Union Pacific Reports Record Fourth Quarter and Full Year

Union Pacific Reports Record Fourth Quarter and Full Year

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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.

Union Pacific Corporation

Jan 19, 2012, 08:00 ET

OMAHA, Neb., Jan. 19, 2012 /PRNewswire/ -- 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.

(Logo: http://photos.prnewswire.com/prnh/20110304/LA59497LOGO)

"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.

Supplemental financial information is attached.

This press release and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically the statements regarding the Corporation's expectations with respect to its ability to take advantage of growth opportunities and generate returns for shareholders; future economic conditions; and its prospects for future performance. 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 2010, which was filed with the SEC on February 4, 2011. 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.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Income (unaudited)

Millions, Except Per Share Amounts and Percentages,	*4th Quarter*					*Full Year*
For the Periods Ended December 31,		2011		2010	%		2011		2010	%
Operating Revenues
Freight revenues	$	4,829	$	4,171	16 %	$	18,508	$	16,069	15 %
Other revenues		279		239	17		1,049		896	17
Total operating revenues		5,108		4,410	16		19,557		16,965	15
Operating Expenses
Compensation and benefits		1,155		1,112	4		4,681		4,314	9
Fuel		935		687	36		3,581		2,486	44
Purchased services and materials		508		467	9		2,005		1,836	9
Depreciation		413		380	9		1,617		1,487	9
Equipment and other rents		289		278	4		1,167		1,142	2
Other		191		173	10		782		719	9
Total operating expenses		3,491		3,097	13		13,833		11,984	15
Operating Income		1,617		1,313	23		5,724		4,981	15
Other income		54		9	F		112		54	F
Interest expense		(141)		(142)	(1)		(572)		(602)	(5)
Income before income taxes		1,530		1,180	30		5,264		4,433	19
Income taxes		(566)		(405)	40		(1,972)		(1,653)	19
Net Income	$	964	$	775	24 %	$	3,292	$	2,780	18 %

Share and Per Share
Earnings per share - basic	$	2.01	$	1.58	27 %	$	6.78	$	5.58	22 %
Earnings per share - diluted	$	1.99	$	1.56	28	$	6.72	$	5.53	22
Weighted average number of shares - basic		480.7		491.3	(2)		485.7		498.2	(3)
Weighted average number of shares - diluted		484.7		496.3	(2)		489.8		502.9	(3)
Dividends declared per share	$	0.60	$	0.38	58	$	1.93	$	1.31	47

Operating Ratio		68.3%		70.2%	(1.9) pts		70.7%		70.6%	0.1 pts
Effective Tax Rate		37.0%		34.3%	2.7 pts		37.5%		37.3%	0.2 pts

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)

	*4th Quarter*					*Full Year*
For the Periods Ended December 31,		2011		2010	%		2011		2010	%
*Freight Revenues (Millions)*
Agricultural	$	854	$	840	2 %	$	3,324	$	3,018	10 %
Automotive		408		323	26		1,510		1,271	19
Chemicals		728		617	18		2,815		2,425	16
Energy		1,070		887	21		4,084		3,489	17
Industrial Products		810		652	24		3,166		2,639	20
Intermodal		959		852	13		3,609		3,227	12
Total	$	4,829	$	4,171	16 %	$	18,508	$	16,069	15 %
*Revenue Carloads (Thousands)*
Agricultural		236		248	(5) %		934		918	2 %
Automotive		171		155	10		653		611	7
Chemicals		232		211	10		921		844	9
Energy		558		519	8		2,164		2,056	5
Industrial Products		281		263	7		1,146		1,073	7
Intermodal *		817		841	(3)		3,254		3,313	(2)
Total		2,295		2,237	3 %		9,072		8,815	3 %
*Average Revenue per Car*
Agricultural	$	3,630	$	3,386	7 %	$	3,561	$	3,286	8 %
Automotive		2,378		2,100	13		2,311		2,082	11
Chemicals		3,131		2,923	7		3,055		2,874	6
Energy		1,917		1,709	12		1,888		1,697	11
Industrial Products		2,878		2,483	16		2,762		2,461	12
Intermodal *		1,175		1,012	16		1,109		974	14
Average	$	2,103	$	1,865	13 %	$	2,040	$	1,823	12 %

* Each intermodal container or trailer equals one carload.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Financial Position (unaudited)

	*Dec. 31,*	Dec. 31,
Millions, Except Percentages	2011	2010
Assets
Cash and cash equivalents	$ 1,217	$ 1,086
Other current assets	2,510	2,346
Investments	1,175	1,137
Net properties	39,934	38,253
Other assets	260	266
Total assets	$ 45,096	$ 43,088

Liabilities and Common Shareholders' Equity
Debt due within one year	$ 209	$ 239
Other current liabilities	3,091	2,713
Debt due after one year	8,697	9,003
Deferred income taxes	12,385	11,557
Other long-term liabilities	2,136	1,813
Total liabilities	26,518	25,325
Total common shareholders' equity	18,578	17,763
Total liabilities and common shareholders' equity	$ 45,096	$ 43,088

Debt to Capital	32.4%	34.2%
Adjusted Debt to Capital*	40.7%	42.5%
Return on Invested Capital*	12.4%	10.8%

* Adjusted Debt to Capital and Return on Invested Capital are non-GAAP measures; however, we believe that they are important in evaluating our

financial performance. See pages 8 and 9 for a reconciliation to GAAP.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows (unaudited)

Millions,	*Full Year*
For the Periods Ended December 31,	2011		2010
Operating Activities
Net income	$	3,292	$	2,780
Depreciation		1,617		1,487
Deferred income taxes		1,003		672
Other - net		(39)		(834)
Cash provided by operating activities		5,873		4,105

Investing Activities
Capital investments		(3,176)		(2,482)
Other - net		57		(6)
Cash used in investing activities		(3,119)		(2,488)

Financing Activities
Common shares repurchased		(1,418)		(1,249)
Dividends paid		(837)		(602)
Debt repaid		(690)		(1,412)
Debt issued		486		894
Debt exchange		(272)		(98)
Other - net		108		86
Cash used in financing activities		(2,623)		(2,381)

Net Change in Cash and Cash Equivalents		131		(764)
Cash and cash equivalents at beginning of year		1,086		1,850
Cash and Cash Equivalents End of Period	$	1,217	$	1,086

Free Cash Flow*
Cash provided by operating activities	$	5,873	$	4,105
Receivables securitization facility**		-		400
Cash provided by operating activities excluding receivables securitization facility		5,873		4,505
Cash used in investing activities		(3,119)		(2,488)
Dividends paid		(837)		(602)
Free cash flow	$	1,917	$	1,415

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Operating and Performance Statistics (unaudited)

	*4th Quarter*			*Full Year*
For the Periods Ended December 31,	2011	2010	%	2011	2010	%
Operating/Performance Statistics
Gross ton-miles (GTMs) (millions)	252,686	240,087	5 %	978,163	931,400	5 %
Employees (average)	44,922	43,462	3	44,861	42,884	5
GTMs (millions) per employee	5.62	5.52	2	21.80	21.72	-
Customer satisfaction index	92	90	2 pts	92	89	3 pts

Locomotive Fuel Statistics
Average fuel price per gallon consumed	$ 3.16	$ 2.46	28 %	$ 3.12	$ 2.29	36 %
Fuel consumed in gallons (millions)	286	270	6	1,106	1,051	5
Fuel consumption rate*	1.135	1.123	1	1.131	1.129	-

AAR Reported Performance Measures
Average train speed (miles per hour)	25.6	26.5	(3) %	25.6	26.2	(2) %
Average terminal dwell time (hours)	26.5	25.8	3	26.2	25.4	3
Average rail car inventory (thousands)	274.1	270.6	1	272.9	274.4	(1)

Revenue Ton-Miles (Millions)
Agricultural	21,949	23,976	(8) %	88,094	88,237	- %
Automotive	3,404	3,101	10	13,004	12,542	4
Chemicals	15,166	13,619	11	59,542	54,233	10
Energy	62,293	57,237	9	238,567	225,583	6
Industrial Products	16,971	14,840	14	66,823	60,347	11
Intermodal	19,641	20,001	(2)	78,367	79,458	(1)
Total	139,424	132,774	5 %	544,397	520,400	5 %

* Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Income (unaudited)

	2011
Millions, Except Per Share Amounts and Percentages		*1st Qtr*	*2nd Qtr*		*3rd Qtr*		*4th Qtr*		*Full Year*
Operating Revenues
Freight revenues	$	4,248	$	4,595	$	4,836	$	4,829	$	18,508
Other revenues		242		263		265		279		1,049
Total operating revenues		4,490		4,858		5,101		5,108		19,557
Operating Expenses
Compensation and benefits		1,167		1,166		1,193		1,155		4,681
Fuel		826		904		916		935		3,581
Purchased services and materials		475		516		506		508		2,005
Depreciation		395		401		408		413		1,617
Equipment and other rents		302		283		293		289		1,167
Other		188		196		207		191		782
Total operating expenses		3,353		3,466		3,523		3,491		13,833
Operating Income		1,137		1,392		1,578		1,617		5,724
Other income		15		26		17		54		112
Interest expense		(141)		(148)		(142)		(141)		(572)
Income before income taxes		1,011		1,270		1,453		1,530		5,264
Income tax expense		(372)		(485)		(549)		(566)		(1,972)
Net Income	$	639	$	785	$	904	$	964	$	3,292

Share and Per Share
Earnings per share - basic	$	1.31	$	1.61	$	1.87	$	2.01	$	6.78
Earnings per share - diluted	$	1.29	$	1.59	$	1.85	$	1.99	$	6.72
Weighted average number of shares - basic		489.6		488.4		484.2		480.7		485.7
Weighted average number of shares - diluted		494.1		492.4		488.1		484.7		489.8
Dividends declared per share	$	0.38	$	0.475	$	0.475	$	0.60	$	1.93

Operating Ratio		74.7%		71.3%		69.1%		68.3%		70.7%
Effective Tax Rate		36.8%		38.2%		37.8%		37.0%		37.5%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)

	2011
		*1st Qtr*		*2nd Qtr*		*3rd Qtr*		*4th Qtr*	*Full Year*
*Freight Revenues (Millions)*
Agricultural	$	807	$	849	$	814	$	854	$	3,324
Automotive		342		381		379		408		1,510
Chemicals		664		703		720		728		2,815
Energy		952		950		1,112		1,070		4,084
Industrial Products		690		803		863		810		3,166
Intermodal		793		909		948		959		3,609
Total	$	4,248	$	4,595	$	4,836	$	4,829	$	18,508
*Revenue Carloads (Thousands)*
Agricultural		238		237		223		236		934
Automotive		157		165		160		171		653
Chemicals		223		233		233		232		921
Energy		538		496		572		558		2,164
Industrial Products		263		297		305		281		1,146
Intermodal *		770		819		848		817		3,254
Total		2,189		2,247		2,341		2,295		9,072
*Average Revenue per Car*
Agricultural	$	3,386	$	3,580	$	3,655	$	3,630	$	3,561
Automotive		2,175		2,321		2,364		2,378		2,311
Chemicals		2,974		3,024		3,087		3,131		3,055
Energy		1,770		1,916		1,945		1,917		1,888
Industrial Products		2,628		2,697		2,832		2,878		2,762
Intermodal *		1,031		1,108		1,119		1,175		1,109
Average	$	1,941	$	2,045	$	2,066	$	2,103	$	2,040

* Each intermodal container or trailer equals one carload.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Non-GAAP Measures Reconciliation to GAAP

Debt to Capital*
		*Dec. 31,*		Dec. 31,
Millions, Except Percentages		2011		2010
Debt (a)	$	8,906	$	9,242
Equity		18,578		17,763
Capital (b)	$	27,484	$	27,005
Debt to capital (a/b)		32.4%		34.2%

* Total debt divided by total debt plus equity. Management believes this is an important measure in evaluating our balance

sheet strength and is important in managing our credit ratios and financing relationships.

Adjusted Debt to Capital, Reconciliation to GAAP*
		*Dec. 31,*		Dec. 31,
Millions, Except Percentages		2011		2010
Debt		8,906		9,242
Net present value of operating leases		3,224		3,476
Unfunded pension and OPEB		623		421
Adjusted debt (a)	$	12,753	$	13,139
Equity		18,578		17,763
Adjusted capital (b)	$	31,331	$	30,902
Adjusted debt to capital (a/b)		40.7%		42.5%

* Total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation divided by total debt plus net

present value of operating leases plus after-tax unfunded pension and OPEB obligation plus equity. Operating leases were discounted

using 6.2% at December 31, 2011 and December 31, 2010. Management believes this is an important measure in evaluating the total amount

of leverage in our capital structure including off-balance sheet obligations.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Non-GAAP Measures Reconciliation to GAAP

Return on Invested Capital as Adjusted (ROIC)*
		*Dec. 31,*		Dec. 31,
Millions, Except Percentages		2011		2010
Net income	$	3,292	$	2,780
Add: Interest expense		572		602
Add: Interest on present value of operating leases		208		222
Less: Taxes on interest		(293)		(307)
Net operating profit after taxes as adjusted (a)	$	3,779	$	3,297
Average equity	$	18,171	$	17,282
Add: Average debt		9,074		9,545
Add: Average value of sold receivables		-		200
Add: Average present value of operating leases		3,350		3,574
Average invested capital as adjusted (b)	$	30,595	$	30,601
Return on invested capital as adjusted (a/b)		12.4%		10.8%

* ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K, and may not be defined and

calculated by other companies in the same manner. We believe this measure is important in evaluating the efficiency and effectiveness of

the Corporation's long-term capital investments, and we currently use ROIC as a performance criteria in determining certain elements of

equity compensation for our executives. ROIC should be considered in addition to, rather than as a substitute for, other information provided

in accordance with GAAP. The most comparable GAAP measure is Return on Average Common Shareholders' Equity.

SOURCE Union Pacific Corporation

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* Free cash flow is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance and measures

our ability to generate cash without incurring additional financing.

** Effective January 1, 2010, new accounting guidance required us to account for receivables transferred under our receivables

    securitization facility as secured borrowings in our Condensed Consolidated Statements of Financial Position and as financing activities

   in our Condensed Consolidated Statements of Cash Flows. The receivables securitization facility line in the above table is included in our

   free cash flow calculation to adjust cash provided by operating activities as though our receivables securitization facility had been accounted

    for under the new accounting guidance for all periods presented.