Union Pacific (UNP) 8-K High Demand and Operational Improvement Drive 64 Percent

Exhibit 99.1

HIGH DEMAND AND OPERATIONAL IMPROVEMENT DRIVE 64 PERCENT

GAIN IN UNION PACIFIC’S SECOND QUARTER EARNINGS PER SHARE

FOR IMMEDIATE RELEASE:

OMAHA, Neb., July 20, 2006

• Second quarter 2006 earnings per share grew 64 percent to $1.44 per diluted share.

• Commodity revenue was an all-time quarterly record of $3.7 billion, up 17 percent.

• Operating Income increased 53 percent to $717 million.

• Second quarter 2006 operating ratio improved by 4.3 points to 81.7 percent.

Union Pacific Corporation (NYSE: UNP) today reported second quarter 2006 net income of $390 million or $1.44 per diluted share, compared to $233 million, or $.88 per diluted share in the same quarter last year. Operating income during the second quarter of 2006 was $717 million, up from $468 million reported in the second quarter of 2005.

“Quarterly operating income was the best ever in the history of the railroad,” said Jim Young, President and Chief Executive Officer. “Reaching this milestone so early in the year is a clear indication that the demand environment remains very strong, and that we are moving volume more efficiently. The accomplishment I’m most pleased with is that we converted strong demand and yield gains into our best operating ratio in over two years. In addition, customers are seeing our service reliability improve.”

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Second Quarter 2006 Overview

• Quarterly operating revenue was an all-time record $3.9 billion compared to $3.3 billion in the second quarter of 2005.

• Commodity revenue set an all-time quarterly record, up 17 percent to $3.7 billion. This compares to $3.2 billion in the second quarter of 2005 and was driven by improved yields, higher fuel surcharge recoveries and a 5 percent increase in volume.

• The second quarter 2006 operating ratio improved to 81.7 percent compared to 86 percent in 2005. This was the best operating ratio in over two years.

• The Railroad’s average quarterly fuel price increased 29 percent versus the year ago quarter, from $1.67 per gallon in 2005 to $2.15 per gallon in the second quarter of 2006. The fuel surcharge recovered 80 percent of the cost in excess of the Railroad’s $.75 per gallon base fuel price.

• Employee productivity, as measured by gross ton-miles per employee, gained 3 percent versus the year ago quarter.

• In the face of record volume, operating metrics remained stable. Average terminal dwell time increased slightly and average quarterly train speed remained flat versus a year ago.

Second Quarter Railroad Commodity Revenue Summary versus 2005

• Agricultural up 22 percent

• Automotive up 18 percent

• Chemicals up 17 percent

• Intermodal up 16 percent

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• Energy up 16 percent

• Industrial Products up 15 percent

Looking Forward

“We expect the volume strength we saw in the first half of the year to continue through the upcoming peak shipping season,” Young said. “The biggest challenge ahead for us will be to continue to make progress on our operating initiatives, productivity and service reliability in the face of record volume.”

Union Pacific Corporation owns one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country and serves the fastest-growing U.S. population centers. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad offers competitive long-haul routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico, making it North America’s premier rail franchise.

Supplemental financial information is attached.

Additional information is available at our Web site:www.up.com. Our contact for investors is Jennifer Hamann at (402) 544-4227. Our media contact is Kathryn Blackwell at (402) 319-4288 or (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, information or statements regarding: expectations as to continued or increasing demand for rail transportation services; expectations regarding operational improvements, including the effectiveness of network management initiatives that have been or will be implemented to improve system velocity, productivity, customer service and shareholder returns; expectations as to increased returns, cost savings, revenue growth and earnings; expectations regarding fuel price; the time by which certain objectives will be achieved, including expected improvements in velocity, operating efficiencies and implementation of network management initiatives; estimates of costs relating to environmental remediation and restoration; proposed new products and services; expectations that claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; and statements concerning projections, predictions, expectations, estimates or forecasts as to the Corporation’s and its subsidiaries’ business, financial and operational results, and future economic performance; and statements of management’s beliefs, expectations, goals and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking information, including expectations as to operational, service and network fluidity improvements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.

Important factors that could affect the Corporation’s and its subsidiaries’ future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements include, but are not limited to: whether the Corporation and its subsidiaries are fully successful in implementing their financial and operational initiatives, including those plans and management initiatives to improve system velocity and network performance or otherwise improve operations; the impact of ongoing track maintenance and restoration work being performed in the Southern Powder River Basin of Wyoming; the outcome of claims and litigation, including those related to environmental contamination, personal injuries, and occupational illnesses arising from hearing loss, repetitive motion and exposure to asbestos and diesel fumes; legislative and regulatory developments, including possible enactment of initiatives to re-regulate the rail industry; the impact of a rail accident involving the release of hazardous materials; natural events such as severe weather, fire, floods, hurricanes and earthquakes; changes in fuel prices; changes in labor costs, labor stoppages, and the availability of qualified personnel required for our operations; industry competition, conditions, performance and consolidation; legislative, regulatory and legal developments involving taxation, including enactment of new federal or state income tax rates, revisions of controlling authority and the outcome of tax claims and litigation; changes in securities and capital markets; the effects of adverse general economic conditions, both within the United States and globally; any adverse economic or operational repercussions from terrorist activities and any governmental response thereto; and war or risk of war. More information regarding risk factors is available in the Corporation’s Annual Report on Form 10-K for 2005, which was filed with the SEC on February 24, 2006. The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q (or such other reports that may be filed with the SEC).

Forward-looking statements speak only as of the date the statements were made. The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements. References to our website are provided for convenience and, therefore, information on the website is not, and should not be construed to be, incorporated by reference herein.

UNION PACIFIC CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

Periods Ended June 30

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

	Second Quarter								Year-to-Date
	2006			2005			Pct Chg		2006			2005			Pct Chg
Operating Revenues	$	3,923		$	3,344		17		$	7,633		$	6,496		18
Operating Expenses
Salaries, Wages, and Employee Benefits		1,140			1,075		6			2,269			2,174		4
Fuel and Utilities		794			597		33			1,486			1,136		31
Equipment and Other Rents		371			340		9			738			693		6
Depreciation		308			292		5			611			581		5
Materials and Supplies		178			128		39			342			263		30
Purchased Services and Other		415			444		(7	)		865			868		—
Total Operating Expenses		3,206			2,876		11			6,311			5,715		10
Operating Income		717			468		53			1,322			781		69
Other Income - Net		29			29		—			39			49		(20	)
Interest Expense		(120	)		(128	)	(6	)		(240	)		(260	)	(8	)
Income Before Income Taxes		626			369		70			1,121			570		97
Income Tax Expense		(236	)		(136	)	74			(420	)		(209	)	U
Net Income	$	390		$	233		67		$	701		$	361		94
Basic Earnings Per Share	$	1.45		$	0.89		63		$	2.61		$	1.38		89
Diluted Earnings Per Share	$	1.44		$	0.88		64		$	2.58		$	1.36		90

July 20, 2006 (1)

UNION PACIFIC RAILROAD

REVENUE DETAIL

Periods Ended June 30

(Unaudited)

	Second Quarter						Year-to-Date
	2006		2005		Pct Chg		2006		2005		Pct Chg
Commodity Revenue (000):
Agricultural	$	565,743	$	463,261	22		$	1,128,332	$	911,163	24
Automotive		389,980		329,166	18			751,308		622,271	21
Chemicals		536,075		458,754	17			1,037,576		899,418	15
Energy		732,164		629,437	16			1,431,631		1,297,220	10
Industrial Products		823,701		718,611	15			1,598,371		1,348,820	19
Intermodal		694,302		597,247	16			1,337,923		1,121,516	19
Total	$	3,741,965	$	3,196,476	17		$	7,285,141	$	6,200,408	17
Revenue Carloads:
Agricultural		225,414		215,257	5			459,372		431,012	7
Automotive		224,739		210,321	7			434,629		402,638	8
Chemicals		234,598		235,727	—			452,324		463,227	(2	)
Energy		575,150		525,470	9			1,125,315		1,099,457	2
Industrial Products		386,604		397,071	(3	)		752,918		755,505	—
Intermodal		864,168		807,142	7			1,678,746		1,539,353	9
Total		2,510,673		2,390,988	5			4,903,304		4,691,192	5
Average Revenue per Car:
Agricultural	$	2,510	$	2,152	17		$	2,456	$	2,114	16
Automotive		1,735		1,565	11			1,729		1,545	12
Chemicals		2,285		1,946	17			2,294		1,942	18
Energy		1,273		1,198	6			1,272		1,180	8
Industrial Products		2,131		1,810	18			2,123		1,785	19
Intermodal		803		740	9			797		729	9
Total	$	1,490	$	1,337	11		$	1,486	$	1,322	12

July 20, 2006 (2)

UNION PACIFIC CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of June 30, 2006 and December 31, 2005

(Dollars in Millions)

(Unaudited)

	June 30, 2006		December 31, 2005
Assets:
Cash and Cash Equivalents	$	262	$	773
Other Current Assets		1,625		1,552
Investments		831		806
Properties - Net		32,491		31,975
Other Assets		798		514
Total	$	36,007	$	35,620
Liabilities and Shareholders’ Equity:
Current Portion of Long Term Debt	$	391	$	656
Other Current Liabilities		2,723		2,728
Long Term Debt		6,678		6,760
Deferred Income Taxes		9,534		9,482
Other Long Term Liabilities		2,266		2,287
Common Shareholders’ Equity		14,415		13,707
Total	$	36,007	$	35,620

July 20, 2006 (3)

UNION PACIFIC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30

(Dollars in Millions)

(Unaudited)

	2006			2005
Operating Activities:
Net Income	$	701		$	361
Depreciation		611			581
Deferred Income Taxes		81			155
Other - Net		(160	)		40
Cash Provided by Operating Activities		1,233			1,137
Investing Activities:
Capital Investments		(1,131	)		(1,078	)
Other - Net		(253	)		(388	)
Cash Used in Investing Activities		(1,384	)		(1,466	)
Financing Activities:
Dividends Paid		(160	)		(156	)
Debt Repaid		(342	)		(639	)
Other - Net		142			311
Cash Used in Financing Activities		(360	)		(484	)
Net Change in Cash and Cash Equivalents	$	(511	)	$	(813	)

July 20, 2006 (4)

APPENDIX

UNION PACIFIC CORPORATION

OPERATING AND FINANCIAL STATISTICS

Periods Ended June 30

(Unaudited)

	Second Quarter								Year-to-Date
	2006			2005			Pct Chg		2006			2005			Pct Chg
Operating Statistics:
Revenue Carloads (Thousands)		2,511			2,391		5			4,903			4,691		5
Revenue Ton-Miles (Billions)		143.4			136.8		5			282.7			274.3		3
Gross Ton-Miles (GTMs) (Billions)		272.1			260.0		5			535.1			518.4		3
Operating Margin		18.3	%		14.0	%	4.3	pt		17.3	%		12.0	%	5.3	pt
Operating Ratio		81.7	%		86.0	%	(4.3	)pt		82.7	%		88.0	%	(5.3	)pt
Average Employees		51,077			50,093		2			50,670			49,694		2
GTMs (Millions) per Average Employee		5.33			5.19		3			10.56			10.43		1
Average Fuel Price Per Gallon	$	2.15		$	1.67		29		$	2.01		$	1.56		29
Fuel Consumed in Gallons (Millions)		346			335		3			691			679		2
Fuel Consumption Rate (Gal per 000 GTM)		1.27			1.29		(2	)		1.29			1.31		(2	)
AAR Reported Performance Measures:
Average Train Speed (Miles per Hour)		21.2			21.2		—			21.3			21.2		—
Average Terminal Dwell Time (Hours)		27.6			27.4		1			28.3			28.4		—
Average Rail Car Inventory (a)		324,833			N/A		N/A			326,220			N/A		N/A
Financial:
Weighted Average Shares - Basic (Millions)		269.3			262.8		2			268.8			262.1		3
Weighted Average Shares - Diluted (Millions)		272.1			265.6		2			271.6			265.0		2
Effective Income Tax Rate		37.7	%		36.9	%	0.8	pt		37.5	%		36.7	%	0.8	pt
Debt to Capital (b)										32.9	%		35.1	%	(2.2	)pt
Lease Adjusted Debt to Capital (c)										41.2	%		43.6	%	(2.4	)pt
Free Cash Flow (Millions) (d)									$	(311	)	$	(485	)	36

(a) On October 1, 2005, the rail car inventory measurement was standardized for all reporting railroads. Rail car inventory for prior periods was not recalculated.

(b) Debt to capital is computed as follows: total debt divided by total debt plus equity. 2005 percentages are as of December 31, 2005.

(c) Lease adjusted debt to capital, a non-GAAP measure, 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. 2005 percentages are as of December 31, 2005. See Union Pacific web site under Investor Relations for a reconciliation to GAAP.

(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
	2006			2005
Cash Provided by Operating Activities	$	1,233		$	1,137
Cash Used in Investing Activities		(1,384	)		(1,466	)
Dividends Paid		(160	)		(156	)
Free Cash Flow	$	(311	)	$	(485	)

July 20, 2006 (A-1)

UNION PACIFIC CORPORATION

STATEMENTS OF CONSOLIDATED INCOME

By Quarter and Year-to-Date 2006

(Dollars in Millions, Except Per Share Amounts)

(Unaudited)

	Quarter Ended						Year-to-Date June 30
	March 31			June 30
Operating Revenues	$	3,710		$	3,923		$	7,633
Operating Expenses
Salaries, Wages, and Employee Benefits		1,129			1,140			2,269
Fuel and Utilities		692			794			1,486
Equipment and Other Rents		367			371			738
Depreciation		303			308			611
Materials and Supplies		164			178			342
Purchased Services and Other		450			415			865
Total Operating Expenses		3,105			3,206			6,311
Operating Income		605			717			1,322
Other Income - Net		10			29			39
Interest Expense		(120	)		(120	)		(240	)
Income Before Income Taxes		495			626			1,121
Income Tax Expense		(184	)		(236	)		(420	)
Net Income	$	311		$	390		$	701
Basic Earnings Per Share	$	1.16		$	1.45		$	2.61
Diluted Earnings Per Share	$	1.15		$	1.44		$	2.58

July 20, 2006 (A-2)

UNION PACIFIC RAILROAD

REVENUE DETAIL

By Quarter and Year-to-Date 2006

(Unaudited)

	Quarter Ended				Year-to-Date June 30
	March 31		June 30
Commodity Revenue (000):
Agricultural	$	562,589	$	565,743	$	1,128,332
Automotive		361,328		389,980		751,308
Chemicals		501,501		536,075		1,037,576
Energy		699,467		732,164		1,431,631
Industrial Products		774,670		823,701		1,598,371
Intermodal		643,621		694,302		1,337,923
Total	$	3,543,176	$	3,741,965	$	7,285,141
Revenue Carloads:
Agricultural		233,958		225,414		459,372
Automotive		209,890		224,739		434,629
Chemicals		217,726		234,598		452,324
Energy		550,165		575,150		1,125,315
Industrial Products		366,314		386,604		752,918
Intermodal		814,578		864,168		1,678,746
Total		2,392,631		2,510,673		4,903,304
Average Revenue per Car:
Agricultural	$	2,405	$	2,510	$	2,456
Automotive		1,722		1,735		1,729
Chemicals		2,303		2,285		2,294
Energy		1,271		1,273		1,272
Industrial Products		2,115		2,131		2,123
Intermodal		790		803		797
Total	$	1,481	$	1,490	$	1,486

July 20, 2006 (A-3)