Summary
Union Pacific Corporation (UNP) filed a Current Report on Form 8-K on October 25, 2010, primarily to disclose a change in its accounting policy for rail grinding costs. Historically, these costs were capitalized and depreciated; however, effective January 1, 2010, the company adopted a preferable accounting principle to expense these costs as incurred. This change, while deemed preferable for eliminating subjectivity, resulted in a retrospective reduction of net income for prior periods. Specifically, net income for the years ended December 31, 2009, 2008, and 2007, was reduced by $8 million, $3 million, and $7 million, respectively. This equates to a $0.01, $0.01, and $0.02 per share reduction for those respective years. The filing provides "as adjusted" financial information to reflect this accounting change and emphasizes that it is not an amendment or restatement of the prior Form 10-K, but rather an update to incorporate this policy change. Investors should note this impact on historical earnings figures when analyzing the company's performance trends.
Key Highlights
- 1Union Pacific Corp. is updating its financial reporting to reflect a change in accounting principle for rail grinding costs.
- 2The company is shifting from capitalizing rail grinding costs to expensing them as incurred, effective January 1, 2010.
- 3This change in accounting principle is considered preferable for reducing subjectivity in financial reporting.
- 4The retrospective application of this change results in a decrease in reported net income for prior years: $8 million (2009), $3 million (2008), and $7 million (2007).
- 5Earnings per share are also reduced retrospectively by $0.01 (2009), $0.01 (2008), and $0.02 (2007).
- 6The filing includes "as adjusted" financial information to reflect this change but is not a restatement of the 2009 Form 10-K.
- 7The report also contains various certifications and XBRL-formatted financial data.