission.NetworkOperationsIn2023,westrivetoincreasereliabilityofourserviceproduct,reducevariabilityinnetworkoperations,andimproveresourceavailability,includingactivelyhiringadditionaltrain,engine,andyardemployees.Furthe

293、rtrainlengthinitiativesallowustoefficientlyaddincrementalvolumegrowthtoourexistingtrainnetwork.Wewillcontinuetomakecapitalinvestmentstargetedtoimproveoperationalperformance,handlemorevolume,andincreaseefficiency,requiringfewerlocomotives,freightcars,andothercriticalresources.FinancialExpectationsWee

294、xpectvolumetooutpaceindustrialproductiongrowthin2023duetoourbusinessdevelopmenteffortsbringingnewcustomerstoourrailroad.Inthecurrentenvironment,weexpectcontinuedoperatingratioimprovementdrivenbypricinginexcessofinflation,improvingourserviceproduct,andbetterleveragingourresources.Weexpecttogeneratest

295、rongcashflowfromoperatingactivitiesallowingustocontinueourindustryleadingdividendpayoutratioandcommitexcesscashtooursharerepurchaseprograms.Macroeconomicuncertaintiesremainin2023thatcouldhaveamaterialimpactonour2023financialandoperatingresults.Regardlessofexternalfactors,wewillfocusonprovidingourcus

296、tomersconsistentandreliableserviceefficientlymanagingoperationsseekingnewbusinessopportunitiesandprotectingouremployees,customers,andcommunities.MarketConditionsCurrentforecastsforindustrialproductionindicatenegativegrowthin2023.Themacroeconomicuncertainty,highinflationaryenvironment,anddisruptionsi

297、nsupplychainswillcontinuetoimpactourshipments.Inaddition,otherfactors,suchaschangesindomesticandforeignmonetarypolicy(includingrisinginterestrates),mayaffecteconomicactivityanddemandforrailtransportationnaturalgasprices,weatherconditions,anddemandforotherenergysourcesmayimpactthecoalmarketcrudeoilpr

298、icesandspreadsmaydrivedemandforpetroleumproductsanddrillingmaterialsavailabletruckcapacitycouldimpactourintermodalbusinessandinternationaltradeagreementscouldpromoteorhindertrade.26TableofContentsFuelPricesProjectionsforcrudeoilandnaturalgascontinuetofluctuateinthecurrenteconomicenvironment.Wecoulda

299、gainseevolatilefuelpricesduring2023,astheyaresensitivetoglobalandU.S.domesticdemand,refiningcapacity,geopoliticalevents,weatherconditions,andotherfactors.Aspricesfluctuate,therewillbeatimingimpactonearnings,asourfuelsurchargeprogramstrailincreasesordecreasesinfuelpricebyapproximatelytwomonths.Signif

300、icantchangesinfuelpricescouldhaveanimpactonconsumerdiscretionaryspending,impactingdemandforvariousconsumerproductswetransport.Alternatively,thosechangescouldhaveaninverseimpactoncommoditiessuchascoal,petroleumproducts,anddomesticdrilling-relatedshipments.Increaseddieselfuelpricesalsoimpactourcompeti

301、tivepositionversustrucks.Aspricesrise,thedemandformorefuel-efficientrailtransportationalsorises,butataslowerrate.CapitalPlanIn2023,weexpectourcapitalplantobeapproximately$3.6billion,up6%from2022aswemakeinvestmentstosupportourgrowthstrategy.Wewillcontinuetohardenourinfrastructure,replaceolderassets,a

302、ndimprovethesafetyandresilienceofthenetwork.Inaddition,theplanincludesinvestmentsingrowth-relatedprojectstodrivemorecarloadstothenetwork,certainrampstoefficientlyhandlevolumesfromnewandexistingintermodalcustomers,continuousmodernizationofourlocomotivefleet,andprojectsintendedtoimproveoperationaleffi

303、ciency.Thecapitalplanmayberevisedifbusinessconditionswarrantorifnewlawsorregulationsaffectourabilitytogeneratesufficientreturnsontheseinvestments.(SeefurtherdiscussioninthisItem7underLiquidityandCapitalResourcesCapitalPlan.)RESULTSOFOPERATIONSOperatingRevenues%Change%ChangeMillions2022 2021 2020 202

304、2v2021 2021v2020Freightrevenues$23,159$20,244$18,251 14%11%Othersubsidiaryrevenues 884 741 743 19 -Accessorialrevenues 779 752 473 4 59Other 53 67 66 (21)2Total$24,875$21,804$19,533 14%12%Wegeneratefreightrevenuesbytransportingproductsfromourthreecommoditygroups.Freightrevenuesvarywithvolume(carload

305、s)andaveragerevenuepercar(ARC).Changesinprice,trafficmix,andfuelsurchargesdriveARC.Customerincentives,whichareprimarilyprovidedforshippingto/fromspecificlocationsorbasedoncumulativevolumes,arerecordedasareductiontooperatingrevenues.Customerincentivesthatincludevariableconsiderationbasedoncumulativev

306、olumesareestimatedusingtheexpectedvaluemethod,whichisbasedonavailablehistorical,current,andforecastedvolumes,andrecognizedastherelatedperformanceobligationissatisfied.Werecognizefreightrevenuesovertimeasshipmentsmovefromorigintodestination.Theallocationofrevenuesbetweenreportingperiodsisbasedonthere

307、lativetransittimeineachreportingperiodwithexpensesrecognizedasincurred.Othersubsidiaryrevenues(primarilylogisticsandcommuterrailoperations)aregenerallyrecognizedovertimeasshipmentsmovefromorigintodestination.Theallocationofrevenuesbetweenreportingperiodsisbasedontherelativetransittimeineachreporting

308、periodwithexpensesrecognizedasincurred.Accessorialrevenuesarerecognizedatapointintimeasperformanceobligationsaresatisfied.Freightrevenuesincreased14%year-over-yearto$23.2billiondrivenbyhigherfuelsurchargerevenues,corepricinggains,anda2%increaseinvolume.Volumeincreasesweredrivenbystrongproductionandi

309、nventoryreplenishmentintheautomotiveindustry,increaseddemandforcoalduetohighernaturalgasprices,andcontinuedstrengthintheindustrialmarketsdrivenbyrock,sand,andplastics.Thesegainswerepartiallyoffsetbydeclinesininternationalintermodal,parcel,grain,andpetroleumproducts.Ourfuelsurchargeprogramsgeneratedf

310、reightrevenuesof$3.7billionand$1.7billionin2022and2021,respectively.Fuelsurchargerevenuesin2022increased$2.0billionbecauseofa64%increaseinfuelpriceanda2%increaseincarloadings.In2022,othersubsidiaryrevenuesincreasedcomparedto2021primarilydrivenbyhigherfuelsurchargeandanincreaseinautomotivepartsshipme

311、ntsduetomarketdemandandcontractwinsatourLoupsubsidiary.Accessorialrevenuesincreasedin2022comparedto2021drivenbyincreasedintermodalaccessorialchargestiedtoglobalsupplychaindisruptions.Otherrevenuesdecreasedyear-over-year.27TableofContentsThefollowingtablessummarizetheyear-over-yearchangesinfreightrev

312、enues,revenuecarloads,andARCbycommoditytype:FreightRevenues%Change%ChangeMillions2022 2021 2020 2022v2021 2021v2020Grain&grainproducts$3,598$3,181$2,829 13%12%Fertilizer 712 697 660 2 6Food&refrigerated 1,093 998 937 10 7Coal&renewables 2,134 1,780 1,534 20 16Bulk 7,537 6,656 5,960 13 12Industrialch

313、emicals&plastics 2,158 1,943 1,845 11 5Metals&minerals 2,196 1,811 1,580 21 15Forestproducts 1,465 1,357 1,160 8 17Energy&specializedmarkets 2,386 2,212 2,037 8 9Industrial 8,205 7,323 6,622 12 11Automotive 2,257 1,761 1,680 28 5Intermodal 5,160 4,504 3,989 15 13Premium 7,417 6,265 5,669 18 11Total$

314、23,159$20,244$18,251 14%11%RevenueCarloads%Change%ChangeThousands2022 2021 2020 2022v2021 2021v2020Grain&grainproducts 798 805 745 (1)%8%Fertilizer 190 201 193 (5)4Food&refrigerated 187 189 185 (1)2Coal&renewables 885 819 797 8 3Bulk 2,060 2,014 1,920 2 5Industrialchemicals&plastics 637 606 587 5 3M

315、etals&minerals 785 697 646 13 8Forestproducts 241 250 220 (4)14Energy&specializedmarkets 552 559 539 (1)4Industrial 2,215 2,112 1,992 5 6Automotive 778 701 692 11 1Intermodala 3,116 3,211 3,149 (3)2Premium 3,894 3,912 3,841 -2Total 8,169 8,038 7,753 2%4%Change%ChangeAverageRevenueperCar2022 2021 202

316、0 2022v2021 2021v2020Grain&grainproducts$4,509$3,953$3,797 14%4%Fertilizer 3,749 3,470 3,427 8 1Food&refrigerated 5,844 5,279 5,047 11 5Coal&renewables 2,410 2,173 1,926 11 13Bulk 3,658 3,305 3,104 11 6Industrialchemicals&plastics 3,388 3,207 3,144 6 2Metals&minerals 2,797 2,598 2,445 8 6Forestprodu

317、cts 6,092 5,424 5,269 12 3Energy&specializedmarkets 4,320 3,956 3,780 9 5Industrial 3,704 3,467 3,324 7 4Automotive 2,902 2,511 2,427 16 3Intermodala 1,656 1,403 1,267 18 11Premium 1,905 1,601 1,476 19 8Average$2,835$2,519$2,354 13%7%aForintermodalshipments,eachcontainerortrailerequalsonecarload.28T

318、ableofContentsBulkBulkincludesshipmentsofgrainandgrainproducts,fertilizer,foodandrefrigerated,andcoalandrenewables.Freightrevenuesfrombulkshipmentsincreasedin2022comparedto2021duetohigherfuelsurchargerevenues,corepricinggains,andvolumeincreases,partiallyoffsetbynegativemixfromincreasedcoalshipmentsa

319、nddecreasedgrainshipments.Volumegrew2%comparedto2021drivenbyincreasesincoalandrenewableshipmentsduetohighernaturalgaspricesandcontractwins,partiallyoffsetbydeclinesingrainandgrainproductsshipmentsasnetworkconstraintsincreasedshuttlecycletimesforourgraintraffic.2022BulkCarloadsIndustrialIndustrialinc

320、ludesshipmentsofindustrialchemicalsandplastics,metalsandminerals,forestproducts,andenergyandspecializedmarkets.Freightrevenuesfromindustrialshipmentsincreasedin2022versus2021duetohigherfuelsurchargerevenues,volumeincreases,andcorepricinggains,partiallyoffsetbynegativemixoftrafficfromincreasedshortha

321、ulrockshipmentsanddecreasedpetroleum.Volumeincreased5%comparedto2021.Thegrowthwasdrivenbymetalsandmineralsduetostrongdemandforsandandrockaswellasnewbusinesswins,expansions,andmarketdemandforindustrialchemicalsandplastics.ManyofourcustomersintheGulfCoastexperiencedWinterStormUridisruptionsforanextend

322、edperiodcausingasignificantimpactonindustrialchemicalsandplasticsandmetalsandmineralsindustriesinthefirstquarterof2021.The2021weathereventscoupledwithstrongdemandin2022drovetheyear-over-yearincreasefortheimpactedcommodities.Partiallyoffsettingsomeofthegrowthwasadeclineinpetroleumshipments,withinthee

323、nergyandspecializedmarketscommodityline,primarilyduetoregulatorychallengesinMexicomarkets.2022IndustrialCarloadsPremium Premiumincludesshipmentsoffinishedautomobiles,automotiveparts,andmerchandiseinintermodalcontainers,bothdomesticandinternational.Freightrevenuesfrompremiumshipmentsincreaseddrivenby

324、higherfuelsurcharges,corepricinggains,andpositivemixoftraffic,partiallyoffsetbyaslightdeclineinvolume.Automotiveshipmentsincreased11%comparedto2021drivenbyanincreaseinfinishedvehicleshipmentsandautomotivepartsastheautomotiveindustrycontinuedtorecoverfromtheshortageofsemiconductorsandthe2021weatherdi

325、sruptionsinthefirstquarter.Premiumvolumewasflatcomparedto2021astheincreasedautomotiveshipments,domesticintermodalcontractwins,andmarketstrengthduetotighttruckcapacityearlierintheyearweremorethanoffsetbyongoinginternationalsupplychaindisruptionsandthesoftmarketdemandinthefourthquarterfordomesticandpa

326、rcelshipments.2022PremiumCarloadsMexicoBusinessEachofourcommoditygroupsincludesrevenuesfromshipmentstoandfromMexico.RevenuesfromMexicobusinesswere$2.7billionin2022,up14%comparedto2021,drivenbyhigherfuelsurchargerevenues,corepricinggains,andpositivemixoftraffic,partiallyoffsetbya1%declineinvolume.The

327、volumedecreasewasdrivenbylowerintermodalandpetroleumshipments,partiallyoffsetbyincreasesinautomotivepartsandsteelshipments.29TableofContentsOperatingExpenses%Change%ChangeMillions2022 2021 2020 2022v2021 2021v2020Compensationandbenefits$4,645$4,158$3,993 12%4%Fuel 3,439 2,049 1,314 68 56Purchasedser

328、vicesandmaterials 2,442 2,016 1,962 21 3Depreciation 2,246 2,208 2,210 2 -Equipmentandotherrents 898 859 875 5 (2)Other 1,288 1,176 1,345 10 (13)Total$14,958$12,466$11,699 20%7%Operatingexpensesincreased$2.5billion,or20%,in2022comparedto2021drivenbyhigherfuelprices,operationalinefficiencies,inflatio

329、n,increasedvolume-relatedcosts,andaone-timechargeforthelaboragreementsreachedwithourlaborunions(SeeLaborAgreementsinOtherMattersinthisItem7ofPartII).Partiallyoffsettingtheseincreaseswerelowerweather-relatedexpensesin2022comparedto2021,whichincludedcostsassociatedwithWinterStormUriandwildfiresinCalif

330、ornia.2022OperatingExpensesCompensationandBenefitsCompensationandbenefitsincludewages,payrolltaxes,healthandwelfarecosts,pensioncosts,andincentivecosts.In2022,expensesincreased12%comparedto2021,duetowageinflation,increasedemployeelevelstoaddresscongestionacrossthesystemandincreasedcarloadvolumes,and

331、aone-timechargeforthelaboragreementsreachedwithourlaborunions(SeeLaborAgreementsinOtherMattersinthisItem7ofPartII).Theyear-over-yearcomparisonwaspositivelyimpactedbythe2021weather-relatedexpenses.FuelFuelincludeslocomotivefuelandgasolineforhighwayandnon-highwayvehiclesandheavyequipment.Locomotivedie

332、selfuelprices,whichaveraged$3.65pergallon(includingtaxesandtransportationcosts)in2022,comparedto$2.23pergallonin2021,increasedexpenses$1.3billion(excludinganyimpactfromincreasedvolumeyear-over-year).Grosston-milesincreased3%drivinghigherfuelexpense.Partiallyoffsettingthisincreasewasa1%improvementtoa

333、recordlowfuelconsumptionratein2022,computedasgallonsoffuelconsumeddividedbygrosston-miles.PurchasedServicesandMaterialsExpenseforpurchasedservicesandmaterialsincludesthecostsofservicespurchasedfromoutsidecontractorsandotherserviceproviders(includingequipmentmaintenanceandcontractexpensesincurredbyoursubsidiariesforexternaltransportationservices)materialsusedtomaintaintheRailroadslines,structures,a