Union Pacific Reports 24 Percent Earnings Growth

Company Delivers Record Second Quarter Results Despite Rising Fuel Costs

Omaha, Neb., July 24, 2008 – Union Pacific Corporation (NYSE: UNP) today reported record 2008 second quarter net income of $531 million, or $1.02 per diluted share, compared to $446 million, or $.82 per diluted share in the second quarter of 2007.

Second Quarter 2008 Records

  • Diluted earnings per share increased 24 percent to $1.02.
  • Operating revenue totaled $4.6 billion, up 13 percent.
  • Operating income grew 18 percent to $931 million.
  • Net income increased 19 percent to $531 million.

"We achieved a record second quarter in the face of rising fuel costs and an estimated 5 cents earning reduction associated with Midwest flooding," said Jim Young, Chairman and Chief Executive Officer.   "We demonstrated the resiliency of our network by quickly restoring service to our customers, which provided us with a strong finish to the quarter, driving solid revenue growth and continued productivity improvements."

2008 Second Quarter Summary

In the second quarter of 2008, Union Pacific reported record operating income of $931 million compared to $787 million in second quarter of 2007, an 18 percent improvement.

  • The Company's freight revenue grew 13 percent in 2008 to a best-ever $4.3 billion. Four of the six business groups, Agricultural, Chemicals, Energy and Industrial Products posted all-time record revenues. A fifth, Intermodal, set a second quarter revenue record. Five of the six business groups, Agricultural, Autos, Chemicals, Energy and Intermodal, set records for best-ever average revenue per car (ARC), while Industrial Products had a second quarter best for ARC. Overall ARC increased 16 percent, reaching an all-time record of $1,835 per car in the quarter.
  • Business volumes in the second quarter of 2008, as measured by total revenue carloads, were 3 percent lower than second quarter 2007 at 2.4 million.
  • The Railroad's second quarter 2008 average quarterly fuel price was up 64 percent to $3.60 per gallon compared to $2.20 in 2007.
  • Despite high fuel prices, the Company's second quarter operating ratio improved nearly 1 point from 80.5 percent in 2007 to 79.6 percent in 2008.
  • The Company's second quarter 2008 fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a quarterly best 1.216 versus 1.275 in the second quarter 2007.
  • The effective tax rate in the second quarter of 2008 was 35.4 percent reflecting benefits derived from federal tax audits and state tax law changes, which resulted in one-time after tax earnings increases of $18 million.
  • The Company's second quarter 2008 Customer Satisfaction Index improved 3 points versus last year to 83, a post-merger best.
  • The Company repurchased over 6.3 million common shares at an average share price of $75.83 in the second quarter of 2008. Year-over-year, second quarter weighted average diluted shares outstanding declined 4 percent.

Second Quarter 2008 Freight Revenue Summary versus 2007

  • Agricultural up 29 percent
  • Energy up 21 percent
  • Chemicals up 14 percent
  • Industrial Products up 9 percent
  • Intermodal up 7 percent
  • Automotive down 9 percent

2008 Outlook

"We expect that our diverse business mix will continue to provide us with opportunities through the year," Young added. "Although high fuel prices and a soft economy present challenges, we remain committed to ongoing productivity and customer service initiatives as we look forward to achieving a record year."

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 statements of management regarding the estimated impact of flooding, and expectation's regarding the Corporation's business outlook, the impact and effectiveness of the Corporation's productivity and customer service initiatives, and the Corporation's financial performance for the year. 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.