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Union Pacific Reports Record Fourth Quarter and Full Year

Omaha, Neb., January 19, 2012 – Union Pacific Corporation (NYSE: UNP) today reported 2011 fourth quarter net income of $964 million, or $1.99 per diluted share, compared to $775 million, or $1.56 per diluted share, in the fourth quarter 2010.

All-Time Quarterly Records

  • Diluted earnings per share of $1.99 improved 28 percent.
  • Operating revenue grew to $5.1 billion, up 16 percent.
  • Operating income totaled $1.6 billion, up 23 percent.

2011 Full Year Records

  • Diluted earnings per share of $6.72 improved 22 percent.
  • Operating revenue grew to $19.6 billion, up 15 percent.
  • Operating income totaled $5.7 billion, up 15 percent.
  • Return on invested capital of 12.4 percent improved 1.6 points.
  • Customer satisfaction index reached 92, up 3 points.

"The dedicated efforts of our employees, combined with the strength of our diverse railroad franchise, drove record fourth quarter results," said Jim Young, Union Pacific chairman and chief executive officer. "In 2011, we achieved best-ever marks in customer satisfaction and employee safety, invested a record $3.2 billion in capital, and generated record free cash flow of $1.9 billion. 2011 was the most profitable year in Union Pacific's history, allowing us to reward shareholders with increased financial returns.

Fourth Quarter Summary

Fourth quarter business volumes, as measured by total revenue carloads, grew 3 percent versus 2010. Four of Union Pacific's six business groups - chemical, automotive, energy and industrial products - reported strong volume increases. Quarterly operating revenue increased 16 percent in the fourth quarter 2011 to a record $5.1 billion versus $4.4 billion in the fourth quarter 2010. In addition:

  • Each of UP's six business groups reported freight revenue growth in the fourth quarter driven by increased fuel cost recoveries and core pricing gains. Volume growth was also a contributing factor in four of the six business groups.
  • Union Pacific's operating ratio of 68.3 percent was a fourth quarter best, 1.9 points better than the previous fourth quarter record set in 2010. Pricing gains, volume growth and improved operating efficiency contributed to this record performance, more than offsetting the negative impact of higher diesel fuel prices compared to 2010.
  • Average quarterly diesel fuel prices increased 28 percent to $3.16 per gallon in the fourth quarter 2011 from $2.46 per gallon in the fourth quarter 2010.
  • The Customer Satisfaction Index of 92 tied a quarterly best and was two points better than the fourth quarter 2010.
  • Quarterly train speed, as reported to the Association of American Railroads, was 25.6 mph, decreasing 3 percent compared to the fourth quarter 2010.
  • The Company repurchased nearly 3.9 million shares in the fourth quarter 2011 at an average share price of $98.16, and an aggregate cost of $381 million.

Summary of Fourth Quarter Freight Revenues

  • Automotive up 26 percent
  • Industrial Products up 24 percent
  • Energy up 21 percent
  • Chemicals up 18 percent
  • Intermodal up 13 percent
  • Agricultural up 2 percent

2011 Full Year Summary

For the full year 2011, Union Pacific reported net income of $3.3 billion or $6.72 per diluted share. This compares to $2.8 billion or $5.53 per diluted share in 2010, 18 and 22 percent increases, respectively. Operating revenue totaled a record $19.6 billion versus $17.0 billion in 2010. Operating income increased 15 percent to $5.7 billion, up from $5.0 billion in 2010.

  • All six business groups reported freight revenue growth and five of the six business groups reported volume growth in 2011. Carloadings increased 3 percent versus 2010 and freight revenue grew 15 percent to $18.5 billion. This compares to freight revenue of $16.1 billion in 2010.
  • UP's operating ratio in 2011 was 70.7 percent, one-tenth of a point higher than the previous annual record of 70.6 percent set in 2010. Higher fuel prices negatively impacted the operating ratio by 1.7 points compared to 2010.
  • Average diesel fuel prices increased 36 percent to $3.12 per gallon in 2011 from $2.29 per gallon in 2010.
  • The Company increased the quarterly dividend per share twice during 2011, for a total increase of 58 percent for the year.
  • The Company repurchased nearly 14.8 million shares in 2011 at an average share price of $95.94, and an aggregate cost of $1.4 billion.

2012 Outlook

"Looking ahead, we expect continued slow but steady economic growth in 2012," Young said. "The diversity of our unique railroad franchise will continue to provide growth opportunities in various markets. As we move into the 150th year of Union Pacific, our prospects have never looked better. We remain focused on providing excellent service to our customers, investing for the future, and generating increased financial returns for our shareholders."

About Union Pacific

It was 150 years ago that Abraham Lincoln signed the Pacific Railway Act of July 1,1862, creating the original Union Pacific. One of America's iconic companies, today, Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP), linking 23 states in the western two-thirds of the country by rail and providing freight solutions and logistics expertise to the global supply chain. From 2000 through 2011, Union Pacific spent more than $31 billion on its network and operations, making needed investments in America's infrastructure and enhancing its ability to provide safe, reliable, fuel-efficient and environmentally responsible freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad serves many of the fastest-growing U.S. population centers and emphasizes excellent customer service. Union Pacific operates competitive routes from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways.

Investor contact is Michelle Gerhardt, (402) 544-4227.
Media contact is Donna Kush, (402) 544-3753.

Supplemental financial information is attached.

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