Union Pacific (UNP) 8-K Union Pacific Reports Fourth Quarter Earnings

Exhibit 99.1

UNION PACIFIC REPORTS FOURTH QUARTER EARNINGS

FOR IMMEDIATE RELEASE:

OMAHA, Neb., January 24, 2005 –Union Pacific Corporation (NYSE: UNP) today

reported 2004 fourth quarter income from continuing operations of $79 million, or $0.30 per

diluted share compared to $333 million, or $1.28 per diluted share in the fourth quarter of 2003.

Included in the 2004 results is the impact of the $154 million after-tax, or $0.58 per diluted

share, non-cash charge for unasserted asbestos claims that the company announced in December.

For the full year 2004, income from continuing operations was $604 million, or $2.30 per

diluted share compared to $1.1 billion, or $4.07 per diluted share in 2003. The 2004 full year

results also include the impact of the non-cash asbestos charge.

“High fuel prices and increased operating costs continued to impact earnings,” Dick

Davidson, chairman and chief executive officer, said. “However, we continue to be encouraged

by the unprecedented demand we have experienced over the past year. In 2004, our operating

revenue grew to a record $12.2 billion – a six percent increase over 2003 and our first year over

the $12 billion mark. We believe this trend will continue as demand for transportation service

exceeds the available supply, giving us an opportunity to improve returns and grow with our

customers.”

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2004 Fourth Quarter Summary

In the fourth quarter of 2004, Union Pacific Corporation reported operating income of

$204 million, which includes the $247 million pre-tax, non-cash asbestos charge. This compares

to $589 million during the same period in 2003.

· The Railroad’s Commodity Revenue was up 8 percent to a quarterly best $3.1 billion, with   all commodities except Energy posting increases for the quarter. The main component of the   growth was a six percent increase in Average Revenue per Car, which reached an all-time   record of $1,282 per car in the fourth quarter.  

· Business volumes, as measured by total carloads, grew 1 percent to a fourth quarter record   2.4 million.  

· Operating margin was 6.3 percent versus 19.9 percent last year with 7.7 points of the decline   attributable to the asbestos charge. Operating margin was also impacted by higher fuel costs   and slower operational velocity.  

· The Railroad’s average quarterly fuel price of $1.46 per gallon compares to $0.89 per gallon   paid a year ago, increasing quarterly diesel fuel costs by $195 million.  

· Quarterly average system speed, as reported to the Association of American Railroads,   declined 1.3 mph versus the prior quarter and was 2.2 mph slower than the fourth quarter of   2003.

Fourth Quarter Commodity Revenue Summary versus 2003

· Industrial Products up 17 percent  

· Agricultural up 12 percent

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· Intermodal and Chemicals were each up 11 percent  

· Automotive up 2 percent  

· Energy down 5 percent  

2004 Full Year Summary

· Total Operating Revenue increased 6 percent to a record $12.2 billion.  

· Railroad Commodity Revenue totaled a record $11.7 billion, a 6 percent increase. Half of   this growth is attributable to a $41 increase in Average Revenue per Car to a record $1,236   per car.  

· Business volumes, as measured by total carloads, increased 2 percent to a record level of 9.5   million.  

· Operating margin was 10.6 percent versus 18.5 percent last year with 2.0 points of the year-   over-year margin decline attributable to the asbestos charge. Full year operating margin was   also impacted by higher fuel costs and slower operational velocity.  

· The Railroad’s average yearly fuel price was $1.22 per gallon compared to $0.92 per gallon   in 2003, increasing diesel fuel costs by $416 million.  

· Average system speed, as reported to the Association of American Railroads, declined 2.2   mph in 2004 to 21.4 mph. This compares to an average system speed of 23.6 mph in 2003.  

2005 Outlook

“At the top of our list for 2005 is improving service to our customers,” Davidson said.

“Over the past year, efforts to increase our train crew and locomotive resources have been

successful. The next step, already underway, is to improve our network management processes

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to make these resources more productive. We are engaged in a comprehensive redesign of our

operating network. We are calling this program our Unified Plan, and we expect to implement

this plan by the end of the second quarter. Through these efforts, we believe we can simplify our

operations, improve velocity and better manage the volume flowing onto our network in the face

of continued strong demand.

“The year is off to a difficult start with the recent severe storm in California and Nevada,

but we continue to believe that 2005 will be a better year for our company. As we put the

weather challenges behind us, and our new network initiatives gain momentum, we expect to see

improvements in both our service to customers and returns to our shareholders.”

Union Pacific Corporation owns one of America’s leading transportation companies. Its

principal operating company, Union Pacific Railroad, is the largest railroad in North America,

covering 23 states across the western two-thirds of the United States. A strong focus on quality

and a strategically advantageous route structure enable the company to serve customers in

critical and fast growing markets. It is a leading carrier of low-sulfur coal used in electrical

power generation and has broad coverage of the large chemical-producing areas along the Gulf

Coast. With competitive long-haul routes between all major West Coast ports and eastern

gateways, and as the only railroad to serve all six major gateways to Mexico, Union Pacific has

the premier rail franchise in North America.

Supplemental financial information is attached.

Additional information is available at our Web site:www.up.com. Contact for

investors is Jennifer Hamann at 402-544-4227. Contact for media is Kathryn Blackwell at

402-544-3753.

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**********

This press release and related materials may contain statements about the Corporation’s future that are

not statements of historical fact. These statements are, or will be, forward-looking statements as defined by the

Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements include, without

limitation, statements regarding: expectations as to continued demand for rail transportation in excess of supply;

expectations regarding operational improvements, including the effectiveness of actions taken and to be undertaken

to improve system velocity, customer service and shareholder returns; expectations as to increased returns, cost

savings, revenue growth and earnings; the time by which certain objectives will be achieved, including expected

improvements in velocity and implementation of network management initiatives; estimates of costs relating to

environmental remediation and restoration; proposed new products and services; expectations that claims, lawsuits,

environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not

have a material adverse effect on our consolidated financial position, results of operations or liquidity; and

statements concerning projections, predictions, expectations, estimates or forecasts as to the Corporation’s and its

subsidiaries’ business, financial and operational results, and future economic performance; and statements of

management’s beliefs, expectations, goals and objectives and other similar expressions concerning matters that are

not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will

not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved.

Forward-looking information is based on information available at the time and/or management’s good faith belief

with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results

to differ materially from those expressed in the statements.

Important factors that could affect the Corporation’s and its subsidiaries’ future results and could cause

those results or other outcomes to differ materially from those expressed or implied in the forward-looking

statements include, but are not limited to: whether the Corporation and its subsidiaries are fully successful in

implementing their financial and operational initiatives, including those plans and initiatives to improve system

velocity and network management or otherwise improve operations; industry competition, conditions, performance

and consolidation; general legislative and regulatory developments, including possible enactment of initiatives to

re-regulate the rail business; legislative, regulatory and legal developments involving taxation, including enactment

of new federal or state income tax rates, revisions of controlling authority and the outcome of tax claims and

litigation; changes in securities and capital markets; natural events such as severe weather, fire, floods and

earthquakes; the effects of adverse general economic conditions, both within the United States and globally; any

adverse economic or operational repercussions from terrorist activities and any governmental response thereto;

war or risk of war; changes in fuel prices; changes in labor costs; labor stoppages; and the outcome of claims and

litigation, including those related to environmental contamination, personal injuries, and occupational illnesses

arising from hearing loss, repetitive motion and exposure to asbestos and diesel fumes.

Forward-looking statements speak only as of the date the statements were made. The Corporation assumes

no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in

other factors affecting forward-looking information. If the Corporation does update one or more forward-looking

statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or

with respect to other forward-looking statements.

UNION PACIFIC CORPORATION

STATEMENTS OF CONSOLIDATED INCOME

Periods Ended December 31

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

		Fourth Quarter								Year-to-Date
		2004			2003		Pct Chg			2004			2003		Pct Chg
Operating Revenues	$	3,217		$	2,965		8		$	12,215		$	11,551		6
Operating Expenses
Salaries and Benefits		1,051			999		5			4,167			3,892		7
Equipment and Other Rents		331			305		9			1,374			1,221		13
Depreciation		282			272		4			1,111			1,067		4
Fuel and Utilities		533			336		59			1,816			1,341		35
Materials and Supplies		129			108		19			488			414		18
Purchased Services and Other		687			356		93			1,964			1,483		32
Total Operating Expenses		3,013			2,376		27			10,920			9,418		16
Operating Income		204			589		(65	)		1,295			2,133		(39	)
Other Income - Net		22			46		(52	)		88			78		13
Interest Expense		(130	)		(134	)	(3	)		(527	)		(574	)	(8	)
Income Before Income Taxes		96			501		(81	)		856			1,637		(48	)
Income Tax Expense		(17	)		(168	)	(90	)		(252	)		(581	)	(57	)
Income from Continuing Operations		79			333		(76	)		604			1,056		(43	)
Income from Discontinued Operations		-			218		U			-			255		U
Cumulative Effect of Accounting Change		-			-		-			-			274		U
Net Income	$	79		$	551		(86	)	$	604		$	1,585		(62	)
Basic Earnings Per Share
Income from Continuing Operations	$	0.30		$	1.30		(77	)	$	2.33		$	4.15		(44	)
Income from Discontinued Operations		-			0.85		U			-			1.00		U
Cumulative Effect of Accounting Change		-			-		-			-			1.08		U
Net Income	$	0.30		$	2.15		(86	)	$	2.33		$	6.23		(63	)
Diluted Earnings Per Share
Income from Continuing Operations	$	0.30		$	1.28		(77	)	$	2.30		$	4.07		(43	)
Income from Discontinued Operations		-			0.84		U			-			0.95		U
Cumulative Effect of Accounting Change		-			-		-			-			1.02		U
Net Income	$	0.30		$	2.12		(86	)	$	2.30		$	6.04		(62	)

January 24, 2005 (1)

UNION PACIFIC RAILROAD

REVENUE DETAIL

Periods Ended December 31

(Unaudited)

		Fourth Quarter						Year-to-Date
		2004		2003	Pct Chg			2004		2003	Pct Chg
Commodity Revenue (000):
Agricultural	$	471,260	$	419,934	+	12	$	1,675,077	$	1,577,998	+	6
Automotive		324,374		318,114	+	2		1,235,047		1,216,343	+	2
Chemicals		446,772		401,129	+	11		1,718,761		1,588,579	+	8
Energy		592,839		620,975	-	5		2,404,525		2,411,758		-
Industrial Products		627,289		538,029	+	17		2,418,752		2,180,427	+	11
Intermodal		607,134		544,736	+	11		2,239,815		2,065,947	+	8
Total	$	3,069,668	$	2,842,917	+	8	$	11,691,977	$	11,041,052	+	6
Revenue Carloads:
Agricultural		228,750		237,904	-	4		883,360		882,722		-
Automotive		210,267		209,160	+	1		825,732		819,788	+	1
Chemicals		232,563		218,491	+	6		934,785		888,248	+	5
Energy		529,826		566,459	-	6		2,171,520		2,187,088	-	1
Industrial Products		368,502		365,645	+	1		1,515,021		1,478,268	+	2
Intermodal		824,337		762,951	+	8		3,127,385		2,982,717	+	5
Total		2,394,245		2,360,610	+	1		9,457,803		9,238,831	+	2
Average Revenue per Car:
Agricultural	$	2,060	$	1,765	+	17	$	1,896	$	1,788	+	6
Automotive		1,543		1,521	+	1		1,496		1,484	+	1
Chemicals		1,921		1,836	+	5		1,839		1,788	+	3
Energy		1,119		1,096	+	2		1,107		1,103		-
Industrial Products		1,702		1,471	+	16		1,597		1,475	+	8
Intermodal		737		714	+	3		716		693	+	3
Total	$	1,282	$	1,204	+	6	$	1,236	$	1,195	+	3

January 24, 2005 (2)

UNION PACIFIC CORPORATION

STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

As of December 31, 2004 and 2003

(Dollars in Millions)

(Unaudited)

		December 31,
		2004		2003
Assets:
Cash and Temporary Investments	$	977	$	527
Other Current Assets		1,313		1,562
Investments		767		726
Properties - Net		31,014		30,283
Other Assets		518		396
Total	$	34,589	$	33,494
Liabilities and Shareholders’ Equity:
Current Portion of Long Term Debt	$	150	$	167
Other Current Liabilities		2,366		2,289
Long Term Debt		7,981		7,822
Deferred Income Taxes		9,180		9,102
Other Long Term Liabilities		2,257		1,760
Common Shareholders’ Equity		12,655		12,354
Total	$	34,589	$	33,494

January 24, 2005 (3)

UNION PACIFIC CORPORATION

STATEMENTS OF CONSOLIDATED CASH FLOWS

For the Twelve Months Ended December 31

(Dollars in Millions)

(Unaudited)

		2004			2003
Operating Activities:
Net Income	$	604		$	1,585
Income from Discontinued Operations		-			(255	)
Cumulative Effect of Accounting Change		-			(274	)
Depreciation		1,111			1,067
Deferred Income Taxes		359			494
Other		173			(195	)
Cash Provided by Operating Activities		2,247			2,422
Investing Activities:
Capital Investments		(1,876	)		(1,752	)
Proceeds from Sale of Discontinued Operations		-			620
Other		154			276
Cash Used in Investing Activities		(1,722	)		(856	)
Financing Activities:
Dividends Paid		(310	)		(234	)
Debt Repaid		(588	)		(2,117	)
Financings and Other - Net		823			945
Cash Used in Financing Activities		(75	)		(1,406	)
Net Change in Cash and Temporary Investments	$	450		$	160
Non-Cash Capital Lease Financings	$	-		$	188

January 24, 2005 (4)

APPENDIX

UNION PACIFIC CORPORATION

OPERATING AND FINANCIAL STATISTICS

Periods Ended December 31

(Unaudited)

			Fourth Quarter								Year-to-Date
			2004			2003		Pct Chg			2004			2003		Pct Chg
Operating Statistics:
	Revenue Carloads (Thousands)		2,394			2,361		1			9,458			9,239		2
	Revenue Ton-Miles (Billions)		137.0			137.2		-			546.3			532.9		3
	Gross Ton-Miles (GTMs) (Billions)		262.2			264.0		(1	)		1,037.5			1,018.9		2
	Operating Margin		6.3	%		19.9	%	(13.6	)pt		10.6	%		18.5	%	(7.9	)pt
	Operating Ratio		93.7	%		80.1	%	13.6	pt		89.4	%		81.5	%	7.9	pt
	Average Employees		48,943			45,982		6			48,295			46,371		4
	GTMs (Millions) per Average Employee		5.36			5.74		(7	)		21.48			21.97		(2	)
	Average Fuel Price Per Gallon	$	1.46		$	0.89		64		$	1.22		$	0.92		33
	Fuel Consumed in Gallons (Millions)		343			344		-			1,377			1,330		4
	Fuel Consumption Rate (Gal per 000 GTM)		1.31			1.30		1			1.33			1.31		2
Financial:
	Average Basic Shares Outstanding (Millions)		259.8			256.1		1			259.1			254.4		2
	Average Diluted Shares Outstanding (Millions) (a)		263.1			259.9		1			262.2			268.0		(2	)
	Effective Tax Rate		17.7	%		33.5	%	(15.8	)pt		29.4	%		35.5	%	(6.1	)pt
	Debt to Capital (b)										39.1	%		39.3	%	(0.2	)pt
	Lease Adjusted Debt to Capital (c)										45.1	%		44.8	%	0.3	pt
	Free Cash Flow (After Dividends) (Millions) (d)									$	215		$	1,144		(81	)

(a) Included in the year-to-date 2003 average diluted shares outstanding were 10.3 million weighted average shares related to the Convertible Preferred Securities, which were redeemed in 2003.

(b) Debt to capital is computed as follows: total debt divided by total debt plus equity.

(c) Lease adjusted debt to capital is computed as follows: total debt plus net present value of operating leases divided by total debt plus equity plus net present value of operating leases.

(d) Free cash flow is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance and measures our ability to generate cash without incurring additional external financings. The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow:

	Year-to-Date
		2004			2003
Cash Provided by Operating Activities	$	2,247		$	2,422
Cash Used in Investing Activities		(1,722	)		(856	)
Dividends Paid		(310	)		(234	)
Non-Cash Capital Lease Financings		-			(188	)
Free Cash Flow	$	215		$	1,144
Proceeds from Sale of Discontinued Operations		-			(620	)
Net Free Cash Flow	$	215		$	524

January 24, 2005 (A-1)

UNION PACIFIC CORPORATION

STATEMENTS OF CONSOLIDATED INCOME

By Quarter and Full Year 2004

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

	Quarter Ended:								Year Ended December 31
	March 31		June 30		September 30		December 31
Operating Revenues	$	2,893	$	3,029	$	3,076	$	3,217	$	12,215
Operating Expenses
Salaries and Benefits		1,011		1,048		1,057		1,051		4,167
Equipment and Other Rents		327		362		354		331		1,374
Depreciation		274		277		278		282		1,111
Fuel and Utilities		389		435		459		533		1,816
Materials and Supplies		123		114		122		129		488
Purchased Services and Other		455		434		388		687		1,964
Total Operating Expenses		2,579		2,670		2,658		3,013		10,920
Operating Income		314		359		418		204		1,295
Other Income - Net		28		8		30		22		88
Interest Expense		(135)		(130)		(132)		(130)		(527)
Income Before Income Taxes		207		237		316		96		856
Income Tax Expense		(42)		(79)		(114)		(17)		(252)
Net Income	$	165	$	158	$	202	$	79	$	604
Basic Earnings Per Share	$	0.64	$	0.61	$	0.78	$	0.30	$	2.33
Diluted Earnings Per Share	$	0.63	$	0.60	$	0.77	$	0.30	$	2.30
Average Basic Shares Outstanding (Millions)		258.7		258.9		259.0		259.8		259.1
Average Diluted Shares Outstanding (Millions)		262.5		261.6		261.6		263.1		262.2

January 24, 2005 (A-2)

UNION PACIFIC RAILROAD

REVENUE DETAIL

By Quarter and Full Year 2004

(Unaudited)

	Quarter Ended:								Year Ended
		March 31		June 30		September 30		December 31		December 31
Commodity Revenue (000):
Agricultural	$	411,259	$	398,501	$	394,057	$	471,260	$	1,675,077
Automotive		296,801		326,095		287,777		324,374		1,235,047
Chemicals		410,081		428,822		433,086		446,772		1,718,761
Energy		586,464		596,694		628,528		592,839		2,404,525
Industrial Products		562,734		606,584		622,145		627,289		2,418,752
Intermodal		510,065		543,966		578,650		607,134		2,239,815
Total	$	2,777,404	$	2,900,662	$	2,944,243	$	3,069,668	$	11,691,977
Revenue Carloads:
Agricultural		230,412		215,003		209,195		228,750		883,360
Automotive		203,210		216,983		195,272		210,267		825,732
Chemicals		223,737		238,309		240,176		232,563		934,785
Energy		541,143		539,508		561,043		529,826		2,171,520
Industrial Products		364,728		387,398		394,393		368,502		1,515,021
Intermodal		724,851		770,328		807,869		824,337		3,127,385
Total		2,288,081		2,367,529		2,407,948		2,394,245		9,457,803
Average Revenue per Car:
Agricultural	$	1,785	$	1,853	$	1,884	$	2,060	$	1,896
Automotive		1,461		1,503		1,474		1,543		1,496
Chemicals		1,833		1,799		1,803		1,921		1,839
Energy		1,084		1,106		1,120		1,119		1,107
Industrial Products		1,543		1,566		1,577		1,702		1,597
Intermodal		704		706		716		737		716
Total	$	1,214	$	1,225	$	1,223	$	1,282	$	1,236

January 24, 2005 (A-3)