Union Pacific Reports Increased Third Quarter Earnings

Operating Income and Operating Margin Improve for the Second Straight Quarter

Omaha, Neb., October 27, 2005 – Union Pacific Corporation (NYSE:UNP) today reported 2005 third quarter net income of $369 million or $1.38 per diluted share. This quarter's results include the $118 million after-tax, or $.44 per diluted share, non-cash income tax expense reduction that the company announced on October 7, 2005.

Excluding the tax item, net income would have been $251 million or $.94 per diluted share. This compares to net income of $202 million or $.77 per diluted share in the third quarter of 2004.

"Our quarterly earnings of $.94 per share represents a solid 22 percent improvement versus last year," said Dick Davidson, chairman and chief executive officer. "In addition, operating income and operating margin improved for the second consecutive quarter. Despite two hurricanes and record volumes, our operating team did a tremendous job maintaining and improving network fluidity in the quarter."

2005 Third Quarter Summary

For the quarter, Union Pacific Corporation reported operating income of $481 million, up 15 percent compared to $418 million for the same period in 2004.

• Operating revenue grew 13 percent to $3.5 billion versus 2004
• Operating margin improved to 13.9 percent in the third quarter of 2005 compared to 13.6 percent in 2004
• Total commodity revenue reached best-ever quarterly levels, reflecting a 1 percent growth in carloads to a record 2.4 million loads, along with yield improvements and fuel cost recovery under the company’s surcharge programs
• The Railroad’s average quarterly fuel price including transportation and taxes was $1.88 per gallon versus $1.25 per gallon a year ago
• Two of the Railroad’s three key operating metrics, as reported to the Association of American Railroads, improved in the third quarter of 2005 versus the third quarter of 2004. Higher train speeds, lower terminal dwell times and smaller rail car inventories would all be indicators of better system fluidity. In the face of record demand, average terminal dwell time decreased 7 percent from 30.1 hours to 28.1 hours and rail car inventory decreased 1 percent to 318,626 cars
• Average third quarter train speed fell slightly from 21.8 mph in 2004 to 21.6 mph in the third quarter of 2005. Average train speeds have increased more than 1 mph during the first three quarters of 2005 from an average of 20.5 mph in the fourth quarter of 2004.

Third Quarter Railroad Business Revenue Summary versus 2004

Overall, commodity revenue was up 12 percent as follows:

• Agricultural up 27 percent
• Industrial Products up 16 percent
• Intermodal up 13 percent
• Chemicals up 9 percent
• Automotive up 4 percent
• Energy up 4 percent

"We saw solid revenue growth in all six of our business segments in the quarter," Davidson said. "With the exception of autos, demand across the board continues to be remarkably strong."

Outlook

"Our Company has seen both financial and operational improvement through the year," Davidson said. "We continue to be challenged as we work to move record volume across a system that has been stressed by hurricanes along the Gulf Coast and major washouts in Kansas. Nevertheless, efforts to improve our operating efficiency are beginning to show results. Our rail network is more resilient today, and we look forward to continued improvements. The progress we are making, in the face of adversity, is a tribute to the tenacity and hard work of the men and women of Union Pacific."

The third quarter 2005 net income of $251 million and diluted earnings per share of $.94, which excludes the income tax expense reduction, are non-GAAP measures. Management believes these measures provide an alternative presentation of results that more accurately reflects on-going Company operations, without the distorting effect of the income tax expense reduction. These measures should be considered in addition to, not as a substitute for, net income and diluted earnings per share. The following table reconciles third quarter 2005 net income and diluted earnings per share, excluding the income tax expense reduction, to net income and diluted earnings per share:

For the Quarter Ended September 30, 2005	Net Income (in millions)	Diluted Earnings per Share
Excluding income tax expense reduction	$251	$0.94
Income tax expense reduction	$118	0.44
Total	$369	$1.38

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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This press release and related materials may contain statements about the Corporation’s future that are not statements of historical fact. 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 include, without limitation, statements regarding: expectations as to continued or increasing demand for rail transportation in excess of supply; expectations as to the timing of completion and impact of ongoing track maintenance and restoration work being performed in the Southern Powder River Basin of Wyoming; expectations regarding operational improvements, including the effectiveness of network management initiatives that have been or will be implemented to improve system velocity, customer service and shareholder returns; expectations as to increased returns, cost savings, revenue growth and earnings; expectations regarding fuel price; the time by which certain objectives will be achieved, including expected improvements in velocity 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; and 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.

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Important factors that 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 include, but are not limited to: whether the Corporation and its subsidiaries are fully successful in implementing their financial and operational initiatives, including those plans and management initiatives to improve system velocity and network performance or otherwise improve operations; industry competition, conditions, performance and consolidation; general legislative and regulatory developments, including possible enactment of initiatives to re-regulate the rail business; legislative, regulatory and legal developments involving taxation, including enactment of new federal or state income tax rates, revisions of controlling authority and the outcome of tax claims and litigation; changes in securities and capital markets; natural events such as severe weather, fire, floods, hurricanes and earthquakes; the effects of adverse general economic conditions, both within the United States and globally; any adverse economic or operational repercussions from terrorist activities and any governmental response thereto; war or risk of war; changes in fuel prices; changes in labor costs; labor stoppages; and the outcome of claims and litigation, including those related to environmental contamination, personal injuries, and occupational illnesses arising from hearing loss, repetitive motion and exposure to asbestos and diesel fumes.

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