This summary is based on the first quarter fiscal 2008 earnings call conducted by Union Pacific Corp. (UNP: chart) on April 24, 2008.

Management:

- Chairman, CEO and President: James R. Young
- EVP, Marketing and Sales: John J. Koraleski
- EVP, Operations: Dennis J. Duffy
- EVP and CFO: Robert M. Knight, Jr.

Key Investors Issues

- Earnings of $443 million or $1.70 per share were up 21% over the prior year.
- Revenues increased 11% to $4.29 billion.
- The firm bought back 3.3 million shares of stock for $400 million.

First Quarter Highlights

Union Pacific realised earning of $443 million or $1.70 per share, a 21% increase over $386 million or $1.41 a share in 2007, due to a 10% increase in operating income of $788 million.

- Despite a soft economic environment, UP''s franchise diversity provided a solid demand base.
- Record shipments of coal and strong grain movements allowed the firm to offset double-digit volume declines in products such as lumber, finished vehicles and cement.
- The benefits of ongoing operating initiatives were evident as the firm improved employee productivity, asset utilization and overall network fluidity.

Continued focus on price produced total revenues of $4.29 billion, up 11% from $3.89 billion a year ago though this was offset by record diesel fuel prices.

- The automotive business declined 6% with growth in parts partially offsetting the effect the sluggish vehicle sales.
- In addition to the economic softness, the American Axle Strike, which began in late February has also lowered volume and it reduces revenue by $15 million every month if that strike continues.
- Bumping construction markets continued to impact the industrial products, but the Industrial Products business was a 17% increase in steel shipments.

Low inventories creating a strong domestic market and high prices for foreign steel limiting imports.

- Intermodal volumes also continued to be impacted by the economy.
- Ag products revenue grew 10% with strength in grain shipments especially in the export market.
- Demand for coal remains strong and a 34% increase in export potash allowed chemicals being deferred to slight gain.

Operating expenses increased $352 million to just under $3.5 billion, driven by a 45% increase in fuel expense and higher costs associated with the Oregon mudslide, which added $20 million of operating expense.

- Continued focus on price as well as increased fuel surcharge revenue was associated with rising diesel fuel prices that drove the year-over-year gain.
- Other revenue increased 9% or $17 million to $211 million as a result of higher revenue from subsidiaries.

Compensation and benefits expense declined 3% to $1.1 billion as greater employee productivity allowed the firm to lower work force levels by 3%, primarily through attrition.

- Fewer train starts and lower training costs contributed to greater efficiency across the company.
- Fuel expenses increased $295 million to $957 million due to higher fuel prices as the firm consumed 2 million fewer gallons of diesel fuel as it continued to focus efforts on conservation.
- Average first quarter diesel fuel prices increased nearly $1 year-over-year from $1.93 per gallon in 2007 to $2.84 a gallon.
- Purchased services and materials expense were up 6% to $469 million, with one-third of the increased cost to the Oregon mudslide as third party contractors were employed to help reopen the line.

Operating ratio was 81.5% as the effective increased fuel expenses, net of fuel surcharges added 3 points in the quarter as well as the impact of last year''s casualty accrual and the Oregon mudslide.

- Strong operating revenue growth and overall efficiency gains took over 4 points off the operating ratio, nearly offsetting the cost challenges.
- Other income totaled $25 million, up $10 million year-over-year as a result of increased gains from real estate sales and higher leased income.
- Interest expense increased $13 million or 12% to $126 million driven by higher debt levels.
- The firm bought back 3.3 million shares of UP common stock for a total cost of around $400 million and since inception, has repurchased 15.9 million of the 20 million-share program returning nearly $1.9 billion in cash to shareholders.

Business Segments:

- Ag productsposted the largest revenue gain as a 10% growth in volume combined with a 13% improvement in average revenue per car to drive revenue up 24%.
- Wheat shipments increased over 50% with favorable commodity prices, above average production, and a weak US dollar all combining to nearly double exports.
- A weak dollar also helped drive feed grain exports up 32% and much of the growth coming in milo destined to European market.

Both wheat and feed benefited from improved shuttle train productivity.