Union Pacific 2010 Annual Report Download - page 3

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February 4, 2011
Fellow Shareholders:
As our country and our Company emerged from the shadow of the economic recession, the men and
women of Union Pacific demonstrated agility and resiliency to meet the evolving transportation needs of
our customers. The result was a break-out performance in 2010 that culminated in a record year.
The actions taken to support our core strategy of safety, service and customer value positioned us to
successfully handle growing volumes. With strengthening business demand, our service remained
excellent and we achieved many new safety records. Customers gave us their highest satisfaction marks
ever, and many rewarded us with new business. They recognize the value of our diverse service
offerings and the efficiency we add to their supply chains. In return, we’ve kept our commitment, making
strategic investments in infrastructure, facilities, equipment and technology.
These investments further support UP’s commitment to our shareholders to increase profitability and grow
financial returns. In 2010, we achieved new financial milestones, including a 70.6 percent operating ratio
and a 10.8 percent return on invested capital. We also returned more cash directly to shareholders,
increasing the dividend 41 percent and repurchasing nearly $1.25 billion of shares. UP’s stock price
reached new highs in 2010, increasing 45 percent and outpacing the S&P 500 by more than 30 points.
With the foundation of a record year as our springboard, we look forward to even greater opportunities to
grow our business, with the same commitment to safely serving our customers and increasing our
financial returns. One clear opportunity comes from an expanding global economy and greater
international demand for freight transportation, which already accounts for almost one third of UP’s
revenue base. The growing U.S. population alone is expected to increase freight demand 30 percent
over the next 20 years and further crowd our highways. The Department of Transportation recognized
that need when it set the goal of developing strategies to attract 50 percent of all shipments 500 miles or
greater to intermodal rail. They see what we see every day – America needs more rail.
Our strategic capital investments will help us tap into that future growth potential. This is illustrated by
projects such as double tracking our Sunset Corridor, where we are speeding global commerce between
Asia and our nation’s growing consumer base. This is a business model that works – invest, grow the
business, increase returns and invest again.
Great service, coupled with our logistics expertise and continued investment for the future, enables UP to
offer a strong door-to-door value proposition. Through efforts such as the “You’ll Find Us” advertising
campaign, customers who never before considered rail are turning to us to coordinate shipments across
town, across the country and around the world. Shippers also have a growing appreciation for UP’s
“green” profile and our ability to deliver safe, fuel-efficient service.
It’s clear that the opportunity to grow and prosper is well within our reach. This is the mission of the
43,000-plus Union Pacific employees who are “dedicated to serve.” Through innovation, teamwork and
some good old-fashioned hard work, we have set a course for growth designed to generate strong
financial returns in the years ahead.
Chairman, President and
Chief Executive Officer