Second Quarter Earnings ReleaseSecond Quarter Earnings Release

Jim Young, President & CEO

July 20, 2006

2

Second Quarter Results

2005

$0.88

Diluted Earnings per Share Operating IncomeIn Millions

2006

$1.44+64%

2005

$468

2006

$717+53%

3

Second Quarter Highlights

• Record Volumes

– 7-day carloading record of 201,467

– May: Highest carloading month ever of 857,429 carloads

• Record Revenue

– Operating revenue of $3.9 B

• Operating Ratio Improvement of 4.3 pts

– Best operating ratio since 4th quarter 2003

Second Quarter Earnings ReleaseSecond Quarter Earnings Release

Jim Young, President & CEO

July 20, 2006

Second Quarter Financial ReviewSecond Quarter Financial Review

Rob Knight, CFO

July 20, 2006

6

Income Statement SummarySecond Quarter – In Millions

Operating Revenues $3,923 $3,344 +17%

Operating ExpensesSalaries and Benefits 1,140 1,075 + 6Fuel and Utilities 794 597 +33Equipment and Other Rents 371 340 + 9Depreciation 308 292 + 5Materials and Supplies 178 128 +39Purchased Services and Other 415 444 - 7

Total Operating Expenses 3,206 2,876 +11

Operating Income $ 717 $ 468 +53

2006 2005 Pct Chg

7

Commodity Revenue GrowthSecond Quarter - In Millions

2005 2006

$3,196

+4.8%

$3,742

+6.5%

Volume& Mix

Yield FuelRecovery

+5.8%

+17.1%

8

Salaries & BenefitsSecond Quarter – In Millions

$1,075

2005 2006

$1,140+ $65

Change

• Improved Productivity

• Wage Inflation & Volume Costs

Full Year Outlook

• 2.5% Workforce Increase~~

9

Fuel & UtilitiesSecond Quarter

Second Quarter Fuel PriceDollars Per Gallon

20062005Third QuarterDollars per Gallon

$2.15

$1.67

2006 Est.2005

$1.88

• Fuel Surcharge Lag Hurts Recovery

– Q1 recovery = 92%

– Q2 recovery = 80%

• Q2 Earnings Impact $0.13/DilutedShare

• Q3 Earnings Impact Expected$2.20-$2.40

~~

10

Equipment & Other RentsSecond Quarter – In Millions

$340

2005 2006

$371+ $31

Change

• Volume Related Costs

• Locomotive Lease Expense

• Productivity

– Improved car cycle times

11

ExpensesSecond Quarter – In Millions

$444

2005 2006

$415- $29

Change

Purchased Services & Other

Materials & Supplies

$128

$178+ $50

2005 2006Change

Category Cost Shift

• More In House Maintenance

• Less Contract Cost

Materials & Supplies

• Inflation

• Increased Maintenance

Purchased Services & Other

• Lower Joint Facility Costs

• Additional Reimbursable Work

12

Operating Ratio Trend

90.1%

Q12005

Q22005

Q32005

Q42005

Q12006

Q22006

86.0% 86.1%85.3%

83.7%

81.7%

13

Full Income StatementSecond Quarter – In Millions

($ Millions Except EPS)

Operating Revenues $ 3,923 $ 3,344 +17%

Operating Expenses 3,206 2,876 +11

Operating Income 717 468 +53

Other Income – Net 29 29 Flat

Interest Expense (120 ) (128) - 6

Income Before Income Taxes 626 369 +70

Income Tax Expense (236 ) (136) +74

Net Income $ 390 $ 233 +67

Diluted EPS $ 1.44 $ 0.88 +64

2006 2005 Pct Chg

14

2006 Capital OutlookIn Millions

Long-Term Operating Leases

2005

$2,860

$2,169

Cash Capital & Capital Leases

$2,800

2006Estimate

$2,300

15

Cash From OperationsSix Months Ended June 30 – In Millions

$1,233

$1,137

2005 200620042003

$950

$1,057

16

Balance Sheet StrengthLeased Adjusted Debt to Capital

2002 2003 2004

45.1%43.6%

51.7%

44.8%

2005

41.2%

June2006

* See Union Pacific web site under Investor Relations for a reconciliation to GAAP.

Prior year percentages are shown as of December 31.

Second Quarter Financial ReviewSecond Quarter Financial Review

Rob Knight, CFO

July 20, 2006

Second Quarter Marketing & Sales ReviewSecond Quarter Marketing & Sales Review

July 20, 2006

Jack Koraleski, Executive VP – Marketing & Sales

19

Second Quarter Overview

• Revenue

– Record Quarter In All Six BusinessGroups

• Average Revenue Per Car

– Record Quarter In Agricultural,Energy, Industrial and Intermodal

– Record Second Quarter inChemicals

• Year-over-Year ImprovementIn Customer Satisfaction

5%

11%

17%

20

Energy

Second Quarter

• $732 MM Revenue: +16%

• Volume: +9%

• Average Revenue Per Car: +6%

Quarterly Highlights

• All-Time Record SPRB Tonnage

• CO/UT Volumes Declined 7% Dueto Continued Mine Interruptions

CO/UT25%

SPRB68%

Other7%

Revenue Mix

21

Intermodal

Second Quarter

• $694 MM Revenue: +16%

• Volume: +7%

• Average Revenue Per Unit: +9%

Quarterly Highlights

• Continued Strength In ImportsPushed International Volume PastLast Year’s Peak Level

• Domestic Volume Down Slightly

International57%

Domestic36%

Premium7%

Revenue Mix

22

Automotive

Second Quarter

• $390 MM Revenue: +18%

• Volume: +7%

• Average Revenue Per Car: +11%

Quarterly Highlights

• Finished Vehicle ShipmentsContinued Strong

• Parts Growth Driven By NewBusiness

AutoParts19%

FinishedVehicles

81%

Revenue Mix

23

Other Commodity Highlights

• Agricultural Products GrowthDriven by Ethanol, DDG andCottonseed

• Continued Softer Demand forExport Potash, Offset by StrongPetroleum Products Shipments

• Strong Commercial ConstructionDemand, But Slowdown inLumber & Panel Products

• Intentional Shedding of Low-Margin Business

24

Customer Satisfaction IndexGood

60

70

63

69

6667

Q1 Q2 Q3 Q4

2005 2006

25

Commodity Outlook

Third Quarter Outlook

• Volume Up 5%

• Revenue Up 17%

Full-Year Outlook

• Volume Up 5%

• Revenue Up 16% to 17%

17%

Q22006

Q12006

2005200420032002

Average Revenue per Car

Carloads

Commodity Revenue Growth

18%

11%

6%

4%

3%

Second Quarter Operating ReviewSecond Quarter Operating Review

Dennis Duffy, Executive VP - Operations

July 20, 2006

27

Safety - Incidents & ReportablesSix Months Ended June 30

2.79

4.39

2005 2006

4.17

Employee Rail EquipmentPer Million Train Miles

2004

4.59

2005 20062004

3.29

Per 200,000 Work Hours

2.96

1.61 1.771.80

15.79

18.51 17.91

Incidents Reportables

Good Good

28

184,734

194,281

2005 2006

21.2

Average 7-Day Carloadings AAR VelocityMPHUnits

21.2

2005 2006

Service UpdateSecond Quarter Velocity

GoodGood

29

ProductivitySecond Quarter

Carloadings Per Average Freight Car Inventory*

7.5

7.7

2005 200620042003

7.3

7.6

* UP Methodology

Good

30

Freight Train MilesPer Mile of Road

ProductivitySecond Quarter

Gross Ton-Miles Per EmployeeIn Thousands Good

5,191

5,327

2005 20062004

5,385

10.710.5

2005 20062004

11.4

Freight Car UtilizationDays Good

1,219

1,263

2005 20062004

1,172

Fuel Consumption RateGallons per Thousand GTMs

1.29 1.27

2005 20062004

1.33Good

Good

31

Unified PlanSecond Quarter

• Network Simplification

• More Point-to-Point Trains

• Streamlined SouthernRegion Traffic Flows

• Regional Re-alignment

23.5

28.5

2005 2006

Work Event & Switch RatePer Thousand Carloads*

88

81

2005 2006

Industry Spot / PullPercentage

Good

Good

17%

1,336

1,463

2005 2006

9%

* Excludes Energy Carloads

32

Coal Productivity & ServiceSecond Quarter

Average Trains Per DaySouthern Powder River Basin

Good

35.0

31.2

2005 2006

Coal Cycle PerformanceIndex

2005 2006

Good

92.4

89.7

33

LosAngeles

Intermodal Service ImprovementPeak Season 2005 vs. Spring 2006

Memphis

Transit Time

% o

f D

eli

ve

rie

s

Transit Time

% o

f D

eli

ve

rie

s

LA to Memphis Premium Offering

LA to Memphis Standard Offering

Good

Good

Spring 2006

Peak 2005

Dallas

Houston

Chicago

KansasCity

NewOrleans

SanAntonio

Phoenix

Tucson ElPaso

34

CapitalSecond Quarter Highlights

South & West

• Sunset Double Track

– 11 miles cutover

• LA Basin Improvements

• Siding Addition between LAand Las Vegas

Midwest

• 3rd Main on SPRB Joint Line

• Iowa CTC Cutover

Gulf Coast

• San Antonio TerminalImprovements

Equipment

• 104 of 200 RoadLocomotives Delivered

Houston

Las Vegas

LosAngeles

Ft.Worth

Tucson

SanAntonio

El Paso

Chicago

Salt LakeCity

NorthPlatte

35

Third Quarter OutlookPeak Season Operations

• Record Volumes

• Fully Resourced

• Increasing Productivity

• Improving Service Reliability

• Safety

Second Quarter Earnings ReleaseSecond Quarter Earnings Release

Jim Young, President & CEO

July 20, 2006

37

2006 Outlook

$450Free Cash Flow* (after Dividends, in Millions)

$2,800Total Capital (in Millions)

$5.50 to $5.60$1.40 to $1.50Diluted Earnings Per Share

4+ pts4 to 5 ptsOperating Ratio Improvement

16% to 17%17%Commodity Revenue Growth

Full YearThird Quarter

* See Union Pacific web site under Investor Relations for a reconciliation to GAAP.

Second Quarter Earnings ReleaseSecond Quarter Earnings Release

Jim Young, President & CEO

July 20, 2006

Cautionary InformationThis presentation 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, 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 system velocity, productivity, 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, operating

efficiencies 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.

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 as to operational, service and

network fluidity improvements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed

in the statements.

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; the impact of ongoing track maintenance and restoration work being performed in the Southern

Powder River Basin of Wyoming; 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; legislative and regulatory developments,

including possible enactment of initiatives to re-regulate the rail industry; the impact of a rail accident involving the release of hazardous materials; natural

events such as severe weather, fire, floods, hurricanes and earthquakes; changes in fuel prices; changes in labor costs, labor stoppages, and the

availability of qualified personnel required for our operations; industry competition, conditions, performance and consolidation; 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; 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; and war or risk of war. More

information regarding risk factors is available in the Corporation’s Annual Report on Form 10-K for 2005, which was filed with the SEC on February 24,

2006. The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q (or such other

reports that may be filed with the SEC).

Forward-looking statements speak only as of 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 the website is not, and

should not be construed to be, incorporated by reference herein.