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Union Pacific Reports Record Fourth Quarter and Full Year

Omaha, Neb., January 20, 2011 – Union Pacific Corporation (NYSE: UNP) today reported 2010 fourth quarter net income of $775 million, or $1.56 per diluted share, compared to $549 million, or $1.08 per diluted share, in the fourth quarter 2009.

Fourth Quarter Records

  • Diluted earnings per share improved 44 percent to $1.56.
  • Operating income totaled $1.3 billion, up 31 percent.
  • Net income increased 41 percent to $775 million.
  • Operating ratio was 70.2 percent, 3.2 points of improvement.
  • Customer Satisfaction Index improved to 90, up 2 points.

2010 Full Year Records

  • Diluted earnings per share improved 48 percent to $5.53.
  • Operating income totaled $5.0 billion, up 47 percent.
  • Net income increased 47 percent to $2.8 billion.
  • Operating ratio was 70.6 percent, 5.5 points of improvement.
  • Return on invested capital grew 2.6 points to 10.8 percent.
  • Customer Satisfaction Index reached 89, up 1 point.

"Our strong fourth quarter results are indicative of the great performance we've achieved throughout 2010, setting numerous records as we report the most profitable year in Union Pacific's nearly 150-year history, " said Jim Young, Union Pacific chairman and chief executive officer. "As business volumes increased during the year, we kept our customer commitments by ensuring consistent, safe and reliable service. Shareholders also were rewarded as we completed strategic investments designed to further improve financial returns, increased the quarterly dividend more than 40 percent, and repurchased nearly $1.25 billion in shares."

Fourth Quarter Summary

Fourth quarter business volumes, as measured by total revenue carloads, grew 9 percent versus 2009, as all six Union Pacific (UP) business groups reported volume growth for the third consecutive quarter. Quarterly operating revenue increased 17 percent in the fourth quarter 2010 to $4.4 billion versus $3.8 billion in the fourth quarter 2009.  In addition:

  • Each of UP's six business groups reported freight revenue growth in the fourth quarter, up 18 percent versus 2009 to a total of $4.2 billion. Strong volume growth, increased fuel cost recoveries, and core pricing gains contributed to the increase.
  • Quarterly diesel fuel prices increased from an average of $2.05 per gallon in the fourth quarter 2009 to an average of $2.46 per gallon in the fourth quarter 2010.
  • Union Pacific's operating ratio of 70.2 percent was a fourth-quarter best, 3.2 points better than the previous fourth-quarter record set in 2009. Volume growth, improved operating efficiency, and quarterly pricing gains all contributed to this record performance, offsetting the impact of a 20 percent increase in diesel fuel prices.
  • The Customer Satisfaction Index of 90 tied a quarterly best and was 2 points better than the fourth quarter 2009.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.5 mph, the highest quarterly speed of 2010, down 2 percent versus record velocity in the fourth quarter 2009.
  • The Company repurchased more than 2.5 million shares in the fourth quarter 2010 at an average share price of $89.39, and an aggregate cost of approximately $224 million.

Summary of Fourth Quarter Freight Revenues

  • Industrial Products up 27 percent.
  • Intermodal up 25 percent.
  • Energy up 16 percent.
  • Agricultural up 14 percent.
  • Chemicals up 14 percent.
  • Automotive up 7 percent.

2010 Full Year Summary

For the full year 2010, Union Pacific reported net income of $2.8 billion or $5.53 per diluted share. This compares to $1.9 billion or $3.74 per diluted share in 2009, 47 and 48 percent increases, respectively. The Company's operating revenue totaled $17 billion versus $14.1 billion in 2009. Operating income increased 47 percent to $5 billion, up from $3.4 billion in 2009.

  • All six business groups reported volume and freight revenue growth in 2010. Business volumes increased 13 percent versus 2009 and freight revenue grew 20 percent to $16.1 billion. This compares to freight revenue of $13.4 billion in 2009.
  • Average diesel fuel prices increased 31 percent from an average of $1.75 per gallon in 2009 to an average of $2.29 per gallon in 2010. 
  • UP's operating ratio in 2010 was a record 70.6 percent, 5.5 points of improvement versus the previous annual record of 76.1 percent set in 2009.
  • The Company repurchased more than 16.6 million shares in 2010 at an average share price of $75.06, and an aggregate cost of approximately $1.25 billion.

2011 Outlook

"As we look ahead to 2011, we are encouraged by signs of a slowly strengthening economy," Young said. "Union Pacific is well-positioned to serve the total transportation needs of our customers as we focus on becoming a more fully integrated part of our customers' supply chains. Excellent service is the key to our future success, supporting our pricing initiatives and helping us improve asset utilization. This strategy will enable us to further increase our overall profitability, invest for the future, and drive strong shareholder returns."

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. Union Pacific serves many of the fastest-growing U.S. population centers and provides Americans with a fuel-efficient, environmentally responsible and safe mode of freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad emphasizes excellent customer service and offers competitive 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.

Investor contact is Jennifer Hamann, (402) 544-4227.
Media contact is Donna Kush, (402) 544-3753.

Supplemental financial information is attached.

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This press release and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically the statements under the caption "2011 Outlook" in this press release, which include statements regarding the Corporation's expectations with respect to economic conditions; its ability to fulfill the total transportation needs of its customers and its expectations regarding strategy, pricing, asset utilization, profitability, investment and shareholder returns. 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: projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial, and operational results, and future economic performance; and 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 2009, which was filed with the SEC on February 5, 2010. 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 website are provided for convenience and, therefore, information on or available through the website 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.