Union Pacific Reports 38 Percent Earnings Growth

Record Third Quarter Despite Hurricane Impact and Economic Conditions

Omaha, Neb., October 23, 2008 – Union Pacific Corporation (NYSE: UNP) today reported 2008 third quarter net income of $703 million, or $1.38 per diluted share, compared to $532 million, or $1.00 per diluted share for the third quarter of 2007.

Third Quarter 2008 Records

  • Diluted earnings per share increased 38 percent to $1.38.
  • Operating revenue totaled $4.8 billion, up 16 percent.
  • Operating income grew 21 percent to $1.2 billion.
  • Net income increased 32 percent to $703 million.

"Union Pacific achieved record quarterly financial results despite a challenging economic environment and record-high diesel fuel prices," said Jim Young, Union Pacific chairman and chief executive officer. "Solid pricing, increasing fuel cost recoveries and strong operating productivity all made positive impacts on our third quarter earnings."

2008 Third Quarter Summary

Union Pacific reported record operating income of $1.2 billion in the third quarter of 2008, a 21 percent year-over-year improvement.

  • Freight revenue grew 16 percent to a best-ever $4.6 billion. Five of the six business groups – Agricultural, Chemicals, Energy, Industrial Products, and Intermodal – posted all-time record revenues. All six business groups, including Automotive, posted record average revenue per car.
  • In total, average revenue per car was a quarterly record at $1,931 in the third quarter of 2008. Fuel cost recoveries, core pricing gains and a favorable business mix all contributed to the increase.
  • Business volumes in the third quarter of 2008, as measured by carloads, were 5 percent lower than the third quarter 2007, reflecting the impact of a slower economy and the hurricanes.
  • As a result of more high density, long haul shipments, revenue ton-miles increased 1 percent in the third quarter 2008 to 145.8 billion.
  • Third quarter 2008 average quarterly diesel fuel price increased 59 percent to $3.70 per gallon compared to $2.32 in 2007.
  • Union Pacific's third quarter 2008 Customer Satisfaction Index improved 4 points to 83, a third quarter, post-merger best.
  • Hurricanes Gustav and Ike reduced third quarter 2008 earnings by approximately $.08 per diluted share.
  • The impact of diesel fuel prices and hurricane disruptions were more than offset in the third quarter by Union Pacific's pricing gains, increased fuel cost recoveries and greater productivity, which combined to improve the operating ratio 1.1 points.  The third quarter 2008 operating ratio of 74.9 percent compares to 76 percent in the year ago quarter.

Third Quarter 2008 Freight Revenue Summary versus 2007

  • Energy up 28 percent
  • Agricultural up 27 percent
  • Industrial Products up 15 percent
  • Chemicals up 12 percent
  • Intermodal up 9 percent
  • Automotive down 7 percent

Outlook

"UP expects to produce strong year-over-year earnings growth in the fourth quarter despite the continuing effect of the economic slowdown on our business," Young said. "Although today's freight demand is soft, customers are continuing to realize the value of freight rail transportation, making UP's reliable service offerings an attractive choice."

About Union Pacific

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.

Contact for investors is Jennifer Hamann at (402) 544-4227.
Contact for media is Donna Kush at (402) 544-3753.

This press release and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically expectations regarding the Corporation's fourth quarter earnings and statements of management regarding the Corporation's economic outlook, weaker freight demand,  and the future operation of its business.  These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.  Forward-looking statements also generally include, without limitation, information or statements regarding: expectations as to continued or increasing demand for rail transportation services; expectations regarding operational improvements, including the effectiveness of network management initiatives that have been or will be implemented to improve operations, customer service, and shareholder returns; expectations as to increased returns, cost savings, revenue growth, and earnings;  expectations regarding fuel price and our ability to mitigate fuel costs;  the time by which certain objectives will be achieved, including expected improvements in operations and implementation of network management initiatives;  estimates of costs relating to environmental remediation and restoration; proposed new products and services; expectations that claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity;  statements concerning projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial, and operational results, and future economic performance;  and statements of management's beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking information, including expectations regarding operational and financial improvements and the Corporation's future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement.

Important factors, including risk factors, could affect the Corporation's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements.  Information regarding risk factors and other cautionary information are available in the Corporation's Annual Report on Form 10-K for 2007, which was filed with the SEC on February 28, 2008. The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).

Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made. The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements. References to our Web site are provided for convenience and, therefore, information on or available through the Web site is not, and should not be deemed to be, incorporated by reference herein.

The statements and information contained in the news releases provided by Union Pacific speak only as of the date issued. Such information by its nature may become outdated, and investors should not assume that the statements and information contained in Union Pacific's news releases remain current after the date issued. Union Pacific makes no commitment, and disclaims any duty, to update any of this information.