On Feb. 11, 2005, Standard & Poor's Ratings Services revised its outlook on Union Pacific Corp. to stable from positive. The 'BBB' long-term corporate credit rating and 'A-2' short-term corporate credit rating on the railroad were affirmed. The outlook revision reflects Union Pacific's continuing operating challenges and Standard & Poor's expectation that these challenges will continue to adversely affect earnings and cash flow through 2005. Ratings on Union Pacific reflect the favorable risk characteristics of the U.S. freight railroad industry, its strong competitive position within the industry, and the company's moderate financial policies. Offsetting these strengths, to some extent, is price competition from other railroads and trucking companies in selected commodity areas, the capital intensity of the industry, and current
