Greetings and welcome to the Union Pacific first quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website. It is now my pleasure to introduce your host, Mr. Lance Fritz, Chairman, President and CEO for Union Pacific. Thank you, Mr. Fritz, you may now begin.

Good morning, everybody, and welcome to Union Pacific's first quarter earnings conference call. With me here today in Omaha are Eric Butler, our Executive Vice President of Marketing and Sales; Cameron Scott, the Executive Vice President of Operations; and Rob Knight, our Chief Financial Officer. This morning, Union Pacific is reporting net income of nearly $1 billion for the first quarter of 2016. This equates to $1.16 per share, which compares to $1.30 in the first quarter of 2015. Total volume decreased 8% in the quarter compared to 2015. Carload volume declined in four of our six commodity groups, with coal and industrial products down 34% and 10% respectively. Automotive continued to be a bright spot this quarter, with carloads up 7% versus 2015. Our quarterly operating ratio [OR] came in at 65.1%, up only 0.3 percentage point from the first quarter last year, as solid core pricing and productivity improvements helped offset the significant decrease in total volumes. In this challenging volume environment, we've continued our intense focus on operating safely and efficiently, managing our resources, and improving our customer experience. Our team will give you more of the details, starting with Eric.

Thanks, Lance, and good morning. In the first quarter, our volume was down 8%, with the gain in automotive and solid chemicals volume more than offset by declines in the other businesses. While we generated core pricing gains of just over 2.5%, it was not enough to offset decreased fuel surcharges and significant mix headwinds, as average revenue per car declined 6% in the quarter. Overall, the decline in volume and lower average revenue per car drove a 14% reduction in freight revenue. Let's take a closer look at each of the six business groups. Ag products revenue was down 6% on a 4% percent volume reduction and a 2% decrease in average revenue per car. Grain volume declined 7%, as strength in domestic feed markets was more than offset by soft export demand. Domestic feed grain was up 4%, as animal counts increased and there was less local grain available in our key domestic destination markets in the Mid-South and West. Exports declined 26%, as ample worldwide production and the strong dollar continued to hamper U.S. grain exports. Grain products volume declined 6% in the quarter. DDGs were down 29%, driven by a decline in exports to China and increased inclusion in feed rations in the Midwest. Soybean meal carloads were down 9%, as U.S. exports declined from last year's record sales. Ethanol volumes were flat despite lower margins and higher inventories. Food and refrigerated product carloads grew 3%, driven by continued strength in demand for import beer. Automotive revenue was down 1% in the quarter, as a 7% increase in volume was more than offset by an 8% reduction in average revenue per car. Finished vehicle shipments increased 5%, driven by consumer demand for technology and safety features. The seasonally adjusted annual rate [SAAR] for first quarter automotive…

Thanks, Eric, and good morning. Starting with our safety performance, our first quarter reportable personal injury rate improved 12% versus 2015 to a record low of 0.75 [incidents per 200,000 employee-hours]. These results continue to validate the effectiveness of our comprehensive strategy in finding and addressing risk in the workplace. With respect to rail equipment incidents or derailments, our first quarter reportable rate of 3.23 [incidents per 1 million train miles] increased slightly versus last year. However, enhanced TE&Y [Train, Engine & Yard] training and continued infrastructure investment helped reduce the absolute number of incidents, including those that do not meet the reportable threshold, to a record low. In public safety, our grade crossing incident rate increased to 2.37 [accidents per 1 million train miles], as we took a step backward from last year's solid performance. However, we are confident that our focus on reinforcing public awareness through community partnerships and public safety campaigns will drive improvement in the future. In summary for overall safety, the team has carried forward the momentum from last year's record results as we progress towards an incident-free environment. In addition to safety, we have continued to make significant incremental progress in our operating metrics. As reported to the AAR [American Association of Railroads], velocity and terminal dwell improved 11% and 7% respectively when compared to the first quarter of 2015. In fact, our first quarter velocity of 27.3 miles per hour was the best ever at the level of volume handled during the quarter. We were able to generate this solid performance even in the face of March flooding events that impacted operations on several key routes in the southern region of our network. To minimize delays and disruptions for our customers, we temporarily utilized a portion of our surge locomotive fleet and recalled…

Thanks, and good morning. Let's start with a recap of our first quarter results. Operating revenue was $4.8 billion in the quarter, down 14% versus last year. Significantly lower volumes, a challenging business mix, and lower fuel surcharges more than offset solid core pricing achieved in the quarter. Operating expenses totaled about $3.1 billion. Strong productivity improvements, along with volume-related reductions and lower fuel costs, drove the 14% improvement compared to last year. The net result was a 15% decrease in operating income to $1.7 billion. Below the line, other income totaled $46 million, up $20 million versus the previous year, primarily driven by gains from real estate sales and lower environmental costs. Interest expense of $167 million was up 13% compared to the previous year, driven by increased debt issuance during 2015 and the first quarter of 2016. Income tax expense decreased 17% to $587 million, driven primarily by lower pre-tax earnings. Net income totaled nearly $1 billion, down 15% versus 2015, while the outstanding share balance declined 4% as a result of our continued share repurchase activity. These results combined to produce quarterly earnings of $1.16 per share. Now turning to our top line, freight revenue of $4.5 billion was down 14% versus last year. Volume declined 8% and fuel surcharge revenue decreased $334 million when compared to 2015. All in, we estimate the net impact of lower fuel prices was a $0.10 headwind to earnings in the first quarter versus last year. And keep in mind that we did report an $0.08 positive fuel benefit in the first quarter of 2015. As expected, a challenging business mix did have a negative 2.5% impact on freight revenue in the first quarter. The primary drivers of this mix shift were significant declines in frac sand, steel, and export Ag…

Thank you, Rob. As you've heard from the team, 2016 has brought a continuation of many of the same trends that we experienced throughout most of last year. An energy market recession, low commodity prices, the strength of the U.S. dollar and soft global economy, and muted domestic retail demand have all contributed to overall market weakness across many of our business lines. And it's likely that many of these themes will be with us for some time. That said, we are stronger coming into this year than we were a year ago. We've improved the fluidity of our network, with service metrics at all-time bests. We also achieved a record industry-best employee safety rate, as we work toward our ultimate goal of zero injuries. It's challenging to do business is such an uncertain market, but we will continue to be agile and adapting to new business environments, making our company more productive, more innovative, and ultimately more successful for the long term. We will continue to leverage the strength and diversity of the Union Pacific franchise to drive new business opportunities, to provide an excellent customer experience, and to generate strong long-term value for our shareholders. With that, let's open up the line for your questions.

Thank you. And our first question is coming from the line of Jason Seidl of Cowen & Company. Please proceed with your questions. Jason H. Seidl - Cowen & Co. LLC: Good morning, gentlemen, and thank you for taking my questions. I guess the first is going to be a bigger picture one. You talked about, Rob, I think cost inflation being at around 2% this year. Yet, we have seen some of the core pricing, at least sequentially, trend down to 2.5%. That's not a huge delta for you guys to play with. Where do you see core pricing going forward, and what is pressured sequentially? It looks to me probably to be more Intermodal and coal, but I'd love some commentary on that.

Jason, I would remind – I know you know this, but I would remind everyone that if you look and compare the results to last year, remember we got about say 0.5 point of legacy pricing that was embedded in full-year results. The previous year and as we called out, the legacy activity is pretty much behind us, so that 2.5% is comparable to something legacy-like, if you will. Having said that, we don't give specific guidance by commodity group in terms of our pricing. In fact, our commitment still is to be an inflation-plus environment. We're going to continue to work as hard as we can providing a quality service product to our customers so we can continue to garner positive price above inflation as we move forward. Jason H. Seidl - Cowen & Co. LLC: Okay. My follow-up question is going to be on Ag volumes specifically, potentially export Ag. The SOLAS [Safety of Life at Sea] weight regulations are coming up here in July. It seems that basically people – shippers here in the U.S. seemed to be reacting more negatively toward it, particularly some people on the agricultural side. What's UP's view on it, and do you think it could be a potential negative impact, even if it's just a short-term?

So you're right, the regulations just came out here I think in the last – clarity on the regulations just came out in the last 30 days. And it really put a lot of the requirements for implementation upon the shipping community, which is part of the reaction that you get. Like most regulations, I think the shipping community will figure out a way to manage to that. And long term, if you look at our Ag business, it really is dependent on the fact that the U.S. still is a great producer. Generally speaking, long term it is in the sweet spot in terms of world competitiveness. We have had wins this year with the strong dollar, but it's in the sweet spot, and the U.S. as a producer will continue to be a good producer. And we as a transportation provider will continue to have the benefits of moving that business. Jason H. Seidl - Cowen & Co. LLC: Okay, so there are no real concerns on your part with SOLAS?

Not for the long-term, no. Jason H. Seidl - Cowen & Co. LLC: Okay, perfect. Gentlemen, I appreciate the time as always.

Thank you, Jason.

Your next question is coming from the line of Tom Wadewitz with UBS. Please go ahead with your questions.

Good morning. I wanted to ask you on the comp and benefits. So you did well with the head count reduction. And I know, Rob, you say that moves with volume. But how would you think sequentially head count changes? And also, is there anything the per-worker? The per-worker change was pretty low, which was notable in contrast to CSX, which saw more of a mid-single-digit increase in that. So I just wondered if you had any thoughts on those two, on how your head count changed and per-worker.

Tom, I would say that first of all on the per-worker, really what drives changes from that from quarter to quarter is largely – in our case is largely driven by the mix of employees that show up in capital or happen to be working on capital in that quarter or not working on capital. That is generally why you might see swings from one quarter to the next. Because other than that, it's just basically straightforward in terms of the inflation that shows up on the labor line. In terms of our head count going forward, as I said and as we've always said, we're going to continue to squeeze out productivity. Headcount will move as volume does, but not one for one because we are continually focused on identifying continuing productivity initiatives. And I think you saw that certainly in the first quarter with an 11% reduction in the head count. That was good productivity initiatives. But we're not done. The whole theme of the G-to-55 initiative is a focus on continued productivity. So I would expect that trend will continue in terms of moving with volume but offset by productivity results.

Okay. And as a follow-up, just in terms of pricing, do you think that the pricing environment took a little bit of a step down as you saw on the core price and now it's stable, or would you say that there are pressures that are building a bit further as you look forward on just the contracts that get negotiated through the year? Is that pricing getting worse, or is it just a step down and stable where we are?

Before I turn it over to Eric, this is Lance. Just globally, of course we would prefer an environment like 2014 where volume is growing robustly and there's a lot of demand for our services. That's a more favorable environment to be in. We're in a less favorable environment, but even so, we're still committed to doing what exactly what Rob said, which is pricing for our value, getting a reinvestable return on it, and pricing above inflation. Eric, any more?

No, I think that's it. I would say we all know that low fuel prices are allowing trucks to be plentiful. They're very tough competitors. Sluggish retail sales is a headwind to the economy. But within that, we think we have a great value proposition, and we're going to continue to price towards our value proposition.

Okay, well thanks for the time, and nice job on the cost side.

Thanks, Tom.

Our next question is from the line of David Vernon with Bernstein Research. Please go ahead with your question. J. David Scott Vernon - Sanford C. Bernstein & Co. LLC: Good morning, guys, and thanks for taking the question. Maybe Rob or Cameron, as you think about the drivers of productivity in the drive to 55% as an operating ratio, can you help us frame where that's going to come from? Is it the application of technology? Is it business process? And I know it's a broad question, but I guess some investors have had a little bit of feedback around where is this going to come from. And I'm just wondering if you can give us some color in terms of the big broad-brush strokes where you think this productivity can come from in the business?

Cam, let's start with you.

Okay. We mentioned train size earlier in the presentation. Every commodity group that we have has headroom for additional train size productivity. And we feel very good about our progress. We've made record train sizes in every commodity with the exception of coal, which was fairly optimized for a number of years in a row, and we'll do that again this year. Variable costs in every department within the operating team is a very big initiative for us, transportation, mechanical and engineering. And initiatives like recrew rate, where we've made enormous progress over the last 18 months coming down to record recrew performance. So those are some examples.

I also want to add – let's not shorthand, when Rob is talking about Grow to 55 and Zero, productivity isn't just about cutting heads. It's more predominantly about doing things more efficiently, getting more out of our assets, getting more out of a gallon of fuel. And the growth side is equally important, as Eric and his commercial team, in the context of all the headwinds we see on the energy side of the world, growing all the other commodities where we have opportunity, and there's lots of that opportunity.

David, I promise we will not have three responses to every question here, but this is near and dear to all of our hearts. And I would just add to the discussion that Cam and Lance have had is that we're looking at every stone that we can turn over in the company. Cam obviously talked heavily about the operations, which is where the big dollars are and the big opportunities are, but we're not leaving it at that. And Lance talked about the growth opportunities. But aside from that, we're challenging the entire organization, even the administrative groups, to turn over every stone of looking for additional opportunities to be more efficient than ever before. And to your question, yes, technology, where it can enable that, whether it's in core operations or in a support activity, we are certainly looking to leverage that even further. J. David Scott Vernon - Sanford C. Bernstein & Co. LLC: Excellent. And then maybe just as a follow-up, as you think about some of the stranded asset issues that may come with the coal network running at obviously levels that we've never seen before, at least in the last 10 or 15 years, how much of a headwind should we expect in terms of some assets being stranded out there or costs being stranded out there, with the decline of coal?

David, this is Rob. I would say that that's not the case in our network. Again, if you look at – we don't have stranded assets. We don't envision there will be stranded assets. Because if you look at it again, using coal as the obvious example, we've still got the lines going up to the PRB mines. Those lines, while less volume traveling over them perhaps right now than maybe at their peak, they are still the same lines that we've enjoyed. So we don't have a situation. Now having said that, we're going to squeeze to be as productive as we can on our asset base. You see that in our locomotives and certainly our head count related to that. But as it relates to stranded assets, I don't see that as an issue for us. J. David Scott Vernon - Sanford C. Bernstein & Co. LLC: Excellent, thanks a lot for the time, guys.

Thank you, David.

Our next question comes from the line of Brian Ossenbeck with JPMorgan. Please go ahead with your questions.

Hey, good morning. Thanks for taking my questions. I just want to ask a couple high-level questions. Eric, you mentioned the strong dollar still a headwind on grain, crudes, and excess inventories in that market. But it's come off from the peak, the dollar has clearly had a nice run for a long time. How long do you think it needs to stay at this level, or roughly how much lower do you think it needs to go before you start to see some relief? And I guess what would be the first place you would expect to see that?

I'm not a central banker, but I would say the dollar is still very high in any relative sense. It has dropped a little from the peak, but it still is very high. And as you know, dollars impact the competitiveness of U.S. exports across the board. So whether it's Ag, whether it's things like steel, whether it's things like our iron or metals business or other commodities business, it impacts all of those things. And so I don't have any prediction of how much the dollar needs to fall. It still is very high in any relative historical sense.

Okay. But to clarify, it sounds like you're not seeing anything at this stage?

The dollar is still a headwind. The strong dollar is still a headwind to U.S. exports.

Okay, great. And then to follow up on oil, it's again another macro factor, clearly been moving off the lows. How much upside do you think can be to the frac sand business? Are you starting to see any signs of activity there? I know you had another tough quarter on tough comps. You mentioned some regional sourcing that's starting to work its way into the business. But are you starting to at least hear some more optimism that completions would start to move forward here and get some more sand down the wells? Thanks.

I think the public numbers still show drilling rigs down about 45% or 49%, 50%. So, Eric, there's not a lot of drilling activity that has picked back up with the slight bump up in fuel. Certainly when the drilling activity picks back up, we would expect to participate in that in the various markets that we operate in.

The good news on that is, the shale energy producers have done a tremendous job in getting their own cost structures in line and getting productivity as they had experience with this new approach to drilling. And so the strike price for when activity picks up is lower than it was three or four or five years ago, but we're still not at that point.

Okay, thanks. I appreciate the time.

Our next question comes from the line of Ken Hoexter with Bank of America. Please proceed with your question.

Great, good morning. Rob, just following up on Tom's question before, you talked about the cost per employee coming down a bit. Would you expect that to increase with incentive comp? Or you mentioned pension reductions. Can those outweigh it? Can you just walk through the pension savings and incentive comp impacts as we move forward through the year?

I wouldn't anticipate a material change or much of a change at all in the pension. And incentive comp for us, Ken, is not a big mover because we don't have a wide-based plan that affects a wide percentage of our employees. So if you boil it down, the big driver is going to be – again, I would use that 2% labor inflation number that we expect for the full year. And again, the timing of that can change quarter to quarter depending on how many employees are actively involved in capital or not involved in capital. That's really going to be what changes that number going forward. So I don't see any big changes.

So nothing that materially changes the productivity gains you saw in the quarter?

No, not as it relates to the comp per employee.

Okay. And then, Eric, just thinking about Intermodal, obviously given the pressures you talked about, maybe one more to throw out at you with the Panama Canal opening up soon. I know that over the past few years, you and Lance have thrown out that you don't expect much change. But as you see plans and new teaming up amongst the container liners that's going on, is there any thought of any shift of capacity given the impact of the port strike a year ago and thoughts on how that distributes the Intermodal volumes?

Ken, there are a lot of moving parts, as you know, and there are a lot of ins and outs. I don't think anything substantially has changed our perspective that we've given over the time. A couple of the key factors we always look at is that West Coast port entry still is the fastest option to get to the Eastern markets, usually by two weeks. Another factor is with all of the rationalization going on in the container shipping industry, all of the alliances and the mergers and all that's going on, there does seem to be a migration to the larger ships. About half the new capacity coming on is with ships greater than 12,000 or 13,000 TEUs [20-foot Equivalent Units] on it. Those ships cannot go through even the expanded Panama Canal. So I think as you look at this trans-Pacific rationalization, there are even larger ships posting right now on the West Coast that cannot go through even the expanded canal. I think the West Coast ports still will remain a very strong, viable competitor. And fundamentally we're not changing our perspective and our outlook that we've had over the last couple years.

Great, I appreciate the insight. Thanks for the time.

Thanks, Ken.

Our next question is from the line of Justin Long with Stephens. Please go ahead with your questions.

Thanks and good morning. So first question I wanted to ask, there's a lot of noise in the volume numbers right now between volatile comps, the impact of flooding, and what's going on in coal, and it's pretty tough to get a feel for the underlying demand environment. From your perspective through the first three or four months of the year, what's your view on the demand environment and the economy relative to where your outlook was at the start of the year?

Eric, do you want to take a stab at that?

So clearly, as Rob said earlier, the coal side was a lot softer than what we anticipated. Again, warmest winter on weather, we did not expect these low natural gas prices. The shale impact is significant. But if you set aside the shale impact, the energy, the coal impact, you do have some variability going on in terms of retail sales that is probably a little softer than what we anticipated. But if you look at net-net everything else, I think it's pretty solid growth and aligned with what we expected and aligned with the slowly strengthening economy. So you have a retail sales, international Intermodal market issue. You've got a shale/coal energy market issue. But if you look at everything else, I think it's pretty aligned and slowly strengthening.

Okay, thanks, Eric. And as a follow-up, one of the big discrepancies between your year-to-date volume performance and your Western competitor is coming in Intermodal. So I'm just curious if you're seeing more competitive pricing dynamics and any market share shift. Or is there another explanation for this discrepancy?

Yes, Justin, I think it's as I said in my prepared comments; that if you look at the international Intermodal side of the business and all of the rationalization that's going on there with the steamship carriers and the alliance changes and some of the mergers, that clearly has had more of an impact on our book of business based on the shippers that we certainly have been aligned with vis-à-vis our Western competitor.

And, Justin, taking a step back, when you think about Intermodal, you break out international Intermodal and domestic, we still are quite bullish on domestic Intermodal over the long run. There is still a rich opportunity to take trucks off the highway, and we think we're going to be able to grow that product for the foreseeable future.

Okay, great. I'll leave it at that. Thanks for the time.

Our next question is from the line of Matt Troy with Nomura Securities. Please go ahead with your questions.

Thanks, just more a broader question as it relates to CapEx. I know if I go back to 2000 – 2005 timeframe, your volumes today are relatively flat, but your CapEx budget is up 100%. It's doubled, so you're spending twice as much to handle the same level of traffic. I know you've layered in PTC [Positive Train Control]. I know given the long-lived nature of the assets that there's inflation, but I'm just curious. Is it time for you and your rail peers to rethink the brackets or the goalposts in terms of percentage of revenues you're spending on CapEx? I know you've got to take a long 10-year – 20-year view, where most people in the market take a one-month or two-month view. But I'm just curious. In a slower growth environment, which seems to be stubbornly persistent, you took $600 million down year over year, which is impressive. Is it time to rethink more broadly what capital is required to run these railroads? Thanks.

Thanks for the question, Matt. As Rob reminds our investment community all the time, we are constantly reviewing our capital spend in the context of projects that are generating attractive returns, our overall volumes, and where those volumes are moving. If you look at us compared to 10 or 15 years ago in capital, there are a couple of very big moving parts. One is PTC, which...

Right.

...full year last year was a $300 million or a $390 million number that didn't exist at that time. Another big moving part can be locomotives. We're in the market for locomotives more in the past few years than we were 10 or 15 years ago. And the third big moving part is in maintenance capital. I recall back in those days, we were spending in the neighborhood of maybe $1.2 billion, and in these days we're spending more like a $1.8 billion number. And for that, we have a much more robust network that's operating at very high levels. Having said all that, as we look forward, our capital spend will depend on the first three things I mentioned. First and foremost, what's the outlook for volume, what's that environment look like, where is that volume showing up, and what are the projects that we have in front of us that generate attractive returns? In my mind's eye, you're still going to see us spend down in our Southern tier of our network. That's still an area where we would like to continue to enhance our capacity. And you'll still continue to see us invest at a fairly robust level for maintaining the railroad, although that also ebbs and flows with how much we're consuming in GPMs.

I appreciate the thoughtful answer, and just one follow-up. I'm looking for a silver lining in what is otherwise a choppy volume environment. I was surprised at the strength in industrial chems, up 16%, just given that they historically have had – rail chemical traffic has had such a high correlation with economic expansion. I was wondering if you could perhaps just put some additional color there given that strength. Was that share driven? Was that new customer driven? Just some greater clarity there would be extremely helpful. Thank you.

So as we regularly say, we are continuing to focus on business development. And we have a huge number of business development initiatives underway across the board, which are really overshadowed by the coal and the shale fall-off and some of the rationalization we're seeing in international Intermodal. If you look at our chemicals business, the Gulf Coast franchise, while many of those plastics expansions will not come on till next year, as we've talked about in the past, we still have lots of opportunities in terms of LPG growth. Mexico energy reform, there's a lot of growing interest in terms of moving products there, and we are working on a number of different initiatives with that. And so there is general economic strength that we're seeing in our industrial products business in terms of construction coming back, housing coming back. Chemicals has the benefit of plastics going to the automotive industry as you see automotive sales. And so there's a slowly strengthening economy out there and we're doing a lot of business development to go after it, which again is being overshadowed by just the huge volume numbers for coal and shale and the other headwinds we have.

Understood, thank you very much for the time and detail.

Our next question is coming from the line of Allison Landry with Credit Suisse. Please go ahead with your questions. Allison M. Landry - Credit Suisse Securities (USA) LLC (Broker): Thanks, good morning. Given everything that's happening with coal, similar to what your Eastern peers have done in the past few years, are you having to explore potentially changing contracts with your customers and moving more towards a fixed to variable structure?

Eric, do you want to handle that?

So, Allison, as you know, we have a standard answer where we don't really talk about specific contract negotiations. I will say we negotiate aggressively and assertively, and we're in a very competitive environment. And for any particular contract negotiation, we probably have dozens if not hundreds of terms that we're negotiating. And like always, as markets change and we look to be competitive, we evaluate a bunch of those terms and conditions and what works for us and works for our customer base. Allison M. Landry - Credit Suisse Securities (USA) LLC (Broker): Okay, thanks. And as a follow-up question, if we look a little bit out to the future and see volumes will eventually come back to the network, could you talk a little bit about how you're thinking about the operating leverage and earnings power of the company, just in light of the fact that you've taken out a significant amount of costs over the last few quarters?

So as you just lined up, volume is our friend. We're looking forward to the point where we're growing on the top line because it does make it easier to drop that to the bottom line. Having said that, in the place we are right now, we're in the process of getting our overall structure to match where our markets are today. And then from that point moving forward, we'll continue to be aggressive on our productivity, on our efficiency, on our business development, and generally that model is very attractive when we grow. Allison M. Landry - Credit Suisse Securities (USA) LLC (Broker): Okay, thank you for the time.

Thank you. Our next question is from the line of Chris Wetherbee with Citigroup. Please proceed with your questions.

Thanks, good morning. I wanted to touch a little bit on the flooding. You haven't mentioned it on the call. I just wanted to get a sense if you can quantify any impact, if it was material, both from a cost and maybe from a volume standpoint if maybe we see a little bit of lost volumes come back a bit in 2Q. Just give us a sense of how to think about that.

Chris, this is Rob. It was yeoman's work by the operating team because it was a significant challenge for them, but they did a fabulous job. I would say that the impact to us was less than $0.01 in terms of EPS for the quarter.

Okay, that's helpful. And then I wanted to follow up on mix. So mix obviously improved from the fourth quarter, and it feels like it was a little bit less bad than maybe some were thinking for the first quarter despite the fact that some of the bulk commodity groups were down pretty significantly. As you think about the rest of the year, how can this trend? Is the first quarter likely to be the low water mark in terms of the headwind for mix? How do we think about that going forward?

Chris, this is Rob. You know we don't give guidance on mix. And the reason we don't is because we are in so many different markets, which we're very proud of in terms of the diversity of our network. There are a lot of moving parts, as you know, and there's mix even within each of the commodity groups. Having said that, you're right. We are coming off of unusually high negative mix challenges, and we do think our best look at the balance of the year is that will moderate. Again, we're at high water marks here, I would hope, at 2.5% and certainly last quarter's 4% negative impact on mix I would hope is an all-time high water mark. But we do think our best guess is that's going to moderate, but it's difficult to actually put any finer point on it.

Okay, that's helpful. Thanks for the time, I appreciate it.

Thank you, Chris.

Our next question is from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question. Ravi Shanker - Morgan Stanley & Co. LLC: Thanks. Good morning, everyone. I just want to take a longer-term view here and ask you about coal. Obviously another step down in the next couple of quarters. But when you look to 2017, is this a market that can be flat or even up next year, or what's your view there?

Let me take a stab at that, Ravi. So the way we think about coal is it's facing a large number of headwinds right now: low natural gas prices as an alternative; pretty significant inventory overhang on piles right now; and a weak electricity generating market, some driven by weather. So as those headwinds persist, coal is going to continue to have some difficulty. We're going to have to chew up some of this excess inventory before we see coal demand really strengthen. What it might look like two, three, four, five years from now, we still think it's a pretty important part of the overall electricity generating base the United States. It's not going back, we don't think, to where it was four or five years ago. And you can make an argument either way, that it strengthens a bit or that it might decline a bit. Our best guess is we're probably in the relative sphere where it's going operate other than the really significant headwinds that we're facing in this particular timeframe. Ravi Shanker - Morgan Stanley & Co. LLC: Got it. And as a follow-up, going back to the flooding, again, we heard there was a lot of cooperation between a number of rails to get everyone out of that mess. But just generally talking about the competitive environment, what are you seeing out there in terms of some of the actions that some of your peers might be taking?

I think if you're asking specific to the floods, we did a great job of making sure our customers had alternatives and satisfying their needs and keeping them well informed. If you're asking in terms of the overall operating environment... Ravi Shanker - Morgan Stanley & Co. LLC: Right.

...we are in a competitive environment. We compete every day for every piece of business that we enjoy. And we compete on the basis of providing our customers the best experience they're going to get in the marketplace, and everything we do every day is oriented towards making that happen. Ravi Shanker - Morgan Stanley & Co. LLC: Great, thank you.

Our next question comes from the line of Scott Group with Wolfe Research. Please go ahead with your questions.

Hey, thanks. Good morning, guys. So a few things I wanted to clarify. Rob, any coal liquidated damages in the quarter, and are you expecting any for the year?

Scott, for us I'd say minor, and I would anticipate that it will be minor for the balance of the year.

Okay. So that's just not a number that you guys disclose?

Correct.

Okay. Your point, Rob, about there was more capital than expense employees in the quarter – I think that was your point – is that something that is just a first-quarter event, or does that continue all year where we see comp per employee, because of that, less than the 2% wage inflation you talked about?

Scott, the point I was trying to make on that, number one, you can always have those swings depending on what capital projects are going on, but that was more of a sequential comment. Generally speaking, you would start to ramp up some of your capital projects in the first quarter that perhaps you weren't running as you finished the fourth quarter. So that was more of a comment, this particular go-round, relative to the sequential look. Year over year in the first quarter, not as material of an impact, but that can change from time to time. But I think if you look at it, again, the first quarter was pretty clean in my view. When you look year over year in terms of 11% head count reduction, really is representative of very solid, outstanding productivity performance. And of course, remember the year before we had our share of challenges.

I guess I'm just thinking from a comp per employee, because you talked about inflation of 2%, and comp per employee was down 1%. I'm just trying to understand if that's a number that can continue the rest of the year.

I wouldn't give guidance on that. I think probably the best way to think about it is that 2% inflation generally speaking should look like the guidance we're getting on the labor inflation line, which would be closer to 2%.

Okay. If I can just ask one more, Eric, maybe can you let us know? Where are coal stockpiles now relative to targets? And if you think back to last cycle, how long does it take for the stockpiles to come down? Is it one good weather season, is it two, three? I don't know.

The actual numbers I think are 108 days, which is about 41 days above, call it a five-year average – and I think no, 41 days above last year. And how long it takes to come down just depends on all the factors we've talked about.

Okay. All right. Thank you, guys.

Thank you.

Our next question comes from the line of John Barnes with RBC Capital Markets. Please go ahead with your questions.

Hey. Good morning, guys. Thanks for taking my questions. First, look, I believe at some point we're going to see some recovery in volumes. I guess we all hope that, right? But in the meantime, as you go through these cost reduction efforts and align resources with the carload volumes and that type of thing, how long can you do that before you get some ramp up in carloads and protect the profitability of the railroad? Obviously, profitability was down in the quarter, but you did a nice job of protecting the OR and that kind of thing. How long can you continue that until you run out of cost reduction initiatives and start to cut into the muscle of the organization?

John, we can do it for as long as is necessary. We've demonstrated that we understand how to use attrition as our friend, how to use initiatives like Grow to 55 and Zero. We know how to get our cost structure right. We're in the middle of doing that and we're going to continue to do it. My expectation is that we don't have to do that forever because I do expect us at some point to start growing the top line. We're in a unique environment right now with a lot of headwinds. Some of those headwinds represent structural shift, like in coal, where a portion of that book of business is probably permanently reduced. But in the big scheme of things, at some point those headwinds abate, we start growing again. And even in that environment, we're still focused on making sure that we have the structure right, that we have our costs right, and that we're constantly looking for efficiency.

Okay, all right. And then secondly, Rob, you commented in your presentation about a significant increase in the cash balances because of the debt issuance. You've reduced the CapEx budget a little bit, which I would imagine probably juices the cash flow a little bit. Can you just talk a little bit about, I guess with rail M&A off the table, there's no real need to be hoarding cash for some kind of move in that arena? What do you think the plan is on use of cash going forward? Is there any alteration? Should we expect any acceleration in share buyback, just given the cash balances at this point?

John, I would say no. I wouldn't read into the fact that we happened to finish the quarter with a high cash balance as a change in anything we're doing. It's going to be the balanced approach. We need the cash for working capital, for taxes, for dividends. And we'll continue to be, as we have been, opportunistic on the share buyback as we move forward.

All right, very good. Thanks for the time.

Thank you.

Our next question is from the line of Cherilyn Radbourne with TD Securities. Please go ahead with your questions.

Thanks very much and good morning. I wanted to ask one on grain. Because there's so much in storage, you could make case that there's potential upside in the back half just on the basis that some will have to move to make room for this year's harvest. But you still seem pretty cautious, and I'm just curious if that's because it's early in the season or something else.

This is Eric, Cherilyn. There is a lot of grain in storage. There is about 200 million bushels that were carried out from last year. I think the USDA estimates are that can grow by another 500 million bushels based on the number of acres that are being planted and the types of yields that are expected. So there is a lot of grain out there. We believe that eventually it has to move. And so we are certainly optimistic that when it does move, we're going to get our fair share of that, and it will move. It's just right now, U.S. grain is not competitive on world markets. The strong dollar is an issue. There are other issues in terms of really good crops in other places, growing regions around the world. But we do think it will ultimately will move, and we're going get our fair share of it when it does.

Okay. And then in terms of the locomotives that you've got in storage, are any of those potential lease turn-back candidates, or are you comfortable with that as a surge fleet?

Cam, do you want to start by talking about locomotives in storage?

We have a really good mix of high-horsepower and low-horsepower in storage. And particularly on the low-horsepower fleet, as we look out over the next three to four years, there are some very nice lease return-backs that we will do. And we're very confident we can hold our low-horsepower fleet size and return those leases without any impact to our customers.

Great, thank you. That's all for me.

Our next question comes from the line of Brandon Oglenski with Barclays. Please go ahead with your questions.

Hey, good morning, everyone. Thanks for getting my question in. I know it's been a long call. But, Lance or Rob, you guys did guide to an improved operating ratio this year. So can you just talk about the confidence that you have in achieving that, especially with volume down 10% in 2Q, as well as talk a little bit more about the fuel headwind that you were discussing in 1Q?

I'll let Rob talk about the fuel headwind. From the standpoint of operating ratio, we wouldn't be reaffirming it and talking about it if we didn't have confidence and faith in achieving it. We believe that given any reasonable outlook, we are going to improve our operating ratio this year.

I would just add to that, Brandon, that clearly we'd rather have positive volume. And just as a reminder, we did guide that we think full-year volumes will be down mid-single digits. That's a challenge. But to Lance's point, what we're expressing here is confidence in our ability to continue to be squeezing out productivity initiatives and continue to price appropriately in the marketplace. On the fuel, the guidance we're giving on fuel is that while it was a $0.10 headwind in the first quarter, largely driven by the $0.08 benefit the previous first quarter last year, we think that's going to moderate. If fuel prices stay where they are, our expectation would be that that headwind will moderate, largely because we lap the fall-off in fuel from the previous year.

Okay, got you. So that was just the year-on-year impact – or the lag impact from last year.

That's exactly the quarter-over-quarter look, yes.

Okay, and just one real quick one for the model. You did do a debt offering in the quarter. Where should your run rate interest expense be going forward?

I would say probably comparable to what we saw in the first quarter.

Okay, all right. Thanks, Rob.

Our next question is coming from the line of Tyler Brown with Raymond James. These go ahead with your questions. Patrick Tyler Brown - Raymond James & Associates, Inc.: Hey, good morning, everyone.

Good morning. Patrick Tyler Brown - Raymond James & Associates, Inc.: Cameron, thanks for the detail on some of the initiatives behind the Grow to 55. But of the 45 projects that you guys have specifically identified, how many of those have kicked off or are going to kick off this year? And then what's the cadence of the remaining projects over the next couple years? I just want to try to understand the pipeline of opportunities there.

Absolutely. Within the operating department team, we have 12 projects that we've identified that we kicked off late 2014 and into 2015. Many of those projects are gaining very, very good traction into 2016, and we have a couple of others lined up for the end of 2016 going into 2017. So they're broad-based. They're well measured. We feel very confident, to an earlier question, that when we identify one of these productivity projects that we can hold that productivity as volume comes back to us so we have great leverage out into the future. Patrick Tyler Brown - Raymond James & Associates, Inc.: Okay, that's great. And then, Rob, my follow-up, there just remains a lot of concern over there about the impact of mix, the decline in coal, and what it's doing to the holistic margin profile of the railroad. So I totally get it that you don't give margins by commodity. But how should we think about the stratifications of margins by commodity maybe say versus past? So have they tightened over the past couple years, meaning are they much closer to corporate average today versus maybe a more disparate profile in the past, or is that an oversimplification?

As you know, we don't break it out by commodity, but clearly the mix that we've seen the last few quarters is a challenge. I'm particularly proud of the fact that with reductions in volume and the headwind that we faced in the mix, we have continued to drive outstanding operating ratio performance. So that's the focus. Irrespective, you've heard me say this many times. We're going to play the hand that the economy deals us. We're not going to use the challenge that we're facing right now of a mix headwind as an excuse not to make continued margin improvements, and that's what we're all about. That's what driving our initiative of G55. That's what's still driving our plus or minus 60% operating ratio by full-year 2019 focus. We have to live in that world. But clearly, those challenges that we faced here on the mix have been challenges. Patrick Tyler Brown - Raymond James & Associates, Inc.: Okay, that's great and good job on the costs, thanks.

Thank you.

Our next question comes from the line of Donald Broughton with Avondale Partners. Please go ahead with your question.

Good morning, gentlemen.

Good morning.

Obviously, you've done an admirable job in what is a fairly high fixed cost business at managing costs and bringing them down aggressively in line with – or almost in line with the rate in which you've seen revenues fall. Help me think about this, though. If we see further volume declines, can you be as productive? In other words, I'm assuming that as we furlough 1,400 locomotives, you're not furloughing the youngest, most efficient locomotives. You're furloughing the oldest, most in need of maintenance, least efficient locomotives. So as we make further cuts, is it realistic to expect that you can be as effective in your cost control as you have been so far, or am I thinking about that incorrectly?

No, it is reasonable to expect us to continue to be able to be effective at adjusting our cost structure, even in the face of further volume declines. Now we're not saying we anticipate things get worse from where they are right now. But if they were to, we have the ability to continue to adjust our cost structure. We've demonstrated, to this point, there are still levers to be pulled. We'd much prefer to grow, but we will pull those levers as we need to.

But will cost cutting be as productive in the future as it has been in the past?

From my perspective, there are ample opportunities to be more efficient everywhere I look on the railroad. We will continue to be able to generate productivity from that perspective. And as we have to take larger chunks of cost out, we'll continue to evaluate that and do that effectively as well.

Fantastic. Thank you, gentleman.

Thank you.

Thank you, everyone. This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Lance Fritz for closing comments.

Thank you very much and thank you for your questions and interest in Union Pacific today. We look forward to talking to you again in July.

Thank you. This concludes today's conference, and thank you for your participation. You may now disconnect your lines and have a wonderful day.