FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2001

                                     - OR -

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

         For the transition period from ___________________ to ________________

                          Commission file number 1-6075

                            UNION PACIFIC CORPORATION
             (Exact name of registrant as specified in its charter)

              UTAH                                     13-2626465
 (State or other jurisdiction of                   (I.R.S. Employer
  incorporation or organization)                  Identification No.)

                       1416 DODGE STREET, OMAHA, NEBRASKA
                    (Address of principal executive offices)

                                      68179
                                   (Zip Code)

                                 (402) 271-5777
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES    X     NO
    -------    ------

         As of October 31, 2001, there were 248,405,819 shares of the
Registrant's Common Stock outstanding.

                            UNION PACIFIC CORPORATION

                                      INDEX

                          PART I. FINANCIAL INFORMATION

Item 1:   Consolidated Financial Statements:                                         Page Number
                                                                                     -----------
                                                                                  
          CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
               For the Three Months Ended September 30, 2001 and 2000..........            1

          CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
               For the Nine Months Ended September 30, 2001 and 2000...........            2

          CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
               At September 30, 2001 (Unaudited) and December 31, 2000.........            3

          CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
               For the Nine Months Ended September 30, 2001 and 2000...........            4

          CONSOLIDATED STATEMENT OF CHANGES IN COMMON
          SHAREHOLDERS' EQUITY (Unaudited)
               For the Nine Months Ended September 30, 2001....................            5

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)...............           6-13

Item 2:   Management's Discussion and Analysis of Financial
               Condition and Results of Operations.............................          14-22

Item 3:   Quantitative and Qualitative Disclosures About Market Risk...........           22

                           PART II. OTHER INFORMATION

                                                                                  
Item 1:   Legal Proceedings....................................................          22-23

Item 6:   Exhibits and Reports on Form 8-K.....................................           24

Signatures.....................................................................           25

                                      (i)

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Three Months Ended September 30,

                         Millions, Except Per Share and Ratios                       2001        2000
                         -------------------------------------                     --------    --------
                                                                                     
OPERATING REVENUES       Rail, trucking and other..............................    $  3,026    $  3,054
                                                                                   --------    --------
OPERATING EXPENSES       Salaries, wages and employee benefits.................       1,059       1,058
                         Equipment and other rents.............................         332         339
                         Depreciation..........................................         292         285
                         Fuel and utilities....................................         318         344
                         Materials and supplies................................         133         148
                         Casualty costs........................................          97          92
                         Other costs...........................................         221         218
                                                                                   --------    --------
                         Total.................................................       2,452       2,484
                                                                                   --------    --------
INCOME                   Operating Income......................................         574         570
                         Other income - net....................................          31          17
                         Interest expense......................................        (175)       (181)
                                                                                   --------    --------
                         Income before Income Taxes............................         430         406
                         Income taxes..........................................        (163)       (150)
                                                                                   --------    --------
                         Net Income............................................    $    267    $    256
                                                                                   --------    --------
PER SHARE                Basic - Net Income....................................    $   1.08    $   1.04
                         Diluted - Net Income..................................    $   1.04    $   1.00
                                                                                   --------    --------
                         Weighted Average Number of Shares (Basic).............       247.9       246.5

                         Weighted Average Number of Shares (Diluted)...........       271.6       269.4
                                                                                   --------    --------
                         Dividends Declared....................................    $   0.20    $   0.20
                                                                                   --------    --------
                         Ratio of Earnings to Fixed Charges....................         3.2         2.7
                                                                                   --------    --------

The accompanying notes are an integral part of these consolidated financial
statements.

                                     - 1 -

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Nine Months Ended September 30,

                       Millions, Except Per Share and Ratios                        2001           2000
                       -------------------------------------                    ---------      ----------
                                                                                      
OPERATING REVENUES     Rail, trucking and other................................ $   8,967      $    8,926
                                                                                ---------      ----------
OPERATING EXPENSES     Salaries, wages and employee benefits...................     3,207           3,163
                       Equipment and other rents...............................       992             964
                       Depreciation............................................       877             850
                       Fuel and utilities......................................     1,008             966
                       Materials and supplies..................................       417             459
                       Casualty costs..........................................       282             270
                       Other costs.............................................       677             690
                                                                                ---------      ----------
                       Total...................................................     7,460           7,362
                                                                                ---------      ----------
INCOME                 Operating Income........................................     1,507           1,564
                       Other income - net......................................       136              61
                       Interest expense........................................      (534)           (543)
                                                                                ---------      ----------
                       Income before Income Taxes..............................     1,109           1,082
                       Income taxes............................................      (418)           (397)
                                                                                ---------      ----------
                       Net Income.............................................. $     691      $      685
                                                                                ---------      ----------
PER SHARE              Basic - Net Income...................................... $    2.79      $     2.78
                       Diluted - Net Income.................................... $    2.71      $     2.71
                                                                                ---------      ----------
                       Weighted Average Number of Shares (Basic)...............     247.5           246.4
                       Weighted Average Number of Shares (Diluted).............     271.5           269.4
                                                                                ---------      ----------
                       Dividends Declared...................................... $    0.60      $     0.60
                                                                                ---------      ----------
                       Ratio of Earnings to Fixed Charges......................       2.9             2.7
                                                                                ---------      ----------

The accompanying notes are an integral part of these consolidated financial
statements.

                                     - 2 -

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Union Pacific Corporation and Subsidiary Companies

                                                                               (Unaudited)
                                                                                Sept. 30,       Dec. 31,
                           Millions of Dollars                                    2001            2000
                           -------------------                                  ---------      ----------
                                                                                      
ASSETS
Current Assets             Cash and temporary investments...................... $     120      $      105
                           Accounts receivable - net...........................       690             597
                           Inventories.........................................       280             360
                           Current deferred tax asset..........................       117              89
                           Other current assets................................       192             134
                                                                                ---------      ----------
                           Total...............................................     1,399           1,285
                                                                                ---------      ----------
Investments                Investments in and advances to affiliated companies.       700             644
                           Other investments...................................       100              96
                                                                                ---------      ----------
                           Total...............................................       800             740
                                                                                ---------      ----------
Properties                 Cost................................................    36,036          35,458
                           Accumulated depreciation............................    (7,357)         (7,262)
                                                                                ---------      ----------
                           Net.................................................    28,679          28,196
                                                                                ---------      ----------
Other                      Other assets........................................       427             278
                                                                                ---------      ----------
                           Total Assets........................................ $  31,305      $   30,499
                                                                                ---------      ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities        Accounts payable.................................... $     556      $      658
                           Accrued wages and vacation..........................       436             422
                           Accrued casualty costs..............................       408             409
                           Income and other taxes..............................       290             234
                           Dividends and interest..............................       244             265
                           Debt due within one year............................       197             207
                           Other current liabilities...........................       693             767
                                                                                ---------      ----------
                           Total...............................................     2,824           2,962
                                                                                ---------      ----------
Other Liabilities and      Debt due after one year.............................     8,207           8,144
Shareholders' Equity       Deferred income taxes...............................     7,517           7,143
                           Accrued casualty costs..............................       756             834
                           Retiree benefits obligation.........................       753             745
                           Other long-term liabilities.........................       491             509
                           Commitments and contingencies
                           Company-obligated Mandatorily Redeemable
                           Convertible Preferred Securities....................     1,500           1,500
                           Common shareholders' equity.........................     9,257           8,662
                                                                                ---------      ----------
                           Total Liabilities and Shareholders' Equity.......... $  31,305      $   30,499
                                                                                ---------      ----------

The accompanying notes are an integral part of these consolidated financial
statements.

                                     - 3 -

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Nine Months Ended September 30,

                             Millions of Dollars                                          2001         2000
                             -------------------                                       ----------    ---------
                                                                                            
OPERATING ACTIVITIES         Net Income..............................................  $      691    $     685
                             Non-cash charges to income:
                             Depreciation............................................         877          850
                             Deferred income taxes...................................         344          359
                             Other - net.............................................        (313)        (215)
                             Changes in current assets and liabilities...............        (237)        (182)
                                                                                       ----------    ---------
                             Cash Provided by Operating Activities...................       1,362        1,497
                                                                                       ----------    ---------
INVESTING ACTIVITIES         Capital investments.....................................      (1,354)      (1,403)
                             Sale of assets and other investing activities...........          80           49
                                                                                       ----------    ---------
                             Cash Used in Investing Activities.......................      (1,274)      (1,354)
                                                                                       ----------    ---------
FINANCING ACTIVITIES         Dividends paid..........................................        (148)        (150)
                             Debt repaid.............................................        (792)        (651)
                             Financings..............................................         867          538
                                                                                       ----------    ---------
                             Cash Used in Financing Activities.......................         (73)        (263)
                                                                                       ----------    ---------
                             Net Change in Cash and Temporary Investments............          15         (120)
                             Cash and Temporary Investments at Beginning of Period...         105          175
                                                                                       ----------    ---------
                             Cash and Temporary Investments at End of Period.........  $      120    $      55
                                                                                       ----------    ---------
CHANGES IN CURRENT           Accounts receivable.....................................  $      (93)   $     (64)
ASSETS AND LIABILITIES       Inventories.............................................          80            4
                             Other current assets....................................         (86)          14
                             Accounts, wages and vacation payable....................         (88)          14
                             Debt due within one year................................         (10)          (4)
                             Other current liabilities...............................         (40)        (146)
                                                                                       ----------    ---------
                             Total...................................................  $     (237)   $    (182)
                                                                                       ----------    ---------
SUPPLEMENTAL CASH            Cash paid during the year for:
FLOW INFORMATION             Interest................................................  $      563    $     588
                             Income taxes - net......................................          10           10
                                                                                       ----------    ---------

The accompanying notes are an integral part of these consolidated financial
statements.

                                     - 4 -

CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Nine Months Ended September 30, 2001

                                                                                           Accumulated Other
                                                                                      Comprehensive Income (Loss)
                                                                             --------------------------------------------
                                                                              Minimum      Foreign
                                      [a]                            [b]      Pension     Currency
                                    Common    Paid-in-  Retained  Treasury   Liability   Translation   Derivative
Millions of Dollars                 Shares    Surplus   Earnings    Stock    Adjustment  Adjustments  Adjustments   Total    Total
- -------------------                 ------    -------   --------    -----    ----------  -----------  -----------   -----    -----
                                                                                                 
Balance at December 31, 2000 ....   $   688  $ 4,024    $ 5,699    $(1,749)   $    (2)     $     2      $    --   $    --   $ 8,662
                                    -------  -------    -------    -------    -------      -------      -------   -------   -------
Net Income ......................        --       --        691         --         --           --           --        --       691
Other Comprehensive Income
  (Loss), net of tax:
     Minimum Pension Liability
     Adjustment .................        --       --         --         --         --           --           --        --        --
     Foreign Currency Translation
     Adjustments ................        --       --         --         --         --            3           --         3         3
     Derivative Adjustments .....        --       --         --         --         --           --           (1)       (1)       (1)
                                                                                                                            -------
Comprehensive Income ............                                                                                               693
Conversion, exercises of
  stock options, forfeitures
  and other .....................         1      (34)        --         83        --           --           --        --         50
Dividends declared ($0.60 per
      share) ....................        --       --       (148)        --        --           --           --        --       (148)
                                    -------  -------    -------    -------   -------      -------      -------   -------    -------
Balance at September 30, 2001 ...   $   689  $ 3,990    $ 6,242    $(1,666)  $    (2)     $     5      $    (1)  $     2    $ 9,257
                                    -------  -------    -------    -------   -------      -------      -------   -------    -------

[a]      Common stock $2.50 par value; 500,000,000 shares authorized;
         275,233,975 shares issued at beginning of period; 275,487,725 shares
         issued at end of period.
[b]      27,102,444 treasury shares at end of period, at cost.

The accompanying notes are an integral part of these consolidated financial
statements.

                                      - 5 -

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1.       RESPONSIBILITIES FOR FINANCIAL STATEMENTS - The consolidated financial
         statements are unaudited and reflect all adjustments (consisting only
         of normal and recurring adjustments) that are, in the opinion of
         management, necessary for a fair presentation of the financial position
         and operating results for the interim periods presented. The statement
         of consolidated financial position at December 31, 2000 is derived from
         audited financial statements. The consolidated financial statements
         should be read in conjunction with the consolidated financial
         statements and notes thereto contained in the Union Pacific
         Corporation's (the Corporation or UPC) Annual Report to Shareholders
         incorporated by reference in the Corporation's Annual Report on Form
         10-K for the year ended December 31, 2000. The results of operations
         for the three months and nine months ended September 30, 2001 are not
         necessarily indicative of the results for the entire year ending
         December 31, 2001. Certain prior year amounts have been reclassified to
         conform to the 2001 financial statement presentation.

2.       SEGMENTATION - Union Pacific Corporation consists of two reportable
         segments, rail and trucking, and UPC's other product lines (other
         operations). The rail segment includes the operations of the
         Corporation's wholly owned subsidiary, Union Pacific Railroad Company
         (UPRR) and UPRR's subsidiaries and rail affiliates (collectively, the
         Railroad). The trucking segment includes the Corporation's wholly owned
         subsidiary, Overnite Transportation Company (Overnite). The
         Corporation's "other" product lines are comprised of the corporate
         holding company (which largely supports the Railroad), Fenix LLC and
         affiliated technology companies (Fenix), self-insurance activities, and
         all appropriate consolidating entries.

                  The following table details reportable financial information
         for UPC's segments and other operations for the three months and nine
         months ended September 30, 2001 and 2000:

                                     Three Months Ended           Nine Months Ended
                                   ----------------------      ----------------------
                                   Sept. 30,     Sept. 30,     Sept. 30,     Sept. 30,
      Millions of Dollars            2001          2000          2001         2000
      -------------------          --------      --------      --------      --------
                                                                 
      Operating revenues [a]:
           Rail ..............     $  2,727      $  2,757      $  8,082      $  8,061
           Trucking ..........          292           287           862           839
           Other .............            7            10            23            26
                                   --------      --------      --------      --------
           Consolidated ......     $  3,026      $  3,054      $  8,967      $  8,926
                                   ========      ========      ========      ========
      Operating income (loss):
           Rail ..............     $    575      $    563      $  1,515      $  1,567
           Trucking ..........           18            20            43            37
           Other .............          (19)          (13)          (51)          (40)
                                   --------      --------      --------      --------
           Consolidated ......     $    574      $    570      $  1,507      $  1,564
                                   ========      ========      ========      ========
      Assets:
           Rail ..............     $ 30,313      $ 29,488      $ 30,313      $ 29,488
           Trucking ..........          649           654           649           654
           Other .............          343           249           343           249
                                   --------      --------      --------      --------
           Consolidated ......     $ 31,305      $ 30,391      $ 31,305      $ 30,391
                                   ========      ========      ========      ========

[a]      The Corporation has no significant intercompany sales activities.

                                     - 6 -

3.       ACQUISITIONS

         SOUTHERN PACIFIC - UPC consummated the acquisition of Southern Pacific
         (SP) in September 1996 for $4.1 billion. Sixty percent of the
         outstanding Southern Pacific common shares were converted into UPC
         common stock, and the remaining 40% of the outstanding shares were
         acquired for cash. UPC initially funded the cash portion of the
         acquisition with credit facility borrowings, all of which have been
         subsequently refinanced with other borrowings. The acquisition of
         Southern Pacific has been accounted for using the purchase method and
         was fully consolidated into UPC's results beginning October 1996.

         Merger Consolidation Activities - In connection with the acquisition
         and continuing integration of UPRR and Southern Pacific's rail
         operations, UPC will complete the elimination of 5,200 duplicate
         positions in 2001, primarily employees involved in activities other
         than train, engine and yard activities. UPC will also complete the
         relocation of 4,700 positions, merging or disposing of redundant
         facilities, and disposing of certain rail lines. In addition, the
         Corporation will cancel and settle the remaining uneconomical and
         duplicative SP contracts, including payroll-related contractual
         obligations in accordance with the original merger plan.

         Merger Liabilities - In 1996, UPC recognized a $958 million pre-tax
         liability in the SP purchase price allocation for costs associated with
         SP's portion of these activities. Merger liability activity reflected
         cash payments for merger consolidation activities and reclassification
         of contractual obligations from merger liabilities to contractual
         liabilities. In addition, where merger implementation has varied from
         the original merger plan, the Corporation has adjusted the merger
         liability and the fair value allocation of SP's purchase price to fixed
         assets to eliminate the variance. Where the merger implementation has
         caused the Corporation to incur more costs than were envisioned in the
         original merger plan, such costs are charged to expense in the period
         incurred. For the three months and nine months ended September 30,
         2001, the Corporation charged $3 million and $14 million, respectively,
         against the merger liability. The remaining merger payments will be
         made during 2001 as labor negotiations are implemented, and related
         merger consolidation activities are finalized.

         The components of the merger liability as of September 30, 2001 were as
         follows:

                                                                     Original   Cumulative   Sept. 30, 2001
         Millions of Dollars                                        Liability    Activity      Liability
         -------------------                                        ----------   --------    ------------
                                                                                    
         Labor protection related to legislated and contractual
            obligations .......................................     $      361   $    361    $         --
         Severance and related costs ..........................            343        284              59
         Contract cancellation fees and facility and line
            closure costs .....................................            145        141               4
         Relocation costs .....................................            109         97              12
                                                                    ----------   --------    ------------
         Total ................................................     $      958   $    883    $         75
                                                                    ==========   ========    ============

4.       FINANCIAL INSTRUMENTS

         ADOPTION OF STANDARD - Effective January 1, 2001, the Corporation
         adopted Financial Accounting Standards Board Statement No. 133,
         "Accounting for Derivative Instruments and Hedging Activities" (FAS
         133) and Financial Accounting Standards Board Statement No. 138,
         "Accounting for Certain Derivative Instruments and Certain Hedging
         Activities" (FAS 138). FAS 133 and FAS 138 require that the changes in
         fair value of all derivative financial instruments the Corporation uses
         for fuel or interest rate hedging purposes be recorded in the
         Corporation's consolidated statements of financial position. In
         addition, to the extent fuel hedges are ineffective due to pricing
         differentials resulting from the geographic dispersion of the
         Corporation's operations, income statement recognition of the
         ineffective portion of the hedge position may be required. Also,
         derivative instruments that do not qualify for hedge accounting
         treatment per FAS 133 and FAS 138 may require income statement
         recognition. The adoption of FAS 133 and FAS

                                     - 7 -

         138 resulted in the recognition of a $2 million asset on January 1,
         2001. Activity through September 30, 2001 is disclosed within the
         following narrative and tables.

         STRATEGY AND RISK - The Corporation and its subsidiaries use derivative
         financial instruments in limited instances for other than trading
         purposes to manage risk related to changes in fuel prices and to
         achieve the Corporation's interest rate objectives. The Corporation
         uses swaps, futures and/or forward contracts to mitigate the downside
         risk of adverse price movements and hedge the exposure to variable cash
         flows. The use of these instruments also limits future gains from
         favorable movements. The Corporation uses interest rate swaps to manage
         its exposure to interest rate changes. The purpose of these programs is
         to protect the Corporation's operating margins and overall
         profitability from adverse fuel price changes or interest rate
         fluctuations.

                  The Corporation at times may use swaptions to secure near-term
         swap prices. Swaptions are swaps that are extendable past their base
         period at the option of the counterparty. Swaptions do not qualify for
         hedge accounting treatment.

         MARKET AND CREDIT RISK - The Corporation addresses market risk related
         to derivative financial instruments by selecting instruments whose
         value fluctuations highly correlate with the underlying item being
         hedged. Credit risk related to derivative financial instruments, which
         is minimal, is managed by requiring high credit standards for
         counterparties and periodic settlements. The Corporation has not been
         required to provide collateral; however, UPC has received collateral
         relating to its hedging activity where the concentration of credit risk
         was substantial.

         DETERMINATION OF FAIR VALUE - The fair market values of the
         Corporation's derivative financial instrument positions at September
         30, 2001 and December 31, 2000, detailed below, were determined based
         upon current fair market values as quoted by recognized dealers or
         developed based upon the present value of expected future cash flows
         discounted at the applicable U.S. Treasury rate and swap spread.

         INTEREST RATE STRATEGY - The Corporation manages its overall exposure
         to fluctuations in interest rates by adjusting the proportion of fixed
         and floating rate debt instruments within its debt portfolio over a
         given period. The mix of fixed and floating rate debt is largely
         managed through the issuance of targeted amounts of each as debt
         matures or as incremental borrowings are required. Derivatives are used
         as one of the tools to obtain the targeted mix. In addition, the
         Corporation also obtains flexibility in managing interest costs and the
         interest rate mix within its debt portfolio by issuing callable
         fixed-rate debt securities.

                  In May and August 2001, the Corporation entered into interest
         rate swaps on $598 million of debt with varying maturity dates
         extending to November 2004. The swaps allowed the Corporation to
         convert the debt from fixed rates to variable rates and thereby hedge
         the risk of changes in the debt's fair value attributable to the
         changes in the benchmark interest rate (LIBOR). The swaps have been
         accounted for using the short-cut method as allowed by FAS 133; and
         therefore, no ineffectiveness has been recorded within the
         Corporation's consolidated financial statements.

         FUEL STRATEGY - Fuel costs are a significant portion of the
         Corporation's total operating expenses. As a result of the significance
         of fuel costs and the historical volatility of fuel prices, the
         Corporation's transportation subsidiaries periodically use swaps,
         futures and/or forward contracts to mitigate the impact of adverse fuel
         price changes. In addition, the Corporation at times may use swaptions
         to secure near-term swap prices. Swaptions are swaps that are
         extendable past their base period at the option of the counterparty.

                                     - 8 -

         The following is a summary of the Corporation's derivative financial
instruments at September 30, 2001 and December 31, 2000:

Millions                                                                Sept. 30,   Dec. 31,
Except Percentages and Average Commodity Prices                            2001       2000
- -----------------------------------------------                         -------     -------
                                                                              
Interest Rate Hedging:
     Amount of debt hedged ...................................          $   598     $    --
     Percentage of total debt portfolio ......................                7%         --
Rail Fuel Hedging/Swaptions:
     Number of gallons hedged for the remainder of 2001 [a] ..              161         101
     Percentage of forecasted 2001 fuel consumption hedged ...               48%          8%
     Average price of 2001 hedges outstanding (per gallon) [b]          $  0.65     $  0.68
     Number of gallons hedged for 2002 [c] ...................              139          --
     Percentage of forecasted 2002 fuel consumption hedged ...               10%         --
     Average price of 2002 hedges outstanding (per gallon) [b]          $  0.61     $    --
Trucking Fuel Hedging:
     Number of gallons hedged for  the remainder of 2001 .....               --          --
     Percentage of forecasted 2001 fuel consumption hedged ...               --          --
     Average price of 2001 hedges outstanding (per gallon) [b]          $    --     $    --
                                                                        -------     -------

[a]      Rail fuel hedges expire December 31, 2001. Rail fuel hedges include the
         swap portion of a swaption with a base term expiring December 31, 2001,
         and they exclude the option portion of the swaption to extend the swap
         through December 31, 2002.
[b]      Excluding taxes, transportation costs and regional pricing spreads.
[c]      Rail fuel hedges expire December 31, 2002. Rail fuel hedges include the
         swap portions of the swaptions with base terms expiring December 31,
         2002, and they exclude the option portions of the swaptions to extend
         the swaps through December 31, 2003.

         The asset and liability positions of the Corporation's outstanding
derivative financial instruments at September 30, 2001 and December 31, 2000
were as follows:

                                             Sept. 30,      Dec. 31,
Millions of Dollars                            2001          2000
- -------------------                           ------         ------
                                                       
Interest Rate Hedging:
     Gross fair market asset position .....   $   16         $   --
     Gross fair market (liability) position       --             --
Rail Fuel Hedging:
     Gross fair market asset position .....        3              2
     Gross fair market (liability) position       (4)            --
Rail Fuel Swaptions:
     Gross fair market asset position .....       --             --
     Gross fair market (liability) position       (8)            --
Trucking Fuel Hedging:
     Gross fair market asset position .....       --             --
     Gross fair market (liability) position       --             --
                                              ------         ------
Total net asset position .............        $    7         $    2
                                              ------         ------

         Rail fuel hedging positions will be reclassified from accumulated other
comprehensive income to fuel expense over the life of the hedge as fuel is
consumed. Rail fuel swaption positions will be reflected in the consolidated
statements of income as fuel expense over the life of the swap and as other
income as the fair value of the outstanding option fluctuates.

                                     - 9 -

                  The Corporation's use of derivative financial instruments had
         the following impact on pre-tax income for the three months and nine
         months ended September 30, 2001 and September 30, 2000:

                                                                       Three Months        Nine Months
                                                                      Ended Sept. 30,      Ended Sept. 30,
                                                                      ---------------      ---------------
         Millions of Dollars                                          2001       2000      2001       2000
         -------------------                                          ----       ----      ----       ----
                                                                                          
         Decrease in interest expense from interest rate hedging      $  1       $ --      $  1       $ --
         Decrease in fuel expense from rail fuel hedging .......         3         15         7         35
         Decrease in fuel expense from rail fuel swaptions .....         2         --         2         --
         Decrease in fuel expense from trucking fuel hedging ...        --          1        --          2
                                                                      ----       ----      ----       ----
         Decrease in operating expenses ........................         6         16        10         37
         Decrease in other income - net from rail fuel swaptions       (10)        --       (10)        --
                                                                      ----       ----      ----       ----
         Increase (Decrease) in pre-tax income .................      $ (4)      $ 16      $ --       $ 37
                                                                      ====       ====      ====       ====

                  At September 30, 2001, there was no ineffectiveness recorded
         within fuel expense for hedging.

         SALE OF RECEIVABLES - The Railroad has sold, on a revolving basis, an
         undivided percentage ownership interest in a designated pool of
         accounts receivable to third parties through a bankruptcy-remote
         subsidiary. The amount of receivables sold fluctuates based upon the
         availability of the designated pool of receivables and is directly
         affected by changing business volumes and credit risks. At September
         30, 2001 and December 31, 2000, accounts receivable are presented net
         of approximately $600 million receivables sold.

5.       DEBT

         CREDIT FACILITIES - On September 30, 2001, the Corporation had $2.0
         billion in revolving credit facilities, of which $1.0 billion expires
         in March 2002, with the remaining $1.0 billion expiring in 2005. The
         facilities, which were entered into during March 2001 and March 2000,
         respectively, are designated for general corporate purposes.

         CONVERTIBLE PREFERRED SECURITIES - Union Pacific Capital Trust (the
         Trust), a statutory business trust sponsored and wholly owned by the
         Corporation, has issued $1.5 billion aggregate liquidation amount of
         6-1/4% Convertible Preferred Securities (the CPS). Each of the CPS has
         a stated liquidation amount of $50 and is convertible, at the option of
         the holder, into shares of UPC's common stock, par value $2.50 per
         share (the Common Stock), at the rate of 0.7257 shares of Common Stock
         for each of the CPS, equivalent to a conversion price of $68.90 per
         share of Common Stock, subject to adjustment under certain
         circumstances. The CPS accrue and pay cash distributions quarterly in
         arrears at the annual rate of 6-1/4% of the stated liquidation amount.
         The Corporation owns all of the common securities of the Trust. The
         proceeds from the sale of the CPS and the common securities of the
         Trust were invested by the Trust in $1.5 billion aggregate principal
         amount of the Corporation's Convertible Junior Subordinated Debentures
         due 2028, which debentures represent the sole assets of the Trust. For
         financial reporting purposes, the Corporation has recorded
         distributions payable on the CPS as an interest charge to earnings in
         the consolidated statements of income.

         SHELF REGISTRATION STATEMENT AND SIGNIFICANT NEW BORROWINGS - During
         May 2001, under an existing shelf registration statement, the
         Corporation issued the remaining $200 million of debt securities
         available as fixed rate debt with a maturity date of May 25, 2004.
         Simultaneously, the Corporation entered into an interest rate swap
         converting the debt from a fixed rate to a variable rate. The proceeds
         from the issuance of this debt were used for repayment of debt and
         other general corporate purposes.

                                     - 10-

                  In June 2001, the Corporation filed a $1.0 billion shelf
         registration statement, which became effective June 14, 2001. Under the
         shelf registration statement, the Corporation may issue, from time to
         time, any combination of debt securities, preferred stock, common stock
         or warrants for debt securities or preferred stock in one or more
         offerings. The total offering price of these securities, in the
         aggregate, will not exceed $1.0 billion.

                  During July 2001, UPRR entered into capital leases covering
         new locomotives. The related capital lease obligations totaled
         approximately $124 million and are included in the statements of
         consolidated financial position as debt.

                  On October 1, 2001, the Corporation issued $300 million of
         fixed-rate debt under its shelf registration statement with a maturity
         date of October 15, 2007, leaving $700 million available for issuance.
         The proceeds from the issuance of this debt were used for repayment of
         debt and other general corporate purposes.

6.       EARNINGS PER SHARE - The following table provides a reconciliation
         between basic and diluted earnings per share for the three months and
         nine months ended September 30, 2001 and 2000:

                                                                            Three Months                 Nine Months
                                                                            Ended Sept. 30,            Ended Sept. 30,
                                                                        ---------------------      ----------------------
         Millions, Except Per Share Amounts                                2001        2000           2001         2000
         ----------------------------------                             ---------    --------      ---------     --------
                                                                                                     
         Income Statement Data:
             Net income available to common shareholders - Basic .      $     267    $    256      $     691     $    685
             Dilutive effect of interest associated with the CPS .             14          14             44           44
                                                                        ---------    --------      ---------     --------
             Net income available to common shareholders - Diluted      $     281    $    270      $     735     $    729
                                                                        ---------    --------      ---------     --------
         Weighted Average Number of Shares Outstanding:
             Basic ...............................................          247.9       246.5          247.5        246.4
             Dilutive effect of common stock equivalents .........           23.7        22.9           24.0         23.0
                                                                        ---------    --------      ---------     --------
             Diluted .............................................          271.6       269.4          271.5        269.4
                                                                        ---------    --------      ---------     --------
         Earnings Per Share:
             Basic ...............................................      $    1.08    $   1.04      $    2.79     $   2.78
             Diluted .............................................      $    1.04    $   1.00      $    2.71     $   2.71
                                                                        ---------    --------      ---------     --------

7.       OTHER INCOME - Other income included the following for the three months
         and nine months ended September 30, 2001 and 2000:

                                                             Three Months           Nine Months
                                                            Ended Sept. 30,        Ended Sept. 30,
                                                         -------------------    --------------------
         Millions of Dollars                               2001       2000        2001         2000
         -------------------                             -------     -------    --------     -------
                                                                                 
         Net gain on non-operating asset dispositions    $    31     $    15    $    112     $    37
         Rental income ..............................         11          14          47          43
         Interest income ............................          2           2           7           7
         Other - net ................................        (13)        (14)        (30)        (26)
                                                         -------     -------    --------     -------
         Total ......................................    $    31     $    17    $    136     $    61
                                                         =======     =======    ========     =======

8.       RATIO OF EARNINGS TO FIXED CHARGES - The ratio of earnings to fixed
         charges has been computed on a consolidated basis. Earnings represent
         net income less equity in undistributed earnings of unconsolidated
         affiliates, plus income taxes and fixed charges. Fixed charges
         represent interest, amortization of debt discount and the estimated
         interest portion of rental charges.

                                     - 11 -

9.       COMMITMENTS AND CONTINGENCIES - There are various claims and lawsuits
         pending against the Corporation and certain of its subsidiaries. The
         Corporation is also subject to federal, state and local environmental
         laws and regulations, pursuant to which it is currently participating
         in the investigation and remediation of numerous sites. For
         environmental sites where remediation costs can be reasonably
         determined, and where such remediation is probable, the Corporation has
         recorded a liability. At September 30, 2001, the Corporation had
         accrued $177 million for estimated future environmental costs.

                  In addition, the Corporation and its subsidiaries periodically
         enter into financial and other commitments in connection with their
         businesses. It is not possible at this time for the Corporation to
         determine fully the effect of all unasserted claims on its consolidated
         financial condition, results of operations or liquidity; however, to
         the extent possible, where unasserted claims can be estimated and where
         such claims are considered probable, the Corporation has recorded a
         liability. The Corporation does not expect that any known lawsuits,
         claims, environmental costs, commitments, contingent liabilities or
         guarantees will have a material adverse effect on its consolidated
         financial condition, results of operations or liquidity.

10.      ACCOUNTING PRONOUNCEMENTS - In September 2000, the Financial Accounting
         Standards Board issued Statement No. 140, "Accounting for Transfers and
         Servicing of Financial Assets and Extinguishments of Liabilities" (FAS
         140), replacing Statement No. 125, "Accounting for Transfers and
         Servicing of Financial Assets and Extinguishments of Liabilities" (FAS
         125). FAS 140 revises criteria for accounting for securitizations,
         other financial asset transfers and collateral, and introduces new
         disclosures. FAS 140 was effective for fiscal 2000 with respect to the
         new disclosure requirements and amendments of the collateral provisions
         originally presented in FAS 125. All other provisions are effective for
         transfers of financial assets and extinguishments of liabilities
         occurring after March 31, 2001. The provisions are to be applied
         prospectively with certain exceptions. The adoption of FAS 140 did not
         have a significant impact on the Corporation's consolidated financial
         statements.

                  In July 2001, the Financial Accounting Standards Board issued
         Statement No. 141, "Business Combinations" (FAS 141). FAS 141 revises
         the method of accounting for business combinations and eliminates the
         pooling method of accounting. FAS 141 is effective for all business
         combinations that are initiated or completed after June 30, 2001.
         Management believes the financial impact that FAS 141 will have on the
         Corporation's consolidated financial statements will not be
         significant.

                  Also in July 2001, the Financial Accounting Standards Board
         issued Statement No. 142, "Goodwill and Other Intangible Assets" (FAS
         142). FAS 142 revises the method of accounting for goodwill and other
         intangible assets. FAS 142 eliminates the amortization of goodwill, but
         requires goodwill to be tested for impairment at least annually at a
         reporting unit level. FAS 142 is effective for the Corporation's fiscal
         year beginning January 1, 2002. Management believes the financial
         impact that FAS 142 will have on the Corporation's consolidated
         financial statements will not be significant.

                  In August 2001, the Financial Accounting Standards Board
         issued Statement No. 143, "Accounting for Asset Retirement Obligations"
         (FAS 143). FAS 143 requires the Corporation to record the fair value of
         a liability for an asset retirement obligation in the period in which
         it is incurred and is effective for the Corporation's fiscal year
         beginning January 1, 2003. Management is in the process of evaluating
         the impact this standard will have on the Corporation's consolidated
         financial statements.

                  In addition, in October 2001, the Financial Accounting
         Standards Board issued Statement No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets" (FAS 144). FAS 144
         replaces Financial Accounting Standards Board Statement No. 121,
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Asset to Be Disposed Of" (FAS 121). FAS 144 develops one accounting
         model, based on the framework established in FAS 121, for long-lived
         assets to be disposed of by sale. The accounting model applies to all
         long-lived assets, including discontinued operations, and it replaces
         the provisions of APB Opinion No. 30, "Reporting Results of
         Operations-Reporting the Effects of Disposal

                                     - 12 -

         of a Segment of a Business and Extraordinary, Unusual and Infrequently
         Occurring Events and Transactions," for disposal of segments of a
         business. FAS 144 requires that long-lived assets be measured at the
         lower of carrying amount or fair value less cost to sell, whether
         reported in continuing operations or in discontinued operations. FAS
         144 also broadens the definition of discontinued operations. FAS 144 is
         effective for the Corporation's fiscal year beginning January 1, 2002.
         Management is currently in the process of evaluating the impact this
         standard will have on the Corporation's consolidated financial
         statements.

11.      WORK FORCE REDUCTION PLAN - Prompted by signs of an economic slowdown,
         the Corporation's Board of Directors approved a work force reduction
         plan (the Plan) in the fourth quarter of 2000. The Plan calls for the
         elimination of approximately 2,000 Railroad positions during 2001. The
         positions will be eliminated through a combination of attrition,
         subsidized early retirement and involuntary layoffs and will affect
         agreement and non-agreement employees across the entire 23-state
         Railroad system. As of September 30, 2001, 1,544 positions had been
         identified for elimination in accordance with the Plan. Of those
         eliminations, 986 will be made through subsidized early retirements and
         involuntary layoffs with the remaining coming through attrition.

                  The Corporation accrued $115 million pre-tax or $72 million
         after-tax in the fourth quarter of 2000 for costs related to the Plan.
         The expense was charged to salaries, wages and employee benefits in the
         Corporation's 2000 consolidated statement of income. Plan liability
         activity in 2001 includes $42 million paid in cash or reclassified to
         contractual liabilities for severance benefits to 494 employees. The
         remaining $60 million of plan liability activity reflects subsidized
         early retirement benefits covering 480 employees.

                  Plan liability activity for 2001 is as follows:

                                                     Original         Cumulative           Sept. 30, 2001
         Millions of Dollars                        Liability          Activity              Liability
         -------------------                        ---------         ----------           --------------
                                                                                    
         Severance and related costs                $     115          $     102             $     13
                                                    ---------          ---------             --------

                  It is expected that the Plan will be completed during the
         remainder of 2001.

                                     - 13 -

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
                             RESULTS OF OPERATIONS

           THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO
                 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000

Union Pacific Corporation (UPC or the Corporation) consists of two reportable
segments, rail and trucking, and UPC's other product lines (Other Operations).
The rail segment includes the operations of the Corporation's wholly owned
subsidiary, Union Pacific Railroad Company (UPRR) and UPRR's subsidiaries and
rail affiliates (collectively, the Railroad). The trucking segment includes the
Corporation's wholly owned subsidiary, Overnite Transportation Company
(Overnite). The Corporation's "other" product lines are comprised of the
corporate holding company (which largely supports the Railroad), Fenix LLC and
affiliated technology companies (Fenix), and self-insurance activities, and all
appropriate consolidating entries (see note 2 to the consolidated financial
statements).

CONSOLIDATED

NET INCOME - Net income for the three and nine month periods ended September 30,
2001 was $267 million ($1.04 per diluted share) and $691 million ($2.71 per
diluted share), respectively, compared to $256 million ($1.00 per diluted share)
and $685 million ($2.71 per diluted share) for the comparable periods in 2000.
For the third quarter, the increase resulted from higher real estate sales,
lower interest expense and a slight increase in operating income. The year to
date increase is primarily the result of higher real estate sales and lower
interest expense, partially offset by a 4% drop in operating income.

OPERATING REVENUES - Operating revenues decreased $28 million (1%) and increased
$41 million (flat) for the three and nine month periods ended September 30,
2001, respectively, over the comparable periods in 2000. The decline for the
three month period reflects lower Railroad commodity revenue in Agricultural,
Automotive, Chemicals, and Intermodal, which was partially offset by higher
commodity revenue in Energy and Industrial Products at the Railroad, as well as
increased revenue at Overnite.

OPERATING EXPENSES - For the three and nine month periods ended September 30,
2001, operating expenses decreased $32 million (1%) and increased $98 million
(1%), respectively, over the comparable periods in 2000. Costs decreased in the
third quarter due primarily to lower fuel prices and lower materials and
supplies expense. The increase in costs during the first nine months was
attributable to higher fuel prices during the first six months, increased rent
expense, and salaries, wages and employee benefits expense. Partially offsetting
these increases were lower materials and supplies expenses and continued
improvements in productivity through work force level reductions, and cost
control initiatives. Operating expense comparisons by category for the three and
nine month periods ending September 30, 2001 and September 30, 2000 are
discussed below.

         Salaries, wages, and employee benefits were higher reflecting wage
increases and higher benefits expense partially offset by a 3% reduction in
employment levels and improved productivity. Equipment and other rents expense
decreased in the third quarter as a result of lower rail volume, higher receipts
and lower car and intermodal leases which were partially offset by increased
locomotive lease expense and longer car cycle times. Equipment and other rents
expense increased for the nine month period due primarily to increased car cycle
times and higher locomotive lease expense. Lower automotive carloads created
increased cycle time as excess cars were temporarily stored at assembly plants
and unloading facilities. Depreciation expense increased as a result of the
Railroad's capital program in 2000 and the first nine months of 2001. Fuel and
utilities costs declined in the third quarter due to lower fuel prices; however,
for the first nine months of 2001, costs rose due to significantly higher fuel
prices and increased gross ton miles at the Railroad compared to 2000. The
decrease in materials and supplies reflects fewer locomotive overhauls and lower
freight car repair costs at the Railroad. Casualty costs increased due to
slightly higher settlement costs at the Railroad. Other costs increased 1% and

                                     - 14 -

decreased 2% for the three and nine month periods, respectively. Cost control
and productivity gains at the Railroad for the first nine months were partially
offset by higher state and local taxes and joint facilities expense at the
Railroad during the third quarter of 2001.

OPERATING INCOME - Operating income increased $4 million (1%) and decreased $57
million (4%) for the three and nine month periods ended September 30, 2001,
respectively, over the comparable periods in 2000. In the third quarter, lower
fuel prices and material costs were partially offset by a decline in revenue.
For the nine month period, higher fuel, wage and benefit, and rent expenses more
than offset revenue growth and productivity gains at the Railroad and Overnite.

NON-OPERATING ITEMS - Non-operating expense decreased $20 million and $84
million for the three and nine months ended September 30, 2001, respectively.
The reductions were primarily the result of higher income from real estate sales
at the Railroad and lower interest expense. Income taxes for the three and nine
month periods of 2001 increased $13 million (9%) and $21 million (5%),
respectively, over the comparable periods of 2000 reflecting higher pre-tax
income and a higher effective tax rate, in all periods of 2001.

RAIL SEGMENT

NET INCOME - Rail operations reported net income of $286 million and $757
million for the three and nine month periods ended September 30, 2001,
respectively, compared to net income of $274 million for the third quarter of
2000 and $752 million for the nine month period in 2000. Lower fuel prices and
materials and supplies expenses offset a 1% decline in revenue in the third
quarter. For the nine month period, a 1% increase in commodity revenue, lower
materials and supplies expenses and other costs and higher real estate sales
income were partially offset by higher fuel prices, rent expenses, and
depreciation.

OPERATING REVENUES - Rail operating revenues decreased $30 million (1%) to $2.7
billion in the third quarter and increased $21 million (flat) to $8.1 billion
for the nine month period ended September 30, 2001 over the comparable periods
in 2000. Revenue carloads declined 1% in the third quarter and were flat for the
first nine months of 2001 as weakness in the economically sensitive commodities
of Automotive, Chemicals, and Intermodal offset strong Energy demand.

The following tables summarize rail commodity revenue, revenue carloads and
average revenue per car for the periods indicated:

   Three Months Ended Sept. 30,                                       Nine Months Ended Sept. 30,
  -----------------------------      %       Commodity Revenue       -----------------------------      %
            2001          2000     Change    In Millions                     2001            2000     Change
- ------------------------------------------------------------------------------------------------------------
                                                                                      
          $   357       $    363     (2)     Agricultural                 $ 1,071         $ 1,047       2
              253            280    (10)     Automotive                       830             877      (5)
              393            412     (5)     Chemicals                      1,170           1,248      (6)
              611            586      4      Energy                         1,781           1,605      11
              514            502      3      Industrial Products            1,509           1,519      (1)
              499            506     (1)     Intermodal                     1,412           1,418      --
- ------------------------------------------------------------------------------------------------------------
          $ 2,627       $  2,649     (1)     Total                        $ 7,773         $ 7,714       1
- ------------------------------------------------------------------------------------------------------------

                                     - 15 -

- ------------------------------------------------------------------------------------------------------------
   Three Months Ended Sept. 30,      %       Revenue Carloads         Nine Months Ended Sept. 30,       %
            2001          2000     Change    In Thousands                    2001            2000     Change
- ------------------------------------------------------------------------------------------------------------
                                                                                      
             214             217        (1)  Agricultural                       645           651        (1)
             177             196       (10)  Automotive                         561           609        (8)
             225             237        (5)  Chemicals                          666           713        (7)
             549             513         7   Energy                           1,602         1,432        12
             368             363         1   Industrial Products              1,078         1,094        (1)
             741             767        (3)  Intermodal                       2,112         2,181        (3)
- ------------------------------------------------------------------------------------------------------------
           2,274           2,293        (1)  Total                            6,664         6,680        --
- ------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------
   Three Months Ended Sept. 30,      %       Average Revenue          Nine Months Ended Sept. 30,       %
            2001          2000     Change    Per Car                         2001            2000     Change
- ------------------------------------------------------------------------------------------------------------
                                                                                      
          $1,667          $1,673     --      Agricultural                    $1,662        $1,607        3
           1,429           1,425     --      Automotive                       1,478         1,439        3
           1,745           1,738     --      Chemicals                        1,757         1,752       --
           1,113           1,141     (2)     Energy                           1,112         1,120       (1)
           1,399           1,383      1      Industrial Products              1,400         1,389        1
             674             661      2      Intermodal                         668           650        3
- ------------------------------------------------------------------------------------------------------------
          $1,155          $1,155     --      Total                           $1,166        $1,155        1
- ------------------------------------------------------------------------------------------------------------

Agricultural - Agricultural revenue decreased for the three month period and
increased for the nine month period of 2001 over the comparable periods in 2000.
Wheat carloads declined in the third quarter and for the year as a result of
soft domestic and overseas export demand and were the primary driver of the
revenue decline in the third quarter. A weak export market throughout the year
for corn shipments has been mostly offset by strong shipments to domestic feeder
markets. Partially offsetting the overall decline was strong export demand for
meals and oils shipments. Beverages, frozen and refrigerated products, and
fruits and vegetables grew from strong domestic demand and new railroad services
introduced last year. For the nine month period of 2001, average revenue per car
increased primarily due to longer haul domestic corn shipments and fewer low
average revenue per car wheat and sweeteners shipments.

Automotive - Automotive revenue declined for both the three and nine month
periods of 2001 over the comparable periods in 2000 as carload volumes fell 10%
in the third quarter and 8% for the nine months ended September 30, 2001. These
declines were the result of soft consumer demand for vehicles compared to high
vehicle production levels in 2000. The weak market led suppliers to shutdown
plants and adjust inventories which also reduced auto materials shipments.
Partially offsetting the weak demand was an increase in market share. Average
revenue per car increased for the nine months due to fewer materials shipments
with low average revenues per car. In addition, the use of boxcars rather than
containers also contributed to the increase.

Chemicals - Chemicals revenue and carloads decreased for both the three and nine
month periods of 2001 over the comparable periods in 2000 as a slowing economy
and lower industrial production reduced demand for plastics and liquid and dry
chemicals. Production and demand for plastics and fertilizer have decreased due
to high raw material costs resulting from high natural gas costs.

Energy - The Railroad recorded its third consecutive quarterly record for
revenue, carloads, and average coal trains per day out of the Southern Powder
River Basin. The growth for both the three and nine month periods was the result
of high utility demand and market share gains. Extreme weather and high prices
for natural gas and Eastern-sourced coal reduced utility stockpiles compared to
a year ago. Severe weather in the first half of the year and delays due to mine
production issues partially offset these increases.

                                     - 16-

Industrial Products - Industrial Products revenue increased in the third quarter
but decreased for the nine month period of 2001 over the comparable periods in
2000. Strong construction activity drove up demand for lumber, stone, and cement
in the third quarter and for the nine months ended September 30, 2001. The
slowdown elsewhere in the economy reduced demand in the third quarter and nine
months for steel and metallic minerals, advertising newsprint, and ferrous
scrap. Average revenue per car for the three and nine month periods increased
slightly as price increases and increased volumes of high average revenue per
car lumber shipments more than offset growth in low average revenue per car
stone carloads.

Intermodal - Intermodal revenue declined for both the three and nine month
periods of 2001 over the comparable periods in 2000, as carloadings fell 3% for
both periods. Volumes declined primarily in domestic segments as the slowing
economy reduced demand. International segments continued to grow for both the
three month and nine month periods of 2001. Average revenue per car grew
primarily as the result of price increases.

OPERATING EXPENSES - Operating expenses decreased $42 million (2%) in the third
quarter and increased $73 million (1%) for the three and nine month periods
ended September 30, 2001, respectively. Operating expense comparisons by
category for the three and nine month periods ending September 30, 2001 and 2000
are discussed below. The factors primarily responsible for the increase or
decrease in each category are substantially the same for both the three and nine
month periods, except as noted.

Salaries, Wages and Employee Benefits - Labor costs decreased $9 million (1%) in
the third quarter and increased $18 million (1%) for the nine month period ended
September 30, 2001. In the third quarter, the lower expenses were due to a 5%
reduction in employee levels and higher train crew productivity compared to
2000, partially offset by wage and benefit inflation. Labor costs increased for
the nine month period primarily from higher wage and benefit inflation, which
was partially offset by a 4% reduction in employees and higher train crew
productivity.

Equipment and Other Rents - Expenses decreased $6 million (2%) for the three
month period and increased $32 million (4%) for the nine month period ended
September 30, 2001. Lower costs in the third quarter were due primarily to lower
volume costs and car leases, which were partially offset by increased locomotive
leases and cycle times. Expenses were higher in the nine month period due to
increased cycle times and higher locomotive leases partially offset by lower
volume costs. Locomotive leases increased due to the acquisition of new, more
reliable and fuel-efficient units to replace older models in the fleet.

Depreciation - Depreciation increased $7 million (3%) and $25 million (3%) for
the three and nine month periods, respectively, over comparable periods in 2000,
as a result of the Railroad's capital program in 2000 and the first nine months
of 2001. Capital spending was $1.3 billion in the nine months ended September
30, 2001, compared to $1.4 billion in the nine months ended September 30, 2000.

Fuel and utilities - Expenses were down $24 million (7%) and up $43 million (5%)
for the three and nine month periods, respectively. Lower fuel prices in the
third quarter reduced expense by $20 million in the third quarter. Higher year
to date average fuel prices added $41 million of expense in the first nine
months of 2001 over comparable periods in 2000. Additional costs due to higher
gross ton miles were offset by a lower diesel fuel consumption rate. In 2001,
the Railroad's fuel consumption was 32% hedged at an average of 69 cents per
gallon in the first quarter, 8% hedged at 68 cents per gallon in the second
quarter, and 26% hedged at 67 cents per gallon in the third quarter (excluding
taxes, transportation charges, and regional pricing spreads). The hedges
decreased fuel costs by $4 million in the first half of the year and $3 million
in the third quarter. In 2000, the Railroad hedged approximately 10% of its fuel
consumption for the three and nine month periods, which decreased fuel costs by
$15 million and $35 million, respectively. As of September 30, 2001, expected
fuel consumption for the remaining three months of 2001 is 48% hedged at 65
cents per gallon excluding taxes, transportation costs and regional pricing
spreads (see note 4 to the consolidated financial statements). During

                                     - 17 -

October 2001, additional swaps were entered into which increased the hedge
percentage to 58% and decreased the cents per gallon, excluding taxes,
transportation costs and regional pricing spreads to 64 for the remaining three
months of 2001.

Materials and Supplies - Expenses decreased $16 million (12%) and $48 million
(11%) for the three and nine month periods, respectively, reflecting decreases
in locomotive overhauls as well as freight car repairs and purchasing costs. The
decrease in locomotive overhauls is due to the acquisition of newer, more
reliable units and the retirement of older models in the fleet.

Casualty Costs - Expenses increased $4 million (5%) and $7 million (3%) for the
three and nine month periods, respectively, primarily due to higher settlement
costs.

Other Costs - Expenses increased $2 million (1%) for the third quarter of 2001
and decreased $4 million (1%) for the first nine months compared to the same
periods in 2000. Higher contract expenses, state and local taxes, and joint
facilities expenses were partially offset by cost control measures during the
third quarter of 2001. Lower costs in the first nine months were primarily due
to cost control and productivity gains, which were partially offset by higher
state and local taxes and joint facilities expenses.

OPERATING INCOME - Operating income increased $12 million (2%) to $575 million
in the third quarter and decreased $52 million (3%) to $1.5 billion for the nine
months ended September 30, 2001. The operating ratio for the third quarter of
2001 was 78.9%, 0.7 percentage points better than 2000's 79.6% operating ratio.
The operating ratio for the nine months ended September 30, 2001 was 81.2%, 0.6
percentage points worse than 2000's 80.6%.

NON-OPERATING ITEMS - Non-operating expense decreased $12 million and $78
million for the three and nine months ended September 30, 2001, respectively.
The gains were primarily the result of higher income from real estate sales and
lower interest expense. Income taxes increased $12 million for the third quarter
and $21 million for the first nine months of 2001 reflecting higher pre-tax
income and a higher effective tax rate in 2001.

TRUCKING SEGMENT

OPERATING REVENUES - For the three and nine month periods ended September 30,
2001, trucking revenues increased $5 million (2%) to $292 million and $23
million (3%) to $862 million, respectively, over the comparable periods in 2000
despite a decline in volume. The growth in each period resulted primarily from
improved yield, partially offset by lower tonnage hauled.

OPERATING EXPENSES - For the three and nine month periods ended September 30,
2001, operating expenses increased $7 million (3%) to $274 million and $17
million (2%) to $819 million, respectively, over the comparable periods in 2000.
Salaries, wages and employee benefits costs increased $9 million (5%) to $173
million and $25 million (5%) to $519 million for the three and nine month
periods of 2001, respectively, reflecting wage and benefit increases and a 3%
increase in employee levels. Fuel and utilities costs decreased $1 million (6%)
to $17 million for the third quarter due to lower fuel prices partially offset
by lower fuel economy. For the nine month period, fuel and utilities expense was
nearly flat compared to 2000 as fuel price was the same in both periods. In the
first nine months of 2001, Overnite had no fuel hedges. In the first nine months
of 2000, fuel consumption was 9% hedged at an average of 39 cents per gallon
(excluding taxes, transportation charges, and regional pricing spreads). As of
September 30, 2001, no fuel consumption for the remaining three months of 2001
was hedged. Depreciation expense was flat at $12 million and $36 million for the
three and nine months ended September 30, 2001, respectively. Materials and
supplies expenses were flat at $12 million in the third quarter and up $1
million (3%) to $37 million for the nine month period ended September 30, 2001.
Equipment and other rents decreased $1 million (4%) to $25 million for the third
quarter

                                     - 18 -

and decreased $2 million (3%) to $71 million for the nine-month period over 2000
due to a reduction in local transportation services which offset an increase in
contracted linehaul purchased transportation. Other expenses were flat at $35
million for the third quarter and down $6 million to $104 million (5%) for the
nine month period ended September 30, 2001 primarily due to lower security,
legal, and travel expenses compared to 2000.

OPERATING INCOME - Operating income decreased $2 million (7%) to $18 million and
increased $6 million (15%) to $43 million for the three and nine months ended
September 30, 2001, respectively. The operating ratio for the third quarter of
2001 was 93.7%, 0.5 percentage points worse than 2000's 93.2% operating ratio.
The operating ratio for the nine months ended September 30, 2001 was 95.1%, 0.5
percentage points better than 2000's 95.6%.

OTHER OPERATIONS

OTHER PRODUCT LINES

The other product lines include the corporate holding company (which largely
supports the Railroad), Fenix LLC, self-insurance activities, and all
appropriate consolidating entries (see note 2 to the consolidated financial
statements). For the three and nine month periods ended September 30, 2001,
operating losses increased $6 million and increased $11 million, respectively,
reflecting increased operating expenses over the same periods of 2000.

              CHANGES IN FINANCIAL CONDITION AND OTHER DEVELOPMENTS

FINANCIAL CONDITION - During the first nine months of 2001, cash provided by
operations was $1.4 billion, compared to $1.5 billion in 2000. The decrease is
primarily attributable to the timing of large cash payments including payments
for the work force reduction.

         Cash used in investing activities was $1.3 billion during the first
nine months of 2001, compared to $1.4 billion in 2000. The decrease in 2001 is a
result of lower capital spending and higher asset sales in 2001, partially
offset by the receipt of a cash dividend from an affiliate in 2000.

         Cash used in financing activities was $73 million in the first nine
months of 2001, compared to $263 million in 2000. This lower net use of cash in
financing activities is the result of higher debt and other financings in 2001
($867 million in 2001 compared to $538 million in 2000) partly offset by higher
net debt repayments ($792 million in 2001 versus $651 million in 2000).

         Including the Convertible Preferred Stock as an equity instrument, the
ratio of debt to total capital employed was 43.9% at September 30, 2001 and
45.1% at December 31, 2000.

FINANCING ACTIVITIES

CREDIT FACILITIES - On September 30, 2001, the Corporation had $2.0 billion in
revolving credit facilities, of which $1.0 billion expires in March 2002, with
the remaining $1.0 billion expiring in 2005. The facilities, which were entered
into during March 2001 and March 2000, respectively, are designated for general
corporate purposes.

SHELF REGISTRATION STATEMENT AND SIGNIFICANT NEW BORROWINGS - During May 2001,
under an existing shelf registration statement, the Corporation issued the
remaining $200 million of debt securities available as fixed rate debt with a
maturity date of May 25, 2004. Simultaneously, the Corporation entered into an
interest rate swap converting the debt from a fixed rate to a variable rate. The
proceeds from the issuance of this debt were used for repayment of debt and
other general corporate purposes.

                                     - 19 -

         In June 2001, the Corporation filed a $1.0 billion shelf registration
statement, which became effective June 14, 2001. Under the shelf registration
statement, the Corporation may issue, from time to time, any combination of debt
securities, preferred stock, common stock or warrants for debt securities or
preferred stock in one or more offerings. The total offering price of these
securities, in the aggregate, will not exceed $1.0 billion.

         During July 2001, UPRR entered into capital leases covering new
locomotives. The related capital lease obligations totaled approximately $124
million and are included in the statements of consolidated financial position as
debt.

         On October 1, 2001, the Corporation issued $300 million of fixed-rate
debt under its shelf registration statement with a maturity date of October 15,
2007, leaving $700 million available for issuance. The proceeds from the
issuance of this debt were used for repayment of debt and other general
corporate purposes.

                                  OTHER MATTERS

COMMITMENTS AND CONTINGENCIES - There are various claims and lawsuits pending
against the Corporation and certain of its subsidiaries. The Corporation is also
subject to various federal, state and local environmental laws and regulations,
pursuant to which it is are currently participating in the investigation and
remediation of various sites. A discussion of certain claims, lawsuits,
contingent liabilities and guarantees is set forth in note 9 to the consolidated
financial statements, which is incorporated herein by reference.

ACCOUNTING PRONOUNCEMENTS - In September 2000, the Financial Accounting
Standards Board issued Statement No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (FAS 140),
replacing Statement No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (FAS 125). FAS 140 revises
criteria for accounting for securitizations, other financial asset transfers and
collateral, and introduces new disclosures. FAS 140 was effective for fiscal
2000 with respect to the new disclosure requirements and amendments of the
collateral provisions originally presented in FAS 125. All other provisions are
effective for transfers of financial assets and extinguishments of liabilities
occurring after March 31, 2001. The provisions are to be applied prospectively
with certain exceptions. The adoption of FAS 140 did not have a significant
impact on the Corporation's consolidated financial statements.

         In July 2001, the Financial Accounting Standards Board issued Statement
No. 141, "Business Combinations" (FAS 141). FAS 141 revises the method of
accounting for business combinations and eliminates the pooling method of
accounting. FAS 141 is effective for all business combinations that are
initiated or completed after June 30, 2001. Management believes the financial
impact that FAS 141 will have on the Corporation's consolidated financial
statements will not be significant.

         Also in July 2001, the Financial Accounting Standards Board issued
Statement No. 142, "Goodwill and Other Intangible Assets" (FAS 142). FAS 142
revises the method of accounting for goodwill and other intangible assets. FAS
142 eliminates the amortization of goodwill, but requires goodwill to be tested
for impairment at least annually at a reporting unit level. FAS 142 is effective
for the Corporation's fiscal year beginning January 1, 2002. Management believes
the financial impact that FAS 142 will have on the Corporation's consolidated
financial statements will not be significant.

         In August 2001, the Financial Accounting Standards Board issued
Statement No. 143, "Accounting for Asset Retirement Obligations" (FAS 143). FAS
143 requires the Corporation to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred and is
effective for the Corporation's fiscal year beginning January 1, 2003.
Management is in the process of evaluating the impact this standard will have on
the Corporation's consolidated financial statements.

         In addition, in October 2001, the Financial Accounting Standards Board
issued Statement No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (FAS 144). FAS 144 replaces Financial

                                     - 20 -

Accounting Standards Board Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Asset to Be Disposed Of" (FAS 121). FAS 144
develops one accounting model, based on the framework established in FAS 121,
for long-lived assets to be disposed of by sale. The accounting model applies to
all long-lived assets, including discontinued operations, and it replaces the
provisions of APB Opinion No. 30, "Reporting Results of Operations-Reporting the
Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," for disposal of segments of a
business. FAS 144 requires that long-lived assets be measured at the lower of
carrying amount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations. FAS 144 also broadens the definition
of discontinued operations. FAS 144 is effective for the Corporation's fiscal
year beginning January 1, 2002. Management is currently in the process of
evaluating the impact this standard will have on the Corporation's consolidated
financial statements.

MOTOR CARGO ACQUISITION - On October 15, 2001, the Corporation announced that it
had entered into an Agreement and Plan of Merger, dated October 15, 2001 (the
Agreement), with Motor Cargo Industries, Inc., a Utah corporation (Motor Cargo),
and Motor Merger Co., a Utah corporation and wholly owned subsidiary of UPC,
pursuant to which the Corporation agreed to offer to exchange for each share of
Motor Cargo common stock, no par value (Motor Cargo Stock), at the election of
the holder, either 0.26 of a share of common stock, par value $2.50 per share,
of the Corporation or $12.10 in cash. On October 31, 2001, the Corporation
announced the commencement of its offer to acquire the shares of Motor Cargo
Stock, which offer will remain open until November 29, 2001, unless the
Corporation elects to extend the offer beyond such date in accordance with the
Agreement. Under the purchase method of accounting, the purchase price will be
approximately $80 million. Motor Cargo is a western regional less than truckload
(LTL) carrier providing comprehensive service throughout 10 western states.

                             CAUTIONARY INFORMATION

CAUTIONARY INFORMATION

Certain statements in this report are, and statements in other material filed or
to be filed with the Securities and Exchange Commission (as well as information
included in oral statements or other written statements made or to be made by
the Corporation) are, or will be, forward-looking within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934. These
forward-looking statements include, without limitation, statements regarding:
expectations as to operational improvements; expectations as to cost savings,
revenue growth and earnings; the time by which certain objectives will be
achieved; estimates of costs relating to environmental remediation and
restoration; proposed new products and services; expectations that claims,
lawsuits, environmental costs, commitments, contingent liabilities, labor
negotiations or agreements, or other matters will not have a material adverse
effect on its consolidated financial position, results of operations or
liquidity; and statements concerning projections, predictions, expectations,
estimates or forecasts as to the Corporation's and its subsidiaries' business,
financial and operational results, and future economic performance, statements
of management's goals and objectives and other similar expressions concerning
matters that are not historical facts.

         Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the
times at, or by which, such performance or results will be achieved.
Forward-looking information is based on information available at the time and/or
management's good faith belief with respect to future events, and is subject to
risks and uncertainties that could cause actual performance or results to differ
materially from those expressed in the statements.

                                     - 21 -

         Important factors that could cause such differences include, but are
not limited to, whether the Corporation and its subsidiaries are fully
successful in implementing their financial and operational initiatives; industry
competition, conditions, performance and consolidation; legislative and/or
regulatory developments, including possible enactment of initiatives to
re-regulate the rail business; natural events such as severe weather, floods and
earthquakes; the effects of adverse general economic conditions, both within the
United States and globally; any adverse economic or operational repercussions
from recent terrorist activities, any government response thereto and any future
terrorist activities; changes in fuel prices; changes in labor costs; labor
stoppages; and the outcome of claims and litigation.

         Forward-looking statements speak only as of the date the statement was
made. The Corporation assumes no obligation to update forward-looking
information to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information. If the Corporation does
update one or more forward-looking statements, no inference should be drawn that
the Corporation will make additional updates with respect thereto or with
respect to other forward-looking statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided
in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
Disclosure concerning market risk-sensitive instruments is set forth in note 4
to the consolidated financial statements included in Item 1 of Part I of this
Report and is incorporated herein by reference.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

SHAREHOLDER LITIGATION

As previously reported, a purported derivative action was filed by nine
individuals, seven of whom are members of the International Brotherhood of
Teamsters (Teamsters), on behalf of the Corporation on June 21, 2001 in the
Chancery Court of Shelby County, Tennessee, naming as defendants current and
certain former directors of the Corporation and various present and former
officers and employees of Overnite Transportation Company, as well as Overnite,
and, as a nominal defendant, the Corporation. The derivative action alleges,
among other things, that the named defendants breached their fiduciary duties to
the Corporation, wasted its assets and mismanaged the company by opposing the
efforts of the Teamsters to organize the employees of Overnite. Plaintiffs claim
that the "anti-union" campaign allegedly waged by the defendants cost millions
of dollars and caused a substantial decline in the value of Overnite. On July
31, 2001, defendants filed a motion to dismiss the action on various grounds,
which is still pending. The Corporation, Overnite and the individual defendants
believe that the claims raised by the plaintiffs are without merit and intend to
defend them vigorously. There have been no material developments with respect to
these claims during the period covered by this report.

LABOR MATTERS

As previously reported, the General Counsel of the National Labor Relations
Board (NLRB) is seeking a bargaining order remedy in 11 cases involving Overnite
where a Teamsters local union lost a representation election. In these eleven
cases an administrative law judge ruled that the bargaining order remedy is
warranted. Overnite appealed those rulings to the NLRB. In two separate
decisions, the NLRB upheld the decisions of the administrative law judge, and
Overnite appealed the NLRB's rulings to the United States Court of Appeals for
the Fourth Circuit. On February 16, 2001 a two-one majority of a Fourth Circuit
panel enforced the NLRB bargaining orders in the first four cases. On July 5,
2001 a majority of judges of the entire Fourth Circuit bench granted Overnite's
petition for a rehearing by the entire court in those four cases, and a hearing
was held on September 25, 2001. A decision with respect to this hearing is still
pending. The appeal of the other seven

                                     - 22 -

cases has been held in abeyance. In a twelfth case, the administrative law judge
found that a bargaining order remedy was not warranted. Overnite believes it has
substantial defenses in the bargaining order cases and intends to continue to
defend them aggressively.

ENVIRONMENTAL MATTERS

The State of Illinois filed a complaint against the Railroad with the Illinois
Pollution Board on May 14, 2001 seeking penalties for an alleged violation of
state air pollution laws arising out of a release of styrene from a tank car
near Cora, Illinois, which occurred on August 29, 1997. The car contained
styrene monomer, a hazardous substance, stabilized by an inhibitor by the origin
shipper. The car was delayed in transit for a number of different reasons
including rerouting and reconsignment by the shipper. The Railroad was not
notified that such delays could jeopardize the shipment. Eventually the effect
of the inhibitor wore off and the styrene went into a reactive state resulting
in pressure and venting near Cora, Illinois. A small populated area was
evacuated for a few hours. The situation was controlled and remediated promptly.
Styrene has since been put on the Railroad's list of time sensitive shipments
for special monitoring. The State of Illinois seeks to assess a penalty in
excess of $100,000. The Railroad believes the penalty should be significantly
less than $100,000 and is vigorously defending the case. A hearing of the
complaint is scheduled for March 22, 2002.

OTHER MATTERS

As previously reported in the Corporation's Annual Report on Form 10-K for 2000,
Western Resources (Western) filed a complaint on January 24, 2000 in the U.S.
District Court for the District of Kansas alleging that UPRR and The Burlington
Northern Santa Fe Railway Company (BNSF) materially breached their service
obligations under the transportation contract to deliver coal in a timely manner
to Western's Jeffrey Energy Center. The original complaint sought recovery of
consequential damages and termination of the contract, excusing Western from
further performance. In an amended complaint filed September 1, 2000, Western
claimed the right to retroactive termination and added a claim for restitution.
On October 23, 2001, Western moved for leave to file a second amendment to its
complaint to add counts for innocent misrepresentation and negligent
misrepresentation and to request rescission of the contract. The railroads are
vigorously defending this lawsuit and oppose amendment of the complaint. As of
the date of this report, the railroads have not filed their opposition to the
second amendment. The suit currently is scheduled for trial in May of 2002. If,
however, Western is permitted to file the second amended complaint, the trial
date likely will be postponed. UPRR and BNSF have filed two motions seeking
dismissal of the termination and restitution claims, both of which are still
pending.

                                     - 23 -

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS

                  12(a)    Computation of ratio of earnings to fixed charges for
                           the Three Months Ended September 30, 2001.

                  12(b)    Computation of ratio of earnings to fixed charges for
                           the Nine Months Ended September 30, 2001.

         (b)      REPORTS ON FORM 8-K

                  On July 19, 2001, UPC filed a Current Report on Form 8-K
                  announcing UPC's financial results for the second quarter of
                  2001.

                  On October 16, 2001, UPC filed a Current Report on Form 8-K
                  announcing the Agreement and Plan of Merger by and among Motor
                  Cargo Industries, Inc., Union Pacific Corporation and Motor
                  Merger Co.

                  On October 18, 2001, UPC filed a Current Report on Form 8-K
                  announcing UPC's financial results for the third quarter of
                  2001.

                                     - 24 -

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: November 14, 2001

                              UNION PACIFIC CORPORATION
                              (Registrant)

                              By /s/ Richard J. Putz
                                 -----------------------------------------------
                                 Richard J. Putz
                                 Vice President and Controller
                                 (Chief Accounting Officer and Duly Authorized
                                 Officer)

                                     - 25-

                            UNION PACIFIC CORPORATION
                                  EXHIBIT INDEX

Exhibit No.   Description of Exhibits Filed with this Statement
- -----------   -------------------------------------------------

     12(a)    Computation of ratio of earnings to fixed charges for the Three
              Months Ended September 30, 2001.

     12(b)    Computation of ratio of earnings to fixed charges for the Nine
              Months Ended September 30, 2001.

                                                                   EXHIBIT 12(a)

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

               COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                  (UNAUDITED)

                                                                 Three Months Ended Sept. 30,
                                                                 ----------------------------
Millions, Except Ratios                                            2001                2000
- -----------------------                                          -------              -------
                                                                                
Earnings:
     Net income .............................................    $   267              $   256
     Undistributed equity earnings ..........................        (19)                 (16)
                                                                 -------              -------
Total earnings ..............................................        248                  240
                                                                 -------              -------
Income taxes ................................................        163                  150
                                                                 -------              -------
Fixed charges:
     Interest expense including amortization of debt discount        175                  181
     Portion of rentals representing an interest factor .....         10                   45
                                                                 -------              -------
Total fixed charges .........................................        185                  226
                                                                 -------              -------
Earnings available for fixed charges ........................    $   596              $   616
                                                                 -------              -------
Ratio of earnings to fixed charges ..........................        3.2                  2.7
                                                                 -------              -------

                                                                   EXHIBIT 12(b)

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

               COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                  (UNAUDITED)

                                                                   Nine Months Ended Sept. 30,
                                                                   ---------------------------
Millions, Except Ratios                                              2001                2000
- -----------------------                                            --------            -------
                                                                                 
Earnings:
     Net income .............................................      $    691            $   685
     Undistributed equity earnings ..........................           (34)                44
                                                                   --------            -------
Total earnings ..............................................           657                729
                                                                   --------            -------
Income taxes ................................................           418                397
                                                                   --------            -------
Fixed charges:
     Interest expense including amortization of debt discount           534                543
     Portion of rentals representing an interest factor .....            30                131
                                                                   --------            -------
Total fixed charges .........................................           564                674
                                                                   --------            -------
Earnings available for fixed charges ........................      $  1,639            $ 1,800
                                                                   --------            -------
Ratio of earnings to fixed charges ..........................           2.9                2.7
                                                                   --------            -------