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Table of Contents

Overview

Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Key Metrics and Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Manifest Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Bulk Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Premium Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Operations Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Marketing Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Capital Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Capacity and Commercial Projects . . . . . . . . . . . . . . . . . . . 14Track and Terminal Density . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Markets

Agricultural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Automotive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Industrial Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Intermodal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Financials

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . 35 Consolidated Statements of Financial Position . . . . . . . . . . . 36 Consolidated Statements of Cash Flow . . . . . . . . . . . . . . . . 37 Financial and Operating Statistics . . . . . . . . . . . . . . . . . . . . . 38Non-GAAP Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Non-GAAP Reconciliations Free Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Return on Invested Capital (ROIC) . . . . . . . . . . . . . . . . . . 41 Debt to Capital/Adjusted Debt to Capital . . . . . . . . . . . . . 41 Cautionary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Investor Inquiries

Union Pacific’s investor relations are coordinated through the Corporate Treasurer . Requests for interviews, investor packages and general information should be directed to:(402) 544-4227 or (877) 547-7261 or investor .relations@up .com

Website Information

For immediate receipt of new information as it becomes available, we invite you to regularly visit www .up .com . In the Investors section, you can view on-line or download a variety of informative documents, including SEC filings, annual reports, proxy statements, quarterly earnings, press releases, company presentations and corporate governance information . For automatic updates, please subscribe to the Company’s RSS (Really Simple Syndication) feed which provides links to new headlines and summaries through your news reader .

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The strength of UP’s diverse franchise, efficient asset utilization, strong pricing opportunities and solid network infrastructure enable it to provide customers with consistent, reliable service and shareholders with higher returns .

VISIONBuilding AmericaOur vision symbolizes the Union Pacific experience for all the people whose lives we touch . It connects the importance of UP’s rail transportation to America’s economy, honors the generations that preceded us and is the promise for the generations that will follow us .

MISSIONThe Men and Women of Union Pacific Are Dedicated to Serve.Union Pacific works for the good of our customers, our shareholders and one another . Our commitment defines us and drives the economic strength of our company and our country .

Company Overview

Union Pacific Railroad Company is the principal operating subsidiary of Union Pacific Corporation and one of America’s leading transportation companies (Company, UP or Railroad) . The Railroad’s network covers 23 states in the western two-thirds of the country and serves many of the fastest-growing U.S. population centers, providing a fuel-efficient, environmentally responsible and safe mode of freight transportation. The Company’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal . The Company connects with other rail carriers to move freight all across North America and Mexico . UP serves eastern markets through major gateways in Chicago, St . Louis, Memphis and New Orleans . In addition, UP is the only railroad serving all six major Mexican gateways, and operates key north/south corridors for interchange traffic with the Canadian and Mexican rail systems . UP accesses markets in Canada through both the Eastport gateway in Idaho and exchange points in Minnesota, Wisconsin and Illinois . This network, combined with the well-balanced and diverse traffic mix, makes UP the premier rail franchise in North America . UP generated freight revenue of $16 .1 billion in 2010 .

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Key Financial and Operating Metrics 2010 2009 2008

Operating Revenues (millions) $16,965 $14,143 $17,970

Operating Income (millions) $4,981 $3,379 $4,070

Operating Ratio 70 .6% 76 .1% 77 .4%

Operating Margin 29 .4% 23 .9% 22 .6%

Employees (average) 42,884 43,531 48,242

Average Fuel Price Per Gallon Consumed $2 .29 $1 .75 $3 .15

Cash Capital Expenditures (millions) $2,482 $2,354 $2,754

Long-Term Leases (millions) (a) $ - $100 $353

Revenue Carloads (thousands) 8,815 7,786 9,261

Revenue Ton-Miles (billions) 520 479 563

Gross Ton-Miles (billions) 931 846 1,020

Average Train Speed (miles per hour) (b) 26 .2 27 .3 23 .5

Average System Dwell (hours) (b) 25 .4 24 .8 24 .9

Average Rail Car Inventory (b) 274,450 283,102 300,679

Fuel Consumed (millions of gallons) 1,051 979 1,229

GTMs per Employee (millions) 21 .72 19 .44 21 .15

(a) Represents the net present value of long-term operating and/or capital leases for new equipment.(b) As reported to the Association of American Railroads (AAR).

Rail Equipment AverageLocomotives Owned Leased Total Age (yrs.)Multiple Purpose 4,935 2,628 7,563 15 .9 Switching 431 26 457 31 .5Other 95 59 154 25 .0Total Locomotives 5,461 2,713 8,174 N/A AverageFreight Cars Owned Leased Total Age (yrs.)Covered Hoppers 12,123 18,252 30,375 28 .7 Open Hoppers 11,854 4,351 16,205 31 .2Gondolas 6,500 6,190 12,690 28 .1Boxcars 5,702 1,857 7,559 28 .0 Refrigerated Cars 2,584 4,331 6,915 22 .6Flat Cars 2,885 664 3,549 33 .3 Other 104 456 560 N/ATotal Freight Cars 41,752 36,101 77,853 N/A AverageHighway Revenue Equipment Owned Leased Total Age (yrs.)Containers 9,401 39,234 48,635 5 .2 Chassis 2,669 23,210 25,879 7 .3Total Highway Revenue Equipment 12,070 62,444 74,514 N/A* Represent “all-in” numbers, which include engineering replacement programs, commercial facility and capacity work, and other miscellaneous rail and tie projects.

Track Miles of Rail Installed and Replaced * New 594Used 201Total 795 Track Miles of Continuous Welded Rail 28,254Track Miles Under Centralized Traffic Control 21,501Track Miles Ballasted 10,883Ties Installed and Replaced (thousands) * 4,559

2010 Facts (As of 12/31/10)

Track MilesRoute Miles 31,953Other Main Line 6,596Passing Lines and Turnouts 3,118Switching and Classification Yard Lines 9,006Total Track Miles 50,673

Key Metrics and Facts

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Union Pacific reported operating revenue of nearly $17 billion in 2010, a 20 percent increase from the prior year . Volume growth of 13 percent, combined with core pricing gains and increased fuel surcharges drove the improvement . Net income jumped 47 percent to a record $2 .8 billion . In May of 2010, the Company resumed its share repurchase program, making opportunistic purchases based on market prices, reducing the outstanding share balance 1 percent during the year . Earnings per share grew 48 percent year-over-year to $5 .53 . Record net income drove return on invested capital up 2 .6 points to a best-ever 10 .8 percent .

Better economic conditions increased demand for rail services across nearly all of Union Pacific’s markets in 2010 . Each of UP’s six business teams saw volume growth, with particular strength in automotive, intermodal and industrial products . The Railroad efficiently leveraged the returning traffic, utilizing existing assets to minimize year-over-year operational cost increases . As a result, the Company reported a record operating ratio of 70 .6 percent for the year, outpacing the previous record of 76 .1 percent set in 2009 .

Operating expenses grew 11 percent, with higher year-over-year diesel fuel prices contributing nearly half of the increase . Fuel prices generally increased throughout 2010 as the economy improved, driving Union Pacific’s average diesel fuel price per gallon up nearly 20 percent from January to December . UP’s average diesel fuel price for 2010 was $2 .29 per gallon, up 31 percent from $1 .75 per gallon in 2009 . The Railroad’s fuel consumption improved 3 percent in 2010, partially offsetting the higher fuel prices and saving approximately 27 million gallons of fuel .

Volume improvement, efficient operations and pricing gains generated strong incremental margins throughout 2010 . Volumes are a critical component to this achievement, as quarterly incremental margins of approximately 60 percent corresponded with double-digit volume growth .

The Company’s free cash flow more than doubled in 2010 to $1 .4 billion, supporting two quarterly dividend increases during the year . Quarterly dividends grew from $0 .27 to $0 .33 and then to $0 .38 per share, for a total increase of 41 percent .

Financial Results

1Q104Q09 2Q10

27%

60%58% 60%

48%

3Q10 4Q10

-5%

18%13% 14%

9%

Year-over-year volume growth

Incremental Margins

2007 20092008 2010

79.3

76.177.4

70.6

Operating Ratio (Percent)

1Q 3Q2Q 4Q

$0.27

$0.33

$0.38

$0.33

+41%

Declared Dividends Per Share (2010)

Return on Invested Capital (Percent)

2007 2008

10.28.8

8.2

10.8

2009 2010

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Manifest Network

Manifest traffic includes individual carload or less-than-trainload business, involving commodities such as lumber, steel, paper, food and chemicals, all transported from thousands of locations across Union Pacific’s network . The Railroad’s extensive manifest infrastructure includes terminal locations throughout its system and storage-in-transit facilities in the Gulf Coast region, which allow our chemical customers to store their products at our facilities prior to final delivery . This unique aspect of UP’s franchise serves customers in virtually every segment of the economy . Through rail industry partnerships, UP can access approximately 90 percent of the North American population . In 2010, manifest traffic represented 24 percent of the Company’s volume and 41 percent of freight revenue .

Bulk32%

Manifest24%

Premium44%

Freight Traffic - 2010 Carloads

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Bulk Network

Bulk traffic primarily consists of coal, grain, soda ash and rock shipped in unit trains – trains transporting a single commodity from one origin to one destination. Most of UP’s coal traffic originates from the Southern Powder River Basin (SPRB) of northeastern Wyoming and the Uinta Basin of Colorado and Utah . Grain and grain products move out of the Midwest to serve domestic markets, Mexico and export ports in the Gulf Coast and Pacific Northwest (PNW). Producers mine soda ash near Green River, Wyoming destined for export ports in the Gulf Coast and PNW . Rock trains move primarily in and around Texas . The Railroad designed its bulk network to handle high volume, efficient, point-to-point moves. Operating this network represents a core competency and franchise strength for UP . In 2010, bulk traffic represented 32 percent of the Company’s volume and freight revenue .

Bulk32%

Manifest24%

Premium44%


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Premium Network

Union Pacific’s premium business includes the transportation of finished vehicles, auto parts, intermodal containers and truck trailers . UP is the largest automotive carrier west of the Mississippi River . The Railroad’s extensive franchise serves vehicle assembly plants and connects to West Coast ports and the Port of Houston to accommodate import and export shipments . UP’s network directly accesses all six U .S ./Mexico rail gateways, providing expedited handling of the growing cross-border automotive traffic . Intermodal and automotive import traffic profits from excellent service in competitive long-haul routes connecting the West Coast ports and eastern gateways, particularly along the Sunset Corridor from Los Angeles to El Paso . Additionally, time-sensitive domestic intermodal shippers benefit from the ramp-to-ramp and door-to-door service UP provides across its network . In 2010, premium traffic represented 44 percent of the Company’s volume and 27 percent of freight revenue .

Bulk32%

Manifest24%

Premium44%


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Union Pacific continues to improve customer satisfaction and drive efficiency in all aspects of its operations. Building upon recent success, the network is continuously evaluated for additional improvement opportunities . By simplifying operations and removing variability, the Company creates a streamlined network with greater asset utilization, leading to better customer service and shareholder value .

System velocity, as reported to the AAR, declined 4 percent compared to a best-ever performance in 2009 . Maintenance activities and weather disruptions, combined with higher volume levels, drove the decrease . Despite this slight reduction in year-over-year train speed, the Company’s ongoing efforts to enhance operations through process improvement, advanced technology and capacity investment again translated into better customer service . In fact, customer satisfaction improved in 2010, surpassing a record established in 2009 .

Lower volumes in 2009 required the Company to idle a significant number of assets, with approximately 26 percent of UP’s road locomotives and 18 percent of freight car inventory in storage at year-end. As traffic levels improved during 2010, a portion of these assets returned to active service . At the end of 2010, idle assets accounted for approximately 17 percent of the road locomotive fleet and 14 percent of freight car inventory, reflecting UP’s ability to effectively leverage assets as volumes return to the network. Union Pacific closed or significantly reduced operations at 30 of its 114 principal rail yards in 2009, routing traffic to larger, more efficient yards. The Railroad re-opened seven yards during 2010 as traffic returned to the network . The remaining 23 terminals represent available capacity to handle future carload growth . Additionally, roughly 1,500 employees remained on furlough status at year-end 2010, significantly less than the peak of 5,300. Most of the furloughed employees have been out of service more than two years, so only a portion is expected to return to work . Those furloughed employees who do return require less training than newly hired individuals and enter active service more quickly .

Union Pacific’s Unified Plan creates operational efficiencies by generating capacity through better utilization of resources and reducing network variability . In 2010, carloads increased 13 percent and gross ton-miles grew 10 percent, but through efficiencies created by the Unified Plan total first crew starts increased only 5 percent . A 1 percent decline in average

Operations Review

Service - Volume Equation (Monthly Data)

Service Excellence

200

190

180

170

160

150

140

130

120

110

100

(000)

28

26

24

22

20

18

16

14

(MPH)2010 Average

Velocity*

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

7-Day Carloads Velocity*

* as reported to the AAR

2008 2009 2010

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Operations Review

employees drove a 12 percent year-over-year improvement in gross ton-miles per employee. Freight car utilization improved during the year, with cycle time decreasing to an all-time best of 8.6 days. In addition, train size increased year-over-year for all train categories. Better resource utilization enables the Railroad to efficiently transport more freight with fewer assets.

Safety

Good safety performance benefits all facets of Union Pacific’s business, from employees, customers and communities to velocity, productivity and service . UP’s focus on safety creates a culture that is immersed in safe practices and behaviors, resulting in year-over-year improvement during 2010 .

Reportable employee injury incident rates fell 6 percent versus 2009 to a new record low level, as Total Safety Culture (TSC) continues to be implemented throughout the Company . TSC promotes safety among employees, and empowers them to support safe behavior individually and among their peers, and implement best practices .

The Company’s reportable equipment incident rate declined 6 percent, driven by a multi-faceted approach to identifying and mitigating risk, including the use of advanced technology such as lasers, ultrasound and acoustic vibration monitoring, as well as visual inspection from dedicated track safety experts .

Economic improvement increased rail and highway traffic in 2010, contributing to a higher number of crossing accidents . The Railroad closed 286 grade crossings during the year to reduce exposure to grade crossing incidents . Video cameras continue to be installed on UP’s locomotive fleet to assist in reviewing grade crossing incidents . More than 97 percent of UP’s through-freight trains have camera-equipped locomotives in the lead position . In addition, the Company continues to engage in public education efforts such as Operation Lifesaver and UP CARES to improve safety .

Fuel Efficiency

Improvements in the Railroad’s operating practices save fuel and reduce emissions . The implementation of automatic locomotive shutdown technology, locomotive assignment to trains on a tons per axle basis and distributed power

Employee Safety (Reportable Personal Injury Incidents Per 200,000 Man-Hours)

2007 20092008 2010*

Good1.73

1.45

1.59

1.37

* Best-ever safety performance

Customer Safety (Reportable Incidents Per Million Train Miles)

2007 20092008 2010*

3.61

3.17

3.68

2.98

Good

* Best-ever safety performance

Public Safety (Crossing Accidents Per Million Train Miles)

2007 20092008 2010

2.72

2.11

2.37 2.32

Good

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locomotives (DPU), all contribute to this effort . Additionally, UP’s ongoing employee-driven Fuel Masters Unlimited program rewards the fuel-saving efforts of locomotive engineers .

The use of newer, more fuel efficient locomotives also helps save fuel. Union Pacific operates the cleanest and most modern fleet in North America. Since 2000, UP has spent approximately $6 billion to purchase more than 3,400 locomotives that meet EPA Tier 0, Tier 1 or Tier 2 guidelines .

Reduced fuel consumption is also expected from emerging technologies, such as wheel/rail lubrication and aerodynamic enhancements .

Technology

Technology enables the Company to continually focus on improving all aspects of its operations . DPU implementation leads to fuel savings and improves the efficiency of locomotive and crew resources by increasing train length without jeopardizing performance. The use of DPU continues to be expanded across UP’s network, moving over 8 percent more GTMs in 2010 than in 2009. DPU helped drive record train sizes in 2010 .

Advancements in technology also facilitate better defect detection. Union Pacific built the first device to ultrasonically test wheel sets for internal cracking . The Company’s ultrasonic wheel testing facility in North Platte, NE is the first of its kind in the world, and tests every wheel on a train as it passes through the facility . As a result, no coal trains derailed from internal wheel defects during the past two years .

Current wayside detection technologies measure characteristics such as wheel and bearing temperature and wheel geometry as trains pass, to help identify defects before derailments occur. Union Pacific is in the early stages of implementing a new photographic imaging detection system to provide comprehensive monitoring of axles, wheels, brakes, couplers, springs and other components at a single location while trains pass .

Operations Review

Intermodal Train Size (Boxes)

2007 20092008 2010

158

153154

166Good

Manifest Train Size (Cars)

2007 20092008 2010

79

8281

86Good

SPRB Coal Train Size (Cars)

2007 20092008 2010

130

132

131

132

Good

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An improving economy and Union Pacific’s strong value proposition increased volume and revenue in 2010, even as some markets struggled to show signs of a sustained recovery .

The strength of the Railroad’s unique franchise, targeted capital investments that improved network fluidity and asset utilization, and strong service levels came together to create value for customers in 2010. Customer satisfaction levels reflect this value, as UP set new records for the fourth consecutive year . The Company’s continued focus on strengthening relationships with customers, targeting new business opportunities on the UP network and beyond with door-to-door service offerings and creating a competitive advantage that earns a higher price in the market improved overall returns .

Each of the Company’s six business teams benefited from a stronger economy in 2010, with overall volume growing 13 percent . Agricultural volume grew 6 percent, boosted by strong export demand for U .S . wheat, corn and soybeans . Demand for ethanol and DDGS (dried distillers grain with solubles, a co-product of ethanol production that is used for animal feeding) drove growth in the grain products segment. Union Pacific’s automotive traffic climbed 31 percent versus the prior year, as a result of stronger industry sales . Several factors contributed to an 11 percent increase in chemicals traffic. Strong potash exports led to improved fertilizer volume, and growth in the crude oil market contributed to strong demand for petroleum products . Improving industrial production and a return to more normal inventory levels led to increased industrial chemical shipments . Energy volume increased 2 percent year-over-year, driven by a stronger economy and unusually warm weather during the summer . Industrial Products shipments grew 19 percent, as stronger industrial production and increased energy-related drilling activity spurred demand for steel, scrap and non-metallic minerals. Hazardous waste shipments more than doubled in 2010 – largely driven by the short-haul uranium tailings move in Utah for the Department of Energy . While volumes related to commercial construction-related markets, such as cement, declined in 2010, drilling-related construction led to an increase in rock shipments. Intermodal traffic grew 19 percent, with continued inventory restocking and higher consumer demand driving international volumes up 20 percent . Domestic business increased 18 percent from 2009 levels,

Marketing Review

Annual Pricing Trend

2007 20092008 2010

6.0%

4.5%

5.0%

5.5% 5.5%5.0% 4.5%

Price Excluding RCAF Fuel Impact

Reported Core Price (Including RCAF Fuel Impact)

6.0%

Agricultural19%

Automotive8%

Chemicals15%

Energy22%

Industrial Products

16%

Intermodal20%

Business Mix - 2010 Freight Revenue

Customer Satisfaction Index

2007 2008

8380

88 89

2009 2010

12

Marketing Review

Domestic69%

International31%

Import - Other41%

Import - Mexico

14%Export - Other29%

Export - Mexico

16%

2010 Revenue Composition

Annual Summary by Quarter

2010 2009 2008 1st 2nd 3rd 4th Total 1st 2nd 3rd 4th Total 1st 2nd 3rd 4th Total

Freight Revenue (millions of dollars)

3,755 3,956 4,187 4,171 16,069 3,240 3,121 3,471 3,541 13,373 4,059 4,349 4,630 4,080 17,118

Revenue Ton-Miles (millions)

126,803 126,314 134,509 132,774 520,400 118,420 113,234 124,007 123,527 479,188 140,707 140,939 145,787 135,198 562,631

Revenue Carloads (thousands)

2,082 2,180 2,316 2,237 8,815 1,847 1,852 2,035 2,052 7,786 2,335 2,371 2,398 2,157 9,261

Average Revenue Per Car (dollars)

1,804 1,815 1,807 1,865 1,823 1,755 1,685 1,706 1,726 1,718 1,738 1,835 1,931 1,891 1,848

driven by service improvement and new product offerings that continued to attract highway conversions . The Streamline subsidiary’s door-to-door product jumped more than 60 percent, with nearly half of the growth coming from converted highway business .

Volume growth, core price improvement of 5 percent and higher fuel surcharge revenue combined to drive a 20 percent increase in freight revenue to $16 .1 billion . UP’s competitive service

offerings and strong value proposition enable us to enter new markets and attract more business at higher returns, supporting future revenue growth . From 2007 to 2010, UP’s core price improvements ranged between 4 .5 and 6 percent . Legacy contracts comprised 12 percent of the Company’s revenue portfolio at the beginning of 2011, and present significant opportunities for further yield improvement as UP competes for and re-prices this business .

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Capital investments in Union Pacific’s network improve safety, service and network efficiency, while also expanding capacity to meet the transportation needs of current and future customers . Investments include the replacement, improvement and expansion of track and facilities, as well as the acquisition of new locomotives, freight cars and intermodal containers .

The Company’s capital can be broadly classified into three categories: replacement, growth and productivity, and positive train control (PTC) . Replacement capital improves safety and efficiency by replacing current infrastructure, such as track, facilities and equipment . Growth and productivity capital targets the future needs of the Company and its customers, supporting both volume expansion and efficiency. Equipment acquisitions can be categorized as either replacement or growth and productivity, as new equipment can add capacity to our network or replace older, less efficient assets. Capital for PTC addresses the legislative mandate contained within the Rail Safety Improvement Act of 2008 that requires railroad carriers to implement PTC by the end of 2015 .

2010 Summary: $2.5 billion

Union Pacific spent $1.8 billion on replacement capital. Approximately $1 .6 billion went to the engineering replacement program, and included installing more than 4 .3 million ties and 795 track miles of rail to improve track infrastructure and reduce slow orders, providing safe, fluid operations and greater network efficiency. The remaining replacement capital consisted of locomotive fleet overhauls, upgrades and fuel conservation projects, as well as improvements to freight cars and information technology assets .

Spending on growth and productivity initiatives totaled more than $600 million . The Company completed construction of the Joliet Intermodal Terminal, which officially opened in August 2010 . The new terminal increases the Railroad’s international and domestic container capacity while improving rail traffic efficiencies throughout the Chicago region. UP acquired new equipment to meet growing demand for rail transportation, including 775 covered hoppers, 9,200 intermodal containers and nearly 3,000 chassis . Spending during the year also included work on the Sunset Corridor and yard and bridge capacity expansion projects to improve network efficiency.

Union Pacific spent about $85 million on PTC development in 2010 . Spending on this developing collision avoidance technology focused on signal work and related communication infrastructure .

Capital Investments

2011 Outlook: Approximately $3.2 billion

Replacement capital is expected to total more than $1 .8 billion . The engineering replacement program is forecast to be approximately $1 .7 billion, and includes the installation of about 4 .3 million ties and roughly 1,000 track miles of rail . The remaining replacement capital is for locomotive fleet overhauls, upgrades and servicing facilities, as well as other equipment needs .

Union Pacific anticipates spending around $1.1 billion for growth and productivity initiatives . Projects such as double-tracking the Sunset Corridor and the Blair Subdivision will improve network capacity to efficiently handle volume growth along the Railroad’s two primary east/west routes .

UP plans to acquire 100 new road locomotives, which will improve fleet reliability and fuel efficiency, reduce emissions and expand distributed power capability . In addition, they provide flexibility in advance of developing technology to meet Tier 4 emissions standards set by the EPA (effective 2015) .

Planned acquisitions of new equipment include 650 freight cars, 4,800 containers and 4,800 chassis, helping provide the capacity to efficiently handle current and future demand growth.

Spending on PTC is expected to be about $250 million in 2011 . The Company currently estimates that PTC will cost approximately $1 .4 billion to implement by the end of 2015 . This includes costs for installing the new system along the Railroad’s tracks, upgrading locomotives to work with the new system and adding digital data communication equipment so all parts of the system can communicate with each other .

2010 Capital Investments (In Millions)

Capacity/Commercial

Facilities$349

Engineering Replacement

$1,625

Technology& Other

$94 Locomotives& Equipment

$330

Positive Train Control

$84

Replacement Growth and Productivity Positive Train Control

14

Capacity and Commercial Projects

2008

3.1

2009

2.5

2010

2.5

2011E

3.2

1% 3%

8%

Base

Positive Train Control

* Includes cash capital, leases and other non-cash capital

Capital Spending ($ In Billions)

2010 Capacity/Commercial Projects

Existing and Proposed Corridor/Terminal Projects

15

Track and Terminal Density

2010 Terminal Volumes

Major Classification Yards Average Daily Volume/CarsNorth Platte, Nebraska 2,100North Little Rock, Arkansas 1,500Englewood (Houston), Texas 1,400Proviso (Chicago), Illinois 1,300Fort Worth, Texas 1,200Livonia, Louisiana 1,200Roseville, California 1,100West Colton, California 1,100Pine Bluff, Arkansas 1,100Neff (Kansas City), Missouri 900

Major Intermodal Terminals Annual LiftsICTF (Los Angeles), California 450,000 East Los Angeles, California 429,000 Global II (Chicago), Illinois 342,000 Global I (Chicago), Illinois 317,000 Marion (Memphis), Tennessee 292,000 Dallas, Texas 280,000 Lathrop (Stockton), California 247,000 Yard Center (Chicago), Illinois 241,000 City of Industry (Los Angeles), California 233,000 LATC (Los Angeles), California 224,000

Lane density based on carloadingsLine thickness depicts traffic density

Local = UP Origin + UP Destination Forwarded = UP Origin + Other Destination UP Destination = Other Origin + UP Destination Bridged = Other Origin + UP Intermediate + Other Destination

Traffic Classification - 2010 Carloads

Local62%

Forwarded20%

UPDestination

15%

Bridged 3%

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Transportation of whole grains, commodities produced from these grains, and food and beverage products generated 19 percent of the Railroad’s 2010 freight revenue. Union Pacific accesses most major grain markets, linking the Midwest and western producing areas to export terminals in the PNW and Gulf Coast ports, as well as Mexico . Unit shuttle trains, which transport a single commodity efficiently between producers and export terminals or domestic markets, represent nearly 35 percent of Agricultural shipments. UP also serves significant domestic markets, including grain processors, animal feeders and ethanol producers in the Midwest, West, South and Rocky Mountain states .

Union Pacific’s unique franchise, coupled with ownership of the largest refrigerated boxcar fleet in the industry, creates a competitive advantage in the shipment of perishables . Union Pacific offers two premium services for these products. Produce Railexpress carries fresh produce from the West Coast to New York. Express Lane moves dairy products, canned goods, wine, frozen foods and some fresh produce from the West Coast to destinations in the East and Southeast . These two services directly access California and Washington, which produce over 60 percent of the nation’s fresh fruits and vegetables . The Railroad also transports frozen meat and poultry from the Midwest and Mid-South to the West Coast for export .

UP considers Canada and Mexico important extensions of its domestic markets through alliances with other railroads . Roughly two-thirds of Agricultural shipments to and from Mexico consist of southbound commodities such as corn, soybeans, wheat and soybean meal . Shipments of beer account for most of the northbound traffic from Mexico.

Agricultural

Agricultural revenue grew 13 percent in 2010, driven by a 6 percent rise in carloads, higher fuel surcharges and price improvements . Corn and feed grain shipments increased from 2009, reflecting more export volume to the PNW and heightened demand in Mexico, as well as higher volumes into ethanol plants in California and Idaho . In 2009, some forward ethanol plants (production facilities located closer to consumers) temporarily ceased operations due to lower ethanol margins, contributing to a favorable year-over-year comparison . In addition, strong export demand via the Gulf ports drove up shipments of wheat and food grains .

The U .S . government’s ethanol production mandate within the Energy Independence and Security Act of 2007 increased from 10 .5 to 12 billion gallons per year in 2010 . As a result, ethanol traffic grew 15 percent and revenue rose 25 percent year-over-year .

The shipment of perishables is a highly truck-competitive market, as customers require fast, reliable transit times . Improvement of the Railroad’s network performance creates opportunities to capture market share from trucks . In 2010, Union Pacific’s Produce Railexpress moved 20 percent more refrigerated boxcars, carrying produce from the West Coast to the East Coast .

Agricultural Line Density Map

Lane density based on carloadings. Line thickness depicts traffic density.

2010 Carloads

Whole Grains 44% Domestic Feed Grains 21% Wheat & Food Grains 12% Export Feed Grains 11%

Grain Products 33% Meals & Oils 13% Feed Ingredients 10% Corn Refining & Ethanol 10%

Food & Refrigerated 23% Food & Beverage 12% Refrigerated Products 5% Flour & Rice* 6%

*Flour & Rice moved from Grain Products to Food & Refrigerated

GrainProducts

33%

Food &Refrigerated

23%WholeGrains44%

Domestic - 70%

Mexico - 13%

International - 17%

17

Paul Hammes,VP & GM Agricultural

How is your business group positioned to generate “economy plus” volume growth between 2011 and 2015?

Growth in many Agricultural markets depends on grain production in the United States and throughout the world . As demand increases, grain production needs to grow as well . The majority of crop production growth is expected to come from three sources: shifting crop acres, acreage growth and higher crop yields . We are currently seeing a modest acreage shift from wheat to corn, which has a higher yield per acre . Also, some acreage may be taken out of the USDA’s Conservation Reserve Program over the next five years, adding to the total acreage available for production. Corn yield is expected to exceed 170 bushels per acre by 2015, representing an increase of more than 10 percent above current levels .

While domestic demand should remain fairly constant, export markets present significant opportunities for Union Pacific. Population growth in Asian countries coupled with standard of living improvements are expected to drive strong demand for grain, soybeans, soybean meal, soybean oil and DDGS .

While these opportunities will vary with world production, we expect to capitalize on this growth. Union Pacific’s network in Iowa, Nebraska and Minnesota is closely aligned with production areas that should have corn yields higher than the national average. Also, to enhance the efficiency of our grain service, Union Pacific acquired (via purchase and operating lease) 1,100 new high-capacity large covered hoppers in 2010 . Another 500 grain cars are part of the Company’s 2011 capital budget of $3 .2 billion .

We expect volume growth in the food and refrigerated markets to be driven by increased population and further penetration in the historically truck-served perishables market . Our premium perishable services, Produce Railexpress and Express Lane, provided more than 95 percent on-time or early service reliability over the past year . Additionally, we offer door-to-door service in cooperation with Union Pacific Distribution Services, allowing greater reach into the refrigerated truck markets . We expect demand to grow and are well-positioned to handle it with the largest, most modern refrigerated boxcar fleet in the United States .

Agricultural

More than half of UP’s agricultural business moves on the Railroad’s manifest network . This network allows shippers of all sizes to benefit from access to efficient, value-added rail service, and enables the Railroad to effectively compete for food and grain products business .

2011 Market Drivers

Strong export demand for grain and soybeans is expected to continue through the first half of 2011. Wheat exports should remain strong, as U.S. exports continue to benefit from grain production problems in Eastern Europe and Russia . Strong protein demand in China occurred throughout the first quarter of 2011, which translated into continued growth in soybean exports . Some weakness in corn exports is expected, however, as a result of lower overall corn yield . While the potential exists for a strong second half, actual results will depend on crop growing conditions in the United States and throughout the world .

Inclement weather late in the 2010 growing season negatively impacted crop yields, primarily corn . The USDA projects a 4 percent decline in corn and soybean production compared to record production in the prior crop year, which could affect carload volumes . While animal feeding is expected to grow slightly during the current crop year, it is expected to remain below the five year average. Soybean crush volume, the leading indicator for soybean meal and oil production, is forecast to decline from the prior crop year due to lower soybean production and increased soybean exports .

Ethanol should deliver modest volume growth in 2011 . Current corn-based production can meet the government’s mandate, which increases from 12 to 12 .6 billion gallons per year in 2011 . Texas and California are viewed as the largest growth areas for this product within Union Pacific’s network, and new terminals that opened in these states during 2010 are expected to support ongoing efficient distribution. Corn shipments to forward ethanol plants are also forecast to grow in 2011 .

Both of UP’s premium perishable service offerings are expected to see volume growth in 2011, driven by continued improvement in transit time performance .

18

Export Grain Flows

Annual Summary by Quarter - Agricultural



730 698 750 840 3,018 661 618 649 738 2,666 756 778 848 792 3,174


22,052 20,147 22,062 23,976 88,237 20,067 18,854 19,563 22,723 81,207 22,485 22,111 22,431 21,560 88,588


228 213 229 248 918 212 203 215 235 865 240 236 243 228 947


3,202 3,277 3,271 3,386 3,286 3,116 3,045 3,026 3,129 3,080 3,151 3,301 3,486 3,472 3,352

19

Union Pacific is the largest automotive carrier west of the Mississippi River and operates or accesses 43 distribution centers . The Railroad’s extensive franchise serves vehicle assembly plants and connects to West Coast ports and the Port of Houston to accommodate both import and export shipments. In addition to transporting finished vehicles, UP provides expedited handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U .S . and Canada . The Automotive group generated 8 percent of Union Pacific’s 2010 freight revenue. Finished vehicles accounted for 77 percent of this revenue, with 23 percent coming from the movement of automotive parts and materials .

An improving economy led to stronger demand in 2010, driving increased vehicle sales and production . New light vehicle sales in the U .S . increased to 11 .5 million vehicles in 2010, up 11 percent from relatively weak 2009 levels . North American light vehicle production improved 39 percent for the year, to 11 .9 million units . Volume growth, core pricing gains and fuel surcharges drove a 49 percent improvement in Union Pacific’s automotive freight revenue. Revenue from finished vehicle shipments climbed 54 percent, as carloads rose nearly 37 percent . Revenue from auto parts and materials grew 33 percent, with volumes up 24 percent .

In each of the past four years, Union Pacific’s automotive traffic represented more than 75 percent of the total western U .S . automotive carload business. Going forward, finished vehicle

Automotive

shipments likely will reflect changing dynamics among industry manufacturers as they work to keep or gain market share . Market share for the Detroit Three remained constant from 2009, at approximately 45 percent of new light vehicle sales in the U .S . Other manufacturers have domestic manufacturing capabilities and import a significant number of vehicles via West Coast and Gulf ports. Union Pacific faces competition from trucks for the finished vehicles imported through the West Coast ports and destined to U .S . and Canadian automotive dealerships .

In 2010, approximately 52 percent of UP’s automotive shipments moved to or from Mexico, including finished vehicles as well as parts and materials moving in intermodal or boxcar/flatcar service. Consistent with the overall automotive industry improvement, Mexico parts and materials shipments increased 43 percent and finished vehicle moves grew 41 percent. Supported by a more than 20 percent service improvement over the past five years, UP moves 100 percent of Mexico intermodal automotive production parts .

2011 Market Drivers

Among Union Pacific’s six business teams, Automotive will likely experience the most significant impact from the disaster in Japan . Although the extent to which this disaster will affect the automotive industry and its supply chain remains uncertain, it is anticipated that most of the impact should be limited to the second quarter . However, further improvement in economic

Automotive Line Density Map


2010 Carloads

Mexico - 52%

Automotive Materials

41%

AssembledAutos59%

Domestic - 36%

International - 12%

20

Linda Brandl,VP & GM Automotive


The Automotive team is taking an increasingly proactive approach to anticipating customer needs by developing and delivering innovative products . Extending our vehicle and parts networks creates opportunities for vertical integration in a customer’s supply chains . Examples include vehicle visibility tools offered through partnerships with our subsidiaries; Shipment Vision with UPDS and VinVision with INL. Opportunities exist to capitalize on UP’s co-load capability by providing online quotes for both domestic and international automotive shipping . In addition, co-load capability can be leveraged through collaboration with SCN and vehicle manufacturers to expand our reach into the used car market . UP is also preparing to handle electric vehicles by installing charging stations at automotive facilities across our network in 2011 .

Making the appropriate capital investments in facilities, track infrastructure and the multi-level fleet is key to efficiently handling anticipated volume growth . In addition, we are focusing on further development of UP’s capacity at West Coast port locations to facilitate growth from our existing customer base and support new vehicle production from China and India .

Global production trends have the potential to alter transportation flows, due primarily to increased production in China, Mexico and Europe. The Company has an established sales office in Shanghai, China to further cultivate relationships with Chinese automotive original equipment manufacturers and suppliers in anticipation of increasing import parts and vehicle volume . The Railroad is also focusing on Europe to support those potential international opportunities . UP’s focus on developing early ties with the industry beyond the U .S . should help us deliver better service to our customers .

In addition, strategic infrastructure improvements across the network enhance current operations and ensure the Company efficiently handles profitable traffic as volumes continue to return. Improvements that support the automotive business in California, Texas and the Chicago area create operational efficiencies and position UP for future growth opportunities . For example, the acquisition of property at Fremont, CA in 2010 provides the Railroad with a potential automotive ramp location to support future growth . This location could also serve as a processing center for import volumes in the Northern California market .

Automotive

conditions should generate a 12 percent increase in U .S . light vehicle sales and a 9 percent increase in North American light vehicle production for 2011. Traffic to and from Mexico is also expected to improve, driven by the global economic recovery as well as additional production capacity in Mexico . Union Pacific serves a broad customer base that includes import and transplant manufacturers . This diverse business mix helps the Company mitigate the effects of production and consumer preference changes in the automotive industry .

Union Pacific expects to begin production of the AutoFlex© rail car in the middle of 2011. The AutoFlex©, designed by Union Pacific, is a convertible multi-level rail car that can be adjusted to accommodate bi-level (large vehicles) or tri-level (small vehicles) transport with the same rack structure. The AutoFlex© improves safety, service and security, and demonstrates UP’s leadership in and commitment to the automotive industry .

Union Pacific’s ability to address market changes is critical to maintaining superior customer service . UP is preparing to handle electric vehicle shipments by installing charging stations at most auto ramps in 2011. The AutoFlex© car and innovative facility planning will help manage the potential impact of the Corporate Average Fuel Economy standards on the automotive industry . Implementation of these standards is scheduled for 2016, and could potentially create production shifts between cars and trucks as well as expand the electric and micro vehicle markets .

Growth opportunities exist with the Railroad subsidiaries: Insight Network Logistics (INL), ShipCarsNow (SCN) and Union Pacific Distribution Services (UPDS) . These companies offer supply chain logistic services for major automotive manufacturers . SCN is making inroads into the used car remarketing area by providing management and coordination services for vehicle auction companies and rental car firms both domestically and internationally . Marketed jointly with UP’s rail services, these subsidiaries can assist manufacturers in meeting customers’ changing inventory needs and provide continued growth opportunities . Extending UP’s reach beyond the Railroad’s physical boundaries to customers that are not rail-served promotes vertical integration and new market development .

21

Automotive Facilities and Assembly Centers

Annual Summary by Quarter - Automotive



305 334 309 323 1,271 162 163 227 302 854 363 352 324 305 1,344


3,186 3,271 2,984 3,101 12,542 1,952 1,995 2,619 3,174 9,740 3,890 3,646 3,278 3,169 13,983


151 159 146 155 611 97 93 124 151 465 188 176 153 150 667


2,022 2,094 2,114 2,100 2,082 1,675 1,755 1,827 2,004 1,838 1,930 2,005 2,114 2,040 2,017

22

Transporting chemicals generated 15 percent of Union Pacific’s freight revenue in 2010 . The Railroad’s unique franchise serves the chemical producing areas along the Gulf Coast, where roughly two-thirds of the Company’s chemical business originates, terminates or travels . UP’s chemical franchise also accesses chemical producers in the Rocky Mountains and on the West Coast . The Company’s chemical shipments can be classified into three broad categories: Petrochemicals, Fertilizer and Soda Ash .

Petrochemicals constitutes 67 percent of UP’s chemical business and includes industrial chemicals, plastics, petroleum products and liquid petroleum gases . These products move primarily to and from the Gulf Coast region . Barges, pipelines, and to a lesser extent trucks, provide transportation alternatives for some of these commodities .

The industrial chemicals market consists of several dozen segments of basic, intermediate and specialty chemicals produced by, and shipped to, both large and small customers . Strong demand from industrial manufacturers drives this market . Plastics shipments support the automotive, housing, and durable and disposable consumer goods markets . UP is an important link in the plastics supply chain through its ownership and operation of storage-in-transit (SIT) facilities . Plastics customers utilize railroad SIT yards for intermediate storage of plastic resins, and UP’s SIT capacity is more than double that of any other railroad .

Strengthening industrial production, availability of low cost natural gas feedstock and a return to more normal inventory

Chemicals

Chemicals Line Density Map


levels helped spur an 8 percent growth in UP’s petrochemical business in 2010 . New shipments of crude oil destined to blending facilities at St James, LA also contributed to the increase . Volume growth combined with higher average revenue per car to push revenue up 16 percent year-over-year . Average revenue per car increased 7 percent, driven by product mix changes, price improvements and higher fuel surcharges .

Fertilizer movements originate in the Gulf Coast region, the western part of the U .S . and Canada for delivery to major agricultural users in the Midwest, western U .S . and abroad . The combination of fertilizer and other related materials (phosphate rock and sulfur) represented 20 percent of the Railroad’s chemical business in 2010 . Reduced inventories, strong global demand related to delayed 2009 purchases, and higher commodity prices drove a 20 percent increase in shipments . Average revenue per car declined 3 percent as price improvements and increased fuel surcharges were mitigated by product mix changes, notably growth in unit train shipments of potash for export .

Soda ash accounted for 13 percent of UP’s chemical business in 2010 . This product originates in southwestern Wyoming and California, destined for chemical and glass producing markets in North America and abroad . UP directly serves the world’s largest natural soda ash reserve and production region at Green River, Wyoming . During 2010, soda ash revenue increased 13 percent, driven by a 12 percent increase in volume and higher fuel surcharges . Volume growth resulted from stronger exports related to the price competitiveness of U .S . producers and increased global demand . Domestic demand remained relatively flat year-over-year.

2010 Carloads

Domestic - 72%

Mexico - 5%

International - 23%

Plastics25%

Industrial Chemicals

25%Fertilizer

20%

Petroleum& Other

17%

SodaAsh 13%

23

Diane Duren,VP & GM Chemicals


The strength of Union Pacific’s chemical franchise is created by our ability to efficiently serve a diverse product base across our network. We are well-positioned to capitalize on market opportunities brought about by global economic expansion and a changing business environment . Whether serving domestic or export markets, our strategy for achieving business growth remains the same – build strong partnerships with customers by providing consistent, reliable service, and support their long-term global competitiveness through supply chain efficiencies. We expect U .S . chemical production to remain competitive in the global marketplace due to an abundant supply of low cost natural gas and other raw materials, such as soda ash and potash . Investments in Union Pacific’s chemical franchise and a continued focus on service excellence and innovation position the Company to capitalize on existing business opportunities and address the needs of emerging markets .

Chemicals

2011 Market Drivers

Global demand for chemicals is expected to be stronger in 2011 than the prior two years, as a result of an improving worldwide economy and robust growth projections for developing countries such as China, India and Brazil. The availability of low cost natural gas feedstock and efficiencies gained from industry restructuring are strengthening the competitive position of North American chemical production . Strength in segments of the U .S . economy such as automotive and consumer products is expected to have a significant impact on the overall demand for soda ash, plastics and industrial chemical products .

Shipments of crude oil from the Bakken formation in North Dakota to terminal facilities in St James, LA move primarily in unit trains . This business is expected to total over 16,000 carloads in 2011, more than triple the 2010 level . Increasing crude oil prices coupled with an efficient rail-based supply chain support ongoing viability of this business . Additionally, market development of crude oil reserves in both the Niobrara region of Wyoming and Colorado, and the Eagle Ford shale formation in South Texas is expected to contribute to the growth .

Fertilizer demand is expected to remain strong in 2011, due to increasing prices for commodities and tight supply .

Annual Summary by Quarter - Chemicals



587 592 629 617 2,425 513 499 551 539 2,102 603 654 659 578 2,494


13,333 13,325 13,956 13,619 54,233 11,999 11,481 12,544 12,031 48,055 13,939 14,559 13,668 12,641 54,807


203 209 221 211 844 180 188 202 191 761 225 241 224 195 885


2,893 2,826 2,858 2,923 2,874 2,843 2,659 2,730 2,815 2,761 2,676 2,714 2,951 2,957 2,818

24

For the fourth consecutive year, coal and petroleum coke transportation accounted for the largest share of Union Pacific’s freight revenue, representing 22 percent in 2010 . The Railroad’s network supports the transportation of coal and petroleum coke to utilities and industrial facilities throughout the U .S . Through interchange gateways and ports, UP’s reach extends to eastern U .S . utilities, Mexico, Europe and Asia . Water terminals allow the Railroad to move western U .S . coal east via the Mississippi and Ohio Rivers, as well as the Great Lakes . Export coal moves through West Coast ports to Asia and through Mississippi River terminals to Europe . Coal traffic originating in the Southern Powder River Basin (SPRB) area of Wyoming is the largest segment of UP’s energy business, comprising 75 percent in 2010 . This reliable, low-cost, low-sulfur coal is attractive to utilities in the competitive electricity generation market . Coal produced in the Uinta Basin region of Colorado and Utah is the second largest source of UP coal volume, representing 13 percent in 2010 . This mostly sub-surface coal is relatively high in BTUs (British Thermal Unit) and is low in sulfur content. The remaining energy traffic consists of petroleum coke from oil refineries, coal shipments from southern Wyoming’s Hanna Basin and mines in southern Illinois, and coal forwarded to UP from other carriers .

A recovering economy and the fourth hottest summer on record helped drive total coal volumes up 2 percent in 2010 . Stronger coal demand and more efficient deliveries reduced utilities’ average coal inventories by 14 days (19 percent) to near normal

Energy

levels, and drove SPRB carloads up 60,000 units . Volume also increased as a result of a Midwestern utility’s decision to use Union Pacific as the single line carrier, whereas UP previously did not originate the move .

SPRB train size reached a new record in 2010, with tons per train increasing to 15,736 . A record 132 .5 cars per train, combined with an all-time high 118 .8 tons per car, drove the increase . Operational improvements at North Platte, including the in-train wheel repair process and continued emphasis on maintaining inbound train length, enabled the Railroad to achieve these results .

Colorado and Utah shipments decreased 8 percent year-over-year . Delays associated with equipment relocations impacted mine production . Despite the improving economy, the Uinta Basin coal struggled to compete with other low cost fuel options (eastern coal and natural gas) . Lower industrial and utility demand also negatively affected volumes. Train size declined slightly to 11,046 tons per train, as a dip in train length to 98 .7 cars per train offset record tons per car of 112 .0 .

Petroleum coke is a residual of the oil refining process. It is a source of high sulfur fuel for electricity generation and is used by industrial customers in the production of aluminum, steel and cement. This traffic originates mainly on the Gulf Coast, as well as in Oklahoma, Kansas, Wyoming and California . The primary destination is Texas; however, shipments also move to

Energy Line Density Map


2010 Carloads

South - 40%

North - 29%

East - 18%

West - 8%Industrial - 5%

Colorado/Utah13%

Other12%

SouthernPowder River

Basin75%

25

Doug Glass,VP & GM Energy


The coal industry likely will face regulatory and associated cost challenges in the years ahead . The EPA issued its draft rules in March of this year, but there is still much uncertainty surrounding the new emissions regulations . Potential costs of adhering to such regulations can impact a utility’s decisions regarding the replacement of older coal-fired units. Whereas older units were typically replaced with new, more efficient coal-fired units, alternative fuel sources, such as natural gas, could receive additional consideration due to more stringent regulations .

While the challenges are real, Union Pacific continues to improve service, provide value to customers and develop new opportunities for coal transportation . We are working with utilities that have new facilities under construction and are assisting in the development of new, cutting-edge, low carbon emission power plants . In addition, we are actively engaged with western U .S . mine operators to extend the reach of western bituminous coal to locations in Mexico, Asia, Europe and South America . Expansion of existing West Coast, Mississippi River and Gulf port operations is critical to ensure available capacity for future growth opportunities . UP shipped 1 .5 million tons of export coal in 2010, and we believe that several million tons is a real possibility over the next five years.

New facilities should come online between 2011 and 2015 in Arkansas, Missouri, Texas and Wisconsin, generating more than 20 million incremental tons . A utility plans to break ground on a new coal-fired plant in western Texas during the fourth quarter of 2011, with completion scheduled for 2014 . The plant will utilize carbon capture and sequestration technology, allowing it to capture more than 90 percent of CO2 emissions for use in secondary oil recovery or sequestration in safe, underground caverns .

As these developments unfold, we will continue to focus on meeting and exceeding customer expectations through improving service, ongoing productivity initiatives and expanded use of technology .

Energy

the Midwest, California and Louisiana . In 2010, the recovering economy created modest demand growth, driving petroleum coke shipments up 4 percent year-over-year .

The remaining energy traffic declined 1 percent in 2010 as a result of several factors. A Midwestern utility’s SPRB traffic previously received from another carrier was converted to a UP-originating move. In addition, Hanna Basin traffic declined 10 percent as Colorado and Utah coal availability improved, reducing the need for substitute coal from Hanna mines . Growth in coal loadings from Southern Illinois as well as increased volume of Central Appalachian coal received at Chicago partially offset the declines .

2011 Market Drivers

Several factors are expected to contribute to growth of SPRB volumes, including nine million tons of new business to Wisconsin customers, a new unit at a Texas utility that began receiving coal in May of 2010 and a new utility in Texas scheduled to open mid-year 2011 . Colorado and Utah carloads should also increase, with one Colorado mine anticipating the completion of its equipment relocation to new reserves and resumption of full production in the second quarter . Additional traffic out of a Wyoming refinery should drive higher petroleum coke volume, and more eastern coal received at Chicago for delivery to a Wisconsin utility should boost the remaining energy traffic.

SPRB Coal Tonnage (In Millions)

2005 20072006 2008

179.0

194.0

204.6

194.8

176.9

184.5

2009 2010

26

New Coal-Fired Units

Annual Summary by Quarter - Energy



844 836 922 887 3,489 807 715 831 765 3,118 857 919 1,051 983 3,810


55,578 53,437 59,331 57,237 225,583 56,003 50,740 57,391 54,093 218,227 63,334 61,748 67,887 65,393 258,362


516 486 535 519 2,056 521 470 531 499 2,021 582 561 615 590 2,348


1,636 1,722 1,721 1,709 1,697 1,550 1,520 1,564 1,536 1,543 1,473 1,639 1,709 1,664 1,622

27

Union Pacific’s extensive network facilitates the movement of numerous commodities between thousands of origin and destination points throughout North America . The Industrial Products group consists of several product categories, including construction products, metals, minerals, paper, consumer goods, lumber and other miscellaneous products . In 2010, this group generated 16 percent of Union Pacific’s total freight revenue .

Commercial and highway construction drives shipments of steel and construction products, consisting of rock, cement and roofing materials. Industrial manufacturing plants receive nonferrous metals and industrial minerals . Paper and consumer goods, including furniture and appliances, move to major metropolitan areas for consumers . Lumber shipments originate primarily in the PNW and Canada and move throughout the U .S . for use in new home construction and repair and remodeling. In addition, the Railroad provides safe and efficient transportation for government entities and waste companies .

Macro-economic factors such as industrial production and housing starts drive demand for the Industrial Products group . In 2010, U .S . industrial production grew 5 .3 percent and housing starts rose 7 percent, contributing to a 19 percent increase in carloads . Core pricing improvement and higher fuel surcharges drove average revenue per car up 3 percent versus 2009 . Total freight revenue climbed 23 percent in 2010 due to higher volume and average revenue per car .

Industrial Products

Home buyer tax incentives offered during the first half of 2010 drove the increase in housing starts . As a result, lumber carloads grew 6 percent and revenue rose 12 percent year-over-year .

Growth in oil and natural gas drilling activity contributed to volume and revenue increases across several Industrial Products categories . Expanded road construction to access drilling sites drove greater demand for stone, sand and gravel, which more than offset weakness in commercial construction activity . As a result, volume increased 15 percent and revenue rose 15 percent . Increased demand for drilling pipe, as well as overall improving economic conditions, resulted in steel and scrap steel carloads growing 46 percent and revenue jumping 56 percent . In addition, the use of frac sand, bentonite and barites in the drilling process gave a boost to minerals, pushing volume up 38 percent and revenue up 49 percent .

The ongoing federal government remediation program involving removal of uranium mill tailings from a site near Moab, Utah drove a 132 percent increase in hazardous waste shipments for 2010 . However, this short-haul business earns a very low average revenue per car, and revenue for this category increased only 21 percent over 2009 .

Industrial Products Line Density Map


2010 Carloads

Domestic - 78%

Mexico - 8%

International - 14%Construction

32%

Metals19%

Minerals/Consumer

16%

Lumber8%

Paper10%

Other15%

28

Eric Butler,VP & GM Industrial Products


The economic recession significantly reduced Industrial Products volumes . Compared to the peak year, lumber and panel carloads in 2010 were down approximately 60 percent and construction products volumes were off 25 percent . While these depressed volume levels are evidence of a challenging environment, they also indicate significant opportunities.

Annual housing starts in 2010 of approximately 0 .6 million are much lower than historically sustainable levels of around 1 .5 - 1 .7 million . Current estimates show housing starts growing at a 24 percent compound annual growth rate over the next 5 years . In addition, considerable upside exists for the stone, cement, rebar and structural steel markets as we return to normal levels of activity for highway, commercial and residential construction .

Much of our recent growth is due to domestic oil and natural gas drilling activity, which generates growth in frac sand, barites, pipe products and stone . We expect this trend to continue with the development of new shale operations, including Eagle Ford and Niobrara . The increasing number of drilling rigs provides substantial growth opportunities, especially when considering that a well can require more than 100 carloads of frac sand .

Finally, our business development efforts should continue to bring new business to the Railroad . Through improved global supply chain solutions, flexibility and agility in emerging markets, and new relationships, new markets and new services, we expect to drive growth across all commodity areas .

Industrial Products

2011 Market Drivers

As economic conditions improve, demand for products such as lumber, rock, cement, steel and minerals should increase . Current projections call for housing starts to increase 5 percent and industrial production to grow 5 .5 percent year-over-year . Domestic drilling activity, which drives demand for frac sand and contributes to growth in steel shipments and rock, also should improve . An indicator of greater demand is the 20 percent year-over-year increase in the number of land-based drilling rigs in the U .S . at the end of 2010 .

With the expiration of government funding in 2011 associated with the movement of uranium mill tailings, volumes for this business will likely decline versus 2010 .

Annual Summary by Quarter - Industrial Products



598 692 697 652 2,639 546 531 557 513 2,147 773 877 906 717 3,273


13,863 15,957 15,687 14,840 60,347 13,123 12,842 13,479 12,429 51,873 17,507 19,138 18,648 15,421 70,714


242 286 282 263 1,073 222 229 235 213 899 304 346 329 270 1,249


2,474 2,420 2,470 2,483 2,461 2,459 2,319 2,367 2,412 2,388 2,540 2,537 2,747 2,662 2,620

29

Union Pacific’s Intermodal business is divided into two shipment categories: international and domestic . International business consists of imported and exported container traffic that mainly passes through West Coast ports served by UP’s extensive terminal network . Domestic business includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents and logistics companies), as well as truckload carriers . Less-than-truckload and package carriers with time-sensitive business requirements are also an important part of domestic shipments . Together, international and domestic business generated 20 percent of UP’s 2010 freight revenue .

International traffic moves in 20, 40 or 45 foot shipping containers through ports on the West Coast . The majority of domestic shipments move in 48 or 53 foot containers or trailers to and from points within the U .S ., Canada and Mexico .

Union Pacific’s network includes several key intermodal lanes. The Railroad’s east/west lanes run between the West Coast and Chicago, Texas and interchange connections to the eastern U .S . The north/south intermodal lanes operate between Los Angeles and the Pacific Northwest, as well as Chicago and the upper Midwest and locations south in Texas and Mexico . UP also directly accesses all six Mexican gateways and serves most of the major metropolitan areas in the western two-thirds of the U .S . Virtually all routes are competitive with other railroads and are comparable to shipping distances on highways .

Intermodal

Total intermodal volumes increased 19 percent year-over-year due to the recovering economy and service-driven growth from truckload conversions . Strong volumes, higher fuel surcharges and pricing gains resulted in a 30 percent increase in total revenue . International revenue grew 25 percent, as strong imports drove a 20 percent volume increase . Domestic intermodal revenue jumped 35 percent on an 18 percent increase in volume, driven by continued truckload conversions, transloading growth and the conversion of traffic from Hub Group . 2011 Market Drivers

Prospects for a sustained recovery in 2011 are hopeful . International volumes are expected to improve year-over-year, driven by growth in import traffic. Domestic traffic also should increase, as UP’s value proposition and competitive service drive more shippers to convert traffic from truck to intermodal rail . In addition, continued pricing opportunities are anticipated in both markets .

Union Pacific offers consistent, reliable service for domestic intermodal customers . New truck-competitive services began in several lanes during 2010, which are expected to yield volume growth as customers convert from truck to rail . To support current volumes and provide for future growth, UP continues to invest in its intermodal network and equipment . Domestic container capacity is a key component of this investment . In 2010, UP acquired 9,200 containers and nearly 3,000 chassis

Intermodal Line Density Map


2010 Units

Domestic44%

International56%

30

John Kaiser,VP & GM Intermodal


Union Pacific’s Intermodal group is committed to delivering best-ever service that is responsive, consistent and reliable . Our comprehensive network provides international customers superior market coverage and the best value for access to most major U .S . population centers . Investments in our intermodal network should favorably position Union Pacific to capture “economy plus” growth in the years ahead . Our new Joliet, IL intermodal terminal, which opened in the third quarter of 2010, helps enable UP to efficiently handle current volumes as well as expected future growth . For our domestic customers, Union Pacific continues to add and expand service offerings that provide reliable, truck-competitive and environmentally friendly service . This improved service should accommodate additional growth through truckload conversions, as anticipated driver shortages and increased operating costs constrain truck capacity . To remain competitive, shippers seek to reduce costs, and converting from truck to intermodal helps accomplish this objective .

Our service has never been better . In 2010, we created and improved service in 86 lanes . We enhanced train schedules to reduce transit times from 2009 levels, and provided new truck-competitive services between Los Angeles and Chicago, the Northeast, the Ohio Valley and El Paso, as well as between the PNW and Chicago . As demonstrated by record satisfaction levels, our customers are pleased with what we have accomplished . With the tremendous opportunities for growth, train productivity and price improvement ahead, there should certainly be more to come .

Intermodal

to meet growing demand in the domestic intermodal market, with the acquisition of an additional 4,800 containers and 4,800 chassis planned for 2011 .

Joliet Intermodal Terminal

31

Intermodal Terminals and Traffic Flows

Annual Summary by Quarter - Intermodal



691 804 880 852 3,227 551 595 656 684 2,486 707 769 842 705 3,023


18,791 20,177 20,489 20,001 79,458 15,276 17,322 18,411 19,077 70,086 19,552 19,737 19,875 17,014 76,178


742 827 903 841 3,313 615 669 728 763 2,775 796 811 834 724 3,165


930 974 974 1,012 974 897 889 901 896 896 889 947 1,010 974 955

32

Union Pacific provides customers the most efficient rail route between markets in Mexico, the U .S . and Canada . The Railroad’s unique franchise serves all six major gateways to Mexico, connecting directly to the two largest Mexican railroads . In 2010, approximately 54 percent of UP shipments to and from Mexico interchanged with Ferrocarril Mexicano (Ferromex or FXE) . The remaining 46 percent interchanged with Kansas City Southern de Mexico (KCSM). Union Pacific retains a 26 percent ownership interest in Ferromex .

Cooperation with FXE and KCSM allows UP to capture opportunities created by the North American Free Trade Agreement (NAFTA) and by Mexico’s competitive position in today’s global economic landscape . The Railroad also works with Ferrocarril del Sureste (Ferrosur or FSRR) and other smaller railroads to explore new businesses . The Mexican railroads continue investing in equipment, facilities and track to improve service and performance, which should yield market share gains from trucks and create new business opportunities . In addition, Union Pacific’s sales and marketing presence in Mexico enables direct communication with Mexican customers and shippers .

Traffic to and from Mexico includes a diversified mix of commodities within each of Union Pacific’s six business teams. Approximately 57 percent of UP’s Mexico traffic consists of southbound shipments . Corn, dry feed ingredients, autos and auto parts, intermodal, meals and oils, steel, plastics, minerals, coal, soda ash, wheat and newsprint shipments make up

Mexico

about 80 percent of southbound revenue, with the remainder spread across the Company’s six business teams . Northbound shipments grew during the past five years with increased Mexican manufacturing, and now comprise nearly 45 percent of revenue from Mexico operations . Autos and auto parts, beer and food products, steel products and manufactured goods represent almost 85 percent of northbound revenue .

The recovering economy drove an increase in volume and revenue for all six business teams in 2010 . Mexico shipments increased 25 percent and revenue grew 30 percent to $1 .6 billion . The Energy group reported 15 percent revenue growth and 9 percent volume growth . Agricultural revenue increased 11 percent and volume increased 9 percent . Food and beverage revenue increased 16 percent with volume growing 8 percent, and corn and feed grains revenue increased 20 percent on 20 percent volume growth . Revenue for Industrial Products increased 29 percent, as steel volumes climbed 54 percent . Automotive represents the largest share of Mexico revenue and volume. Lower traffic levels due to economic conditions in 2009, additional Mexico production capacity and market share gains in auto parts moving in intermodal containers drove revenue up 63 percent and volumes up 42 percent . Revenue from chemicals rose 18 percent, primarily from soda ash, petroleum products and plastics, and volume increased 12 percent . Intermodal revenue increased 25 percent with volume up 18 percent .

Mexico Line Density Map


Agricultural16%

Automotive42%

Chemicals6% Energy

1%

Industrial Products

11%

Intermodal24%

2010 Carloads

33

Bernardo Ayala,VP Mexico Markets


UP’s unique franchise directly accesses all six major U .S ./Mexico rail gateways, connecting to Mexico’s fastest growing regions as well as more mature markets . Our business model focuses on excellent service and direct interaction with customers . We have extensive coverage of the Mexican market with sales offices in Mexico City, Monterrey, El Paso, Laredo and Houston . Building upon our franchise strengths, customer relationships and record service, we recently created a sales team dedicated exclusively to developing new business with customers that do not currently ship via rail. With sales offices in Guadalajara and Irapuato, this group targets the fast growing Bajio region northwest of Mexico City (the states of Jalisco, Queretaro, Guanajuato, Michoacan and Aguascalientes) .

The development of new transportation products and services provides direct, competitive rail offerings to the Mexico market . Through these efforts we are well-positioned to effectively handle existing business as well as expected volume growth . Union Pacific’s International Customer Service Center helps make international business seamless for our customers . As worldwide economic trends continue to improve and Mexico’s competitive position strengthens, our commitment to meeting customer needs should enable us to generate “economy plus” volume growth in the coming years .

Mexico

2011 Market Drivers

Union Pacific expects Mexico traffic growth to continue in 2011, but at more moderate levels versus 2010 . The combination of additional Mexico automotive production capacity coming online and a projected 12 percent increase in U .S . auto sales should drive growth in vehicle and parts volumes . Mexican population growth and insufficient local crop production should drive continued demand for imported U.S. grain, benefiting UP’s southbound shipments of corn, soybeans, DDGS and wheat . Sugar production in Mexico is forecast to increase 7 percent, which should yield growth in northbound carloads of sugar . Volume growth in northbound beer is also expected in 2011, driven by increased U .S . consumption .

Mexican government infrastructure programs, private sector construction projects and higher commodity prices, combined with a more stable peso exchange rate are expected to benefit southbound shipments of scrap, steel, plastics, soda ash, paper, minerals, construction materials, sand, cardboard and other products and northbound shipments of household appliances and steel . In addition, Mexico’s proximity to U .S . markets should create additional opportunities, as manufacturing firms seek to shorten supply chains and keep production costs low . At the same time, persistently high U .S . unemployment rates may restrain consumer spending, which is a critical factor for Mexico business .

Union Pacific’s current strategies focus on maintaining excellent service, developing new business and improving core price, and support an expectation of retaining current business and potentially generating growth . Foreign investment in Mexico is forecast to increase around 4 percent, and the current outlook suggests that markets such as the “maquiladora” industry, food, steel, coal/coke and mining minerals should grow in 2011 .

Rail operations across the border remain fluid. Increased hours of operation at the Eagle Pass gateway and targeted capital spending should improve cross border operations at all six UP-served gateways in 2011, further enhancing the Railroad’s ability to efficiently handle anticipated traffic growth.

Percent of Carloads at Border Crossings

Laredo37%

Eagle Pass32%

El Paso9%

Nogales12%

Brownsville9%

Calexico1%

34

SELECTED FINANCIAL DATA Union Pacifi c Corporation and Subsidiary Companies

Millions, except per share amounts, carloads, employee statistics and ratios

For the year ended December 31, 2010 2009 2008 2007 2006 Operating revenues [a] $16,965 $14,143 $17,970 $16,283 $15,578 Operating income 4,981 3,379 4,070 3,364 2,871 Net income 2,780 1,890 2,335 1,848 1,598 Earnings per share - basic [b] 5.58 3.76 4.57 3.47 2.97 Earnings per share - diluted [b] 5.53 3.74 4.53 3.44 2.94 Dividends declared per share [b] 1.31 1.08 0.98 0.745 0.60 Cash provided by operating activities 4,105 3,204 4,044 3,248 2,853Cash used in investing activities (2,488) (2,145) (2,738) (2,397) (2,015)Cash used for capital investments (2,482) (2,354) (2,754) (2,467) (2,215)Cash used in fi nancing activities (2,381) (458) (935) (800) (784)Cash used for common share repurchases (1,249) - (1,609) (1,375) -

At December 31 Total assets $43,088 $42,184 $39,509 $37,825 $36,318 Long-term obligations 22,373 22,701 21,314 19,328 17,589 Debt due after one year 9,003 9,636 8,607 7,543 6,000 Common shareholders’ equity 17,763 16,801 15,315 15,456 15,190 Equity per common share [c] 36.14 33.27 30.43 29.62 28.11

Additonal Data Freight revenues [a] $16,069 $13,373 $17,118 $15,486 $14,791 Revenue carloads (units) (000) 8,815 7,786 9,261 9,733 9,852 Operating margin (%) [d] 29.4 23.9 22.6 20.7 18.4 Operating ratio (%) [d] 70.6 76.1 77.4 79.3 81.6 Average employees (000) 42.9 43.5 48.2 50.1 50.7 Operating revenues per employee (000) $395.5 $325.1 $372.8 $325.0 $307.2

Financial Ratios (%) Debt to capital [e] 34.2 37.0 36.8 33.2 30.9 Return on average common shareholders’ equity [f] 16.1 11.8 15.2 12.1 11.1

[a] Includes fuel surcharge revenue which partially offsets increased operating expenses for fuel. Fuel surcharge revenue is not comparable from year to year due to implementation of new mileage-based fuel surcharge programs in each respective year. See 2010 SEC Form 10-K for more information.[b] Earnings per share and dividends have been restated to refl ect the May 28, 2008 stock split.[c] Equity per common share is calculated as follows: common shareholders’ equity divided by common shares issued less treasury shares outstanding. Shares have been adjusted to refl ect the May 28, 2008 stock split.[d] Operating margin is defi ned as operating income divided by operating revenues. Operating ratio is defi ned as operating expenses divided by operating revenues.[e] Debt to capital is determined as follows: total debt divided by total debt plus equity.[f] Return on average common shareholders’ equity is determined as follows: Net income divided by average common shareholders’ equity.

35

CONSOLIDATED STATEMENTS OF INCOME (unaudited)Union Pacifi c Corporation and Subsidiary Companies

2010Millions, except per share amounts and percentages 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full YearOperating Revenues Freight revenues $3,755 $3,956 $4,187 $4,171 $16,069 Other revenues 210 226 221 239 896 Total operating revenues $3,965 $4,182 $4,408 $4,410 $16,965 Operating Expenses Compensation and benefi ts 1,059 1,051 1,092 1,112 4,314 Fuel 583 608 608 687 2,486 Purchased services and materials 432 472 465 467 1,836 Depreciation 367 368 372 380 1,487 Equipment and other rents 290 282 292 278 1,142 Other 246 122 178 173 719 Total operating expenses 2,977 2,903 3,007 3,097 11,984 Operating Income 988 1,279 1,401 1,313 4,981 Other income 1 19 25 9 54 Interest expense (155) (152) (153) (142) (602)Income before income taxes 834 1,146 1,273 1,180 4,433 Income taxes (318) (435) (495) (405) (1,653)Net Income $516 $711 $778 $775 $2,780 Share and Per Share Earnings per share - basic $1.02 $1.42 $1.58 $1.58 $5.58 Earnings per share - diluted $1.01 $1.40 $1.56 $1.56 $5.53 Weighted average number of shares - basic 504.5 501.8 493.0 491.3 498.2 Weighted average number of shares - diluted 508.7 506.5 497.7 496.3 502.9 Dividends declared per share $0.27 $0.33 $0.33 $0.38 $1.31 Operating Ratio 75.1% 69.4% 68.2% 70.2% 70.6%Effective Tax Rate 38.1% 38.0% 38.9% 34.3% 37.3%

2009Millions, except per share amounts and percentages 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full YearOperating Revenues Freight revenues $3,240 $3,121 $3,471 $3,541 $13,373 Other revenues 175 182 200 213 770 Total operating revenues $3,415 $3,303 $3,671 $3,754 $14,143 Operating Expenses Compensation and benefi ts 1,070 976 999 1,018 4,063 Fuel 386 370 466 541 1,763 Purchased services and materials 404 399 413 428 1,644 Depreciation 341 350 363 373 1,427 Equipment and other rents 317 307 290 266 1,180 Other 226 153 179 129 687 Total operating expenses 2,744 2,555 2,710 2,755 10,764 Operating Income 671 748 961 999 3,379 Other income 23 135 14 23 195 Interest expense (141) (150) (156) (153) (600)Income before income taxes 553 733 819 869 2,974 Income taxes (191) (268) (305) (320) (1,084)Net Income $362 $465 $514 $549 $1,890 Share and Per Share Earnings per share - basic $0.72 $0.92 $1.02 $1.09 $3.76 Earnings per share - diluted $0.72 $0.92 $1.01 $1.08 $3.74 Weighted average number of shares - basic 502.7 502.9 503.1 503.5 503.0 Weighted average number of shares - diluted 504.6 505.3 507.0 507.8 505.8 Dividends declared per share $0.27 $0.27 $0.27 $0.27 $1.08

Operating Ratio 80.4% 77.4% 73.8% 73.4% 76.1%Effective Tax Rate 34.5% 36.6% 37.2% 36.8% 36.4%

Refer to the Union Pacifi c Corporation 2010 SEC Form 10-K for additional information, including audited fi nancial statements and related footnotes.

36

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONUnion Pacifi c Corporation and Subsidiary Companies

Millions, as of December 31, 2010 2009

Assets Current assets:

Cash and cash equivalents $1,086 $1,850

Accounts receivable, net 1,184 666

Materials and supplies 534 475

Current deferred income taxes 261 339

Other current assets 367 350

Total current assets 3,432 3,680

Investments 1,137 1,036

Properties:

Land 4,984 4,891

Road 37,268 35,667

Equipment 8,327 8,209

Other 1,329 1,443

Accumulated depreciation (13,655) (13,008)

Total net properties 38,253 37,202

Other assets 266 266

Total assets $43,088 $42,184

Liabilities and Common Shareholders’ Equity

Current liabilities:

Accounts payable $677 $612

Dividends and interest 383 347

Accrued wages and vacation 357 339

Income and other taxes 337 224

Accrued casualty costs 325 379

Equipment rents payable 86 89

Other 548 480

Debt due within one year 239 212

Total current liabilities 2,952 2,682

Debt due after one year 9,003 9,636

Deferred income taxes 11,557 11,044

Other long-term liabilities 1,813 2,021

Total liabilities 25,325 25,383

Common shareholders’ equity:

Common shares, $2.50 par value, 800,000,000 authorized; 553,931,181 and

553,497,981 issued; 491,565,880 and 505,039,952 outstanding, respectively 1,385 1,384

Paid-in-surplus 3,985 3,968

Retained earnings 17,154 15,027

Treasury stock (4,027) (2,924)

Accumulated other comprehensive loss (734) (654)

Total common shareholders’ equity 17,763 16,801

Total liabilities and common shareholders’ equity $43,088 $42,184

Refer to the 2010 Union Pacifi c Corporation SEC Form 10-K for additional information.

37

CONSOLIDATED STATEMENTS OF CASH FLOWUnion Pacifi c Corporation and Subsidiary Companies

Millions, for the years ended December 31, 2010 2009 2008Operating ActivitiesNet income $2,780 $1,890 $2,335 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 1,487 1,427 1,366 Deferred income taxes and unrecognized tax benefi ts 672 718 545 Net gain on non-operating asset disposition (25) (162) (41) Other operating activities, net (458) (376) 89 Changes in current assets and liabilities: Accounts receivable, net (518) (72) 38 Materials and supplies (59) (25) 3 Other current assets (17) (106) 51 Accounts payable and other current liabilities 243 (90) (342)Cash provided by operating activities 4,105 3,204 4,044 Investing ActivitiesCapital investments (2,482) (2,354) (2,754)Proceeds from asset sales 67 187 93 Acquisition of equipment pending fi nancing - (100) (388)Proceeds from sale of assets fi nanced - 100 388 Other investing activities, net (73) 22 (77)Cash used in investing activities (2,488) (2,145) (2,738)

Financing ActivitiesDebt issued 894 843 2,257 Common share repurchases (1,249) - (1,609)Debt repaid (1,412) (871) (1,208)Dividends paid (602) (544) (481)Other fi nancing activities, net (12) 114 106 Cash used in fi nancing activities (2,381) (458) (935)Net change in cash and cash equivalents (764) 601 371 Cash and cash equivalents at beginning of year 1,850 1,249 878 Cash and cash equivalents at end of year $1,086 $1,850 $1,249

Supplemental Cash Flow Information Non-cash investing and fi nancing activities: Capital lease fi nancings $ - $842 $175 Cash dividends declared but not yet paid 183 132 132 Capital investments accrued but not yet paid 125 96 93 Settlement of current liabilities for debt - 14 - Cash paid during the year for: Interest, net of amounts capitalized $(614) $(578) $(500) Income taxes, net of refunds (936) (452) (699)

Refer to the Union Pacifi c Corporation 2010 SEC Form 10-K for more information.

38

FINANCIAL AND OPERATING STATISTICS (unaudited)Union Pacifi c Corporation and Subsidiary Companies

For periods ended December 31, 2010 2009 1st 2nd 3rd 4th Full 1st 2nd 3rd 4th FullFinancial and Revenue Statistics Qtr Qtr Qtr Qtr Year Qtr Qtr Qtr Qtr Year

Operating revenues (millions) $3,965 $4,182 $4,408 $4,410 $16,965 $3,415 $3,303 $3,671 $3,754 $14,143

Operating expenses (millions) $2,977 $2,903 $3,007 $3,097 $11,984 $2,744 $2,555 $2,710 $2,755 $10,764

Operating ratio (%) 75.1 69.4 68.2 70.2 70.6 80.4 77.4 73.8 73.4 76.1

Operating margin (%) 24.9 30.6 31.8 29.8 29.4 19.6 22.6 26.2 26.6 23.9

Compensation and

benefi ts (millions) $1,059 $1,051 $1,092 $1,112 $4,314 $1,070 $976 $999 $1,018 $4,063

Compensation and benefi ts/

Operating revenue (%) 26.7 25.1 24.8 25.2 25.4 31.3 29.5 27.2 27.1 28.7

Freight revenue/

Average employees (000) $89.1 $92.9 $96.5 $96.0 $374.7 $72.0 $71.4 $80.3 $84.0 $307.2

Fuel expense (millions) $583 $608 $608 $687 $2,486 $386 $370 $466 $541 $1,763

Average fuel price

per gallon consumed [a] $2.16 $2.29 $2.24 $2.46 $2.29 $1.51 $1.57 $1.87 $2.05 $1.75

Freight revenues (millions) $3,755 $3,956 $4,187 $4,171 $16,069 $3,240 $3,121 $3,471 $3,541 $13,373

Average revenue per car $1,804 $1,815 $1,807 $1,865 $1,823 $1,755 $1,685 $1,706 $1,726 $1,718

Freight revenue/

Revenue ton-mile (cents) 2.96 3.14 3.12 3.14 3.09 2.75 2.76 2.80 2.86 2.79

Effective tax rate (%) 38.1 38.0 38.9 34.3 37.3 34.5 36.6 37.2 36.8 36.4

Debt to capital (%) [b] 34.2 37.0

Adjusted debt to capital (%) [c] 42.5 46.1

Operating Statistics

Revenue carloads (thousands) 2,082 2,180 2,316 2,237 8,815 1,847 1,852 2,035 2,052 7,786

Revenue ton-miles (billions) 127 126 134 133 520 118 113 124 124 479

Gross ton-miles (billions) 224 228 239 240 931 207 201 219 220 847

Average train speed (miles per hour) [d] 26.2 26.4 25.7 26.5 26.2 27.2 27.4 27.4 27.0 27.3

Average system dwell (hours) [d] 26.1 24.7 25.0 25.8 25.4 24.3 24.5 24.5 25.8 24.8

Average rail car inventory [d] 277,549 275,239 274,371 270,642 274,450 286,398 281,780 281,455 282,773 283,102

Fuel consumed (millions of gallons) 263 257 261 270 1,051 252 229 242 256 979

Employees (average) 42,130 42,571 43,375 43,462 42,884 44,997 43,721 43,248 42,157 43,531

GTMs per employee (millions) 5.31 5.36 5.52 5.52 21.72 4.59 4.59 5.06 5.22 19.44

[a] Including taxes and transportation costs.[b] Debt to capital is computed as follows: total debt divided by total debt plus equity.[c] Adjusted debt to capital is determined as follows: total debt plus net present value of operating leases plus sale of receivables plus unfunded pension and OPEB divided by total debt plus equity plus net present value of operating leases plus sale of receivables. [d] As reported to the Association of American Railroads.

39

NON-GAAP DEFINITIONS

Management believes certain non-GAAP measures provide an alternative presentation of the results that more accurately refl ect

ongoing Company operations. These measures should be considered in addition to, not a substitute for, the reported GAAP

results.

Free Cash Flow

Cash provided by operating activities (adjusted for the reclassifi cation of our receivables securitization facility), less cash used in

investing activities and dividends paid. Management believes this is an important measure in evaluating our fi nancial performance

and measures our ability to generate cash without additional external fi nancings.

Return on Invested Capital

Net income plus interest expense, plus interest on present value of operating leases, plus receivable securitization fees, less taxes

on interest and fees divided by average equity plus average debt, plus average value of sold receivables, plus average present

value of operating leases. Management believes this is an important measure for evaluating the effi ciency and effectiveness of

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

elements of compensation for our executive offi cers and senior management.

Debt to Capital

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 fi nancing relationships.

Adjusted Debt to Capital

Total debt plus value of sold receivables, 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 value of sold receivables, plus after-tax unfunded

pension and OPEB obligation, plus equity. Operating leases were discounted using 6.2% at December 31, 2010, 6.3% at December

31, 2009 and 8.0% at December 31, 2008. The lower discount rate refl ects changes to interest rates and our current fi nancing costs.

Management believes this is an important measure in evaluating the total amount of leverage in our capital structure including

off-balance sheet lease obligations.

40

FREE CASH FLOW AND CONSOLIDATED STATEMENT OF CASH FLOWSReconciliation to GAAP

Millions

FREE CASH FLOW - RECONCILIATION TO GAAP 2010 2009 2008 Cash provided by operating activities $4,105 $3,204 $4,044 Receivables securitization facility* 400 184 16 Cash provided by operating activities 4,505 3,388 4,060 adjusted for the receivables securitization facility Cash used in investing activities (2,488) (2,145) (2,738)Dividends paid (602) (544) (481)Free cash fl ow $1,415 $699 $841

* Effective January 1, 2010, a new accounting standard required us to account for receivables transferred under our receivables securitization facility as secured borrowings in our Consolidated Statements of Financial Position and as fi nancing activities in our Consolidated Statements of Cash Flows. The receivables securitization facility is included in our free cash fl ow calculation to adjust cash provided by operating activities as though our receivables securitization facility had been accounted for under the new accounting standard for all periods presented.

CONSOLIDATED STATEMENTS OF CASH FLOWS 2010 2009 2008 Operating Activities: Net income $2,780 $1,890 $2,335 Depreciation 1,487 1,427 1,366 Deferred income taxes 672 718 545 Other operating activities - net (834) (831) (202)Cash Provided by Operating Activities 4,105 3,204 4,044

Investing Activities: Capital investments (2,482) (2,354) (2,754)Other investing activities - net (6) 209 16 Cash Used in Investing Activities (2,488) (2,145) (2,738)

Financing Activities: Debt issued 894 843 2,257 Common shares repurchased (1,249) - (1,609)Debt repaid (1,412) (871) (1,208)Dividends paid (602) (544) (481)Other fi nancing activities - net (12) 114 106 Cash Used in Financing Activities (2,381) (458) (935)Net Change in Cash and Cash Equivalents $(764) $601 $371

41

DEBT TO CAPITAL/ADJUSTED DEBT TO CAPITAL 2010 2009 2008Debt (a) $9,242 $9,848 $8,927 Equity 17,763 16,801 15,315 Capital (b) $27,005 $26,649 $24,242 Debt to capital (a/b) 34.2% 37.0% 36.8% 2010 2009 2008Debt $9,242 $9,848 $8,927 Value of sold receivables - 400 584 Debt including value of sold receivables 9,242 10,248 9,511 Net present value of operating leases 3,476 3,672 3,690 Unfunded pension and OPEB 421 456 734 Adjusted debt (a) $13,139 $14,376 $13,935 Equity 17,763 16,801 15,315 Adjusted capital (b) $30,902 $31,177 $29,250 Adjusted debt to capital (a/b) 42.5% 46.1% 47.6%

RETURN ON INVESTED CAPITAL (ROIC)Reconciliation to GAAP

Millions, except percentages

2010 2009 2008 Net income $2,780 $1,890 $2,335 Add: Interest expense 602 600 511 Add: Interest on present value of operating leases 222 232 299 Add: Receivable securitization fees - 9 23 Less: Taxes on interest and fees (307) (306) (300)Net operating profi t after taxes as adjusted (a) $3,297 $2,425 $2,868 Average equity $17,282 $16,058 $15,386 Add: Average debt 9,545 9,388 8,305 Add: Average value of sold receivables 200 492 592 Add: Average present value of operating leases 3,574 3,681 3,737 Average invested capital as adjusted (b) $30,601 $29,619 $28,020 Return on invested capital as adjusted (a/b) 10.8% 8.2% 10.2%

42

Cautionary Information

The 2010 Analyst “Fact Book” provides additional explanatory

information regarding Union Pacifi c that may not be

available, included or directly derived from information in

the Company’s Annual Report. The information provided

is supplemental in nature and is not, and should not be

considered or deemed to be better than that available in the

Company’s publicly available reports fi led with the SEC.

Additionally, some of the information in the Fact Book is

derived from the Company’s audited fi nancial statements, but

the Fact Book and its contents have not been, and should not

be considered, audited.

This Fact Book includes statements and information regarding

future expectations or results of the Company that are not

historical facts. These statements and information are, or will

be, forward looking as defi ned by the federal securities laws.

Forward looking statements and information can be identifi ed

by use of forward looking terminology (and derivations

thereof), such as “believes”, “expects”, “may”, “should”, “will”,

“would”, “intends”, “plans”, “estimates”, “anticipates”, “projects”

and other words or phrases of similar intent. Forward looking

statements and information generally include statements

and information included under sections of this Fact Book

entitled “2011 Market Drivers” and information regarding

business opportunities over the next fi ve years, and specifi cally

include statements and information regarding: the Company’s

expectations or forecasts with respect to general economic

conditions in the U.S. and the world; the Company’s fi nancial

and operational performance; increases of the Company’s

earnings; demand for the Company’s rail service; the

continued ability of the Company to increase prices; improving

customer service; enhancing profi tability; volume and revenue

growth; effi ciency improvements and increasing returns;

improving asset utilization; the effectiveness or growth of

new and newer services; management of network volumes;

increasing shareholder value; plans for and total amount of

capital investments; completion and effectiveness of capacity

expansion and other capital investments, and other investments

in upgrading or adding signals and facilities; returns on capital

investments; improvements regarding safety of our operations

and equipment; and effectiveness of plans, programs and

initiatives to reduce costs, improve the Company’s Operating

Ratio and other effi ciency improvements.

Forward-looking statements and information 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 statements and information are subject to risks and

uncertainties that could cause actual performance or results to

differ materially from those expressed in the statements.

Forward-looking statements and information refl ect the good

faith consideration by management of currently available

information, and may be based on underlying assumptions

believed to be reasonable under the circumstances. However,

such information and assumptions (and, therefore, such

forward-looking statements and information) are or may

be subject to variables or unknown or unforeseeable events

or circumstances over which management has little or no

infl uence or control. The Risk Factors in Item 1A of the

Company’s Annual Report on Form 10-K, fi led on February

4, 2011, could affect our future results and could cause those

results or other outcomes to differ materially from those

expressed or implied in the forward-looking statements and

information. This Fact Book should be read in consideration

of these Risk Factors. To the extent circumstances require or

the Company deems it otherwise necessary, the Company will

update or amend these Risk Factors in subsequent Annual

Reports, periodic reports on Form 10-Q or current reports on

Form 8-K.

Forward-looking statements speak only as of the date the

statement was made. We assume no obligation to update

forward-looking information to refl ect actual results, changes

in assumptions or changes in other factors affecting forward-

looking information. If we do update one or more forward-

looking statements, no inference should be drawn that we will

make additional updates with respect thereto or with respect to

other forward-looking statements.

The Company’s fi nancial statements are included solely as

a convenience. The fi nancial statements should be read in

conjunction with the notes to the Financial Statements and

Supplementary Data in Item 8 of the Company’s 2010 Annual

Report on Form 10-K.

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