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Union Pacific: First Quarter Operating Ratio Of 65.1 Percent FOR IMMEDIATE RELEASE First Quarter Results

The following excerpt is from the company's SEC filing.

Diluted earnings per share of $1.16 declined 11 percent.

Operating income totaled $1.7 billion, down 15 percent.

Operating ratio of 65.1 percent, up 0.3 points.

– Union Pacific Corporation (NYSE: UNP) today reported 2016 first quarter net income of

nearly

$1.0 billion, or $1.16 per diluted share compared to

about

$1.2 billion, or $1.30 per diluted share, in the first quarter 2015.

“In this challenging volume environment, we have continued our intense focus on operating safely and efficiently, managing our resources, and improving our customer experience,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “As a result, the quarterly operating ratio came in at 65.1 percent, up only 0.3 points from last year, as solid core pricing and productivity improvement

helped to offset an 8 percent decline in total volumes.”

-more-

First Quarter Summary

Operating revenue of $4.8 billion was down 14 percent in the first quarter 2016 compared to the first quarter 2015. First quarter business volumes, as measured by total revenue carloads, declined 8 percent compared to 2015. Volume declines in coal, industrial products, agricultural products, and intermodal more than offset growth in automotive. Chemicals volume was flat compared to 2015 as declines in crude oil and fertilizer

offset growth in other chemicals shipments. In addition:

Quarterly freight revenue decreased 14 percent compared to the first quarter 2015, as volume declines, lower fuel surcharge revenue, and negative business mix more than offset core pricing gains.

Union Pacific’s 65.1 percent operating ratio was unfavorable by 0.3 points compared to the first quarter 2015. The net impact of lower fuel prices during the quarter negatively impacted the operating ratio by about 0.5 point

The $1.25 per gallon average quarterly diesel fuel price in the first quarter 2016 was 36 percent lower than the first quarter 2015.

Quarterly train speed, as reported to the Association of American Railroads, was 27.3 mph, 11 percent faster than the first quarter 2015.

Union Pacific’s reportable personal injury rate of 0.75 per 200,000 employee-hours was a first quarter record, improving 12 percent compared to the first quarter 2015.

The Company repurchased 9.3 million shares in the first quarter 2016 at an aggregate cost of $713 million.

Summary of First Quarter Freight Revenues

Automotive down 1 percent

Chemicals down 2 percent

Agricultural Products down 6 percent

Intermodal down 9 percent

Industrial Products down 18 percent

Coal down 43 percent

2016 Outlook

“This year has brought a continuation of many of the same trends we experienced throughout most of 2015,” Fritz said. “An energy market recession, low commodity prices, the strength of the U.S. dollar in a soft global economy, and muted domestic retail demand all contributed to market weakness across many of our business lines.

Despite the current challenges

, we will continue to

adapt

to new business environments,

drive productivity

innovation, and

improve our industry leading safety performance as we work toward our ultimate goal of zero incidents. At the same time, we will leverage the strength and diversity of the Union Pacific franchise to

develop

new business opportunities, provide an excellent customer experience, and generate strong long-term value for our shareholders.”

First Quarter 2016 Earnings Conference Call

Union Pacific will host its first quarter 2016 earnings release presentation live over the Internet and via teleconference on Thursday, April 21, 2016 at 8:45 a.m. Eastern Time. The presentation will be webcast live over the internet on Union Pacific’s website at

www.up.com/investor

. Alternatively, the webcast can be accessed directly through the following

. Participants may join the conference call by dialing 877/407-8293 (or for international participants, 201/689-8349).

BOUT UNION PACIFIC

Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2006-2015, Union Pacific invested approximately $33 billion in its network and operations to support America’s transportation infrastructure. The railroad’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific serves many of the fastest-growing U.S. population centers, operates 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. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner

Union Pacific Investor contact

: Mike Staffenbeal at 402-544-4227.

Union Pacific Media contact

: Aaron Hunt at 402-544-0100.

Supplemental financial information is attached.

This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically the statements regarding the Company’s expectations with respect to economic conditions and demand levels; its ability to generate financial returns, improve network performance

, productivity and cost efficiency; capital spending plans; new business development opportunities; and providing

returns to its shareholders. 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 Company’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 Company’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 Company’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 Company’s Annual Report on Form 10-K for 2015, which was filed with the SEC on February 5, 2016. The Company 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 Company 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 Company does update one or more forward-looking statements, no inference should be drawn that the Company 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,

1st Quarter

For the Periods Ended March 31,

2016

2015

Operating Revenues

Freight revenues

4,502

5,251

(14)

Other revenues

327

363

(10)

Total operating revenues

4,829

5,614

Operating Expenses

Compensation and benefits

1,213

1,369

(11)

Purchased services and materials

569

643

(12)

Depreciation

491

Fuel

320

564

(43)

Equipment and other rents

289

311

(7)

249

259

(4)

Total operating expenses

3,142

3,637

Operating Income

1,687

1,977

(15)

Other income

46

26

Interest expense

(167)

(148)

Income before income taxes

1,566

1,855

(16)

Income taxes

(587)

(704)

(17)

Net Income

979

1,151

Share and Per Share

Earnings per share - basic

1.16

1.31

Earnings per share - diluted

1.30

Weighted average number of shares - basic

844.0

879.3

Weighted average number of shares - diluted

846.7

882.8

Dividends declared per share

0.55

Operating Ratio

65.1%

64.8%

0.3

Effective Tax Rate

37.5%

38.0%

(0.5)

Freight Revenues Statistics (unaudited)

Freight Revenues (Millions)

Agricultural Products

882

939

(6)

Automotive

510

516

(1)

Chemicals

878

897

(2)

519

915

834

1,017

(18)

Intermodal

879

967

(9)

Revenue Carloads (Thousands)

235

245

217

202

268

267

262

399

(34)

274

306

Intermodal*

788

812

(3)

2,044

2,231

(8)

Average Revenue per Car

3,749

3,838

2,350

2,553

3,272

3,362

1,985

2,293

(13)

3,041

3,325

1,116

1,191

Average

2,202

2,354

Each intermodal container or trailer equals one carload.

Condensed Consolidated Statements of Financial Position (unaudited)

Mar. 31,

Dec. 31,

Millions, Except Percentages

Assets

Cash and cash equivalents

2,673

1,391

Other current assets

2,410

2,739

Investments

1,404

1,410

Net properties

49,071

48,866

Other assets

214

194

Total assets

55,772

54,600

Liabilities and Common Shareholders' Equity

Debt due within one year

402

594

Other current liabilities

2,885

2,612

Debt due after one year

14,791

13,607

Deferred income taxes

15,404

15,241

Other long-term liabilities

1,815

1,844

Total liabilities

35,297

33,898

Total common shareholders' equity

20,475

20,702

Total liabilities and common shareholders' equity

Debt to Capital

42.6%

40.7%

Adjusted Debt to Capital*

47.1%

45.7%

Adjusted Debt to Capital is a non-GAAP measure; however, management believes that it is an important measure in evaluating our financial performance. See page

for a reconciliation to GAAP.

Condensed Consolidated Statements of Cash Flows (unaudited)

Year-to-Date

Operating Activities

Net income

Depreciation

169

108

Other - net

523

314

Cash provided by operating activities

2,173

2,064

Investing Activities

Capital investments

(687)

(1,101)

(41)

Cash used in investing activities

(672)

(1,142)

Financing Activities

Debt issued

1,278

1,146

Common shares repurchased

(706)

(792)

Dividends paid*

(465)

(922)

Debt repaid

(282)

(333)

(44)

(20)

Cash used in financing activities

(219)

(921)

Net Change in Cash and Cash Equivalents

1,282

Cash and cash equivalents at beginning of year

1,586

Cash and Cash Equivalents at End of Period

1,587

Free Cash Flow**

Cash provided by operating activities

Cash used in investing activities

Free cash flow

1,036

The 2015 dividends paid amount includes the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, as well as the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015. Beginning in 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter.

Free cash flow is a non-GAAP measure; however,

believe

is important to management and investors

in evaluating our financial performance and measures our ability to generate cash without additional external financing.

Operating and Performance Statistics (unaudited)

Operating/Performance Statistics

Gross ton-miles (GTMs) (millions)

205,480

237,213

Employees (average)

43,655

48,830

GTMs (millions) per employee

4.71

4.86

Locomotive Fuel Statistics

Average fuel price per gallon consumed

$ 1.25

$ 1.95

(36)

Fuel consumed in gallons (millions)

247

Fuel consumption rate*

1.204

1.187

AAR Reported Performance Measures

Average train speed (miles per hour)

27.3

24.6

Average terminal dwell time (hours)

28.6

30.6

Revenue Ton-Miles (Millions)

Agricultural Products

22,291

22,982

Automotive

4,578

4,293

Chemicals

17,272

18,209

(5)

Coal

24,773

41,710

Industrial Products

17,041

20,168

Intermodal

18,708

19,048

104,663

126,410

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

Non-GAAP Measures Reconciliation to GAAP

Debt (a)

15,193

14,201

Capital (b)

35,668

34,903

Debt to capital (a/b)

Total debt divided by to

tal debt plus equity. We believe this

is important to management and investors

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

Adjusted Debt to Capital, Reconciliation to GAAP*

Net present value of operating leases

2,617

2,726

Unfunded pension and OPEB

445

463

Adjusted debt (a)

18,255

17,390

Adjusted capital (b)

38,730

38,092

Adjusted debt to capital (a/b)

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 4.7% at March

31, 2016

% at December 31, 201

. The discount rate reflects our effective interest rate.

in evaluating the total amount of leverage in our capital structure including off-balance sheet lease

obligations.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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