OMAHA, Neb., Oct. 21 /PRNewswire-FirstCall/ -- Union Pacific Corporation today reported 2004 third quarter income from continuing operations of $202 million or $.77 per diluted share. This compares to income from continuing operations of $300 million or $1.15 per diluted share in the third quarter of 2003.

"Our $3.1 billion in third quarter operating revenue marks the second consecutive quarter of Railroad revenue over the $3 billion mark and our best total revenue performance ever as a company," said Dick Davidson, chairman and chief executive officer. "However, unprecedented fuel prices and high operating costs resulting from our service inefficiencies out-weighed the revenue growth."

    2004 Third Quarter Summary
    For the quarter, Union Pacific Corporation reported operating income of
$418 million compared to $592 million for the same period in 2003.
     *  Best ever Railroad Operating Revenue of $3.1 billion -- up four
        percent versus 2003
     *  Commodity Revenue and Total Revenue Carloads also reached best ever
        quarterly levels
     *  Average Quarterly Fuel Price of $1.25 per gallon versus $0.90 per
        gallon a year ago, which increased diesel fuel costs by $121 million
     *  Quarterly Average System Speed, as reported to the Association of
        American Railroads, improved 0.5 mph versus the prior quarter, but was
        1.1 mph lower than the third quarter of 2003
     *  Operating Margin -- 13.6 percent compared to 20.0 percent in the third
        quarter of 2003

    Third Quarter Railroad Business Revenue Summary versus 2003
    Overall, commodity revenue was up 4 percent as follows:

     *  Industrial Products up 9 percent
     *  Chemicals up 8 percent
     *  Intermodal up 7 percent
     *  Automotive up 4 percent
     *  Energy was flat
     *  Agricultural down 4 percent

"We had strong revenue growth in four of our six business groups, but I'm particularly encouraged by the continued strong performance of our Chemicals group," Davidson said. "The Chemicals performance, combined with another big quarter for Industrial Products is a good-news indicator that the nation's economy remains healthy."

Outlook

"One fact that stood out clearly this quarter is that Union Pacific, and the entire rail industry, is experiencing unprecedented levels of demand," Davidson said. "Unfortunately, operational challenges associated with these record volumes and our resource shortages, are preventing us from making the most of this increasing demand. We are focused on making improvements and we continue to believe the resource plans that we are implementing will make a difference. As fluidity to the network is restored, our follow-on challenge will be to improve efficiency and profitability while providing quality service to our customers."