1

Second Quarter Earnings ReleaseJuly 23, 2009

Jim Young, Chairman and CEO

2

Second Quarter 2009 Results

• Reported EPS = $0.92

– Includes $0.14 from RTD land sale

• Record Operating Ratio

• Quarterly Safety “Bests”

• Continued Service Excellence

• Strong Cash Position & Solid Balance Sheet

3

Second Quarter Marketing & Sales ReviewJuly 23, 2009

Jack Koraleski, Executive VP – Marketing & Sales

4

2009 Volume DriversSelected Market Indicators

• Manufacturing & Construction

– Electrical generation by coal -10% (June YTD)

– Average utility coal stockpiles +17% (June YTD)

• Consumer Spending

– U.S. light vehicle sales -35% (June YTD)

– West Coast port volumes -20% (June YTD)

• Agricultural Sector

– Corn & soybean export sales -13% (’08/’09 Crop YTD)

– Livestock sector prices -13 to -25% (June YTD)

– U.S. construction spending -12% (May annualized estimate)

– U.S. steel capacity utilization -47pts (July YTD)

5

Second Quarter Volume(In Thousands)

2,371

1,852

2008 International

IntermodalCoal Autos Construction

Products

ChemicalsOther Domestic

Intermodal

2009

(155)(91)

(53)(71)

(83)(78)

+12

6

AgriculturalSecond Quarter 2009 Quarterly Results

• $618M, -21%

• -14% Carloadings

• $3,045 ARC, -8%

Quarterly Drivers

• Slowdown in Grain Exports

• Decline in Domestic Animal Feeding

• Reduction in Soybean Crush

*Volume in (000s) of carloads

-46%

-17%

Export Whole Grain*

Domestic Whole Grain*

40.8

2009

53.0

43.9

2008 2009

22.1

2008

7

AutosSecond Quarter 2009

Quarterly Results

• $163M, -54%

• -47% Carloadings

• $1,755 ARC, -12%

Quarterly Drivers

• Auto Plant Shutdowns

• Vehicle Production -48% in Second Quarter

*Volume in (000s) of carloads

-49%

-44%

Vehicle Parts*

Finished Vehicles*

2008 2009

105.2

53.2

70.6

39.4

2008 2009

8

ChemicalsSecond Quarter 2009

Quarterly Results

• $499M, -24%

• -22% Carloadings

• $2,659 ARC, -2%

Quarterly Drivers

• Weak Demand Across Major Market Segments

*Volume in (000s) of carloads

-43%

-23%

Fertilizer*

Liquid & Dry*

2008 2009

61.7

47.6

35.3

20.0

2008 2009

9

EnergySecond Quarter 2009

Quarterly Results

• $715M, -22%

• -16% Carloadings

• $1,520 ARC, -7%

Quarterly Drivers

• Decreased Electrical Production

• SPRB Contract Losses

• CO/UT Production Issues

– Loaded 366 Fewer CO/UT Trains Year-Over-Year

-14%

-35%

*Millions of tons

SPRB Tonnage*

CO/UT Tonnage*

2008 2009

11.0

7.1

2008 2009

47.6

40.9

10

Quarterly Results

• $531M, -39%

• -34% Carloadings

• $2,319 ARC, -9%

Quarterly Drivers

• Sharp Downturn in Steel Market

• Continued Softness in Housing & Construction

• High Inventories and Reduced Production of Paper

*Volume in (000s) of carloads

-60%

-41%

Industrial ProductsSecond Quarter 2009

Steel & Scrap*

Lumber & Building

Materials*

2008 2009

62.5

24.8

2008 2009

37.1

21.9

11

IntermodalSecond Quarter 2009

International Volume*

2008

Domestic Volume*

2009

*Volume in (000s) of units

Quarterly Results

• $595M, -23%

• -18% Carloadings

• $889 ARC, -6%

Quarterly Drivers

• Weak Import Volumes

• Service-Driven Product Offerings

524.9

369.8

287.1299.4

+4%

-30%

2008 2009

12

7-Day Carloads

(000s)

Looking AheadSecond Half Volume Second Half Opportunities

• Agricultural

– Fall grain harvests

– Ethanol

• Autos

– Record low inventories

– “Cash for Clunkers”

• Chemicals

– Fertilizer?

• Energy

– Summer coal burn

• Industrial Products

– Uptick in production?

– Stimulus?

• Intermodal

– Peak season?

– New services

– Hub growth

2007

2008

2009

July MTD, not a full month estimate

200

180

160

140

120

100

Jan June Dec

13

2007 2008 2009

Customer Satisfaction Index

Good

Q1 Q1Q2 Q3 Q4 Q2Q1 Q3 Q4 Q2

87

79

87

14

Second Quarter Operating ReviewJuly 23, 2009

Dennis Duffy, Executive VP – Operations

15

2009 Safety & ServiceSecond Quarter

AAR VelocityMPH

10.5

Freight Car UtilizationCycle Days

27.4

2006 2009

21.2 8.6

Good Good

2006 20092007 2008 2007 2008

2007 20082006

27.6

2009

24.5

2007 2008

AAR Terminal DwellHours

Good

Service Delivery Index*

68

2006 2009

93

Good

* Includes early deliveries

16

2009 ProductivitySecond Quarter

• Improved Train Crew

Productivity

– Reduced crew expenses

• Record Fuel Efficiency

• Increased Network

Fluidity

2007 20082006 2009

9.4%

3.8%

Recrew Rate

Good

2007 20082006 2009

1.27

1.14

Fuel Consumption RateGallons/(000) GTM

Good

17

Aligning Working Resources

GTMs (millions)

Road

Locomotives

Freight Cars-30%

-27%

-22%

-25%

-22%

Train Starts (000s)

Average TE&Y

Employees

Second Quarter Average

• April/May “Peak” Levels

– 5,300 TE&Y furloughs

– 2,100 locomotives stored

– 71,000 freight cars parked

• Current Reduction Levels

– 4,400 TE&Y furloughs

– 1,900 locomotives stored

– 60,000 freight cars parked

18

St. Louis

Chicago

Oakland

Portland

Los Angeles

Kansas City

Ft. Worth

St Louis

Chicago

Denver

San Antonio

Houston

Reduced Yard Operations

2007 2008

2006

65

2009

91

2007 2008

Manifest SDI*Good

Industry Spot and Pull%

88

2006 2009

97Good

Volume Variability with Service GainsSecond Quarter

* Includes early deliveries

19

2009 Capital InvestmentsUpdate

• Replacement / Renewal

Programs

– Safety

– Service

– Throughput

• Productivity

• Engineering Maintenance

– Slow order miles down 20%

– Production exceeding plan

$2.6 Billion Capital Plan*In Millions

Engineering Replacement

$1,700

Locomotives/Equipment

$400

Capacity/ Commercial

Facilities $400

Technology/

Other $100

Replacement

Growth and Productivity* Capital budget as of July 2009.

~~

20

2009 Operating Initiatives

• Ongoing Safety

Commitment

• Volume Variability with

Excellent Service

• Summer Capital

Programs

– Productivity improvement

• Well Positioned for

Upside Leverage

21

Second Quarter Financial ReviewJuly 23, 2009

Rob Knight, CFO

22

Income Statement SummarySecond Quarter – In Millions

Operating Revenues

Freight Revenues $ 3,121 $ 4,349

Other Revenues 182 219

Total Operating Revenues 3,303 4,568

Operating Expenses

Compensation and Benefits 976 1,101

Purchased Services & Materials 391 494

Fuel 370 1,159

Depreciation 355 346

Equipment & Other Rents 307 338

Other 153 199

Total Operating Expenses 2,552 3,637

Operating Income $ 751 $ 931

2009 2008 %

(28)

(17)

(28)

(11)

(21)

(68)

3

(9)

(23)

(30)

(19)

23

Freight Revenue Drivers

Q1 Q1

$1,738 $1,755

Q2 Q3 Q4

$1,835

$1,931$1,891

Average Revenue Per Car

2008 2009

Q2

$1,685

• $3.1 B Freight Revenue

– 28% decline on 22% lower carloadings

• ARC Declined 8%

– Customers benefit from lower diesel fuel prices

– $500M less fuel surcharge revenue

• Pricing Gains Consistent with Outlook

24

Compensation & BenefitsSecond Quarter – In Millions

$1,101

2008 2009

$976

-11%• 10% Workforce Reduction

– Labor productivity

– 22% fewer GTMs

• Wage & Benefit Inflation

• July 1st Union Wage Increase = 4.5%

25

Purchased Services & MaterialsSecond Quarter – In Millions

$494

2008 2009

$391

-21% • Decreased Contract Service Expense

• Reduced Crew Transportation & Lodging

• Fewer Locomotive Repairs & Materials

26

Fuel Surcharge Lag Impact

Price/

Gallon$4.00

$3.00

$2.00

$1.00

$0.00Q2

2008

Q1

2009

Q4

2008

Q3

2008

Q2

2009

Fuel Price – Actual/Estimated

Fuel Price – Lagged 2 months

Negative Lag Impact

Positive Lag Impact

Quarterly EPS ImpactActual and Estimated

Q3

2009

Q4

2009

Q1

2008

27

Volume & Efficiency Savings Second Quarter

Gross Ton-Miles(In Billions)

Fuel ConsumptionGallons (in millions)

20092008

257201

20092008

313

229

• 22% Decline in Gross Ton-Miles

– $234M savings

• Fuel Efficiency

– Fuel consumption rate improved 6%

– $65M savings

28

Equipment and Other RentsSecond Quarter – In Millions

• Volume Savings

– Industrial Products & Intermodal

• Improved Asset Utilization

• Fewer Leased Assets

$338

2008 2009

$307

-9%

29

OtherSecond Quarter – In Millions

• $38M Year-Over-Year Casualty Expense Reduction

• Lower Utility Costs

• Higher Property Taxes

• Increased Provision for Bad Debts

$199

2008 2009

$153

-23%

30

Expense Variability

55%

70%

Q2 Q1

Volume Variability

Second Quarter

Revenue Carloads(000s)

20092008

2,371

1,852

-22%

2009

~~

31

Second QuarterOperating Ratio (%)

2006 2007 2008 2009

81.780.5

79.6

77.3

• Volume Variability

– Cost reductions

– Efficiency gains

• Lower Fuel Prices

• Price Increases

32

Full Income StatementSecond Quarter – In Millions (Except EPS)

Operating Revenues $ 3,303 $ 4,568

Operating Expenses 2,552 3,637

Operating Income 751 931

Other Income – Net 135 19

Interest Expense (150) (128)

Income Before Income Taxes 736 822

Income Tax Expense (268) (291)

Net Income – As Reported 468 531

RTD Land Sale (72) -

Net Income – Adjusted $396 $531

Diluted EPS – As Reported $0.92 $1.02

RTD Land Sale (0.14) -

Diluted EPS – Adjusted $0.78 $1.02

2009 2008 %

(28)

(30)

(19)

F

17

(10)

(8)

(12)

-

(25)

(10)

-

(24)

33

Balance Sheet StrengthSecond Quarter – In Millions

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

*Lease Adjusted Total Debt

Lease Adjusted Debt to Capital

• Maintaining Strong Cash Position

• Moderately Increased Year-Over-Year Debt

Cash Balance

20092008

20092008

$611

$1,656

Total Debt*

$12,731$14,845

45.0% 48.1%

34

Second Half Drivers

• Volume Levels

• Fuel

• Continued Profitability Improvements

7-Day Carloads

(000s)

2007

2008

2009

200

180

160

140

120

100

Jan June Dec

July MTD, not a full month estimate

35

Second Quarter Earnings ReleaseJuly 23, 2009

Jim Young, Chairman and CEO

36

Cautionary InformationThis presentation and related materials contain statements about the Corporation’s future that are not statements of

historical fact, including specifically expectations regarding the Corporation’s outlook regarding economic conditions,

future operating and safety performance, competitiveness of service and capital investments. 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 2008, which was filed with the SEC on February 6, 2009. 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.

37

Q&A Session