Ratings on Union Pacific Corp. 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. Union Pacific operates a large rail network, which covers 23 states across the western U.S. It has a well-diversified traffic base, consisting of energy (largely coal, 22% of revenues); industrial products (19%); intermodal (19%); chemicals (15%); agricultural products (14%); and automotive (11%). Union Pacific has built its current rail system through a series of mergers, the most notable in recent years being the 1996 acquisition of Southern Pacific, which followed the 1995 acquisition of Chicago and North Western Transportation Co. Although the addition of Southern Pacific significantly enhanced Union Pacific's rail
