View 2008 Fact Book - Union Pacific

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Safety and the Environmentparticulate matter and other pollutants. With more than twothirdsof its road locomotives certifi ed under the existing EPAtier standards, UP owns the cleanest fl eet in the nation. Furtherimprovements are on the horizon as the Company works withmanufacturers to fi eld-test new, high-horsepower locomotives thatsurpass the EPA’s most stringent standards. UP is also retrofi ttingolder locomotives with new emission-reduction equipment.Union Pacifi c has a comprehensive waste reduction andrecycling program that touches nearly every part of the Company.Concerted efforts are made to address high-volume items suchas wooden track ties and used oil. When possible, wooden trackties are refurbished for use elsewhere on the UP system or sold tocontractors. UP is also installing more concrete ties, which requirelower maintenance and generate less waste than wooden ties.UP helped test and develop an ultra low-emissions switchlocomotive, the “Genset Switcher”. These units utilize “off-road”truck–style diesel engines that are projected to reduce emissionsof nitrogen oxide by 80 percent and particulate matter by 90percent. Additionally, these engines use as much as 37 percentless fuel compared to current older switching locomotives. UP’scommitment to, and operation of, the Genset resulted in thecompany earning the 2008 CALSTART Blue Sky Merit Award. Thisaward recognizes outstanding contributions to clean air, energyeffi ciency and a cleaner transportation industry overall. UnionPacifi c also partnered with the EPA on one-of-a-kind fi eld testingto reduce emissions on older road and switch locomotives.Did you know...?• Trains are almost four times more fueleffi cient than trucks on a ton-mile basis.• If just 10 percent of the freight moved byhighway were diverted to rail, the nationcould save as much as 1 billion gallons offuel annually.• Fuel effi ciency for U.S. railroads hasincreased by 86 percent since 1980.• One double-stack train can take up to300 trucks off congested highways.9
Investing in Our FutureUnion Pacifi c’s vast network requires large capital commitmentseach year in order to ensure and enhance operational safety,expand capacity to meet the transportation needs of current andfuture customers and improve operational effi ciency. Capitalinvestments include the replacement and improvement of trackand facilities, and the acquisition of new locomotives and freightcars. In 2008, UP’s total capital investments were $3.1 billion,including cash spending of $2.8 billion. The Company’s capitalcan be broadly classifi ed into two categories: replacement capitaland growth capital. Replacement capital is spending required toimprove safety or replace current infrastructure, such as track,facilities and equipment. Growth capital is targeted at futureneeds of the Company and its customers, supporting both volumeexpansion and effi ciency. Equipment acquisitions are includedwithin both of these capital categories. New equipment is neededto add capacity to the network as well as to replace older, lesseffi cient assets.Replacement CapitalThe Company spent approximately $1.7 billion replacing trackand facilities under its engineering replacement program in 2008.This program included the installation of nearly 4.1 million tiesand 694 track miles of rail, providing safe and fl uid operationsand increasing network effi ciency through capital investments.All together, UP spent approximately $2.2 billion in 2008 onreplacement capital.In 2009, Union Pacifi c expects to spend around $1.7 billion inengineering replacement, installing nearly 4.4 million ties andover 850 track miles of rail. Additionally, the Company plans toacquire 125 high-horsepower locomotives during the year. Thelocomotives represent the fi nal tranche of a three-year purchasingcontract, and will replace older units that are at the end of theiruseful life. Total replacement capital spending for 2009 shouldapproximate $2.1 billion.Capital Spending($ Billions)2.431%2.92.730% 25%3.1 3.12.629% 29% 19%2004 2005 2006 2007 2008 2009 EReplacement CapitalGrowth Capital2008, making it approximately 60 percent double tracked at yearend. Given the signifi cant decline in traffi c volume in late 2008and early 2009, the Company scaled back the project spending.Only 11 miles are scheduled for completion in 2009. During 2008,a new intermodal facility at San Antonio, TX opened, and theCompany acquired property for the construction of an intermodalfacility in Joliet, IL.An important part of Union Pacifi c’s franchise is its access tothe SPRB coal fi elds of northeastern Wyoming through a jointline, which UP owns with the BNSF (the Joint Line). In 2007 thefi nal sections of the Joint Line were triple tracked, and capacityexpansion continued in 2008 with 20 miles of quadruple trackadded. Ten miles of triple track were also added to UP’s line intothe SPRB during 2008, and an additional 8 miles are scheduledfor 2009.The Company also spent approximately $105 million ontechnology to support growth during the year. Upgrades totelecommunications and mainframe software systems, a new crewdispatching system and advancement of positive train control werethe major technology spending initiatives in 2008.Growth CapitalUnion Pacifi c spent approximately $900 million on growth capitalin 2008. One of the Company’s key routes is the Sunset Corridor,which runs between Los Angeles, CA and El Paso, TX. This heavilytraveled corridor carries about 20 percent of all traffi c operated bythe Railroad. UP added 45 miles of double track to the corridor inIn 2009, Union Pacifi c expects to spend approximately $500million for growth capital. Capacity expansion on the OverlandRoute, which runs between Oakland, CA and Chicago, IL, and theSunset Corridor is expected to continue during the year. Furtherprogress is anticipated on the Joliet, IL intermodal facility, andtechnology spending is planned to upgrade information technologysystems and continue testing new operational technology such aspositive train control.10
Page 4: Company OverviewUnion Pacifi c Corp
Page 7 and 8: The Year in Review - OperationsThe
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Page 14 and 15: AgriculturalCommodity ProfileAgricu
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Page 40: Cautionary InformationThe 2008 Anal

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