Union Pacific Posts Record First Quarter Earnings

Union Pacific Corporation (NYSE:UNP):

First Quarter 2007 Highlights

• First quarter operating revenue grew 4 percent to a record $3.8 billion.
• Operating income increased 19 percent to a first quarter record of $719 million.
• First quarter best operating ratio of 81.3 percent, year-over-year improvement of 2.4 points.

Union Pacific Corporation (NYSE:UNP) today reported 2007 first quarter net income of $386 million or $1.41 per diluted share, compared to $311 million, or $1.15 per diluted share in the same quarter last year.

“Our operating ratio improved 2.4 points to 81.3 percent – a first quarter record,” said Jim Young, Chairman and Chief Executive Officer. “We’re making good progress on improving profitability and increasing operating efficiency. I’m particularly pleased that our customers are also showing their confidence in Union Pacific with satisfaction survey results reaching a four-year high.”

2007 First Quarter Summary

• Quarterly operating revenue increased 4 percent in the first quarter of 2007 to a record $3.8 billion. Four of the six business groups posted revenue increases in the quarter as total average revenue per car (ARC) grew 6 percent. Yield improvements increased ARC, offset somewhat by lower year-over-year fuel surcharge revenue.
• First quarter 2007 carloads declined 2 percent versus the first quarter of 2006 to 2.3 million. Winter storms, a softer housing market and decreased domestic intermodal volume all contributed to the decline.
• First quarter 2007 operating income grew 19 percent versus 2006 to $719 million, setting a first quarter record.
• The Railroad’s average quarterly fuel price, including transportation and taxes, was $1.90 per gallon in 2007 versus $1.87 per gallon in the first quarter of 2006.
• Quarterly average train speed, as reported to the Association of American Railroads, was 21.7 mph, up 0.4 mph versus the first quarter of 2006. Quarterly terminal dwell time improved 13 percent to 25.3 hours versus 29 hours reported in the first quarter of 2006.
• The Company repurchased more than 2 million common shares at an average share price of $98.68 in the first quarter of 2007.

First Quarter Railroad Commodity Revenue Summary versus 2006

• Chemicals up 9 percent
• Agricultural up 8 percent
• Energy and Intermodal each up 4 percent
• Automotive down 2 percent
• Industrial Products down 3 percent

Looking Forward

“Despite economic uncertainty, we will continue to enhance shareholder value through our productivity initiatives over the balance of the year,” Young said. “Our first quarter results were a good start, giving us momentum for the rest of 2007.”

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.

This press release and related materials contain statements about the Corporation’s future that are not statements of historical fact, including specifically statements regarding improving the Corporation’s financial returns through productivity initiatives and operational efficiency. 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 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 2006, which was filed with the SEC on February 23, 2007. 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 website is not, and should not be deemed to be, incorporated by reference herein.