Third Quarter Earnings ReleaseThird Quarter Earnings Release

Jim Young, President & CEO

October 19, 2006

2

Third Quarter Results

2005Reported

$0.94

Diluted Earnings per Share Operating IncomeIn Millions

2006

$1.54

$481

$752

2005Adjusted*

$1.38

2005 2006

+ 64%

Income tax expense reduction

+ 56%

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

3

Third Quarter Highlights

• Record Volume Growth

• Record All-Time Operating Revenue

• Operations Improving

• Operating Ratio Gains

Third Quarter Earnings ReleaseThird Quarter Earnings Release

Jim Young, President & CEO

October 19, 2006

Third Quarter Marketing & Sales ReviewThird Quarter Marketing & Sales Review

October 19, 2006

Jack Koraleski, Executive VP – Marketing & Sales

6

Third Quarter Overview

• Revenue

– Record Quarter In All BusinessGroups Except Automotive

– Record Third Quarter inAutomotive

• Average Revenue Per Car

– Record Quarter In All BusinessGroups Except Automotive

• Year-over-Year Improvement InCustomer Satisfaction

3%

12%

15%

3Q-2005 3Q-2006

Commodity RevenueIn Millions $3,802

$3,302

3Q-2005 3Q-2006

Average Revenue Per Car$1,515

$1,357

3Q-2005 3Q-2006

Volume (000)2,5092,433

7

Energy

Third Quarter

• $764 MM Revenue: +17%

• Volume: +7%

• Average Revenue Per Car: +10%

Quarterly Highlights

• All-Time Record SPRB Tonnage

• CO/UT Volumes Declined 1%

Other8%

CO/UT24%

SPRB68%

Revenue Mix

8

Intermodal

Third Quarter

• $743 MM Revenue: +14%

• Volume: +5%

• Average Revenue Per Unit: +8%

Quarterly Highlights

• Strength in Imports Continues

• Softer Domestic Demand

International58%

Domestic35%

Premium7%

Revenue Mix

9

Industrial Products

Third Quarter

• $830 MM Revenue: +15%

• Volume: -4%

• Average Revenue Per Car: +19%

Quarterly Highlights

• Slowdown in Lumber & PanelProducts

• Shedding Low Margin Paper &Newsprint Business

• Strong Steel Demand

Paper14%

Lumber24%

Steel18%

ConstructionProducts

19%

Consumer/Gov’t/

Waste 11%

Non-Ferrous

14%

Revenue Mix

10

Other Commodity Highlights

• Agricultural Products GrowthDriven by Ethanol, DDGS,Cottonseed and Meal Exports

• Automotive Parts Growth

• Weak Fall Fertilizer Season

Ag Prod

Commodity Revenue

Autos Chemicals

+19%

+10%

+14%

Ag Prod

Average Revenue Per Car

Autos Chemicals

+18%

+6%

+15%

Ag Prod

Volume Growth

Autos Chemicals

+1%

+3%

-1%

11

Commodity Outlook

Fourth Quarter Outlook

• Volume Up 3% to 4%

• Revenue Up 10%+/-

Full-Year Outlook

• Volume Up 4%

• Revenue Up 15%

Third Quarter Commodity Revenue($ Millions)

2003 2004 2005 2006

$2,827$2,944

$3,302

$3,802

+4%

+12%

+15%

Third Quarter Operating ReviewThird Quarter Operating Review

Dennis Duffy, Executive VP - Operations

October 19, 2006

13

Safety - Incidents & ReportablesNine Months Ended September 30

2.80

4.54

2005 2006

4.32

Employee Rail EquipmentPer Million Train Miles

2004

4.75

2005 20062004

3.40

Per 200,000 Work Hours

3.07

1.77 1.771.85

14.30

19.2617.44

Incidents Reportables

Good Good

14

Network Performance Update

AAR VelocityMPH

GoodAvg. 7-Day Carloadings(000)

Q1-2006 Q3-2006

187

194 21.3

AAR Terminal DwellHours

Good

27.6

26.2

InventoryUP Measurement (000)

329

321

Good

Q2-2006

194 21.2

Good

Q1-2006 Q3-2006Q2-2006

29.0

Q1-2006 Q3-2006Q2-2006 Q1-2006 Q3-2006Q2-2006

324

21.3

188

Q3-2005

28.1

319

21.6

15

Productivity Update

Train Plan CompliancePercentage

Good

Freight Car UtilizationDays

11.0

9293

Fuel Consumption RateGallons per Thousand GTMs

Good1.31

1.27

Industry Spot/PullPercentage

8788

Good

Good

10.5

Q1-2006 Q3-2006Q2-2006 Q1-2006 Q3-2006Q2-2006

Q1-2006 Q3-2006Q2-2006 Q1-2006 Q3-2006Q2-2006

95

89

10.7

10.4

1.27

1.26

Q3-2005

93

83

16

Third Quarter Review

• Scheduled Maintenance

– Iowa

– St. Louis

– Coal Lines

• Slow Order Removal /Winterization

• Sunset Interruptions

• Capacity Enhancements

– Sunset

– San Antonio

– Iowa CTC

– Ethanol

• Terminal Performance

• Peak Season Launch

Challenges Progress

17

Fourth Quarter Outlook

• Peak Season

– Grain

– Coal

– Intermodal

• Productivity

– Slow order removal

– Lean initiatives

– Failure cost reduction

• Service Improvement

• Safety!!!

Third Quarter Financial ReviewThird Quarter Financial Review

Rob Knight, CFO

October 19, 2006

19

Income Statement SummaryThird Quarter – In Millions

Operating Revenues $3,983 $3,461 +15%

Operating ExpensesSalaries and Benefits 1,161 1,093 + 6Fuel and Utilities 821 673 +22Equipment and Other Rents 371 356 + 4Depreciation 311 294 + 6Materials and Supplies 178 140 +27Purchased Services and Other 389 424 - 8

Total Operating Expenses 3,231 2,980 + 8

Operating Income $ 752 $ 481 +56

2006 2005 Pct Chg

20

Commodity Revenue GrowthThird Quarter - In Millions

2005 2006

$3,302

+3%

$3,802

+6%

Volume Price FuelRecovery

+7%

+15%

Mix

-1%

21

Salaries & BenefitsThird Quarter – In Millions

$1,093

2005 2006

$1,161+ $68

Change

• Wage Inflation

• Larger Workforce

• Volume Costs

Full Year Outlook

• 2% Workforce Increase~~

22

Fuel & UtilitiesThird Quarter

Third Quarter Fuel PriceDollars Per Gallon

20062005

Fourth Quarter Fuel PriceDollars per Gallon

$2.27

$1.88

2006 Est.2005

$2.08

• Record High Fuel Prices

– Current prices moderating

• 3rd Quarter Recovery = 89%

• 4th Quarter Lag Impact

$1.95 - $2.10

23

Equipment & Other RentsThird Quarter – In Millions

$356

2005 2006

$371+ $15

Change

• Locomotive and EquipmentLease Expenses

• Volume Related Costs

• Improved Cycle Times

24

Materials & SuppliesThird Quarter – In Millions

$140

2005 2006

$178+ $38

Change

• Inflation

• Increased ProgramMaintenance

• Category Shift fromPurchased Services & Other

25

Purchased Services & OtherThird Quarter – In Millions

$424

2005 2006

$389

- $35

Change

• West Coast StormReimbursement

• Lower Casualty Expense

• Volume Related Costs

26

Operating Ratio Improvement

90.1%

Q1 Q2

86.0% 86.1%

81.7%

83.7%

Q3

81.1%

2005

2006

27

Full Income StatementThird Quarter – In Millions

($ Millions Except EPS)

Operating Revenues $ 3,983 $ 3,461 +15%

Operating Expenses 3,231 2,980 + 8

Operating Income 752 481 +56

Other Income – Net 22 42 - 48

Interest Expense (119 ) (124) - 4

Income Before Income Taxes 655 399 +64

Income Tax Expense (235 ) (30) U

Net Income $ 420 $ 369 +14

Diluted EPS $ 1.54 $ 1.38 +12

2006 2005 Pct Chg

U = Unfavorable

28

Balance Sheet StrengthLeased Adjusted Debt to Capital

2002 2003 2004

45.1%43.6%

51.7%

44.8%

2005

41.7%

Sept2006

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

Prior year percentages are shown as of December 31.

29

2006 Outlook

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

$2,800Total Capital (in Millions)

$5.63 to $5.73$1.50 to $1.60Diluted Earnings Per Share

5 pts4 to 5 ptsOperating Ratio Improvement

15%10%+/-Commodity Revenue Growth

Full YearFourth Quarter

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

Third Quarter Financial ReviewThird Quarter Financial Review

Rob Knight, CFO

October 19, 2006

Third Quarter Earnings ReleaseThird Quarter Earnings Release

Jim Young, President & CEO

October 19, 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 and our ability to mitigate fuel costs; 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 or changes to an ability to recover fuel costs; 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.