Record Operating Revenue Drives 15 Percent Earnings Growth for Union Pacific

Omaha, Neb., July 19, 2007 – Union Pacific Corporation (NYSE: UNP) today reported second quarter 2007 net income of $446 million or $1.65 per diluted share, compared to $390 million, or $1.44 per diluted share in the same quarter last year. Operating income during the second quarter of 2007 was $787 million, up from $717 million reported in the second quarter of 2006.

Second Quarter 2007 Highlights

  • Second quarter 2007 earnings per share grew 15 percent to $1.65 per diluted share.
  • Operating revenue was an all-time quarterly record of $4 billion, up 3 percent.
  • Operating income increased 10 percent to $787 million.
  • Second quarter 2007 operating ratio improved by 1.2 points to 80.5 percent.

"Union Pacific topped the $4 billion quarterly revenue mark for the first time in our history," said Jim Young, Chairman and Chief Executive Officer. "More importantly, in the face of economic and weather challenges, we improved our operating efficiency, posting the best second quarter operating ratio in four years. In addition, our customer satisfaction scores improved 11 points year-over-year."

Second Quarter 2007 Overview

  • Commodity revenue set an all-time quarterly record, up 3 percent to $3.9 billion. Four of the six business groups posted revenue increases in the quarter as total average revenue per car (ARC) grew 7 percent.
  • Second quarter 2007 carloads declined 3 percent versus the second quarter of 2006 to 2.4 million. Severe weather in the Midwest, a softer housing market and decreased auto sales all contributed to the decline.
  • The second quarter 2007 operating ratio improved to 80.5 percent compared to 81.7 percent in the second quarter of 2006. This was the best second quarter operating ratio in four years.
  • Quarterly operating metrics, as reported to the Association of American Railroads, improved. Average terminal dwell time improved 11 percent to 24.7 hours versus 27.6 hours reported in the second quarter of 2006. Average quarterly train speed was 21.6 mph versus 21.2 mph in the second quarter of 2006, a two percent increase.
  • The Company repurchased more than 3.6 million common shares at an average share price of $116.40 in the second quarter of 2007. Year-to-date purchases total 5.7 million common shares or 28 percent of the 20 million share repurchase program.

Second Quarter Railroad Commodity Revenue Summary versus 2006

  • Chemicals up 8 percent
  • Agricultural up 7 percent
  • Energy up 4 percent
  • Intermodal up 3 percent
  • Automotive was flat
  • Industrial Products down 1 percent

Looking Forward

"Although the economic outlook remains uncertain, our continued focus on yield and productivity improvements should drive better service for our customers and strong financial results for our shareholders in the second half of 2007," Young said.

Union Pacific Corporation owns one of America's leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country and serves the fastest-growing U.S. population centers. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad offers competitive long-haul routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico, making it North America’s premier rail franchise.

Supplemental financial information is attached.

Additional information is available at our Web site: www.up.com.

Our contact for investors is Jennifer Hamann at (402) 544-4227.
Our media contact is Kathryn Blackwell at (402) 544-3753.

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