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COVER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________ to _________
Commission file number 1-6075
UNION PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
Utah 13-2626465
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Martin Tower, Eighth and Eaton Avenues 18018
Bethlehem, Pennsylvania (Zip Code)
(Address of principal executive offices)
(610) 861-3200
(Registrant's telephone number, including area code)
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ---------------------------------------- -------------------------
Common Stock (Par Value $2.50 per share) New York Stock Stock Exchange, Inc.
___________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ].
___________________________________
As of February 28, 1997 the aggregate market value of the registrant's
Common Stock held by non-affiliates (using the New York Stock Exchange closing
price) was approximately $14,872,259,119.
The number of shares outstanding of the registrant's Common Stock as of
February 28, 1997 was 246,842,475.
Portions of the following documents are incorporated by reference into
this Report: (1) registrant's Annual Report to Stockholders for the year ended
December 31, 1996 (Parts I, II and IV); and (2) registrant's definitive Proxy
Statement for the annual meeting of stockholders to be held on April 18, 1997
(Part III).
1
PART I
Item 1. Business and Item 2. Properties
Discussion of Significant Events and Operations
Union Pacific Corporation (UPC or the Corporation), incorporated in Utah
in 1969, operates through subsidiaries primarily in the areas of rail
transportation and trucking. The Corporation's rail transportation operations
include Union Pacific Railroad Company (including Missouri Pacific Railroad
Company (MPRR), which was merged with Union Pacific Railroad Company on
January 1, 1997)(UPRR), and the rail subsidiaries of Southern Pacific Rail
Corporation (Southern Pacific or SP)(collectively, the Railroad), the
acquisition of which was completed in September 1996. The Corporation's
trucking operations principally consist of Overnite Transportation Company
(Overnite). Each of the foregoing subsidiaries is either directly or indi-
rectly wholly owned by the Corporation. During 1996 and 1995, UPC completed
several strategic transactions that refocused the Corporation's business
objectives on its core transportation operations (see "Corporate
Reorganization" below).
Corporate Reorganization
Chicago and North Western Transportation Company (CNW) - In April 1995,
UPC acquired the remaining 71.6% of CNW's outstanding common stock not
previously owned by UPC for $1.2 billion. The acquisition of CNW was
accounted for as a purchase, and CNW's financial results were consolidated
with UPC, beginning in May 1995.
Natural Resources Divestiture - In July 1995, UPC's Board of Directors
approved a formal plan to dispose of its oil, gas and mining business through
an initial public offering (IPO) of 17% of the common stock of Union Pacific
Resources Group Inc. (Resources), followed by a distribution of UPC's
remaining interest in Resources to the Corporation's stockholders on a tax-
free, pro-rata basis (the Spin-Off). In October 1995, Resources completed the
IPO, and, after UPC's receipt of a favorable Internal Revenue Service ruling
as to the tax-free nature of the Spin-Off in September 1996, UPC completed its
divestiture of Resources.
Southern Pacific Acquisition - In September 1995, UPC acquired 25% of
Southern Pacific, and, in September 1996, it acquired the remaining 75% after
receipt of a favorable decision from the Surface Transportation Board of the
U.S. Department of Transportation (STB) regarding the Corporation's
acquisition of SP. The aggregate Southern Pacific purchase price was $4.1
billion ($2.5 billion in UPC common stock and $1.6 billion in cash). The
acquisition of Southern Pacific was accounted for as a purchase, and Southern
Pacific's results were fully consolidated with the Corporation's results
beginning in October 1996.
Continuing Operations
Rail Transportation - The Railroad is the largest railroad in the United
States (measured in both track miles and freight revenue), operating nearly
36,000 route miles linking Pacific Coast and Gulf Coast ports with the
Midwest. The Railroad serves the western two-thirds of the country and
maintains coordinated schedules with other carriers for the handling of
freight to and from
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the Atlantic seaboard, the Pacific Coast, the Southeast,
the Southwest, Canada and Mexico. Export and import traffic is moved through
Gulf Coast and Pacific Coast ports, and across the Mexican and (primarily
through interline connections) Canadian borders. Major categories of freight
hauled by the Railroad are agricultural products, automotive, chemicals,
energy (primarily coal), industrial products and intermodal. In 1996, energy
was the largest commodity hauled, representing 39.3% of the Railroad's revenue
ton-miles and 22.0% of the Railroad's commodity revenue. Percentages of
revenue ton-miles and commodity revenue for other commodities hauled by the
Railroad are presented on page 49 of the 1996 Annual Report to Stockholders
(Annual Report) and are incorporated herein by reference.
In its rail transportation business, the Railroad is subject to price and
service competition from other railroads, motor carriers and barge operators.
The vast majority of the Railroad's freight is hauled in corridors served by
competing railroads and motor carriers. Motor carrier competition has been
strengthened by longer combination vehicles that are allowed in a number of
states in which the Railroad operates and magnified by aggressive motor
carrier pricing caused by overcapacity within the trucking industry. Because
of the Railroad's proximity to major inland and Gulf Coast waterways, barge
competition can be particularly pronounced for grain and bulk commodities in
certain markets.
Approximately 90% of the Railroad's 54,000 employees are represented by
rail unions. During 1996, nearly all UPRR's unionized workforce ratified
five-year national agreements that include a combination of general wage
increases and lump-sum payments. In addition, the contracts provide for
increased flexibility in work rules. The Railroad has implemented two-person
crews for all through-freight trains and for a portion of yard and local
operations. Expansion of two-person crews is planned for other sections of
the system. With respect to Southern Pacific's unionized workforce, under the
conditions imposed by the STB in connection with the Southern Pacific
acquisition, labor agreements between the Railroad and the unions must be
negotiated before the UPRR and SP rail systems can be fully integrated. UPRR
has begun negotiations with the union leadership representing Southern
Pacific's workforce and expects union agreements to be ratified in 1997 and
1998. To date, the leadership of certain regional shopcraft, carmen and
clerical unions (collectively representing approximately 40% of SP's
unionized workforce) has negotiated agreements relating to the consolidation
and coordination of UPRR's and Southern Pacific's operations.
A separate Annual Report on Form 10-K for the year ended December 31,
1996, was filed by UPRR and contains additional information concerning that
company.
Trucking - Overnite, a major interstate trucking company, serves all 50
states and portions of Canada and Mexico through 161 service centers located
throughout the United States. As one of the largest trucking companies in the
United States, Overnite serves 95% of the U.S. population, specializing in
less-than-truckload shipments and offering a comprehensive array of services.
Overnite transports a variety of products, including machinery, tobacco,
textiles, plastics, electronics and paper products.
Overnite experiences intense service and price competition from both
regional and national motor carriers, which has been amplified by overcapacity
in the trucking industry. Overcapacity and intense competition will likely
3
continue well into 1997. During 1996, Overnite launched several strategic
initiatives aimed at better matching its operations to the current trucking
environment. Actions taken included workforce reductions, service center
consolidations, centralization of the linehaul management process, and pricing
initiatives targeting Overnite's lowest margin customers.
As the nation's largest non-union trucking company, Overnite is
periodically targeted by major labor organization efforts and is currently the
subject of an organizational campaign instituted by the International
Brotherhood of Teamsters (Teamsters) at many of its service centers. Since
year-end 1994, over 50 of Overnite's 161 service centers have received
petitions for union elections. Where elections have been held, 29 Overnite
service centers voted against representation and two elections remain
unresolved. The employees of three service centers that previously voted for
union representation filed petitions with the National Labor Relations Board
(NLRB) to decertify the Teamsters as their union bargaining representative.
Thirteen service centers, representing approximately 8% of Overnite's
nationwide workforce, have voted for union representation, and the Teamsters
have been certified as the bargaining representative for such employees
without challenge by Overnite. Seven other service centers, representing
another 9% of Overnite's nationwide workforce, have either voted for union
representation, or it is unclear how such employees have voted, and such
elections are currently being challenged by Overnite before the NLRB or the
Federal courts. Overnite has begun negotiations with the Teamsters at the
certified service centers and does not anticipate that these negotiations will
have a significant impact on its future operating results.
Discontinued Operations
Natural Resources - Resources is an independent oil and gas company
engaged in the exploration for and production of natural gas, crude oil and
associated products.
A separate Annual Report on Form 10-K for the year ended December 31,
1996 was filed by Resources, which contains additional information concerning
that company.
Other Information
Additional information for UPC's principal businesses is presented on
pages 8 through 21, 39, 40, 49 and 50 of the Annual Report and such
information (excluding photographs on pages 8 through 21, none of which
supplements the text and which are not otherwise required to be disclosed
herein) is incorporated herein by reference. Information on business segments
on page 33 and a map of the Corporation's operations on pages 52 and 53 of the
Annual Report are also incorporated herein by reference.
Governmental Regulation
UPC's operations are currently subject to a variety of Federal,
state and local regulation. The most significant areas of regulation are
described below.
4
The operations of the Railroad and Overnite are subject to the regulatory
jurisdiction of the STB, the successor to the Interstate Commerce Commission
(ICC), other Federal agencies and various state agencies. The STB has
jurisdiction over rates charged on certain regulated rail traffic; freight car
compensation; transfer, extension or abandonment of rail lines; and
acquisition of control of rail and motor carriers by rail common carriers.
Other Federal agencies have jurisdiction over safety, movement of hazardous
materials, movement and disposal of hazardous waste and equipment standards.
As a result of the ICC Termination Act of 1995, effective January 1,
1996, state agencies no longer have authority to regulate intrastate rail
rates, practices and services. In addition, in January 1995, the Federal
government deregulated intrastate trucking, lifting state oversight of rates,
routes and service. However, various state and local agencies have
jurisdiction over disposal of hazardous wastes and seek to regulate movement
of hazardous materials.
Environmental Regulation
Subsidiaries of UPC are subject to various environmental statutes and
regulations, including the Resource Conservation and Recovery Act (RCRA), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA), and the Clean Air Act (CAA).
RCRA applies to hazardous waste generators and transporters, as well as
persons engaged in treatment and disposal of hazardous waste, and specifies
standards for storage areas, treatment units and land disposal units. All
generators of hazardous waste are required to label shipments in accordance
with detailed regulations and to prepare a detailed manifest identifying the
material and stating its destination before waste can be released for offsite
transport. The transporter must deliver the hazardous waste in accordance
with the manifest and only to a treatment, storage or disposal facility
qualified for RCRA interim status or having a final RCRA permit.
Environmental Protection Agency (EPA) regulations under RCRA have
established a comprehensive system for the management of hazardous waste.
These regulations identify a wide range of industrial by-products and residues
as hazardous waste, and specify requirements for "cradle-to-grave" management
of such waste from the time of generation through the time of disposal and
beyond. States that have adopted hazardous waste management programs with
standards at least as stringent as those promulgated by the EPA may be
authorized by the EPA to administer all or part of RCRA on behalf of the EPA.
CERCLA was designed to establish a strategy for cleaning up facilities at
which hazardous waste or other hazardous substances have created actual or
potential environmental hazards. The EPA has designated certain facilities as
requiring cleanup or further assessment. Among other things, CERCLA authorizes
the Federal government either to clean up such facilities itself or to order
persons responsible for the situation to do so. The act created a multi-
billion dollar fund to be used by the Federal government to pay for such
cleanup efforts. In the event the Federal government pays for such clean-up,
it will seek reimbursement from private parties upon which CERCLA imposes
liability.
5
CERCLA imposes strict liability on the owners and operators of facilities
in which hazardous waste and other hazardous substances are deposited or from
which they are released or are likely to be released into the environment. It
also imposes strict liability on the generators of such waste, and the
transporters of the waste who select the disposal or treatment sites.
Liability may include cleanup costs incurred by third persons and damage to
publicly-owned natural resources. UPC's subsidiaries are subject to potential
liability under CERCLA as generators of hazardous waste and as transporters.
Some states have enacted, and other states are considering enacting,
legislation similar to CERCLA. Certain provisions of these acts are more
stringent than CERCLA. States that have passed such legislation are currently
active in designating more facilities as requiring cleanup and further
assessment.
The operations of the Corporation's subsidiaries are subject to the
requirements of the CAA. The 1990 amendments to the CAA include a provision
under Title V requiring that certain facilities obtain operating permits. EPA
regulations require all states to develop Federally-approvable permit
programs. Affected facilities must submit air operating permit applications
to the respective states within one year of the EPA's approval of the state
programs. Certain UPC railroad facilities may be required to obtain such
permits. In addition, in January 1997, the EPA issued proposed regulations
which, if adopted in the proposed form, would require that locomotives
purchased or remanufactured after 1999 or 2000 meet certain stringent
emissions criteria. While the cost of meeting these requirements may be
significant, expenditures are not expected to affect materially the
Corporation's financial condition or results of operations.
The operations of UPC's subsidiaries are also subject to other laws
protecting the environment, including permit requirements for wastewater
discharges pursuant to the National Pollutant Discharge Elimination System and
storm-water regulations under the Federal Water Pollution Control Act.
Cautionary Information
Certain information included in this report contains, and other materials
filed or to be filed by the Corporation with the Securities and Exchange
Commission (as well as information included in oral statements or other
written statements made or to be made by the Corporation) contain or will
contain, forward-looking statements within the meaning of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
Such forward- looking information may include, without limitation, statements
that the Corporation does not expect that lawsuits, environmental costs,
commitments, contingent liabilities, labor negotiations or other matters will
have a material adverse effect on its consolidated financial condition,
results of operations or liquidity and other similar expressions concerning
matters that are not historical facts, and projections as to the Corporation's
financial results. Such forward-looking information is or will be based on
information available at that time and is or will be subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in the statements. Important factors that could cause such
differences include but are not limited to industry competition and regulatory
developments, natural events such as floods and earthquakes, the effects of
adverse general economic conditions, fuel prices and the ultimate outcome of
environmental investigations or proceedings and other types of claims and
litigation.
6
Item 3. Legal Proceedings
Southern Pacific Acquisition
On August 12, 1996, the STB served a decision (the "Decision") approving
the acquisition of control of Southern Pacific and its rail affiliates by the
Corporation and its affiliates, the merger of SP with an affiliate of the
Corporation, and certain related transactions, subject to various conditions.
The acquisition was consummated on September 11, 1996.
On August 29, 1996, the Corporation and its affiliates filed a petition
equesting that the STB clarify certain conditions set forth in the Decision
that would allow the Burlington Northern and Santa Fe Railway Company ("BNSF")
to serve new transloading facilities and other new facilities on SP rail lines
of UPRR or SP over which BNSF has received trackage rights. The STB denied
this petition. In addition, various other parties requested that the STB (a)
clarify certain aspects of the condition requiring that the Corporation and
its affiliates modify contracts with shippers at "2-to-1" points to allow BNSF
to access at least 50% of the volume, (b) remove the restriction that it
imposed on the traffic that the Texas Mexican Railway Company ("Tex Mex")
could transport over trackage rights granted to Tex Mex in the Decision, (c)
expand the trackage rights that it made available to Dow Chemical Company for
use in connection with a possible build-out from its Freeport, Texas,
facility, (d) allow Utah Railway Company access to the facility of Railco,
Inc., in Carbon City, Utah, (e) reconsider its decision not to impose labor
protective conditions on the settlement agreement between certain rail
affiliates of the Corporation and the Gateway Western Railway Company, (f)
reconsider its decision to grant BNSF access to shippers in Lake Charles,
Louisiana, as a condition to the merger, and (g) reconsider its approval of
the merger. The STB resolved all of these petitions against the petitioners
and in favor of the Corporation and its affiliates.
On January 24, 1997, the Corporation and its affiliates, as well as
Kansas City Southern Railway Company ("KCS"), BNSF and Texas Utilities
Electric Company ("TUE"), submitted to the STB their proposals regarding the
implementation of the STB's condition requiring that, in order to preserve
TUE's competitive options for the movement of coal to/from its Martin Lake,
Texas generating station, BNSF be permitted to use its trackage rights over
UPRR and SP lines to handle future TUE coal trans via interchange with KCS at
two locations. The STB is considering the parties' dispute concerning the
scope of interchange rights that would appropriately implement this condition.
The City of Reno, Nevada (the "City"), filed a complaint on July 12, 1996
in the U.S. District Court for the District of Nevada seeking a writ of
mandamus directing the STB to prepare, with regard to the alleged impacts of
the merger on Reno and the surrounding area, an environmental impact statement
pursuant to the National Environmental Policy Act and a conformity
determination pursuant to the Clean Air Act. The District Court dismissed the
complaint for lack of jurisdiction and denied the City's petition to transfer
the suit to the U.S. Court of Appeals for the Ninth Circuit. The City
subsequently filed a petition for review of the Decision in the U.S. Court of
Appeals for the Ninth Circuit on August 21, 1996. The City's petition was
ordered consolidated in the U.S. Court of Appeals for the District of Columbia
Circuit with the petitions for review described below.
7
Judicial appeals with respect to the Decision were filed in the U.S.
Court of Appeals for the District of Columbia Circuit by various parties. The
Corporation and its affiliates filed a petition for review of the STB's
decision to impose a condition permitting BNSF to serve new transloading
facilities on lines of the merging railroads over which BNSF will have
overhead trackage rights, and also seeking review of the STB's approval of the
trackage rights applications of Tex Mex. BNSF also filed petitions for review
of the grant of trackage rights to Tex Mex. The City of Wichita and Sedgwick
County, Kansas, filed a petition seeking review of the Decision insofar as it
may require parties other than the Corporation and its affiliates to
contribute to the costs of mitigating the effects of increased rail traffic in
those locations. Enterprise Products Company filed a petition for review of
the Decision insofar as it did not identify Enterprise's Mont Belvieu, Texas,
facility as a "2-to-1" facility. The Western Coal Traffic League ("WCTL")
filed a petition for review on the grounds that the Decision approving the
merger and denying conditions sought by WCTL was arbitrary and capricious and
based on a misapplication of the facts and law. Geneva Steel Company filed
three petitions for review, contending that the Decision and certain STB
decisions resolving petitions for clarification or reconsideration were
arbitrary, capricious, an abuse of discretion, unsupported by substantial
evidence, or otherwise contrary to law. Tex Mex filed a petition for review
of the STB's decision to impose a restriction on traffic that the Tex Mex can
transport over trackage rights granted to Tex Mex in the Decision, as well as
the STB's decision refusing to reopen or reconsider the Decision. The United
Transportation Union-General Committee of Adjustment filed a petition for
review of the Decision and of the STB's decision denying a petition to reopen
the Decision. KCS filed petitions for review of the Decision raising
challenges to STB determinations (a) to grant rights to BNSF to handle traffic
of shippers in the Lake Charles area, (b) not to require UPRR and SP to ensure
that KCS could interchange traffic with BNSF at Beaumont, Texas, for movements
to Houston, Texas, and at Lake Charles, Louisiana, for movements to New
Orleans, Louisiana, (c) granting trackage rights to BNSF over certain KCS
trackage, (d) imposing limitations on the rights granted to Tex Mex, (e)
addressing environmental aspects of the proceeding, and (f) declining to
expand the procedural schedule.
All of the petitions for review have been consolidated. No briefing
schedule has yet been established. An STB motion to sever the petitions for
review filed by the City of Reno, Nevada, and the City of Wichita and Sedgwick
County, Kansas, and hold briefing in those two cases in abeyance is currently
pending. The Corporation believes that it is unlikely that the disposition of
these appeals will have a material impact on its results of operations.
The Decision provided for an 18-month process to conduct studies to
assess environmental impacts in the areas of Reno, Nevada, and Wichita,
Kansas, and arrive at mitigation measures to address those impacts. Both
studies are currently underway, and the STB's environmental section has
indicated that it expects to issue preliminary recommendations for public
comment by mid-summer.
On December 4, 1996, the Corporation and its affiliates filed a demand
for arbitration with the American Arbitration Association relating to the
implementation of a proportional rate arrangement that was part of the
settlement agreement between BNSF and the Corporation and its affiliates
related to the SP acquisition. On January 8, 1997, the parties signed a
letter agreement resolving in principle their disputes, and agreed to suspend
the arbitration proceeding
8
pending completion of a formal agreement.
On February 11, 1997, BNSF filed a demand for arbitration with the
American Arbitration Association relating to the condition of a rail line that
BNSF had obtained as part of the settlement agreement between BNSF and the
Corporation and its affiliates related to the SP acquisition. BNSF contends
that it is entitled to a $10.5 million escrow that SP established in
connection with this dispute, while the UPRR and SP maintain that BNSF is not
entitled to any of the escrowed funds. The Corporation and SP answered BNSF's
demand on February 25, 1997, and the arbitration proceeding is pending.
Bottleneck Proceedings
On August 27, 1996, the STB initiated a proceeding asking for arguments
and evidence on the issue of whether it should modify its existing regulations
regarding the prescription of, and challenge to, rates for rail service
involving a segment that is served by only one railroad between an interchange
point and an exclusively-served shipper facility (i.e., a bottleneck segment).
The STB proceeding also referred to pending motions to dismiss three
individual complaint proceedings filed by shippers challenging a class rate
charged for the movement of coal, two of which named UPRR and Southern Pacific
Transportation Company (SPT) as a party thereto. Neither complaint proceeding
individually involves significant exposure for reparations. However, if
existing regulation of bottleneck movements were changed, future revenue from
such movements, including those covered by the complaint proceedings, could be
substantially reduced. On December 31, 1996, the STB served a decision which
generally reaffirmed earlier rulings regarding a rail carrier's obligation to
provide rates for bottleneck segments and assured rail carriers' right to
differentially price traffic. It also dismissed the two complaint proceedings
in which UPRR and SPT were defendants. The STB decision is pending on appeal
before the Eighth Circuit Court of Appeals.
Labor Matters
The General Counsel of the NLRB is seeking a bargaining order remedy
in 15 cases involving Overnite where a Teamster local union lost a
representation election. These cases are pending before a NLRB administrative
law judge. A bargaining order remedy would require Overnite to recognize
and bargain with the union as if the union had won instead of lost
the election and would be warranted only if the following findings
are made: (1) the petitioning Teamsters local had obtained valid
authorization cards from a majority of the employees in an appropriate unit;
(2) Overnite committed serious unfair labor practices; and (3) those unfair
labor practices would preclude the holding of a fair election despite the
application of less drastic remedies. Under NLRB case law, a bargaining order
remedy would attach retrospectively to the date when, after a union with a
showing of majority support demanded recognition, Overnite embarked on an
unlawful course of conduct. In the event of such a retroactive effective
bargaining order, Overnite would face back pay liability for losses in
employee earnings due to unilateral changes in terms or conditions of
employment, such as layoffs, reduced hours of work or less remunerative work
assignments. Overnite believes it has substantial defenses to these cases and
intends to aggressively defend them.
9
Environmental Matters
The EPA has brought a civil action against SPT and its subsidiary, The
Denver and Rio Grande Western Railroad Company, in the U.S. District Court for
the District of Colorado alleging violation of the Clean Water Act and the Oil
Pollution Act. The complaint identifies seven incidents involving the alleged
release of hazardous substances into the waters of the United States and seeks
civil penalties of $25,000 per day and unspecified injunctive relief to
prevent future violations. The incidents are all related to derailments
dating back to 1992 and include six incidents in which the alleged releases
were from ruptured locomotive fuel tanks and one incident in 1996 involving an
alleged release of sulfuric acid near the Tennessee Pass.
In July 1995, the Butte County (Oroville, California) District Attorney
advised that a civil penalty action would be filed against UPRR for violations
resulting from a derailment and spill of diesel fuel into the Feather River in
Peo, California on April 14, 1995. In late July, the California Regional
Water Quality Control Board also filed a separate penalty action seeking
$40,000 for the same incident. This latter action was settled for $40,000.
In 1996, the District Attorney and California Department of Fish and Game
asserted a claim for natural resource damages in the range of $90,000 -
$100,000. UPRR is analyzing the claim and expects to resolve this matter
during the first half of 1997.
The Corporation and its affiliates have received notices from the EPA and
state environmental agencies alleging that it is or may be liable under
certain Federal or state environmental legislation for remediation costs
associated with requirements at various sites throughout the United States,
including sites which are on the Superfund National Priorities List or state
superfund lists. Although specific claims have been made by the EPA and state
regulators with respect to some of these sites, the ultimate impact of these
proceedings and suits by third parties cannot be predicted at this time
because of the number of potentially responsible parties involved, the degree
of contamination by various wastes, the scarcity and quality of volumetric
data related to many of the sites and/or the speculative nature of remediation
costs. Nevertheless, at many of the superfund sites, the Corporation believes
it will have little or no exposure because no liability should be imposed
under applicable law, one or more other financially able parties generated all
or most of the contamination, or a settlement of the Corporation's exposure
has been reached although regulatory proceedings at the sites involved have
not been formally terminated. Additional information on the Corporation's
potential environmental costs is set forth under Note 11 to the Corporation's
financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
10
Executive Officers of the Registrant and
Principal Executive Officers of Subsidiaries
Business
Experience
During Past
Name Position Age Five Years
Richard K. Davidson .......Chairman, President and 55 (1)
Chief Executive Officer of
UPC and Chairman and Chief
Executive Officer of the
Railroad
L. White Matthews, III ....Executive Vice President - 51 (2)
Finance
Carl W. von Bernuth .......Senior Vice President 53 Current
and General Counsel Position
John B. Gremillion, Jr. ...Vice President - Taxes 50 Current
Position
Mary E. McAuliffe .........Vice President - External 51 Current
Relations Position
Joseph E. O'Connor, Jr. ...Vice President and Controller 39 (3)
Gary F. Schuster ..........Vice President - Corporate 55 Current
Relations Position
Gary M. Stuart ............Vice President and Treasurer 56 Current
Position
Judy L. Swantak ...........Vice President and Corporate 41 Current
Secretary Position
Jerry R. Davis.............President and Chief Operating 58 (4)
Officer of the Railroad
Leo H. Suggs...............Chairman and Chief Executive 57 (5)
Officer of Overnite
___________________________
11
Executive Officers of the Registrant and
Principal Executive Officers of Subsidiaries (Continued)
(1) Mr. Davidson was elected Chairman and Chief Executive Officer effective
January 1, 1997. He became President of UPC effective May 1994 and was
also Chief Operating Officer of UPC from November 1995 to December 1996.
He was President and Chief Executive Officer of the Railroad from
September 1991 until August 1995, Chairman of the Railroad until November
1996 and Chairman and Chief Executive Officer of the Railroad since
November 1996.
(2) Mr. Matthews was elected to his present position effective April 1992.
Prior thereto, he served as Senior Vice President - Finance of UPC.
(3) Mr. O'Connor was elected to his current position effective October 1996.
He was Director - Strategic Planning of UPC from November 1995 to
October 1996 and Director - Planning of UPC from April 1994 to
November 1995. Prior thereto, he was Manager - Planning of UPC.
(4) Mr. Davis was elected to his current position in November 1996. From
September 1996 to November 1996, he served as President - SP Rail
Operations. From February 1995 to September 1996, he served as
President and Chief Executive Officer of Southern Pacific Rail
Corporation. From January 1992 to February 1995, Mr. Davis served as
Executive Vice President and Chief Operating Officer of CSX
Transportation, Inc.(CSXT). Prior thereto, he was Executive Vice
President - Operations of CSXT and held various executive positions at
the Railroad.
(5) Mr. Suggs was elected to his current position in April 1996. From
January 1993 to April 1996, he was President and Chief Executive Officer
of Preston Trucking Company, Inc. Prior thereto, Mr. Suggs served as
Senior Vice President of Corporate Development of Yellow Corporation.
12
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Information as to the markets in which UPC's Common Stock is traded,
the quarterly high and low prices for such stock, the dividends declared with
respect to the Common Stock during the last two years, and the approximate
number of stockholders of record at January 31, 1997 is set forth under
Selected Quarterly Data and Stockholders and Dividends on page 49 of the
Annual Report. Information as to restrictions on the payment of dividends with
respect to the Corporation's Common Stock is set forth in Note 7 to Financial
Statements on pages 44 and 45 of the Annual Report. Such information is
incorporated herein by reference.
Item 6. Selected Financial Data
Selected Financial Data for the Corporation for each of the last 10
years is set forth under the Ten-Year Financial Summary on page 51 of the
Annual Report. All such information is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Information as to UPC's results of operations, cash flows, liquidity
and capital resources, and other matters is set forth in the Financial Review
on pages 22 through 31 of the Annual Report, and is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The Corporation's consolidated financial statements, accounting
policy disclosures, Notes to Financial Statements, Business Segment
information and Independent Auditors' Report are presented on pages 32 through
48 of the Annual Report. Selected quarterly financial data are set forth
under Selected Quarterly Data on page 49 of the Annual Report. All such
information is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
13
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors of Registrant.
Information as to the names, ages, positions and offices with UPC, terms
of office, periods of service, business experience during the past five years
and certain other directorships held by each director or person nominated to
become a director of UPC is set forth in the Directors segments of the Proxy
Statement and is incorporated herein by reference.
(b) Executive Officers of Registrant.
Information concerning the executive officers of UPC and its subsidiaries
is presented in Part I of this Report under Executive Officers of the
Registrant and Principal Executive Officers of Subsidiaries.
(c) Section 16(a) Compliance.
Information concerning compliance with Section 16(a) of the Securities
Exchange Act of 1934 is set forth in the Compliance with Section 16(a) of the
Securities Exchange Act segment of the Proxy Statement and is incorporated
herein by reference.
Item 11. Executive Compensation
Information concerning remuneration received by Union Pacific's executive
officers and directors is presented in the Compensation of Directors,
Compensation Committee Interlocks and Insider Participation, Report on
Executive Compensation, Summary Compensation Table, Option/SAR Grants Table,
Option/SAR Exercises and Year-End Value Table, Defined Benefit Plans and Five-
Year Performance Comparison segments of the Proxy Statement and is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information as to the number of shares of Union Pacific's equity
securities beneficially owned as of February 12, 1997 by each of its directors
and nominees for director, its five most highly compensated executive officers
and its directors and executive officers as a group is set forth in the
Directors and Security Ownership of Management segments of the Proxy Statement
and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information on related transactions is set forth in the Certain
Relationships and Related Transactions and Compensation Committee Interlocks
and Insider Participation segments of the Proxy Statement and is incorporated
herein by reference.
14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) and (2) Financial Statements and Schedules
----------------------------------------------
The financial statements, accounting policy disclosures, Notes to
Financial Statements and Independent Auditors' Report on pages 32
through 48, inclusive, of the Annual Report are incorporated herein by
reference.
No schedules are required to be filed because of the absence of
conditions under which they would be required or because the required
information is set forth in the financial statements referred to above.
(3) Exhibits
------------
Items 10(j) through 10(w) below constitute management contracts and
executive compensation arrangements required to be filed as exhibits to
this report.
2 Amended and Restated Agreement and Plan of Merger, dated as
of July 12, 1996, among the Corporation, SP, UP Holding
Company, Inc. ("UP Holding") and Union Pacific Merger Co. ("UP
Merger"), is incorporated herein by reference to Annex B to the
Joint Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No.33-64707).
3(a) Revised Articles of Incorporation of UPC, as amended through
April 25, 1996, are incorporated herein by reference to
Exhibit 3 to the Corporation's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996.
3(b) By-Laws of UPC, as amended effective as of September 26, 1996,
are incorporated herein by reference to Exhibit 3 to
the Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.
4 Pursuant to various indentures and other agreements, UPC
has issued long-term debt; however, no such agreement has
securities or obligations covered thereby which exceed 10%
of the Corporation's total consolidated assets. UPC agrees
to furnish the Commission with a copy of any such indenture
or agreement upon request by the Commission.
9 Voting Trust Agreement, dated as of August 3, 1995, among
UPC, UP Acquisition Corporation and Southwest Bank of St.
Louis, is incorporated herein by reference to Annex K to the
Joint Proxy Statement/Prospectus included in UPC's
Registration Statement on Form S-4 (No. 33-64707).
15
10(a) Amended and Restated Anschutz Shareholders Agreement, dated
as of July 12, 1996, among UPC, the Company, The Anschutz
Corporation ("TAC"), Anschutz Foundation (the "Foundation"),
and Mr. Philip F. Anschutz ("Mr. Anschutz"), is incorporated
herein by reference to Annex D to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment
No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(b) Amended and Restated MSLEF Shareholder Agreement, dated as
of July 12, 1996, between UPC and The Morgan Stanley
Leveraged Equity Fund II, L.P., is incorporated herein by
reference to Annex E to the Joint Proxy Statement/Prospectus
included in Post-Effective Amendment No. 2 to UPC's
Registration Statement on Form S-4 (No. 33-64707).
10(c) Amended and Restated Parent Shareholders Agreement, dated as
of July 12, 1996, among UPC, UP Merger and SP is
incorporated herein by reference to Annex F to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(d) Amended and Restated Anschutz/Spinco Shareholders Agreement,
dated as of July 12, 1996, among Union Pacific Resources
Group Inc. ("Resources"), TAC, the Foundation and Mr.
Anschutz is incorporated herein by reference to Annex G to
the Joint Proxy Statement/Prospectus included in Post-
Effective Amendment No. 2 to UPC's Registration Statement on
Form S-4 (No. 33-64707).
10(e) Amended and Restated Registration Rights Agreement, dated as
of July 12, 1996, among UPC, TAC, and the Foundation is
incorporated herein by reference to Annex H to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(f) Amended and Restated Registration Rights Agreement, dated as
of July 12, 1996, among Resources, TAC, and the Foundation
is incorporated herein by reference to Annex I to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(g) Amended and Restated Registration Rights Agreement, dated as
of July 12, 1996, among UPC, UP Holding, UP Merger and SP is
incorporated herein by reference to Annex J to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
16
10(h) Agreement, dated September 25, 1995, among UPC, UPRR, MPRR
and SP, Southern Pacific Transportation Company (SPT), The
Denver & Rio Grande Western Railroad Company (D&RGW), St.
Louis Southwestern Railway Company (SLSRC) and SPCSL Corp.
(SPCSL), on the one hand, and Burlington Northern Railroad
Company (BN) and The Atchison, Topeka and Santa Fe Railway
Company (Santa Fe), on the other hand, is incorporated by
reference to Exhibit 10.11 to UPC's Registration Statement
on Form S-4 (No. 33-64707).
10(i) Supplemental Agreement, dated November 18, 1995, between
UPC, UPRR, MPRR and SP, SPT, D&RGW, SLSRC and SPCSL, on the
one hand, and BN and Santa Fe, on the other hand, is
incorporated herein by reference to Exhibit 10.12 to UPC's
Registration Statement on Form S-4 (No. 33-64707).
10(j) The Executive Incentive Plan of UPC, amended April 27, 1995,
is incorporated herein by reference to Exhibit 10(a) to the
Corporation's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995.
10(k) The 1982 Stock Option and Restricted Stock Plan of UPC, as
amended as of February 1, 1992, is incorporated herein by
reference to Exhibit 10(c) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1991.
10(l) The 1988 Stock Option and Restricted Stock Plan of UPC, as
amended as of February 1, 1992, is incorporated herein by
reference to Exhibit 10(d) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1991.
10(m) The Supplemental Pension Plan for Officers and Managers of
UPC and Affiliates, as amended and restated, is incorporated
herein by reference to Exhibit 10(d) to the Corporation's
Annual Report on Form 10-K for the year ended December 31,
1993.
10(n) Agreement, dated as of January 1, 1997, between UPC and Drew
Lewis.
10(o) Employment Agreement, dated as of February 20, 1995, between
SP and Jerry R. Davis, is incorporated by reference to
Exhibit 10.12 to SP's Annual Report on Form 10-K for the
year ended December 31, 1994.
10(p) Letter Agreement, dated August 30, 1996, between UPC
and Jerry R. Davis, is incorporated by reference to Exhibit
10(b) to the Corporation's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996.
10(q) The 1992 Restricted Stock Plan for Non-Employee Directors of
UPC, as amended as of January 28, 1993, is incorporated
herein by reference to Exhibit 10(a) to the Corporation's
Current Report on Form 8-K filed March 16, 1993.
17
10(r) The 1993 Stock Option and Retention Stock Plan of UPC, as
amended April 21, 1995, is incorporated herein by reference
to Exhibit 10(b) to the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995.
10(s) The Pension Plan for Non-Employee Directors of UPC, as
amended January 25, 1996 is incorporated herein by reference
to Exhibit 10(w) to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1995.
10(t) The Executive Life Insurance Plan of UPC, adopted August 2,
1994, is incorporated herein by reference to Exhibit 10 to
the Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994.
10(u) The UPC Stock Unit Grant and Deferred Compensation Plan for
the Board of Directors, as amended January 25, 1996 is
incorporated herein by reference to Exhibit 10(y) to the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995.
10(v) Charitable Contribution Plan for Non-Employee Directors of
UPC is incorporated herein by reference to Exhibit 10(z) to
the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1995.
10(w) Written Description of Other Executive Compensation
Arrangements of UPC is incorporated herein by reference to
Exhibit 10(o) to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1992.
(11) Computation of earnings per share.
(12) Computation of ratio of earnings to fixed charges.
(13) Pages 8 through 53, inclusive, of UPC's Annual Report to
Stockholders for the year ended December 31, 1996, but
excluding photographs set forth on pages 8 through 21, none
of which supplements the text and which are not otherwise
required to be disclosed in this Annual Report on Form 10-K.
(21) List of the Corporation's significant subsidiaries and their
respective states of incorporation.
(23) Independent Auditors' Consent.
(24) Powers of attorney executed by the directors of UPC.
(27) Financial Data Schedule.
(99) (a) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the UPC
Thrift Plan - to be filed by amendment.
18
(99) (b) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Fruit Express Company Agreement Employee
401(k) Retirement Thrift Plan - to be filed by
amendment.
(99) (c) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Skyway
Retirement Savings Plan - to be filed by amendment.
(99) (d) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Agreement Employee 401(k) Retirement Thrift
Plan - to be filed by amendment.
(99) (e) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Motor Freight Agreement Employee 401(k)
Retirement Thrift Plan - to be filed by amendment.
(99) (f) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the
Chicago and North Western Railway Company Profit
Sharing and Retirement Savings Program - to be filed
by amendment.
(99) (g) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the
Southern Pacific Rail Corporation Thrift Plan - to be
filed by amendment.
(b) Reports on Form 8-K
On October 17, 1996, the Corporation filed Amendment No. 1
to a Current Report on Form 8-K dated September 16, 1996.
Such Amendment contained certain pro forma financial
information related to the Southern Pacific acquisition and
the Spin-Off as required by Regulation S-X.
On October 21, 1996, the Corporation filed a Current Report
on Form 8-K disclosing the completion of the Spin-Off. Such
Report also included a press release dated October 17, 1996
containing earnings information for UPC for the third
quarter of 1996 and the nine months ended September 30,
1996.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on this 26th day of
March, 1997.
UNION PACIFIC CORPORATION
By /s/ Richard K. Davidson
-------------------------------
(Richard K. Davidson, Chairman,
President and Chief Executive
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below, on this 26th day of March, 1997, by the
following persons on behalf of the registrant and in the capacities indicated.
PRINCIPAL EXECUTIVE OFFICER
AND DIRECTOR:
/s/ Richard K. Davidson
-------------------------------
(Richard K. Davidson, Chairman,
President, Chief Executive
Officer and Director)
PRINCIPAL FINANCIAL OFFICER
AND DIRECTOR:
/s/ L. White Matthews, III
-------------------------------
(L. White Matthews, III,
Executive Vice President -
Finance and Director)
PRINCIPAL ACCOUNTING OFFICER:
/s/ Joseph E. O'Connor, Jr.
-------------------------------
(Joseph E. O'Connor, Jr.,
Vice President and Controller)
20
SIGNATURES - (Continued)
DIRECTORS:
Philip F. Anschutz* Judith Richards Hope*
Robert P. Bauman* Richard J. Mahoney*
Richard B. Cheney* John R. Meyer*
E. Virgil Conway* Thomas A. Reynolds, Jr.*
Spencer F. Eccles* James D. Robinson, III*
Elbridge T. Gerry, Jr.* Robert W. Roth*
William H. Gray, III* Richard D. Simmons*
* By /s/ Thomas E. Whitaker
______________________________________
(Thomas E. Whitaker, Attorney-in-fact)
21
EXHIBIT INDEX
_____________
Items 10(j) through 10(w) below constitute management contracts and executive
compensation arrangements required to be filed as exhibits to this report.
Exhibit Number
--------------
2 Amended and Restated Agreement and Plan of Merger, dated as
of July 12, 1996, among the Corporation, SP, UP Holding
Company, Inc. ("UP Holding") and Union Pacific Merger Co.
("UP Merger"), is incorporated herein by reference to
Annex B to the Joint Proxy Statement/Prospectus included in
Post-Effective Amendment No. 2 to UPC's Registration
Statement on Form S-4 (No. 33-64707).
3(a) Revised Articles of Incorporation of UPC, as amended through
April 25, 1996, are incorporated herein by reference to
Exhibit 3 to the Corporation's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996.
3(b) By-Laws of UPC, as amended effective as of September 26,
1996, are incorporated herein by reference to Exhibit 3 to
the Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.
4 Pursuant to various indentures and other agreements, UPC
has issued long-term debt; however, no such agreement has
securities or obligations covered thereby which exceed 10%
of the Corporation's total consolidated assets. UPC agrees
to furnish the Commission with a copy of any such indenture
or agreement upon request by the Commission.
9 Voting Trust Agreement, dated as of August 3, 1995, among
UPC, UP Acquisition Corporation and Southwest Bank of St.
Louis, is incorporated herein by reference to Annex K to the
Joint Proxy Statement/Prospectus included in UPC's
Registration Statement on Form S-4 (No. 33-64707).
10(a) Amended and Restated Anschutz Shareholders Agreement, dated
as of July 12, 1996, among UPC, the Company, The Anschutz
Corporation ("TAC"), Anschutz Foundation (the "Foundation"),
and Mr. Philip F. Anschutz ("Mr. Anschutz"), is incorporated
herein by reference to Annex D to the Joint Proxy
Statement/Prospectus included in Post-Effective Amendment
No. 2 to UPC's Registration Statement on Form S-4(No. 33-64707).
10(b) Amended and Restated MSLEF Shareholder Agreement, dated as
of July 12, 1996, between UPC and The Morgan Stanley
Leveraged Equity Fund II, L.P., is incorporated herein by
reference to Annex E to the Joint Proxy Statement/Prospectus
included in Post-Effective Amendment No. 2 to UPC's
Registration Statement on Form S-4 (No. 33-64707).
22
10(c) Amended and Restated Parent Shareholders Agreement, dated as
of July 12, 1996, among UPC, UP Merger and SP is
incorporated herein by reference to Annex F to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(d) Amended and Restated Anschutz/Spinco Shareholders Agreement,
dated as of July 12, 1996, among Union Pacific Resources
Group Inc. ("Resources"), TAC, the Foundation and Mr.
Anschutz is incorporated herein by reference to Annex G to
the Joint Proxy Statement/Prospectus included in Post-
Effective Amendment No. 2 to UPC's Registration Statement on
Form S-4 (No. 33-64707).
10(e) Amended and Restated Registration Rights Agreement, dated as
of July 12, 1996, among UPC, TAC, and the Foundation is
incorporated herein by reference to Annex H to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(f) Amended and Restated Registration Rights Agreement, dated as
of July 12, 1996, among Resources, TAC, and the Foundation
is incorporated herein by reference to Annex I to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(g) Amended and Restated Registration Rights Agreement, dated as
of July 12, 1996, among UPC, UP Holding, UP Merger and SP is
incorporated herein by reference to Annex J to the Joint
Proxy Statement/Prospectus included in Post-Effective
Amendment No. 2 to UPC's Registration Statement on Form S-4
(No. 33-64707).
10(h) Agreement, dated September 25, 1995, among UPC, UPRR, MPRR
and SP, Southern Pacific Transportation Company (SPT), The
Denver & Rio Grande Western Railroad Company (D&RGW), St.
Louis Southwestern Railway Company (SLSRC) and SPCSL Corp.
(SPCSL), on the one hand, and Burlington Northern Railroad
Company (BN) and The Atchison, Topeka and Santa Fe Railway
Company (Santa Fe), on the other hand, is incorporated by
reference to Exhibit 10.11 to UPC's Registration Statement
on Form S-4 (No. 33-64707).
10(i) Supplemental Agreement, dated November 18, 1995, between
UPC, UPRR, MPRR and SP, SPT, D&RGW, SLSRC and SPCSL, on the
one hand, and BN and Santa Fe, on the other hand, is
incorporated herein by reference to Exhibit 10.12 to UPC's
Registration Statement on Form S-4 (No. 33-64707).
10(j) The Executive Incentive Plan of UPC, amended April 27, 1995,
is incorporated herein by reference to Exhibit 10(a) to the
Corporation's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995.
23
10(k) The 1982 Stock Option and Restricted Stock Plan of UPC, as
amended as of February 1, 1992, is incorporated herein by
reference to Exhibit 10(c) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1991.
10(l) The 1988 Stock Option and Restricted Stock Plan of UPC, as
amended as of February 1, 1992, is incorporated herein by
reference to Exhibit 10(d) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1991.
10(m) The Supplemental Pension Plan for Officers and Managers of
UPC and Affiliates, as amended and restated, is incorporated
herein by reference to Exhibit 10(d) to the Corporation's
Annual Report on Form 10-K for the year ended December 31,
1993.
10(n) Agreement, dated as of January 1, 1997, between UPC and Drew
Lewis.
10(o) Employment Agreement, dated as of February 20, 1995, between
SP and Jerry R. Davis, is incorporated by reference to
Exhibit 10.12 to SP's Annual Report on Form 10-K for the
year ended December 31, 1994.
10(p) Letter Agreement, dated August 30, 1996, between UPC
and Jerry R. Davis, is incorporated by reference to Exhibit
10(b) to the Corporation's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996.
10(q) The 1992 Restricted Stock Plan for Non-Employee Directors of
UPC, as amended as of January 28, 1993, is incorporated
herein by reference to Exhibit 10(a) to the Corporation's
Current Report on Form 8-K filed March 16, 1993.
10(r) The 1993 Stock Option and Retention Stock Plan of UPC, as
amended April 21, 1995, is incorporated herein by reference
to Exhibit 10(b) to the Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995.
10(s) The Pension Plan for Non-Employee Directors of UPC, as
amended January 25, 1996 is incorporated herein by reference
to Exhibit 10(w) to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1995.
10(t) The Executive Life Insurance Plan of UPC, adopted August 2,
1994, is incorporated herein by reference to Exhibit 10 to
the Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994.
10(u) The UPC Stock Unit Grant and Deferred Compensation Plan for
the Board of Directors, as amended January 25, 1996 is
incorporated herein by reference to Exhibit 10(y) to the
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995.
24
10(v) Charitable Contribution Plan for Non-Employee Directors of
UPC is incorporated herein by reference to Exhibit 10(z) to
the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1995.
10(w) Written Description of Other Executive Compensation
Arrangements of UPC is incorporated herein by reference to
Exhibit 10(o) to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1992.
(11) Computation of earnings per share.
(12) Computation of ratio of earnings to fixed charges.
(13) Pages 8 through 53, inclusive, of UPC's Annual Report to
Stockholders for the year ended December 31, 1996, but
excluding photographs set forth on pages 8 through 21, none
of which supplements the text and which are not otherwise
required to be disclosed in this Annual Report on Form 10-K.
(21) List of the Corporation's significant subsidiaries and their
respective states of incorporation.
(23) Independent Auditors' Consent.
(24) Powers of attorney executed by the directors of UPC.
(27) Financial Data Schedule.
(99) (a) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Corporation Thrift Plan - to be filed by
amendment.
(99) (b) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Fruit Express Company Agreement Employee
401(k) Retirement Thrift Plan - to be filed by
amendment.
(99) (c) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Skyway
Retirement Savings Plan - to be filed by amendment.
(99) (d) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Agreement Employee 401(k) Retirement Thrift
Plan - to be filed by amendment.
(99) (e) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the Union
Pacific Motor Freight Agreement Employee 401(k)
Retirement Thrift Plan - to be filed by amendment.
25
(99) (f) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the
Chicago and North Western Railway Company Profit
Sharing and Retirement Savings Program - to be filed
by amendment.
(99) (g) Financial Statements for the Fiscal Year ended
December 31, 1996 required by Form 11-K for the
Southern Pacific Rail Corporation Thrift Plan - to be
filed by amendment.
EX-10
2
CONSULTING AGREEMENT
Exhibit 10(n)
-------------
CONSULTING AGREEMENT
AGREEMENT (the "Agreement"), made as of the 1st day of January,
1997, by and between Union Pacific Corporation, a Utah corporation ("UPC"),
and Drew Lewis ("Consultant").
W I T N E S S E T H:
WHEREAS, Consultant is retiring as Chairman and Chief Executive
Officer of UPC on December 31, 1996; and
WHEREAS, UPC appreciates the value of Consultant's advice and
counsel and wishes to retain him to provide consulting services relating to
governmental affairs, strategic matters and such other matters on which his
advice may be requested by UPC (the "Consulting Services"), and Consultant
is willing to provide the Consulting Services, on the terms and conditions
referred to herein.
NOW THEREFORE, in consideration of the foregoing and the respective
covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. Engagement. UPC hereby agrees to engage the Consultant
to provide the Consulting Services to UPC and its affiliates, and the
Consultant hereby agrees to accept such engagement, on the terms and
conditions set forth herein, for the period commencing January 1, 1997 and
expiring on December 31, 2001.
2. Services. The Consultant agrees, during the Term, to use
his best efforts to provide Consulting Services to UPC and its affiliates,
at the direction and request of the Chief Executive Officer of UPC,
devoting such time as UPC may reasonably request, not to exceed 120 hours
in any three month period unless Consultant agrees to a greater amount of
time.
3. Independent Contractor. The Consultant shall be deemed
to be an independent contractor; the Consultant shall not be considered an
employee or agent of UPC or its affiliates for any purpose and shall not be
entitled or eligible to participate in any benefits or privileges given or
extended by UPC or its affiliates to their employees. The Consultant shall
have no power or right to enter into contracts or commitments on behalf of
UPC or its affiliates.
4. Fees and Expenses.
(a) Fees. In consideration of the Consulting Services
as contemplated by this Agreement, UPC shall pay to the Consultant during
the Term the sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) per
year payable annually in advance on or about the first business day of each
year in the Term.
(b) Reimbursement of Expenses. During the Term, UPC
shall reimburse the Consultant for all reasonable and necessary business
expenses incurred by him in accordance with and on the terms of UPC's
customary expense reimbursement policies.
2
5. Termination of Engagement. UPC shall have the right to
terminate the engagement of the Consultant under this Agreement prior to
the end of the Term for any reason, with or without cause.
6. Effect of Termination. In the event the engagement of
Consultant is terminated by UPC for any reason (other than breach by
Consultant of his obligations hereunder), or in the event of Consultant's
death, he shall be entitled to receive all fees specified under Section
4(a) for the remainder of the Term. Except as expressly provided herein
to the contrary, upon termination of the Consultant's engagement hereunder,
all rights and duties of the Consultant and UPC hereunder shall cease.
Notwithstanding the foregoing, no termination shall affect the Consultant's
duties and obligations to UPC under Sections 7 and 8 of this Agreement.
7. Confidential Information.
(a) The Consultant shall not, without the written
consent of the Board of Directors of UPC or a person authorized thereby or
pursuant to lawful process, while engaged by UPC or at any time thereafter,
directly or indirectly publish or disclose to any person, firm, corporation
or other entity, whether or not a competitor of UPC or any affiliate
thereof, except as necessary in connection with the performance by the
Consultant of his duties to UPC, any Confidential Information. For
purposes of this Agreement, "Confidential Information" means all
information about UPC and its affiliates obtained or developed by Employee
while an employee of or consultant to UPC including, but not limited to,
information regarding directors, officers and other key personnel of UPC
and its affiliates, financial information or plans and other matters, and
which UPC has requested be held in confidence or which it could reasonably
be expected to desire to be held in confidence, or the disclosure of which
would likely be disparaging or disadvantageous to UPC or any of such
employees and directors, but shall not include information already in the
public domain.
(b) The Consultant acknowledges that the provisions of this
Section 7 are reasonable and necessary for the protection of UPC and that
UPC will be irrevocably damaged if such covenants are not specifically
enforced. Accordingly, the Consultant agrees that, in addition to any
other relief to which UPC may be entitled in the form of actual or punitive
damages, UPC shall be entitled to seek and obtain injunctive relief from a
court of competent jurisdiction (without the posting of any bond therefor)
for the purposes of restraining the Consultant from any actual or
threatened breach of such covenants. UPC shall also be entitled to
terminate the engagement of Consultant and cease all payments under Section
4 in the event of a breach of this Section 7 during the Term.
8. Noncompetition.
(a) During the Term and for one year from the
expiration of the Term, the Consultant will not directly or indirectly own,
manage, operate, control or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director, consultant or otherwise with, or have any financial interest in
(except through the ownership of less than 5% of the outstanding shares of
capital stock of publicly held corporations), or aid or assist anyone else
in the conduct of, any business of the same type and character as the
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business UPC or any of its affiliates is conducting at that time (or at the
time the Consultant's engagement hereunder was terminated if the Consultant
is no longer engaged by UPC), including without limitation the business of
providing transportation services, in any location in which UPC or its
affiliates does business at the time (or at the time the Consultant's
engagement hereunder was terminated if the Consultant is no longer engaged
by UPC.)
(b) The Consultant and UPC have attempted to specify a
reasonable period of time, a reasonable area and reasonable restrictions to
which this Section 8 shall apply. The Consultant and UPC agree that if a
court or administrative body should subsequently determine that the terms
of this Section 8 are greater than reasonably necessary to protect UPC's
interests, UPC agrees to waive those terms that are found by a court or
administrative body to be greater than reasonably necessary to protect
UPC's interests and to request that the court or administrative body reform
this Agreement specifying a reasonable period of time and such other
reasonable restrictions as the court or administrative body deems
necessary.
(c) In addition to any other relief to which UPC may be
entitled, UPC shall be entitled to terminate the engagement of Consultant
and cease all payments under Section 4 in the event of a breach of this
Section 8 during the Term.
9. Notices. Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been
duly given when personally delivered or when mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Consultant, to:
Drew Lewis
P.O. Box 70
Lederach, PA 19450
If to UPC, to:
Union Pacific Corporation
Martin Tower
Eighth and Eaton Avenues
Bethlehem, PA 18018
Attn: Chief Executive Officer
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
10. Amendment and Waiver. No provisions of this Agreement
may be amended, waived or discharged unless such amendment, waiver or
discharge is agreed to in writing and signed by the Consultant and the
Chief Executive Officer of UPC or another officer of UPC specifically
designated by the Board of Directors of UPC. No waiver by any party hereto
at any time of any breach by another party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
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party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
11. Prior Agreement; Integration. The parties hereto agree
that the Employment Agreement, dated January 30, 1986, between the parties
is hereby terminated and no further obligations remain thereunder. This
Agreement contains the entire understanding of the parties with respect to
its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those expressly set forth
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter.
12. Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania.
13. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity and
enforceability of any other provision of this Agreement, which other
provisions shall remain in full force and effect.
14. Assignment; Binding Agreement. This Agreement may not be
transferred or assigned by either party, but shall be binding on the
successors and permitted assigns of each party. This Agreement and all
rights of the Consultant hereunder shall inure to the benefit of and be
enforceable by the Consultant's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
UNION PACIFIC CORPORATION
By: /s/ Richard K. Davidson
________________________
Richard K. Davidson
Chairman, President and
Chief Executive Officer
CONSULTANT
By: /s/ Drew Lewis
___________________________
Drew Lewis