FORM 10-Q

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549-1004

(Mark One)

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

For the quarterly period ended March 31, 1998

                                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.)

                   1717 Main Street, Suite 5900, Dallas, TX
                   (Address of principal executive offices)

                                     75201
                                  (Zip Code)

                               (214) 743-5600
              (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 April 30, 1998, there were 247,306,604 shares of the Registrant's
Common Stock outstanding.

                         UNION PACIFIC CORPORATION
                                  INDEX

                  PART I.  FINANCIAL INFORMATION
                                                                 Page Number

Item 1:  Condensed Consolidated Financial Statements:
         
       CONDENSED STATEMENT OF CONSOLIDATED INCOME - For the
         Three Months Ended March 31, 1998 and 1997............      1

       CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION -
         At March 31, 1998 and December 31, 1997...............      2

       CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS - For
         the Three Months Ended March 31, 1998 and 1997........      4

       CONDENSED STATEMENT OF CONSOLIDATED RETAINED EARNINGS -
         For the Three Months Ended March 31, 1998 and 1997....      4

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS....      5

Item 2:  Management's Discussion and Analysis of Financial
         Condition and Results of Operations...................      9

Item 3:  Quantitative and Qualitative Disclosures About 
         Market Risk...........................................     18

                   PART II.  OTHER INFORMATION

Item 1:  Legal Proceedings.......................................   18

Item 2:  Changes in Securities and Use of Proceeds .............    21

Item 4:  Submission of Matters to a Vote of Security Holders ....   21

Item 6:  Exhibits and Reports on Form 8-K........................   22

Signature........................................................   24

1

PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

            CONDENSED STATEMENT OF CONSOLIDATED INCOME

        For the Three Months Ended March 31, 1998 and 1997
    (Amounts in Millions, Except Ratio and Per Share Amounts)
                           (Unaudited)
                                                   1998       1997   

Operating Revenues .........................      $ 2,586    $ 2,810 
                                                  -------    -------
Operating Expenses:
  Salaries, wages and employee benefits....         1,078      1,026 
  Equipment and other rents................           363        322 
  Fuel and utilities (Note 3)..............           221        296 
  Depreciation and amortization ...........           263        258 
  Purchased services.......................           183        183 
  Materials and supplies...................           144        157 
  Other costs..............................           275        223 
                                                  -------    -------
     Total.................................         2,527      2,465 
                                                  -------    -------
Operating Income............................           59        345 
Other Income................................           23         38 
Interest Expense (Note 3)............                (161)      (150)
Corporate Expenses..........................          (26)       (28)
                                                  -------    -------
Income (loss) before Income Taxes...........         (105)       205 
Income Taxes................................           43        (77)
                                                  -------    -------
Net Income (Loss)...........................      $   (62)   $   128 
                                                  =======    ======= 

Earnings Per Share:
  Basic:
    Net Income (Loss)......................     $   (0.25)  $   0.52 
                                                                     
  Diluted:
    Net Income (Loss)......................     $   (0.25)  $   0.52           

Weighted Average Number of Shares...........        247.7      247.8 
Cash Dividends Per Share....................    $    0.20   $   0.43 
Ratio of Earnings to Fixed Charges (Note 4).           .4        2.0 

The accompanying accounting policies and notes to condensed financial
       statements are an integral part of these statements.
        
2

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

      CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
                      (Millions of Dollars)
                           (Unaudited)

                                                    March 31, December 31, 
ASSETS                                                  1998         1997     

Current Assets:

  Cash and temporary investments...............       $   191     $     90 
  Accounts receivable .........................           589          631 
  Inventories..................................           309          296 
  Other current assets.........................           295          398 
                                                    ---------   ----------
       Total Current Assets....................         1,384        1,415 

Investments:

  Investments in and advances to affiliated
     companies.................................           492          443 
  Other investments............................           190          181 
                                                    ---------   ----------
       Total Investments.......................           682          624 
                                                    ---------   ----------
Properties:

  Railroad:

    Road and other.............................        23,867       23,610 
    Equipment..................................         7,241        7,084 
                                                    ---------    ---------
       Total Railroad..........................        31,108       30,694 

  Trucking.....................................           758          750 
  Other........................................            71           70 
                                                    ---------    ---------
       Total Properties........................        31,937       31,514 

  Accumulated depreciation.....................        (5,704)      (5,537)
                                                    ---------    ---------
      Properties - Net ........................        26,233       25,977 
                                                    ---------    ---------

Excess Acquisition Costs - Net..................          613          619 

Other Assets....................................          166          129 
                                                    ---------    ---------
       Total Assets............................     $  29,078    $  28,764 
                                                    =========    ========= 

The accompanying accounting policies and notes to condensed financial
         statements are an integral part of these statements.
         
3
         
         UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

      CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
    (Amounts in Millions, Except Share and Per Share Amounts)
                           (Unaudited)

                                                    March 31, December 31, 
LIABILITIES AND STOCKHOLDERS' EQUITY                    1998         1997    

Current Liabilities:

  Accounts payable................................  $     541    $     758 
  Accrued wages and vacation......................        420          421 
  Accrued casualty costs..........................        334          333 
  Dividends and interest..........................        231          295 
  Income and other taxes..........................        268          268 
  Debt due within one year........................        132          233 
  Other current liabilities (Note 2)..............        882          939 
                                                    ---------    ---------
     Total Current Liabilities.....................     2,808        3,247 

Debt Due After One Year............................     9,258        8,285 

Deferred Income Taxes..............................     6,224        6,252 

Accrued Casualty Costs.............................       683          695 

Retiree Benefits Obligation........................       844          828 

Other Long-Term Liabilities (Note 2)...............     1,143        1,232 

Stockholders' Equity:

  Common stock, $2.50 par value, authorized
    500,000,000 shares, 276,220,489 shares issued
    in 1998, 275,060,633 shares issued in 1997....        690          690 
  Paid-in surplus.................................      4,063        4,066 
  Retained earnings...............................      5,159        5,271 
  Treasury stock, at cost, 28,926,456 shares in
    1998, 29,045,938 shares in 1997...............     (1,794)      (1,802)
                                                    ---------    ---------
    Total Stockholders' Equity....................      8,118        8,225 
                                                    ---------    ---------
    Total Liabilities and Stockholders' Equity....  $  29,078    $  28,764 
                                                    =========    ========= 

The accompanying accounting policies and notes to condensed financial 
         statements are an integral part of these statements.

4
        
        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

          CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
        For the Three Months Ended March 31, 1998 and 1997
                      (Millions of Dollars)
                           (Unaudited)
                                                          1998         1997  
Cash from operations:
 Net income (loss)..................................  $    (62)     $   128  
 Non-cash charges to income:
    Depreciation and amortization...................       263          258  
    Deferred income taxes...........................       (29)          35  
    Other - net.....................................        18           (6) 
 Changes in current assets and liabilities..........      (307)        (164) 
                                                      ---------      --------
    Cash (used in) provided by operations......           (117)         251  
                                                      ---------      --------
Cash flows from investing activities:
 Capital investments................................      (531)        (407) 
 Other - net........................................       (22)         (27) 
                                                      ---------      -------
    Cash used in investing activities...............      (553)        (434) 
                                                      ---------      -------
Cash flows from equity and financing activities:
 Dividends paid.....................................      (106)        (105) 
 Debt repaid........................................      (888)        (348) 
 Financings.........................................     1,766          560  
 Other - net........................................        (1)         (21) 
                                                      ---------      -------
    Cash provided by equity and financing activities       771           86  
                                                      ---------      -------
    Net increase (decrease) in cash and temporary 
        investments................................   $    101     $    (97) 
                                                      ========     ========= 

      CONDENSED STATEMENT OF CONSOLIDATED RETAINED EARNINGS
        For the Three Months Ended March 31, 1998 and 1997
         (Amounts in Millions, Except Per Share Amounts)
                           (Unaudited)
                                                         1998          1997  

Balance at Beginning of Year......................... $ 5,271        $ 5,262 
Net Income (Loss)....................................     (62)           128 
                                                      -------        -------
    Total...........................................    5,209          5,390 

Dividends Declared ($0.20 per share in 1998 and 
    $0.43 per share in 1997)........................      (50)          (107)
                                                      -------        -------
     Balance at End of Period........................ $ 5,159        $ 5,283 
                                                      =======        ======= 

The accompanying accounting policies and notes to condensed financial
          statements are an integral part of these statements.

5

       UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
                                
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                          (Unaudited)
                                
1. Responsibilities for Financial Statements - The condensed 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.  The Condensed Statement of
   Consolidated Financial Position at December 31, 1997 is derived from audited
   financial statements.  The condensed consolidated financial statements
   should be read in conjunction with the consolidated financial statements and
   notes thereto contained in the Union Pacific Corporation (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,
   1997.  The results of operations for the three months ended March 31, 1998
   are not necessarily indicative of the results for the entire year ending
   December 31, 1998.  Certain 1997 amounts have been reclassified to conform
   to the 1998 financial statement presentation.

2. Acquisition of Southern Pacific Rail Corporation (Southern Pacific or SP) -
   UPC consummated the acquisition of Southern Pacific in September 1996.  The
   acquisition of Southern Pacific was accounted for using the purchase method. 
   SP's results were fully consolidated with the Corporation effective October
   1, 1996.  On February 1, 1998, Union Pacific Railroad Company (UPRR) was
   merged with and into Southern Pacific Transportation Company (SPT), the
   principal SP rail affiliate (the SPT    Merger), with SPT continuing as the
   surviving corporation and changing its  name to "Union Pacific Railroad
   Company" immediately following the SPT Merger.  Immediately prior to the SPT
   Merger, SPT was a wholly-owned, indirect subsidiary of UPC, and UPRR was a
   subsidiary of UPC, with all of the issued and outstanding shares of voting
   stock of UPRR being owned, directly or indirectly, by UPC. UPRR and SPT
   operated as a unified system before and after the SPT Merger.

   In connection with the continuing integration of UPRR and Southern Pacific's
   rail operations (collectively, the Railroad), UPC is continuing to eliminate
   duplicate positions (primarily positions other than train crews), relocate
   positions, merge or dispose of redundant facilities, dispose of certain rail
   lines and cancel uneconomical and duplicative SP contracts.  The Corporation
   has also repaid certain of Southern Pacific's debt obligations. UPC
   recognized a $958 million liability in the Southern Pacific purchase price
   allocation for costs associated with SP's portion of these activities. 

   Through March 31, 1998, a total of $323 million in merger-related costs were
   paid by the Corporation and charged against these reserves, composed of
   approximately $160 million and $70 million, respectively, for severance and
   relocation payments made to approximately 3,700 Southern Pacific employees,
   and approximately $63 million for labor protection payments. The Corporation
   expects that the remaining merger payments will be made over the course of
   the next five years as the rail operations of UPRR and SP are integrated and
   labor negotiations are completed and implemented.

        
   In addition, the Railroad expects to incur approximately $206 million in
   acquisition-related costs through 1999 for severing or relocating UPRR
   employees, disposing of certain UPRR facilities, training and equipment
   upgrading.  These costs will be charged to expense as incurred over the next
   two years.  Net income for the three months ended March 31, 1998 includes 
   $18 million in acquisition-related operating costs.

   3.  Financial Instruments - The Corporation uses derivative financial
   instruments in limited instances for other than trading purposes to manage   
   risk as it relates to fuel prices and interest rates.  Where the 
   Corporation has fixed interest rates or fuel prices through the use of 
   swaps, futures or forward contracts, the Corporation has mitigated the 
   downside risk of adverse price and rate movements; however, it has also 
   limited future gains from favorable movements. 

   The Corporation addresses market risk related to these instruments by
   selecting instruments whose value fluctuations correlate highly with the
   underlying item being hedged.  Credit risk related to derivative financial
   instruments, which is minimal, is managed by requiring minimum credit
   standards for counterparties and periodic settlements.  The total credit 
   risk associated with the Corporation's counterparties was $73 million at 
   March 31, 1998.  The Corporation has not been required to provide, nor 
   has it received, any collateral relating to its hedging activity.  

   The fair market value of the Corporation's derivative financial instrument
   positions at March 31, 1998 was determined based upon current fair market
   values as quoted by recognized dealers or developed based upon the present
   value of future cash flows discounted at the applicable zero coupon U.S.
   treasury rate and swap spread.

   Interest Rates - The Corporation controls its overall risk relating to
   fluctuations in interest rates by managing the proportion of fixed and
   floating rate debt instruments within its debt portfolio over a given 
   period.  Derivatives are used in limited circumstances as one of the tools 
   to obtain the targeted mix.  The mix of fixed and floating rate debt is 
   largely managed through the issuance of targeted amounts of such debt 
   as debt maturities occur or as incremental borrowings are required.  The
   Corporation also obtains additional flexibility in managing interest cost
   and the interest rate mix within its debt portfolio by issuing callable fixed
   rate debt securities. 

   At March 31, 1998, the Corporation had outstanding interest rate swaps on
   $260 million of notional principal amount of debt (3% of the total debt
   portfolio) with a gross fair market value asset position of $73 million and
   a gross fair market value liability position of $25 million.  These contracts
   mature over the next one to seven years. Interest rate hedging activity
   increased interest expense by $1 million in the first quarter of 1998 and by
   $2 million in the first quarter of 1997.

   Fuel - Over the past three years, fuel costs approximated 10% of the
   Corporation's total operating expenses.  As a result of the significance of
   the fuel costs and the historical volatility of fuel prices, the
   Corporation's transportation subsidiaries periodically use swaps, futures and
   forward contracts to mitigate the impact of fuel price volatility. The intent
   of this program is to protect the Corporation's operating margins and overall

6

   profitability from adverse fuel price changes.  

   At March 31, 1998, the Railroad and Overnite Transportation Company
   (Overnite), the Corporation's trucking subsidiary, had hedged 49% and 38%,
   respectively, of their estimated remaining 1998 diesel fuel consumption at
   $0.51 and $0.52 per gallon, respectively, on a Gulf Coast basis.  At March
   31, 1998, the Railroad had outstanding swap agreements covering its fuel
   purchases of $267 million, with gross and net liability positions of $28
   million.  Overnite had outstanding swap agreements of $8 million, with gross
   and net liability positions of $1 million.  Fuel hedging increased first
   quarter 1998 fuel expense by approximately $15 million and had no impact on
   first quarter 1997 fuel expense.

4. Ratio of Earnings to Fixed Charges - The ratio of earnings to fixed charges
   has been computed on a total enterprise basis.  Earnings represent income
   from continuing operations less equity in undistributed earnings of
   unconsolidated affiliates, plus income taxes and fixed charges.  Fixed
   charges represent interest, amortization of debt discount and expense, and
   the estimated interest portion of rental charges.  For the three months ended
   March 31, 1998, fixed charges exceeded earnings by approximately $116
   million.

5. Commitments and Contingencies - There are various claims and lawsuits pending
   against the Corporation and certain of its subsidiaries.  Certain customers
   have submitted claims or stated their intention to submit claims to the
   Railroad for damages related to the delay of shipments as a result of
   congestion problems, and certain customers have filed lawsuits seeking relief
   related to such delays.  The nature of the damages sought by claimants
   includes, but is not limited to, contractual liquidated damages, freight loss
   or damage, alternative transportation charges, additional production costs,
   lost business and lost profits.  In addition, some customers have asserted
   that they have the right to cancel contracts as a result of alleged material
   breaches of such contracts by the Railroad. The Corporation expects
   additional claims by shippers. UPC will continue to evaluate the adequacy of
   its reserves for claims and expects to add to such reserves as appropriate.

   The Railroad is also party to certain regulatory proceedings before the
   Surface Transportation Board of the U.S. Department of Transportation (STB). 
   One proceeding pertains to rail service problems in the western United
   States. As an outgrowth of this proceeding, the STB has issued an emergency
   service order imposing certain temporary measures on the Railroad designed,
   among other things, to reduce congestion on the Railroad's lines in the
   Houston, Texas area.  A second proceeding, initiated under the STB's
   continuing oversight jurisdiction with respect to the Corporation's
   acquisition of Southern Pacific and consolidation of Southern Pacific with
   UPRR (and separate from the STB's regularly scheduled annual proceeding to
   review the implementation of the merger and the effectiveness of the
   conditions that the STB imposed on it), is for the purpose of considering the
   justification for and advisability of any proposals for new remedial
   conditions to the merger as they pertain to service in the Houston,
   Texas/Gulf Coast area, including proposals by Kansas City Southern Railway
   Company (KCS), Texas Mexican Railway Company (Tex Mex) and the Greater
   Houston Partnership (GHP) for the forced transfer by the Railroad to Tex Mex
   of certain lines and facilities in and around Houston, the establishment of
   a "neutral" switching operation in the greater Houston area, and the

7

   permanent adoption of provisions in the STB's emergency service order that
   expanded Tex Mex's right to handle traffic to and from Houston.  In addition,
   the STB has initiated various inquiries and formal rulemaking proceedings
   regarding certain elements of rail regulation following two days of hearings
   by the STB at the request of two members of Congress and in response to
   shippers' expressions of concern regarding railroad service quality, railroad
   rates and allegedly inadequate regulatory remedies.  If the Railroad is
   unsuccessful in eliminating the remaining congestion and service problems
   affecting its system, the STB could issue a new emergency service order upon
   the expiration of the current one and order the Railroad to take additional
   actions including, among other things, further diversions of traffic or the
   transfer of certain rail lines or other facilities to other railroads.  In
   addition, there can be no assurance that the proposals advanced by parties
   in the remedial conditions proceeding or the proceedings initiated in
   response to the rail regulation hearings will not be approved in some form. 
   Should the STB or Congress take aggressive action in the rail regulation
   proceedings (e.g., by making purportedly competition-enhancing changes in
   rate and route regulation and "access" provisions), the adverse effect on the
   Railroad and other rail carriers could be material.

   The Corporation is also subject to Federal, state and local environmental
   laws and regulations, and is currently participating in the investigation and
   remediation of numerous sites.  Where the remediation costs can be reasonably
   determined, and where such remediation is probable, the Corporation has
   recorded a liability.  In addition, the Corporation and its subsidiaries
   periodically enter into financial and other commitments and have retained
   certain contingent liabilities upon the disposition of formerly-owned
   operations.
 
   In addition, UPC and certain of its officers and directors are currently
   defendants in two purported class action securities lawsuits, and certain
   current and former directors of the Corporation are currently defendants in
   a purported derivative action filed on behalf of the Corporation.  The class
   action suits allege, among other things, that management failed to disclose
   properly the Railroad's service and safety problems and thereby issued
   materially false and misleading statements concerning the merger with SP and
   the safe, efficient operation of its rail network.  The derivative action
   alleges, among other things, that the named current and former directors
   breached their fiduciary duties to the Corporation by approving the mergers
   of SP and Chicago and North Western Transportation Company into the
   Corporation without ensuring that the Corporation or the Railroad had
   adequate systems in place to effectively integrate those companies into the
   operations of the Corporation and the Railroad.  Because both the size of the
   class and the damages are uncertain, UPC and the Railroad are unable at this
   time to determine the potential liability, if any, which might arise from
   these lawsuits.  Management believes that these claims are without merit and
   intends to defend them vigorously.

   It is not possible at this time for the Corporation to fully determine 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 or
   guarantees will have a material adverse effect on its consolidated financial

8

   condition.

6. Accounting Pronouncements - In June 1997, the Financial Accounting Standards
   Board (FASB) issued Statement No. 130, "Reporting Comprehensive Income" 
   (FAS 130)that is effective for all periods in 1998, including interim 
   periods.  UPC has adopted the provisions of FAS 130 effective January 1, 
   1998.  The components of comprehensive income include, among other things, 
   changes in the market value of futures contracts which qualify for hedge 
   accounting and a net loss recognized as an additional pension liability but 
   not yet recognized as net periodic pension cost. The impact of adopting 
   FAS 130 for the three months ended March 31, 1998 was approximately 
   $2 million. 
   
   Also in June 1997, the FASB issued Statement No. 131, "Disclosures about 
   Segments of an Enterprise and Related Information," effective December 31, 
   1998. The Corporation currently complies with most provisions of this 
   Statement, and any incremental disclosure required by that Statement is 
   expected to be minimal. 

   In February 1998, the FASB issued Statement No. 132, "Employers' Disclosures
   about Pensions and Other Postretirement Benefits" effective in 1998 
   (FAS 132).  FAS 132 revises and standardizes disclosures required by 
   FAS 87, 88, and 106.  Restatement of the retirement plan footnote will be 
   required for all earlier periods presented in comparative financial  
   statements at December 31, 1998.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
          of Operations

              UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
                            RESULTS OF OPERATIONS
           Quarter Ended March 31, 1998 Compared to March 31, 1997 

Southern Pacific Rail Corporation (Southern Pacific or SP) Acquisition - UPC
consummated the acquisition of Southern Pacific in September 1996.  The 
aggregate Southern Pacific purchase price was $4.1 billion ($2.5 billion in 
UPC common stock and $1.6 billion in cash). The acquisition of Southern Pacific 
was accounted for as a purchase. Southern Pacific's results have been fully
consolidated with the Corporation since October 1, 1996. (See Note 2 to the
Condensed Consolidated Financial Statements). Throughout 1997 and continuing in
the first quarter of 1998, Union Pacific Corporation (UPC or the Corporation)
continued the process of implementing the acquisition of Southern Pacific. 

On February 1, 1998, Union Pacific Railroad Company (UPRR) was merged with and
into Southern Pacific Transportation Company (SPT), the principal SP rail
affiliate (the SPT Merger), with SPT continuing as the surviving corporation 
and changing its name to "Union Pacific Railroad Company" immediately 
following the SPT Merger. Immediately prior to the SPT Merger, SPT was a 
wholly-owned, indirect subsidiary of UPC, and UPRR was a subsidiary of UPC, 
with all of the issued and outstanding shares of voting stock of UPRR being 
owned, directly or indirectly, by UPC. UPRR and SPT operated as a unified 
system before and after the SPT Merger.

The Corporation expects to complete the full integration of the railroad
operations of UPRR and the Southern Pacific rail subsidiaries (collectively, the
Railroad) during 1999.  The Corporation believes that the full implementation of
the merger will result in shorter routes, faster transit times, better on-time
performance, expanded single-line service and more efficient traffic flow.

9

As a result of the SP acquisition, UPC now operates the largest rail system in
the United States, with nearly 35,000 route miles linking Pacific Coast and Gulf
Coast ports to the Midwest and eastern U.S. gateways.  The Corporation also owns
Overnite Transportation Company (Overnite), a major interstate trucking company
specializing in less-than-truckload (LTL) shipments.

CONGESTION AND SERVICE ISSUES
As previously reported in the Corporation's 1997 Annual Report on Form 10-K,
congestion in and around Houston and the coastal areas of Texas and Louisiana
(the Gulf Coast region) began to have a material adverse effect on the
Corporation's operations and earnings in the third quarter of 1997.  System
congestion started in the Gulf Coast region and spread throughout the system as
the Railroad shifted resources to help mitigate the problem in the Gulf Coast
region.  The congestion was brought on by, among other things, crew shortages 
and restricted track access caused by necessary track maintenance on former 
Southern Pacific lines, increased demand, washouts due to severe weather, 
derailments and congestion at Texas/Mexico gateways.  Traffic slowed further 
as rail yards in the Gulf Coast region filled, slowing access into and out of 
the yards and forcing trains to be held on sidings.  Slower average train 
velocity led to a greater need for locomotives in the region.  As traffic in 
the region backed up and the Railroad redeployed locomotives to the Gulf Coast 
region to help alleviate local congestion, congestion problems spread to 
other parts of the Railroad's system during the third and fourth quarters of 
1997.

To restore service to acceptable levels, the Railroad implemented a Service
Recovery Plan (the Plan) in October, 1997.  The Plan focuses on reducing the
number of cars on the system and restoring system velocity, which, in turn,
results in more reliable service to customers.  Implementation of the Plan has
resulted in improvement in the overall operation of the Railroad and is
addressing congestion problems in the Gulf Coast region and the surrounding
southeast portion of the Railroad's system (although intermittent periods of
congestion continue to arise in other regions, primarily in the Midwest). In 
late March and early April 1998, congestion in the Gulf Coast region was 
aggravated by several severe storms and congestion caused by operational 
problems on Mexican railroad lines south of Laredo, Texas.  However, 
operational initiatives subsequently implemented by the Railroad, including 
the Railroad's embargo of most southbound traffic destined for the Laredo 
gateway described below, have substantially reduced congestion on the 
Railroad's lines in the Gulf Coast region.

In connection with its integration with Southern Pacific, the Company has
implemented (i) TCS in the southeast portion of UPRR's system, which includes 
the Gulf Coast region, where the cutover to TCS occurred on December 1, 1997, 
(ii) directional running from Dexter Junction, Missouri, on the north, 
across Arkansas, western Louisiana and eastern Texas to the Houston and 
San Antonio areas on the south, beginning on February 1, 1998 and 
(iii) the hub-and-spoke labor agreements in Texas and Arkansas.  Although 
the Company believes that the full implementation of these changes is 
essential to achieving significant long-term benefits, their implementations 
also contributed to the persistence of congestion in the effected Gulf Coast 
region during late 1997 and early 1998.  
 
On March 28, 1998, the Railroad embargoed most southbound traffic destined for
the Laredo, Texas gateway to address worsening congestion at that gateway and
clear the backlog of cars waiting to cross into Mexico.  The embargo applied to
grain, chemicals, industrial products and coal, but not finished automobiles,
auto parts or intermodal traffic or any northbound traffic through Laredo.  The
Railroad rerouted some of the embargoed traffic through other Railroad gateways
to Mexico, none of which were subject to the embargo.  The Railroad believed 
that this embargo was necessary because congestion problems principally 
within Mexico and agricultural inspection delays at the border that affected 
the Laredo gateway had worsened during the weeks preceding the imposition of 
the embargo and were affecting other areas within the southeast region of its 
system, resulting in a substantial backlog of cars waiting to move south to 
Laredo. Imposition of the embargo quickly resulted in a significant reduction 
in the backlog of cars. 

10

Accordingly, on April 14, 1998, the Railroad amended the embargo to introduce
permitting to control traffic volumes.  The permitting system allowed customers
to move traffic that had been embargoed while allowing the Railroad to meter
southbound traffic to prevent any surge of business that could again block the
Laredo crossing. On April 16, 1998, the Railroad further amended the embargo to
eliminate permit requirements for domestic shipments terminating at Laredo, and
on April 22, 1998, the Railroad canceled the embargo.

Financial Impact of Congestion - The Corporation has estimated that the cost of
the congestion-related problems for the three months ended March 31, 1998 was
approximately $260 million, after tax, which reflected the combined effects of
lost business, higher costs associated with system congestion, costs
associated with implementation of the Plan, alternate transportation and 
customer claims.  Although progress has been made in improving service, the 
Railroad expects these problems to continue to have an adverse impact on 1998 
results. In addition, as a result of recent operating losses incurred by the 
Railroad and in order to fund its capital programs, the Corporation has 
incurred substantial incremental debt since December 31, 1997 and obtained 
additional financing from a private placement of preferred securities.  (See
Changes in Financial Condition and Other Developments)  The timing 
of the Corporation's return to profitability will be determined by how rapidly 
it is able to eliminate congestion and return to normal operations throughout 
its system.

FINANCIAL RESULTS
CONSOLIDATED - The Corporation reported a net loss of $62 million or $0.25 per
diluted share for the first quarter of 1998, compared to 1997 net income of $128
million or $0.52 per diluted share.  This earnings decrease resulted primarily
from continued congestion and service issues at the Railroad, which were 
slightly offset by improved operating results at Overnite.  

Operating revenues decreased $224 million (8%) to $2,586 million in 1998,
reflecting an 11% decrease in volumes at the Railroad, which were somewhat 
offset by a 20% increase in revenues at Overnite.

Operating expenses increased $62 million (3%) to $2,527 million in 1998.
Congestion-related costs and wage inflation, partially offset by net merger
benefits and volume-related cost savings, caused salaries, wages and employee
benefits to increase $52 million.  Congestion was also a contributing factor,
along with unfavorable rates, to an increase in equipment and other rents by $41
million.  Lower volumes and the absence of 1997 maintenance projects at the
Railroad were the primary factors causing a decrease in materials and supplies
($13 million).  Fuel and utility costs fell $75 million (25%), principally the
result of decreased volumes at the Railroad and a 15% decrease in fuel prices at
both the Railroad and Overnite.  Depreciation charges rose $5 million, primarily
due to the UPC's extensive capital spending on its equipment and rail
infrastructure.  Other costs increased $52 million, primarily resulting from
miscellaneous costs associated with the congestion and service recovery. 
Personal injury costs and casualty accruals fell $6 million and $3 million,
respectively, while professional fees and other taxes rose $7 million and $4
million, respectively.

Consolidated operating income fell $286 million (83%) to $59 million in 1998,
principally because of declining results at the Railroad, slightly offset by
improved results at Overnite. Other income fell $15 million, primarily 
reflecting fewer real estate sales and lower rental income resulting from the 
sale of the sign board business in 1997.  Interest expense increased 
$11 million, the result of higher debt levels, offset by favorable interest 

11

rates.  Income taxes decreased $120 million to a $43 million benefit, 
primarily reflecting lower income before income taxes.

Railroad - The Railroad lost $32 million in the first quarter of 1998, compared
to net income of $170 million a year ago.  This decline in earnings is the 
result of the continuing effect of congestion on the Railroad's operations. 
Both periods included the impact of one-time SP merger-related costs for 
severance, relocation, and training of employees ($18 million reduction in 
net income in 1998 and $9 million reduction in net income in 1997).  
The operating ratio for the first quarter of 1998 was 97.7, which includes 
approximately 15 points estimated to be attributable to congestion costs 
(both lost business and incremental operating costs).  This compares to 86.2 
for the same period in 1997.  Operating revenues fell $279 million (11%) 
to $2.28 billion in 1998.  This decrease reflects continuing congestion, the 
impact of the Asian crisis on export grain and intermodal markets and weak 
grain demand as farmers delay shipments due to the current grain price 
environment. Average commodity revenue per car (ARC) fell 1% to $1,149 per car, 
while total carloadings fell 9% (approximately 189,000 cars).  Commodity 
revenue in 1998 fell 10% over the same period in 1997 as shown in the table 
below.

                                  Commodity Revenue
            Three Months Ended 3/31/98                      Versus 1997 
                                             Commodity  
(Revenue in Thousands)     Cars        ARC     Revenue         Change      %  

Agricultural              203,177    $1,554    $315,786     $ (87,410)   (22)
Automotive                159,400     1,446     230,464        (6,973)    (3)
Chemicals                 222,798     1,749     389,773       (43,719)   (10)
Energy                    442,094     1,124     496,988       (15,207)    (3)
Industrial                320,602     1,359     435,709       (40,502)    (9)
Intermodal                590,115       606     357,506       (56,924)   (14)
                        ---------    ------  ----------     ---------    ----
 Total Commodity        1,938,186    $1,149  $2,226,226     $(250,735)   (10)
                        =========    ======  ==========     ==========   ====

Agricultural Products: Commodity revenue fell 22% to $316 million.  Carloadings
declined 18% to 203,000 cars, primarily the result of a 25% decrease in corn
volumes due to soft export demand (strong foreign production and the effect on
exchange rates due to the Asian crisis), as well as continued congestion. Most
agricultural products suffered from congestion problems and related equipment
shortages; meals and oils were the only bright spot, as U.S. producers 
benefitted from strong export markets, primarily to Mexico.  Average 
commodity revenue per car declined 5%, primarily the result of weak exports, 
which significantly reduced the average length of haul.

Automotive: Commodity revenue fell 3% to $230 million, in spite of a 1% increase
in carloadings reflecting new business opportunities and steady economic
conditions in the industry. Strong demand and the new Ford business led the 3%
increase in finished autos carloadings while parts volumes fell 2% resulting 
from congestion-related diversions of traffic and inventory control by major
manufacturers. Average commodity revenue per car declined 4%, resulting from
generally shorter haul Ford business and less long-haul Mexico business.

Chemicals: Carloadings declined 6% to 223,000 cars and commodity revenue
decreased $44 million (10%) to $390 million.  The decline in volume resulted

12

principally from system congestion (partially the result of congestion of 
traffic crossing at the Mexican border), which more than offset strong market 
demand.  Average commodity revenue per car declined 4% due to generally 
shorter hauls (storage-in-transit moves for plastic and growth in short-haul 
potash moves) and unfavorable product mix.

Energy (Primarily Coal): Commodity revenue fell 3% to $497 million in 1998,
driven by a 3% decrease in carloadings. Continued congestion problems, 
diversions of business to competing roads and a late February blizzard led 
the decline, despite strong demand.  Average commodity revenue was flat, 
quarter over quarter.  Powder River Basin (PRB) train cycles fell slightly 
quarter-over-quarter, 24.8 in 1998 vs. 25.1 in 1997, however longer trains 
(117.6 cars/train in 1998 vs. 114.1 in 1997) boosted loads by approximately 
3,200 units helping to improve PRB business versus 1997.  All other mine 
locations posted declines, largely due to congestion and related train cycle 
issues.

Industrial Products: Carloadings decreased 10% while commodity revenue declined
9% to $436 million.  Volume declines resulted primarily from continued 
congestion (in the Southern tier and the Pacific Northwest) as well as the 
Railroad's sale of its Duck Creek North line in 1997. Average commodity 
revenue per car improved 1%, the result of the absence of shorter-haul Duck 
Creek business and favorable mix changes. 

Intermodal: Commodity revenue declined 14% to $358 million while carloadings 
fell 12% to 590,000 loads-the result of continued congestion and related 
diversions of traffic, as well as equipment imbalances caused by strong 
imports and weak exports.  Average commodity revenue per car fell 1%, as 
unfavorable mix was largely offset by new longer haul business.
  
Operating expenses were $2,231 million, $21 million (1%) higher than the first
quarter 1997 operating costs of $2,210 million.  Higher operating costs reflect
an estimated $77 million of congestion-related costs ($148 million of 
congestion-related costs offset by $71 million of volume savings from lower 
business levels).  The impact of congestion was partially offset by lower fuel 
costs, merger benefits and volume-related cost savings, as carloads were 
off 9% and gross-ton miles were down 10%.
    
Labor expense was $29 million (3%) higher than 1997, as net congestion-related
costs and wage inflation were partially offset by merger consolidation benefits
and volume-related cost savings.  Quarter-over-quarter, the work force levels
were virtually flat, as merger-related reductions and attrition were offset by
new hiring for train and engine crews.

Depreciation expense grew $6 million or 2% to $246 million due to the Railroad's
extensive capital program in 1997 and 1998.  The Railroad spent over $2 billion
on capital projects in 1997 and anticipates spending $2.2 billion in 1998 of
which $400 million will be merger-related. 

Materials and Supplies costs for the quarter were down $16 million (11%) from
first quarter 1997.  More rebuild projects (which are capitalized) and less 
maintenance projects in 1998 plus the absence of large program maintenance
projects on freight cars in 199 accounted for the quarter-over-quarter decline.

Fuel and Utilities expenses were down $73 million or 26% from 1997, reflecting
lower fuel prices and congestion-related volume declines. A reduction in 
gross-ton 

13

miles quarter-over-quarter (down 10%) generated volume-related fuel savings
of $24 million versus 1997.  Prices were down 11.7 cents per gallon to 63.6
cents, saving $33 million.  The fuel consumption rate of 1.416 gallons per
thousand gross-ton miles improved 3% from last year's 1.457 (largely slower
locomotive speeds), lowering UP's fuel costs by another $7 million.
  
Rent Expense was up 13% ($42 million) versus 1997, as system congestion (which
hindered car cycle times) combined with unfavorable rates (strong market demand
for equipment) to drive up equipment rent costs.

Other Costs increased $33 million (9%) from 1997, reflecting costs for customer
claims and service recovery caused by the system congestion offset by merger
consolidation benefits (trackage rights reimbursements and contract pricing
savings) and cost savings from administrative cost control efforts.

Operating income declined $300 million (85%) to $53 million in 1998, reflecting
the effect of continued congestion and service issues.  Interest expense
increased $12 million to $134 million, principally resulting from higher debt
levels.  Other income, net, declined $18 million due to the absence of the Duck
Creek North branch line sale in 1997.  Income taxes decreased $128 million to a
benefit of $31 million, primarily reflecting lower income before income taxes.

Trucking - During 1997, Overnite continued to benefit from several strategic
initiatives, implemented in 1996, aimed at better matching its operations to the
current trucking industry business environment. Actions taken included workforce
reductions, service center consolidations, centralization of the linehaul
management process and pricing initiatives targeting Overnite's lowest margin
customers.  Primarily as a result of these initiatives, Overnite increased its
net income from $1 million in the first quarter of 1997 to $10 million net 
income in the first quarter of 1998 (excluding goodwill amortization of 
$5 million in each period).

Overnite's operating revenues increased  $43 million (20%) to $257 million, as
a 13% increase in volumes combined with a 7% increase in average 
prices--resulting from Overnite's pricing initiatives.  Higher volumes 
reflected a 15% increase in LTL tonnage, somewhat offset by a 14% decrease 
in truckload volumes. 

Operating expenses increased $30 million (14%) to $244 million. Salaries, wages
and employee benefit costs increased $19 million (14%) to $154 million,
reflecting workforce increases, higher volumes, and wage and benefit inflation. 
An increased use of intermodal rail service and contract linehaul carriers 
caused an $8 million increase in purchased services.  Fuel costs declined 
$.5 million, as a 15% decrease in fuel prices was offset by a 10% 
volume-related increase in fuel consumption. Higher volumes caused increases 
in materials and supplies ($2 million). Overnite generated operating income 
of $13 million for the first quarter of 1998, compared to breaking even for 
the comparable period a year ago (excluding goodwill amortization of $5 
million in each period). Overnite's operating ratio (including goodwill 
amortization) improved to 96.8 in 1998 from 102.2 in 1997.

Corporate Services and Other Operations - Expenses related to Corporate Services
and Other Operations (consisting of corporate expenses, third-party interest
charges, intercompany interest allocations, other income and income taxes 
related to the Corporation's holding company operations, and the results of 
other operating units) decreased $3 million to $35 million in 1998.  This 
decrease

14

largely reflects lower Corporate interest and insurance costs.  Other operating
units generated an operating loss of $3 million in the first quarter of 1998,
compared to the same results during the comparable period in 1997. 

      CHANGES IN FINANCIAL CONDITION AND OTHER DEVELOPMENTS

FINANCIAL CONDITION - During the first three months of 1998, cash from 
operations was a negative $117 million, compared to $251 million in 1997.  
This $368 million decrease primarily reflects lower earnings and timing of 
working capital requirements due to the continuing congestion as well as 
merger consolidation spending.

Cash used in investing activities was $553 million in the first quarter of 1998
compared to $434 million in 1997. This increase primarily reflects higher 
capital spending by the railroad, incuding merger related spending.

Cash provided by equity and financing activities was $771 million in the first
quarter of 1998 compared to $86 million in 1997.  Cash provided in 1998
principally reflects higher net borrowings ($1.76 billion), offset by debt 
repaid of $888 million. The ratio of debt to total capital employed increased 
to 53.6% at March 31, 1998, compared to 50.9% at December 31, 1997 and 50.7% 
at March 31, 1997.  This change resulted from the increase in debt levels 
from year-end 1996.  

In February 1998, the Corporation announced that its Board of Directors had 
taken certain steps, including authorizing the issuance of equity-related 
securities and the reduction of the first quarter 1998 common stock dividend 
to 20 cents per share from 43 cents per share in the previous quarter, to 
ensure that the Railroad maintains the financial flexibility critical to 
funding its 1998 capital program.  On April 1, 1998, the Corporation 
completed a private placement of $1.5 billion of 6-1/4% preferred securities 
of Union Pacific Capital Trust, a statutory business trust sponsored by the 
Corporation, which securities are convertible into common stock of the 
Corporation at an initial conversion price of $68.90 (the Convertible 
Preferred Securities). Proceeds from the sale of the Convertible  Preferred 
Securities were used for repayment of borrowings.  (See "Part II.  OTHER 
INFORMATION; Item 2. Changes in Securities and Use of Proceeds.")

The Convertible Preferred Securities will be presented as a separate line item
in the consolidated balance sheet for the second quarter of 1998 between
liabilities and equity and appropriate disclosures will be included in the 
notes to the financial statements.  For financial reporting purposes, the 
Corporation will record distributions payable on the Convertible Preferred 
Securities as a financing charge to earnings in the statement of consolidated 
income.  

                             OTHER MATTERS

Accounting Pronouncements - In June 1997, the Financial Accounting Standards
Board (FASB) issued Statement No. 130, "Reporting Comprehensive Income" 
(FAS 130) that is effective for all periods in 1998.  UPC has adopted the 
provisions of FAS 130 effective January 1, 1998.  The components of 
comprehensive income include, among other things, changes in the market value 
of futures contracts which qualify for hedge accounting and a net loss 
recognized as an additional pension liability but not yet recognized as net 
periodic pension cost. The impact of adopting FAS 130 for the three months 
ended March 31, 1998 was approximately $2 million. 
             
15

Also in June 1997, the FASB issued Statement No. 131, "Disclosures about 
Segments of an Enterprise and Related Information," effective December 31, 
1998. The Corporation currently complies with most provisions of this 
Statement, and any incremental disclosure required by that Statement is 
expected to be minimal. 

In February 1998, the FASB issued Statement No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits" (FAS 132) effective in 1998. 
FAS 132 revises and standardizes disclosures required by FAS 87, 88, and 106.
Restatement of the retirement plan footnote will be required for all earlier
periods presented in comparative financial statements at December 31, 1998.

Commitments and Contingencies -There are various claims and lawsuits pending
against the Corporation and certain of its subsidiaries.  Certain customers 
have submitted claims or stated their intention to submit claims to the 
Railroad for damages related to the delay of shipments as a result of 
congestion problems, and certain customers have filed lawsuits seeking relief 
related to such delays.  The nature of the damages sought by claimants 
includes, but is not limited to, contractual liquidated damages, freight loss 
or damage, alternative transportation charges, additional production costs, 
lost business and lost profits.  In addition, some customers have asserted 
that they have the right to cancel contracts as a result of alleged material 
breaches of such contracts by the Railroad. The Corporation expects additional 
claims by shippers. UPC will continue to evaluate the adequacy of its 
reserves for claims and expects to add to such reserves as appropriate.

The Railroad is also party to certain regulatory proceedings before the Surface
Transportation Board of the U.S. Department of Transportation (STB).  One
proceeding pertains to rail service problems in the western United States. As an
outgrowth of this proceeding, the STB has issued an emergency service order
imposing certain temporary measures on the Railroad designed, among other 
things, to reduce congestion on the Railroad's lines in the Houston, Texas 
area.  A second proceeding, initiated under the STB's continuing oversight 
jurisdiction with respect to the Corporation's acquisition of Southern Pacific 
and consolidation of Southern Pacific with UPRR (and separate from the STB's
regularly scheduled annual proceeding to review the implementation of the merger
and the effectiveness of the conditions that the STB imposed on it), is for the
purpose of considering the justification for and advisability of any proposals
for new remedial conditions to the merger as they pertain to service in the
Houston, Texas/Gulf Coast area, including proposals by Kansas City Southern
Railway Company (KCS), Texas Mexican Railway Company (Tex Mex) and the Greater
Houston Partnership (GHP) for the forced transfer by the Railroad to Tex Mex of
certain lines and facilities in and around Houston, the establishment of a
"neutral" switching operation in the greater Houston area, and the permanent
adoption of provisions in the STB's emergency service order that expanded Tex
Mex's right to handle traffic to and from Houston.  In addition, the STB has
initiated various inquiries and formal rulemaking proceedings regarding certain
elements of rail regulation following two days of hearings by the STB at the
request of two members of Congress and in response to shippers' expressions of
concern regarding railroad service quality, railroad rates and allegedly
inadequate regulatory remedies.  If the Railroad is unsuccessful in eliminating
the remaining congestion and service problems affecting its system, the STB 
could issue a new emergency service order upon the expiration of the current 
one and order the Railroad to take additional actions including, among other 
things, further diversions of traffic or the transfer of certain rail lines 
or other

16

facilities to other railroads.  In addition, there can be no assurance that the
proposals advanced by parties in the remedial conditions proceeding or the
proceedings initiated in response to the rail regulation hearings will not be
approved in some form.  Should the STB or Congress take aggressive action in the
rail regulation proceedings (e.g., by making purportedly competition-enhancing
changes in rate and route regulation and "access" provisions), the adverse 
effect on the Railroad and other rail carriers could be material.

The Corporation is also subject to Federal, state and local environmental laws
and regulations, and is currently participating in the investigation and
remediation of numerous sites.  Where the remediation costs can be reasonably
determined, and where such remediation is probable, the Corporation has recorded
a liability.  In addition, the Corporation and its subsidiaries periodically
enter into financial and other commitments and have retained certain contingent
liabilities upon the disposition of formerly-owned operations.
 
In addition, UPC and certain of its officers and directors are currently
defendants in two purported class action securities lawsuits, and certain 
current and former directors of the Corporation are currently defendants in 
a purported derivative action filed on behalf of the Corporation.  The class 
action suits allege, among other things, that management failed to disclose 
properly the Railroad's service and safety problems and thereby issued 
materially false and misleading statements concerning the merger with SP and 
the safe, efficient operation of its rail network.  The derivative action 
alleges, among other things, that the named current and former directors 
breached their fiduciary duties to the Corporation by approving the mergers 
of SP and Chicago and North Western Transportation Company into the 
Corporation without ensuring that the Corporation or the Railroad had 
adequate systems in place to effectively integrate those companies into the 
operations of the Corporation and the Railroad.  Because both the size of the 
class and the damages are uncertain, UPC and the Railroad are unable at this
time to determine the potential liability, if any, which might arise from 
these lawsuits.  Management believes that these claims are without merit and 
intends to defend them vigorously.

It is not possible at this time for the Corporation to fully determine 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 
or guarantees will have a material adverse effect on its consolidated 
financial condition.

                      CAUTIONARY INFORMATION

Certain information included in this report contains, and other materials filed
or to be filed by the Corporation 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) contain or will contain, 
forward-looking statements within the meaning of Section 27A of the Securities 
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 
1934, as amended. Such forward-looking information may include, without 
limitation, statements that the Corporation does not expect that lawsuits, 
environmental costs, commitments, contingent liabilities, labor negotiations, 
claims or other matters will have a material adverse effect on its consolidated 
financial condition, results of operations or liquidity and other similar 
expressions concerning matters that are

17

not historical facts, and projections or predictions as to the Corporation's
financial or operational results.  Such forward-looking information is or will
be based on information available at that time, and is or will be subject to
risks and uncertainties that could cause actual results to differ materially 
from those expressed in the statements.  Important factors that could cause 
such differences include, but are not limited to whether the Railroad is fully
successful in overcoming its congestion-related problems and implementing the
Plan and other operational and financial initiatives, industry competition and
regulatory developments, natural events such as floods and earthquakes, the
effects of adverse general economic conditions, fuel prices, labor strikes, the
impact of year 2000 systems problems and the ultimate outcome of shipper claims
related to congestion, environmental investigations or proceedings and other
types of claims and litigation.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Disclosure concerning market risk-sensitive instruments is set forth in Note 3
to the Financial Statements, pages 6-7 herein.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

SOUTHERN PACIFIC ACQUISITION:  As previously reported in the Corporation's 1997
Annual Report on Form 10-K, various appeals have been filed with respect to the
STB's August 12, 1996 decision (the Decision) approving the acquisition of
control of Southern Pacific by the Corporation. All of the appeals have been
consolidated in the U.S. Court of Appeals for the District of Columbia Circuit.
Oral argument in the case is scheduled for September 11, 1998.  Various
appellants have withdrawn their appeals, leaving only Burlington Northern and
Santa Fe Railway Company (BNSF), the Western Coal Traffic League (WCTL),
Enterprise Products Company and the City of Reno, Nevada with appeals pending. 
On April 10, 1998, WCTL filed a motion to vacate and remand the Decision in 
light of a proceeding the STB commenced on March 31, 1998, under its continuing
oversight jurisdiction over the merger, to consider whether any additional
conditions are justified and should be imposed to deal with service problems in
the Houston/Gulf Coast area.  The STB, the Corporation and BNSF have opposed 
this motion.  The Corporation believes that it is unlikely that the disposition 
of the remaining appeals will have a material adverse impact on its consolidated
financial condition or its results of operations.

RAIL SERVICE PROCEEDINGS AND RELATED MATTERS:   As previously reported in the
Corporation's 1997 Annual Report on Form 10-K, the Railroad is currently subject
to an emergency service order issued by the STB on October 31, 1997, as an
outgrowth of a proceeding initiated by the STB on October 2, 1997 to investigate
rail service problems in the western United States.  The original service order,
which, among other things, imposed several temporary measures designed to reduce
congestion on the Railroad's lines in the Houston area, was modified and 
extended by a supplemental order dated December 4, 1997.  On February 25, 
1998, the STB, citing the gravity of the Railroad's congestion problems and 
characterizing them as "not yet close to being resolved," further modified 
the emergency service order and extended it until August 2, 1998, the 
maximum period allowable under

18

the law for the original order.  

On March 31, 1998, the STB initiated a proceeding under its continuing oversight
jurisdiction with respect to the merger of the Corporation and Southern Pacific
to consider proposals for new remedial conditions to the merger as they pertain
to service in the Houston, Texas/Gulf Coast area.  This proceeding, which is
separate from the STB's regularly scheduled annual proceeding to review the
implementation of the merger and the effectiveness of the conditions that the 
STB imposed on it, was initiated in response to submissions by Texas Mexican 
Railway Company (Tex Mex), Kansas City Southern Railway Company (KCS) and the 
Greater Houston Partnership (GHP), proposing that the Railroad be directed to 
transfer certain lines and facilities in the Gulf Coast region to other rail 
carriers, that a "neutral" switching operation be established in the greater 
Houston area and that provisions in the STB's emergency service order that 
expanded Tex Mex's right to handle traffic to and from Houston be adopted 
permanently.  The STB's decision announcing the proceeding established a 
procedural schedule for the submission of evidence, replies and rebuttal.

If continued implementation of the Plan and other operational and financial
initiatives undertaken by the Corporation ultimately prove unsuccessful in
alleviating the remaining congestion and related service problems experienced by
the Railroad, the STB could issue a new emergency service order upon the
expiration of the current one and order the Railroad to take additional actions
including, among other things, further diversions of traffic or the transfer of
certain of the Railroad's rail lines or other facilities to other railroads. In
addition, there can be no assurance that the proposals advanced by Tex Mex, KCS,
GHP or other parties in the remedial conditions proceeding will not be approved
in some form. 

RAIL ACCESS AND COMPETITION: Acting pursuant to requests from two members of
Congress and responding to shippers' concerns about railroad service quality,
railroad rates and allegedly inadequate regulatory remedies, the STB on April 
17, 1998, following two days of hearings, issued a decision opening inquiries 
into certain elements of rail regulation. The STB noted that no parties to the
hearings had shown how aggressive remedies designed to produce lower rates and
enhance competition would permit the industry to cover system costs and support
reinvestment.  Nevertheless, it (i) directed a panel of disinterested economic
experts to recommend appropriate standards to measure railroad revenue adequacy,
which is used to determine whether rates are lawful (this portion of the 
decision was subsequently modified to permit, as an alternative, discussions 
of this issue between railroad and shipper representatives); (ii) initiated 
a rulemaking proceeding to consider revisions to "competitive access" 
regulations in order to address quality of service issues; (iii) ordered 
interested parties to identify modifications to regulations governing access 
on non-service-related grounds; (iv) began a proceeding to consider 
eliminating product and geographic competition as factors to be considered in 
deciding whether a railroad has market dominance over rail traffic; 
(v) ordered large and small railroads to negotiate arrangements that would 
increase the role of short-line rail carriers; and (vi) directed the railroads 
to establish "formalized dialogue" immediately with large and small shippers 
and rail labor.  Should the STB or Congress take aggressive action, (e.g., by 
making purportedly competition-enhancing changes in rate and route regulation 
and "access" provisions), the adverse effect on the Railroad and other 
railroads could be material.

LABOR MATTERS:  As previously reported in the Corporation's 1997 Annual Report

19

on Form 10-K, the General Counsel of the National Labor Relations Board ("NLRB")
is seeking a bargaining order remedy in 15 cases involving Overnite where a
Teamsters local union lost a representation election.  These cases are pending
before the NLRB.  By decision dated April 10, 1998, an administrative law judge
has recommended that bargaining orders be issued in four locations.  Overnite
plans to appeal the decision to the NLRB.  The remaining cases must yet be
scheduled for trial.  A bargaining order remedy would require Overnite to
recognize and bargain with the union as if the union had won instead of lost the
election and would be warranted only if the following findings are made and
upheld: (1) the petitioning Teamsters local had obtained valid authorization
cards from a majority of the employees in an appropriate unit; (2) Overnite
committed serious unfair labor practices; and (3) those unfair labor practices
would preclude the holding of a fair election despite the application of less
drastic remedies.  Under NLRB case law, a bargaining order remedy would attach
retrospectively to the date when, after a union with a showing of majority
support demanded recognition, Overnite embarked on an unlawful course of 
conduct. In the event of such a retroactive effective bargaining order, 
Overnite would face back pay liability for losses in employee earnings due to 
unilateral changes in terms or conditions of employment, such as layoffs, 
reduced hours of work or less remunerative work assignments.  In addition, if 
a bargaining order remedy was granted in all contested cases, the increased 
Teamsters' representation could force Overnite to alter its posture in 
collective bargaining, increase its costs and alter its operating methods. 
Overnite believes it has substantial defenses to these cases and intends to 
continue to aggressively defend them.

ENVIRONMENTAL MATTERS: The Railroad has been named as a defendant in a civil
action brought by the California Department of Fish and Game, Office of Spill
Prevention and Response on April 10, 1998.  The complaint alleges violations of
California Fish and Game Code Section 5650, California Business and Professions
Code Section 17200, Civil Code Sections 3479 and 3480, and damage to the waters
of California for which the Department of Fish and Game allege trusteeship. The
complaint results from derailments and alleged releases of diesel fuel oil 
during 1995 in the Feather River Canyon in Butte County, California. The 
Complaint seeks penalties, exemplary damages, natural resource damages and 
unspecified injunctive relief.

The Railroad has been named as a defendant in a criminal misdemeanor action
brought by the State of California in the Municipal Court of Placer County,
California on February 24, 1998.  The complaint alleges a violation of 
California Fish and Game Code Section 5650 as a result of a diesel fuel spill 
in Norden, California in February 1997.  In addition, the California 
Department of Fish and Game is seeking penalties, monitoring costs and 
natural resource damages under state water statutes, and the U.S. 
Environmental Protection Agency (EPA) is seeking penalties for violation of 
the Clean Water Act in connection with the same incident.

The Railroad and Clean Harbors, a waste disposal firm, are the subject of a
criminal investigation by the EPA and the Federal Bureau of Investigation.  Tank
cars containing hazardous waste billed to Clean Harbors' transload facility in
Sterling, Colorado were held in the Railroad's Sterling, Colorado rail yard for
periods longer than ten days prior to placement in Clean Harbor's facility,
allegedly in violation of hazardous waste regulations.  A finding of violation
could result in significant criminal or civil penalties.

20

Item 2.  Changes in Securities and Use of Proceeds.

On April 1, 1998, Union Pacific Capital Trust (the "Trust"), a statutory 
business trust formed under the laws of the State of Delaware and a 
subsidiary of the Corporation, closed a private placement of $1.5 billion in 
aggregate amount of 6-1/4% Convertible Preferred Securities (the "Convertible 
Preferred Securities"), with a liquidation amount of $50 per each of the 
Convertible Preferred Securities.  Each of the Convertible Preferred Securities 
is convertible, at the option of the holder thereof, into shares of UPC's 
common stock, par value $2.50 per share (the "UPC Common Stock"), at the rate 
of 0.7257 shares of UPC Common Stock for each of the Convertible Preferred 
Securities, equivalent to a conversion price of $68.90 per share of UPC 
Common Stock, subject to adjustment under certain circumstances.  The 
Corporation owns all of the common securities of the Trust.

The initial purchasers of the Convertible Preferred Securities (the "Initial
Purchasers") were Credit Suisse First Boston Corporation; Merrill Lynch, Pierce,
Fenner & Smith Incorporated; Smith Barney Inc.; and Schroder & Co. Inc.  The
Initial Purchasers resold 29,909,600 of the Convertible Preferred Securities 
(the "QIB Securities") to qualified institutional buyers in reliance on 
Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), 
and 32,900 of the Convertible Preferred Securities (the "IAI Securities") to 
a limited number of institutional "accredited investors," as such term is 
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.  
The QIB Securities were sold for their liquidation amount of $50 each or 
$1,495,480,000 in the aggregate, and the IAI Securities were sold for their
liquidation amount of $50 each or $1,645,000 in the aggregate.  In connection 
with the purchase of the QIB Securities and the IAI Securities, the 
Corporation paid the Initial Purchasers a commission equal to 2.25% of the 
purchase price of each of the QIB Securities and the IAI Securities, or 
$33,648,300 and $37,012.50, respectively, in the aggregate.  In addition to 
sales of the QIB and IAI Securities, the initial purchasers also sold 57,500  
of the Convertible Preferred Securities outside the United States to certain 
persons other than U.S. persons in reliance on Regulation S under the 
Securities Act, as previously reported in the Corporation's Current Report on 
Form 8K, filed on April 20, 1998.
 
Item 4.  Submission of Matters to a Vote of Security Holders.

   (a) The annual meeting of shareholders of the Corporation was held on April
       17, 1998.

   (c) At the Annual Meeting, the Corporation's shareholders voted for the 
       election of Philip F. Anschutz (206,359,406 shares in favor;11,044,914 
       shares withheld), Robert P. Bauman (206,581,925 shares in favor; 
       10,822,395 shares withheld), Richard K. Davidson (205,913,479 shares in 
       favor; 11,490,841 shares withheld), Spencer F. Eccles (206,604,706 
       shares in favor; 10,799,614 shares withheld), Elbridge T. Gerry, Jr. 
       (206,601,620 shares in favor; 10,802,700 shares withheld), William H. 
       Gray, III (206,536,320 shares in favor; 10,868,000 shares withheld), 
       Judith Richards Hope (206,553,752 shares in favor; 10,850,568 shares 
       withheld), Richard J. Mahoney (206,564,904 shares in favor; 10,839,416 
       shares withheld), John R. Meyer (206,563,462 shares in favor; 10,840,858
       shares withheld), and Richard D. Simmons (206,586,280 shares in favor;
       10,818,040 shares withheld) as directors of the Corporation.  In 
       
21       

       addition, the Corporation's shareholders voted to ratify the appointment
       of Deloitte & Touche LLP as independent auditors of the Corporation  
       (215,978,952 shares in favor; 696,527 shares against;  728,841 shares  
       withheld).

Item 6.  Exhibits and Reports on Form 8-K

   (a) Exhibits

       3   - By-Laws of Union Pacific Corporation, as amended effective as
             of April 30, 1998.
   
       4.1 - Revised Articles of Incorporation of Union Pacific Corporation, 
             as amended through April 25, 1996 (incorporated by reference to
             Exhibit 3 to Union Pacific Corporation's Quarterly Report on     
             Form 10-Q for the quarter ended March 31, 1996).

       4.2 - By-Laws of Union Pacific Corporation (filed as Exhibit 3).

       4.3 - Certificate of Trust of Union Pacific Capital Trust
             (incorporated by reference to Exhibit 4.3 to Union Pacific
             Corporation's Registration Statement on Form S-3, Registration
             No. 333-51617).
   
       4.4 - Amended and Restated Declaration of Trust of Union Pacific
             Capital Trust, dated as of April 1, 1998, among Union Pacific
             Corporation, as Sponsor, The Bank of New York, as Property
             Trustee, The Bank of New York (Delaware), as Delaware Trustee,
             and Gary M. Stuart, L. White Matthews, III and Joseph E.
             O'Connor, Jr., as Regular Trustees (incorporated by reference
             to Exhibit 4.4 to Union Pacific Corporation's Registration
             Statement on Form S-3, Registration No. 333-51617).

       4.5 - Indenture for the Convertible Junior Subordinated Debentures
             due 2028, dated as of April 1, 1998, among Union Pacific
             Corporation, as Issuer, and The Bank of New York, as Indenture
             Trustee (incorporated by reference to Exhibit 4.5 to Union
             Pacific Corporation's Registration Statement on Form S-3,
             Registration No.333-51617).
        
       4.6 - Form of Union Pacific Corporation Stock Certificate.

       4.7 - Form of Union Pacific Capital Trust 6-1/4% Convertible
             Preferred Securities (included in Exhibit 4.4).

       4.8 - Form of Union Pacific Corporation Convertible Junior
             Subordinated Debentures due 2028 (included in Exhibit 4.5).

       4.9 - Preferred Securities Guarantee, dated as of April 1, 1998,
             between Union Pacific Corporation, as Guarantor, and The Bank
             of New York, as Guarantee Trustee (incorporated by reference to
             Exhibit 4.9 to Union Pacific Corporation's Registration
             Statement on Form S-3, Registration No.333-51617).

22

       4.10 -Common Securities Guarantee, dated as of April 1, 1998, by
             Union Pacific Corporation, as Guarantor (incorporated by
             reference to Exhibit 4.10 to Union Pacific Corporation's
             Registration Statement on Form S-3, Registration No.333-51617).

       11 -  Computation of earnings per share.

       12 -  Computation of ratio of earnings to fixed charges.

       27 -  Financial data schedule.
  
       27.1 Financial Data Schedule (restated for the year ended December 31, 
            1996).

       27.2 Financial Data Schedule (restated for the year ended December 31, 
            1995).

       27.3 Financial Data Schedule (restated for the quarters ended March 31, 
            June 30, and September 30, 1997).

       27.4 Financial Data Schedule (restated for the quarters ended March 31, 
            June 30, and September 30, 1996).

(b)  Reports on Form 8-K

On January 23, 1998, UPC filed a Current Report on Form 8-K regarding the fourth
quarter 1997 earnings of the Corporation.

On February 26, 1998, UPC filed a Current Report on Form 8-K describing first
quarter 1998 results and current actions taken by Union Pacific Corporation's
Board of Directors.

On March 20, 1998, UPC filed a Current Report on Form 8-K regarding the
Corporation's plan to privately place $1 billion of preferred securities of a
statutory business trust sponsored by UPC, convertible into Common Stock of the
Corporation, to provide financial flexibility in funding its 1998 capital
improvement programs and restoring quality service to its customers.

On March 25, 1998, UPC filed a Current Report on Form 8-K announcing that Union
Pacific Railroad will embargo most southbound traffic destined for the Laredo,
TX gateway, effective Saturday, March 28, 1998, to clear the backlog of cars
waiting to cross into Mexico.
                
On March 31, 1998, UPC filed a Current Report on Form 8-K regarding the STB's
commencement of a proceeding under its continuing oversight jurisdiction of the
UPC/Southern Pacific rail merger to consider proposals for new remedial
conditions to the merger as they pertain to service in the Houston, Texas/Gulf
Coast area.

23 SIGNITURE PAGE

                                 SIGNATURE

   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:  May 13, 1998            

                               UNION PACIFIC CORPORATION

                               (Registrant)

                               /S/ Joseph E. O'Connor, Jr.
                               ---------------------------
                               Joseph E. O'Connor, Jr.

                               Vice President and Controller
                               (chief accounting officer 
                                and duly authorized officer)                

 INDEX

                        UNION PACIFIC CORPORATION

                              EXHIBIT INDEX

Exhibit No.                     Description              

  3    By-Laws of Union Pacific Corporation, as amended effective as of  April
       30, 1998.
  
  4.1  Revised Articles of Incorporation of Union Pacific Corporation, as
       amended through April 25, 1996 (incorporated by reference to Exhibit 3
       to Union Pacific Corporation's Quarterly Report on Form 10-Q for the
       quarter ended March 31, 1996).

  4.2  By-Laws of Union Pacific Corporation (filed as Exhibit 3).

  4.3  Certificate of Trust of Union Pacific Capital Trust (incorporated by
       reference to Exhibit 4.3 to Union Pacific Corporation's Registration
       Statement on Form S-3, Registration No. 333-51617).
  
  4.4  Amended and Restated Declaration of Trust of Union Pacific Capital 
       Trust, dated as of April 1, 1998, among Union Pacific Corporation, as
       Sponsor, The Bank of New York, as Property Trustee, The Bank of New
       York (Delaware), as Delaware Trustee, and Gary M. Stuart, L. White
       Matthews, III and Joseph E. O' Connor, Jr., as Regular Trustees
       (incorporated by reference to Exhibit 4.4 to Union Pacific 
       Corporation's Registration Statement on Form S-3, Registration No. 
       333-51617).

  4.5  Indenture for the Convertible Junior Subordinated Debentures due 2028,
       dated as of April 1, 1998, among Union Pacific Corporation, as Issuer,
       and The Bank of New York, as Indenture Trustee (incorporated by
       reference to Exhibit 4.5 to Union Pacific Corporation's Registration
       Statement on Form S-3, Registration No.333-51617).
        
  4.6  Form of Union Pacific Corporation Stock Certificate.

  4.7  Form of Union Pacific Capital Trust 6-1/4% Convertible Preferred
       Securities (included in Exhibit 4.4).

  4.8  Form of Union Pacific Corporation Convertible Junior Subordinated
       Debentures due 2028 (included in Exhibit 4.5).

  4.9  Preferred Securities Guarantee, dated as of April 1, 1998, between 
       Union Pacific Corporation, as Guarantor, and The Bank of New York, as
       Guarantee Trustee (incorporated by reference to Exhibit 4.9 to Union
       Pacific Corporation's Registration Statement on Form S-3, Registration
       No.333-51617).

  4.10 Common Securities Guarantee, dated as of April 1, 1998, by Union
       Pacific Corporation, as Guarantor (incorporated by reference to Exhibit
       4.10 to Union Pacific Corporation's Registration Statement On Form S-3,
       Registration No.333-51617).

  11   Computation of Earnings Per Share.           

  12   Computation of Ratio of Earnings to Fixed Charges.

  27   Financial Data Schedule.

  27.1 Financial Data Schedule (restated for the year ended December 31, 1996).

  27.2 Financial Data Schedule (restated for the year ended December 31, 1995).

  27.3 Financial Data Schedule (restated for the quarters ended March 31, June
       30, and September 30, 1997).

  27.4 Financial Data Schedule (restated for the quarters ended March 31, June 
       30, and September 30, 1996).

_________________________________________________________________________

                             BY-LAWS

                                OF

                    UNION PACIFIC CORPORATION

            As Amended Effective as of April 30, 1998

_________________________________________________________________________
________________________________________________________________________

                              BY-LAWS

                                OF

                    UNION PACIFIC CORPORATION

           (AS AMENDED EFFECTIVE AS OF APRIL 30, 1998)

                            ARTICLE I

                      STOCKHOLDERS MEETINGS

    SECTION 1.  Annual meetings of the stockholders of this Company shall be
held in Salt Lake City, Utah.  Special meetings of the stockholders of this
Company may be held at such place or places as shall be ordered by the Board of
Directors or Executive Committee, but, unless otherwise ordered, such meetings
shall be held in Salt Lake City, Utah.

    SECTION 2.  Annual meetings of the stockholders, for the purpose of
electing directors and transacting any other business, shall be held at such 
time as shall be ordered by the Board of Directors or Executive Committee, but, 
unless otherwise ordered, shall be held at 8:30 a.m. on the third Friday of 
April in each year.

    SECTION 3.  A special meeting of the stockholders may be called by the
Board of Directors, the Executive Committee, or by any other person who, at such
time, is authorized by the Utah Revised Business Corporation Act (the "Act") to
call a special meeting of stockholders.  A request by a stockholder for a 
special meeting must be accompanied by a statement of purposes which includes 
at least the information set out in clauses (i) through (vi) of Section 10(e) 
of Article I of these By-Laws.  The objects of a special meeting shall be 
stated in the order therefor, and the business transacted shall be confined 
to such objects.

    SECTION 4.  Notice of all meetings of the stockholders shall be given,
either personally or by mail, not less than ten nor more than sixty days prior
thereto.  The notice of all special meetings shall state the objects thereof. 
The failure to give notice of an annual meeting, or any irregularity in the
notice, shall not affect the validity of such annual meeting or of any
proceedings thereat. Any stockholder may consent in writing to the holding of a
special meeting without notice.  A stockholder's attendance at a meeting: (i)
waives objection to lack of notice or defective notice of the meeting, unless 
the stockholder at the beginning of the meeting objects to holding the meeting 
or transacting business at the meeting because of lack of notice or defective
notice; and (ii) waives objection to consideration of a particular matter at 
the meeting that is not within the purpose or purposes described in the meeting
notice, unless the stockholder objects to considering the matter when it is
presented.

    SECTION 5.  The Board of Directors or the Executive Committee may fix in
advance a day and hour not more than seventy days preceding any annual or 
special meeting of stockholders or action of stockholders as the time for the
determination of stockholders entitled to vote at such meeting or to take such
action. Stockholders of record at the time so fixed by the Board of Directors 
or the Executive Committee and only such stockholders shall be entitled to 
vote at such meeting. Each share of stock shall entitle such record holder 
thereof to one vote, in person or by proxy in writing.

     SECTION 6. The Chairman of the Board, and in his absence the Chief
Executive Officer, and in their absence the President, and in their absence one
of the Vice Presidents, shall call meetings of the stockholders to order and act
as chairman of such meetings. In the absence of all these officers, the Board of
Directors may appoint a chairman of the meeting to act in such event; but if the
Board shall not make such appointment, then, in the absence of all of these
officers, any stockholder or proxy of any stockholder may call the meeting to
order, and a chairman shall be elected.

     SECTION 7.  The Secretary of the Company shall act as secretary at all
meetings of the stockholders; but the Board of Directors or Executive Committee
may designate an Assistant Secretary for that purpose before the meeting, and if
no such designation shall have been made, then the presiding officer at the
meeting may appoint any person to act as secretary of the meeting.

     SECTION 8. At each meeting of the stockholders the polls shall be opened
and closed and the ballots and proxies shall be received and taken charge of by
two inspectors. Such inspectors shall be appointed before the meeting by the
Board of Directors or by the Executive Committee, and if no such appointment
shall have been made, then by the presiding officer at the meeting; and if for
any reason any of the inspectors previously appointed shall fail to attend, or
refuse or be unable to serve, then inspectors, in place of any so failing to
attend or refusing or unable to serve, shall be appointed by the presiding
officer at the meeting. Such inspectors need not be stockholders.

     SECTION 9. Stockholders may take action on a matter at a meeting only if
a quorum exists with respect to that matter. Unless the articles of 
incorporation or the Act provide otherwise, a majority of the votes entitled 
to be cast on the matter, represented in person or by proxy, constitutes a
quorum for action on that matter. If, however, such quorum shall not be 
present or represented at any meeting of the stockholders, the stockholders 
entitled to vote thereat, present in person or represented by proxy, shall 
have power to adjourn the meeting from time to time, without notice other 
than announcement at the meeting, until a quorum shall be present or 
represented. Once a share is represented for any purpose at a meeting, it is 
deemed present for quorum purposes for the remainder of the meeting and for 
any adjournment of that meeting unless a new record date is or must be set for 
that adjourned meeting.  If a quorum exists, action on a matter, other than 
the election of directors, by stockholders is approved if the votes cast 
favoring the action exceed the votes cast opposing the action, unless
the articles of incorporation or the Act require a greater number of affirmative
votes.  Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.

    SECTION 10.  (a) At any annual meeting of stockholders, only such business
shall be conducted as shall have been brought before the meeting (i) by or at 
the direction of the Board of Directors or the Executive Committee or (ii) by 
any stockholder who complies with the procedures set forth in this Section 10.

               (b) No business may be transacted at any annual meeting of
stockholders, other than business that is either (i) specified in the notice of
meeting (or any supplement thereto) given pursuant to Section 4 of Article I of
these By-Laws, (ii) otherwise properly brought before such meeting of
stockholders by or at the direction of the Board of Directors or (iii) otherwise
properly brought before such meeting by any stockholder (A) who is a stockholder
of record on the date of the giving of the notice by the stockholder provided 
for in this Section 10 and on the record date for the determination of 
stockholders entitled to vote at such annual meeting of stockholders and 
(B) who complies with the notice procedures set forth in this Section 10.

               (c) No business may be transacted at any special meeting of
stockholders, other than business that is specified in the notice of meeting 
(or any supplement thereto) given pursuant to Section 4 of Article I of these 
By-Laws.

               (d) In addition to any other applicable requirements, for
business to be properly brought before a meeting of stockholders by a 
stockholder pursuant to clause (b) of this Section 10 such stockholder must 
have given timely notice thereof in proper written form to the Secretary of 
the Company.  To be timely, a stockholder's notice to the Secretary of the 
Company pursuant to clause (b) of this Section 10 must be delivered to or 
mailed and received at the principal executive offices of the Company not less 
than sixty (60) days nor more than ninety (90) days prior to the anniversary 
date of the immediately preceding annual meeting of stockholders; provided, 
however, that in the event that the annual meeting of stockholders is called 
for a date that is not within thirty (30) days before or after such anniversary 
date, notice by the stockholder in order to be timely must be so received not 
later than the close of business on the tenth (10th) day following the day on 
which notice of the date of the annual meeting of stockholders was mailed or 
public disclosure of the date of the meeting of stockholders was made, 
whichever first occurs.

               (e)  To be in proper written form, a stockholder's notice to
the Secretary of the Company pursuant to clause (b) of this Section 10 must set
forth as to each matter such stockholder proposes to bring before the annual
meeting of stockholders (i) a brief description of the business desired to be
brought before the meeting of stockholders and the reasons for conducting such
business at such meeting of stockholders, (ii) the name and record address of
such stockholder, (iii) the class or series and number of shares of capital 
stock of the Company which are owned beneficially or of record by such 
stockholder as of the record date for the meeting (if such date shall then 
have been made publicly available and shall have occurred) and as of the date 
of such notice, (iv) a description of all arrangements or understandings 
between such stockholder and any other person or persons (including their 
names) in connection with the proposal of such business by such stockholder 
and any material interest of such stockholder in such business, (v) any other 
information which would be required to be disclosed in a proxy statement or 
other filings required to be made in connection with the solicitation of 
proxies for the proposal pursuant to Section 14 of the Securities Exchange Act 
of 1934 (the "Exchange Act"), and the rules and regulations promulgated 
thereunder if such stockholder were engaged in such a solicitation (other 
than a solicitation described in Rules 14a-2(a) or 14a-2(b) promulgated under 
the Exchange Act), and (vi) a representation that such stockholder intends to 
appear in person or by proxy at the meeting of stockholders to bring such 
business before the meeting.

               (f)  No business shall be conducted at the annual meeting of
stockholders except business brought before the meeting of stockholders in
accordance with the procedures set forth in this Section 10, provided, however,
that, once business has been properly brought before the meeting of stockholders
in accordance with such procedures, nothing in this Section 10 shall be deemed
to preclude discussion by any stockholder of any such business.

               (g)  If the chairman of a meeting of stockholders determines
that business was not properly brought before a meeting of stockholders, the
chairman shall declare to the meeting that the business was not properly brought
before the meeting and such business shall not be transacted.

    SECTION 11. (a) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors of the
Company.  Nominations of persons for election to the Board of Directors may be
made at any annual meeting of stockholders, or at any special meeting of
stockholders called for the purpose of electing directors, (i) by or at the
direction of the Board of Directors or the Executive Committee or (ii) by any
stockholder of the Company (A) who is a stockholder of record on the date of the
giving of the notice provided for in this Section 11 and on the record date for
the determination of stockholders entitled to vote at such meeting and (B) who
complies with the notice procedures set forth in this Section 11.

               (b)  In addition to any other applicable requirements for a
nomination to be made by a stockholder pursuant to clause (a) of this 
Section 11, such stockholder must have given timely notice thereof in proper 
written form to the Secretary of the Company.

               (c)  To be timely, a stockholder's notice to the Secretary of
the Company pursuant to clause (a) of this Section 11 must be delivered to or
mailed and received at the principal executive offices of the Company (i) in the
case of an annual meeting of stockholders, not less than sixty (60) days nor 
more than ninety (90) days prior to the anniversary date of the immediately 
preceding annual meeting of stockholders, provided, however, that in the event 
that the annual meeting of stockholders is called for a date that is not 
within thirty (30) days before or after such anniversary date, notice by the 
stockholder in order to be timely must be so received not later than the 
close of business on the tenth (10th) day following the day on which notice 
of the date of the annual meeting of stockholders was mailed or public 
disclosure of the date of the annual meeting was made, whichever first occurs, 
and (ii) in the case of a special meeting of stockholders called for the 
purpose of electing directors, not later than the close of business on the 
tenth (10th) day following the day on which notice of the date of the special 
meeting of stockholders was mailed or public disclosure of the date of the 
special meeting of stockholders was made, whichever first occurs.

               (d)  To be in proper written form, a stockholder's notice to
the Secretary of the Company pursuant to clause (a) of this Section 11 must set
forth (i) as to each person whom the stockholder proposes to nominate for
election as a director (A) the name, age, business address and residence address
of the person, (B) the principal occupation or employment of the person, (C) the
class or series and number of shares of capital stock of the Company which are
owned beneficially or of record by the person as of the record date for the
meeting (if such date shall then have been made publicly available and shall 
have occurred) and as of the date of such notice and (D) any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Exchange Act,
and the rules and regulations promulgated thereunder; and (ii) as to the
stockholder giving the notice (A) the name and record address of such
stockholder, (B) the class or series and number of shares of capital stock of 
the Company which are owned beneficially or of record by such stockholder as 
of the record date for the meeting (if such date shall then have been made 
publicly available and shall have occurred) and as of the date of such notice, 
(C) a description of all arrangements or understandings between such 
stockholder and each proposed nominee and any other person or persons 
(including their names) pursuant to which the nominations are to be made by 
such stockholder, (D) a representation that such stockholder intends to 
appear in person or by proxy at the meeting to nominate the persons named in 
its notice and (E) any other information relating to such stockholder that 
would be required to be disclosed in a proxy statement or other filings 
required to be made in connection with solicitations of proxies for election 
of directors pursuant to Section 14 of the Exchange Act and the rules and 
regulations promulgated thereunder (other than a solicitation described in 
Rules 14a-2(a) or 14a-2(b) promulgated under the Exchange Act).  Such notice 
must be accompanied by a written consent of each proposed nominee to being 
named as a nominee and to serve as a director if elected.

               (e)  No person shall be eligible for election as a director
of the Company unless nominated in accordance with the procedures set forth in
this Section 11.  If the chairman of the meeting determines that a nomination 
was not made in accordance with the foregoing procedures, the chairman shall 
declare to the meeting that the nomination was defective and such defective 
nomination shall be disregarded.

    SECTION 12.  If and to the extent authorized by the Board in connection
with a particular meeting, stockholders may participate in a meeting of
stockholders, and such meetings may be conducted through the use of, any means
of telecommunication permitted under the Act.

                             ARTICLE II

                        BOARD OF DIRECTORS

    SECTION 1.  All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Board of Directors, which shall consist of fourteen
members.  Vacancies and newly created directorships resulting from any increase
in the authorized number of directors may be filled by a vote of the Board and,
if the directors remaining in office consist of fewer than a quorum of the 
Board, a majority of the directors then in office, though less than a quorum, 
may fill the vacancy.  A director elected to fill a vacancy shall be elected 
for the unexpired term of his predecessor in office.  Any director appointed 
by the Board of Directors to fill a directorship caused by an increase in the 
number of directors shall serve until the next annual meeting or a special 
meeting of the stockholders called for the purpose of electing directors.

    SECTION 2.  Regular meetings of the Board of Directors shall be held at
8:30 a.m. on such day in such months as the Board shall from time to time
designate, and no further notice of such regular meetings shall be required. 
Special meetings shall be held whenever called by order of the Chairman or the
Executive Committee or any five members of the Board.  Notice of Special 
meetings shall be given, at least one day prior thereto, by personal service 
of written notice upon the directors or by delivering the same at, or 
transmitting the same by first class mail, facsimile transmission, telephone 
or other electronic means to, their respective residences or offices.  Any 
director may consent in writing to the holding of a special meeting without 
notice, and the attendance or participation of any director at a special 
meeting shall constitute a waiver by him of call and notice thereof and a 
consent to the holding of said meeting and the transaction of any corporate 
business thereat, unless the director at the beginning of the meeting, or 
promptly upon the director's arrival, objects to holding the meeting or 
transacting business thereat because of lack of notice or defective notice, 
and does not thereafter vote for or assent to the action taken at the meeting.  
Meetings of the Board of Directors may be held at such place or places as 
shall be ordered by the Executive Committee or by a majority of the directors 
in office, but unless otherwise ordered, all meetings of the Board of 
Directors shall be held at the principal executive offices of the Company in
Bethlehem, Pennsylvania.

    SECTION 3.  A majority of the number of directors prescribed by Article II,
Section 1 shall constitute a quorum at all meetings of the Board.  If a quorum
be not present at any meeting, a majority of the directors present may adjourn
the meeting until a later day or hour.

    SECTION 4. Each director, other than active employees of the Company, or
of any subsidiary of the Company, shall be paid an annual retainer in an amount
equal to $60,000, a portion of which may be required to be deferred as 
determined by the Board of Directors, and each such director who shall serve 
as the Chairman or a Co-Chairman of a Committee of the Board shall receive an 
additional annual retainer of $6,000, each retainer payable quarterly at the 
end of the quarter, except that directors who attend fewer than 75% of the 
Board and Committee meetings on which they serve will be paid 75% of the 
annual retainer, plus a reasonable allowance for transportation and other 
expenses incurred by such director in going to any meeting of the Board of 
Directors, or of any Committee of the Board, and returning to such director's 
place of residence.

                            ARTICLE III

                       EXECUTIVE COMMITTEE

    SECTION 1.  There shall be an Executive Committee consisting of such number
of directors as shall be elected thereto by the vote of the majority of the
directors then in office, whose terms of office shall continue during the
pleasure of the Board, and in addition the Chairman of the Board, the Chief
Executive Officer, the Chairman of the Executive Committee and the President, 
ex officio. The Executive Committee shall, when the Board of Directors is not 
in session, have all the powers of the Board of Directors to manage and direct 
all the business and affairs of the Company in all cases in which specific 
directions shall not have been given by the Board of Directors.

    SECTION 2.  Meetings of the Executive Committee may be called at any time
by the Chairman of the Board or a majority of the members of the Committee, to
convene at such time and place as may be designated.  The rules regarding notice
of meetings of the Board set forth in Section 2 of Article II of these By-Laws
shall apply to meetings of the Executive Committee.

    SECTION 3.  A majority of the members of the Committee shall constitute a
quorum.  If a quorum be not present at any meeting, the member or members of the
Committee present may adjourn the meeting until a later day or hour.

                             ARTICLE IV

                       OFFICERS AND AGENTS

    SECTION 1.  There may be elected by the Board of Directors from its members
a Chairman of the Board, a Chief Executive Officer, a President, a Chief
Operating Officer, one or more Vice Chairmen of the Board, and a Chairman of the
Executive Committee, and there may also be elected by the Board of Directors an
Executive Vice President-Finance, a Senior Vice President-Human Resources, a 
Vice President-Taxes, a General Counsel, a Controller, a Secretary, a 
Treasurer and such other Executive Vice Presidents, Senior Vice Presidents and 
Vice Presidents as the Board shall determine, and there may also be appointed 
by the Board of Directors or Executive Committee such Assistant Vice 
Presidents, Assistant Secretaries, Assistant Treasurers, Assistant Controllers, 
Associate General Counsels, Assistant General Counsels, General Tax Counsels, 
Associate General Tax Counsels and other officers and agents as the Board of
Directors or Executive Committee shall from time to time determine.

    SECTION 2.  The Chairman of the Board shall preside, when present, at
meetings of the Board of Directors and at meetings of the Executive Committee 
and shall perform such other duties and possess such powers as may be 
prescribed or conferred by the Board of Directors or the Chief Executive 
Officer.

    SECTION 3.  The Chief Executive Officer shall have general supervision of
all departments and offices of the Company and of the interest of the Company in
all companies controlled by it. He shall preside, in the absence of the Chairman
of the Board, at meetings of the Board of Directors and at meetings of the
Executive Committee.

    SECTION 4.  The President shall preside, in the absence of the Chairman of
the Board, at meetings of the Board of Directors and the Executive Committee 
and shall perform such duties and possess such powers as may be prescribed or
conferred by the Board of Directors or the Chief Executive Officer.

    SECTION 5.  The Chief Operating Officer shall have day to day operating
responsibilities for the affairs of the Company, reporting to the Chief 
Executive Officer, and shall perform such duties as may be prescribed or 
conferred by the Board of Directors or the Chief Executive Officer.

    SECTION 6.  The Chairman of the Executive Committee shall preside, in the
absence of the Chairman of the Board and the President, at meetings of the Board
of Directors and the Executive Committee and shall perform such duties and
possess such powers as may be prescribed or conferred by the Board of Directors,
the Executive Committee or the Chief Executive Officer.
    
    SECTION 7.  The Vice Chairmen of the Board shall perform such duties and
possess such powers as may be prescribed or conferred by the Board of Directors
or the Chief Executive Officer. 

    SECTION 8.  The Executive Vice Presidents and Senior Vice Presidents shall
perform such duties as may be prescribed or conferred by the Chief Executive
Officer.

    SECTION 9.  The Executive Vice President-Finance shall have the direction
and management of the financial affairs, investments, strategic planning and
corporate development of the Company and of the offices in charge of the
Controller, the Treasurer and the Vice President-Taxes, and shall perform such
other duties as may be prescribed or conferred by the Chief Executive Officer.

    SECTION 10.  The Senior Vice President-Human Resources shall have the
direction and management of the human resources functions of the Company, and
shall perform such other duties as may be prescribed or conferred by the Chief
Executive Officer.

    SECTION 11.  The General Counsel shall have the direction and management
of all legal business of the Company except as otherwise provided in Sections 12
and 19 of this ARTICLE IV, shall perform such duties respecting legal matters as
shall be assigned to him by the Chief Executive Officer, and shall perform such
other duties as may be prescribed or conferred by the Chief Executive Officer.

    SECTION 12.  The Vice President-Taxes shall, under the control of the
Executive Vice President-Finance, have charge of all aspects of Federal, 
foreign, state and local taxes, and shall perform such other duties as may be 
assigned by the Executive Vice President-Finance.

    SECTION 13.  The other Vice Presidents elected and Assistant Vice
Presidents appointed from time to time shall perform such duties and possess 
such powers as may be prescribed or conferred by the Board of Directors or 
the Chief Executive Officer.

    SECTION 14.  Except as otherwise provided herein or directed by the Board
of Directors, the Controller shall have immediate charge of the general books,
accounts and statistics of the Company and shall be the custodian of all
vouchers, drafts, invoices and other evidences of payment and all bonds, 
interest coupons and other evidences of indebtedness which shall have been 
canceled.  He is authorized to approve for payment by the Treasurer vouchers, 
payrolls, drafts or other accounts. He shall be furnished by the Assistant 
Controllers of the Company periodically or specially as requested by him with 
the approval of and in form prescribed by the Executive Vice President-Finance, 
statements of operating revenues and expenses and estimates thereof and of 
expenditures and estimates on all other accounts; and copies of all statistical 
data that may be compiled in regular course and also all other information in 
reference to the financial affairs and operations of the Company and of any 
subsidiary company that may be required by the Executive Vice President-Finance 
or the Board of Directors.  He shall submit for each regular meeting of the 
Board of Directors, and, at such other times as may be required by said Board 
or the Executive Vice President-Finance, statements of operating results, 
of cash resources and requirements and of appropriations for Capital 
Expenditures, and shall perform such other duties as the Executive Vice 
President-Finance may from time to time direct.

    The Assistant Controllers shall exercise such of the powers and perform
such of the duties of the Controller with respect to accounting and approving 
or authorizing payments as shall be assigned to them by the Controller.

    SECTION 15.  The Secretary shall attend all meetings of the stockholders,
the Board of Directors and the Executive Committee, and keep a record of all
their proceedings.  He shall procure and keep in his files copies of the 
minutes of all meetings of the stockholders, boards of directors and executive 
committees of all companies a majority of whose capital stock is owned by 
this Company.  He shall be the custodian of the seal of the Company.  He 
shall have power to affix the seal of the Company to instruments, the 
execution of which is authorized by these By-Laws or by action of the Board 
of Directors or Executive Committee, and to attest the same.  He shall have 
supervision of the issuance, transfer and registration of the capital stock 
and debt securities of the Company.  He shall perform such other duties as 
may be assigned to him by the Board of Directors or the Chief Executive 
Officer.

    The Assistant Secretaries shall have power to affix the seal of the Company
to instruments, the execution of which is authorized by these By-Laws or by
action of the Board of Directors or Executive Committee, and to attest the same,
and shall exercise such of the other powers and perform such of the other duties
of the Secretary as shall be assigned to them by the Secretary.

    SECTION 16.  Except as otherwise provided herein or directed by the Board
of Directors, the Treasurer shall be the custodian of all moneys, stocks, bonds,
notes and other securities of the Company.  He is authorized to receive and
receipt for stocks, bonds, notes and other securities belonging to the Company
or which are received for its account.  All stocks, bonds, notes and other
securities in the custody of the Treasurer shall be held in the safe deposit
vaults of the Company or in one or more depositories selected by the Treasurer
or other officer authorized by the Board of Directors, in each case subject to
access thereto as shall from time to time be authorized or required by the Board
of Directors, the Chief Executive Officer, or the Treasurer.  Stocks, bonds,
notes and other securities shall be deposited in the safe deposit vaults or
depositories, or withdrawn from them, only by persons and pursuant to procedures
as shall be determined by the Board of Directors, the Chief Executive Officer or
the Treasurer.  The Treasurer is authorized and empowered to receive and collect
all moneys due to the Company and to receipt therefor.  All moneys received by
the Treasurer shall be deposited to the credit of the Company in such
depositories as shall be designated by the Board of Directors, the Chief
Executive Officer, the Treasurer or such other officers as may be authorized by
the Board of Directors; and the Treasurer or other officer designated by the
Treasurer may endorse for deposit therein all checks, drafts, or vouchers drawn
to the order of the Company or payable to it.  He is also authorized to draw
checks against any funds to the credit of the Company in any of its 
depositories.  All such checks shall be signed by such persons, either by 
manual or facsimile signature as shall be authorized by the Board of 
Directors, and countersigned if required by the Board of Directors.  The 
Treasurer is authorized to make disbursements in settlement of vouchers, 
payrolls, drafts or other accounts, when approved for payment by the 
Controller, or such other person as shall be authorized by the Board of 
Directors, the Chief Executive Officer or these By-Laws; for payments which 
have been otherwise ordered or provided for by the Board of Directors or the 
Chief Executive Officer; for interest on bonds and dividends on stock when 
due and payable; for vouchers, pay checks, drafts and other accounts properly 
certified to by the duly authorized officers of the Company; and for vouchers, 
pay checks, drafts and other accounts approved by the officers duly authorized 
to approve for payment of any company which this Company controls through the 
ownership of stock or otherwise, as may be designated in writing from
time to time by the Chief Executive Officer to the Treasurer. He shall cause to
be kept in his office true and full accounts of all receipts and disbursements
of his office.  He shall also perform such other duties as shall be assigned to
him by the Executive Vice President-Finance.

    The Assistant Treasurers may exercise all powers of the Treasurer herein
conferred in respect of the receipt of moneys and securities, endorsement for
deposit and signature of checks.

    SECTION 17.  The Associate General Counsels and Assistant General Counsels
shall perform such duties respecting legal matters as shall be assigned to them
by the General Counsel.

    SECTION 18.  The General Tax Counsels shall be responsible for all 
tax-related legal advice (including federal tax planning and research, 
litigation and legislation; tax aspects of strategic, operational and 
financing transactions; and ERISA/Benefits tax matters), and shall perform 
such other duties as shall be assigned to them by the Vice President-Taxes.

    SECTION 19.  The Associate General Tax Counsels shall perform such duties
as shall be assigned to them by the Vice President-Taxes or the General Tax
Counsels.
    
    SECTION 20.  To the extent that a separate division shall be created within
the Company, the Chief Executive Officer shall be authorized to appoint 
officers of such division and any such officers shall perform such duties and 
possess such powers as are prescribed and conferred by the Chief Executive 
Officer.

                            ARTICLE V

               SUPERVISION, REMOVAL AND SALARIES OF
                      OFFICERS AND EMPLOYEES

    SECTION 1.  Any officer or employee elected or appointed by the Board of
Directors may be removed as such at any time by the affirmative vote of a
majority of the directors then in office, with or without cause.  Any other 
officer or employee of the Company may be removed at any time by vote of the 
Board of Directors or of the Executive Committee or by the officer supervising 
such officer or employee, with or without cause.

    SECTION 2.  All officers, agents and employees of the Company, in the
exercise of the powers conferred and the performance of the duties imposed upon
them, by these By-Laws or otherwise, shall at all times be subject to the
direction, supervision and control of the Board of Directors or the Executive
Committee.

    SECTION 3.  No office or position shall be created and no person shall be
employed at a salary of more than $300,000 per annum, and no salary shall be
increased to an amount in excess of $300,000 per annum, without the approval of
the Board of Directors or Executive Committee.

    SECTION 4.  The Board of Directors may from time to time vest general
authority in the Chairman of the Board, the Chief Executive Officer, the
President, or the Head of any department or office of the Company, or any such
other officer of the Company as any of the foregoing shall designate, for the
sole determination of disposition of any matter which otherwise should be
required to be considered by the Board of Directors or the Executive Committee
under the provisions of this Article.

                             ARTICLE VI

                    CONTRACTS AND EXPENDITURES

    SECTION 1.  All capital expenditures, leases and property dispositions must
be authorized by the Board of Directors or Executive Committee, except that
general or specific authority with regard to such matters may be delegated to
such officers of the Company as the Board of Directors may from time to time
direct.

    SECTION 2.  Expenditures chargeable to operating expenses may be made by
or under the direction of the Head of the department or office of the Company in
which they are required, without explicit or further authority from the Board of
Directors or Executive Committee, subject to direction, restriction or
prohibition by the Chief Executive Officer.

    SECTION 3.  No contract shall be made without the approval of the Board of
Directors or Executive Committee, except as authorized by the Board of Directors
or these By-Laws.

    SECTION 4.  Contracts for work, labor and services and materials and
supplies, the expenditures for which will be chargeable to operating expenses,
may be made in the name and on behalf of the Company by the Head of the
department or office of the Company concerned, or by such officer as he shall
designate, without further authority.

    SECTION 5.  All written contracts and agreements to which the Company may
become a party shall be approved as to form by or under the direction of counsel
for the Company.

    SECTION 6.  The Chief Executive Officer, the Chairman of the Board, the
President, the Heads of the departments and offices of the Company and the Vice
Presidents shall severally have the power to execute on behalf of the Company 
any deed, bond, indenture, certificate, note, contract or other instrument 
authorized or approved by, or pursuant to authority granted by, the Board of 
Directors or the Executive Committee, and to cause the corporate seal to be 
thereto affixed and attested by the Secretary or an Assistant Secretary.

    SECTION 7.  The Board of Directors may from time to time vest general or
specific authority in such officers of the Company as the Board of Directors
shall designate for the sole determination of disposition of any matter which
otherwise would be required to be considered by the Board of Directors or the
Executive Committee under the provisions of this Article.

    SECTION 8. For purposes of this Article VI, any references to "officers
of the Company" shall include officers of any division of the Company and
references to the "Head of the department or office of the Company" shall 
include the Head of any division of the Company or any department or office 
within such a division.

                            
                            
                            ARTICLE VII

           ISSUE AND CANCELLATION OF STOCK CERTIFICATES

    SECTION 1.  The Board of Directors shall provide for the issue, transfer,
and registration of the capital stock of the Company in the City and State of 
New York, and in any other locality which it may designate, and shall appoint 
the necessary officers, transfer agents, and registrars of transfers for that
purpose.

    SECTION 2.  Until otherwise provided by the Board of Directors, stock
certificates shall be signed by the Chief Executive Officer or the President or
a Vice President, and also by the Secretary or an Assistant Secretary thereunto
authorized by the Board of Directors or by the Executive Committee.

    SECTION 3.  The registrar of transfers shall in every case be a trust
company to be appointed by the Board of Directors, in accordance with the
requirements of the New York Stock Exchange, and such registration shall be
performed in accordance with the rules and regulations of said Exchange.

                            
                            
                            ARTICLE VIII

                               FINAL

    SECTION 1.  The Company shall indemnify to the full extent permitted by law
any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person is or was a director, officer or employee of the
Company or serves or served at the request of the Company any other enterprise
as a director, officer, fiduciary or employee.  The indemnification provided in
this section shall include the right to receive payment in advance of any final
disposition of any expenses incurred by any such person in connection with any
such action, suit or proceeding, consistent with the provisions of then
applicable law.  For purposes of this By-Law, the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Company" shall include service as a
director, officer or employee of the Company which imposes duties on, or 
involves services by, such director, officer or employee with respect to an 
employee benefit plan, its participants or beneficiaries; any excise taxes 
assessed on a person with respect to an employee benefit plan shall be deemed 
to be indemnifiable expenses; and action by a person with respect to an employee
benefit plan in good faith which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the corporation.  This Section 1
shall not apply to any action, suit or proceeding pending or threatened on the
date of adoption hereof provided that the right of the Company to indemnify any
person with respect thereto shall not be limited hereby.

    SECTION 2.  Any indemnification under Section 1 of this Article VIII
(unless ordered by a court) shall be made by the Company only as authorized in
the specific case upon a determination that indemnification of the director,
officer or employee is proper in the circumstances because such person has met
the applicable standard of conduct required by law.  Such determination shall 
be made by the persons authorized by the Act.

    SECTION 3.  Notwithstanding Sections 1 and 2 of this Article VIII, except
for proceedings to enforce indemnification, the Company shall not be obligated
to indemnify any director, officer `or employee in connection with a proceeding
(or part thereof) initiated by such person unless such proceeding (or part
thereof) was authorized or consented to by the Board of Directors.  The
indemnification and advancement of expenses provided by Section 1 of this 
Article VIII shall not be deemed exclusive of any other rights to which any 
person seeking indemnification may be entitled under any law, agreement, vote 
of stockholders or disinterested directors or otherwise, both as to action in 
such person's official capacity and as to action in another capacity while 
holding such office, and shall continue as to a person who has ceased to be a 
director, officer or employee and shall inure to the benefit of the heirs, 
executors and administrators of such a person.  Any amendment or repeal of 
Section 1 or Section 2 of this ARTICLE VIII or this Section 3 shall not limit 
the right of any person to indemnity with respect to actions taken or omitted 
to be taken by such person prior to such amendment or repeal.

    SECTION 4.  The Common corporate seal is, and, until otherwise ordered by
the Board of Directors, shall be, an impression upon paper or wax, circular in
form, with the words "Union Pacific Corporation" on the outer edge thereof, and
the words and figures "Corporate Seal", "1969", "Utah" in the center thereof.

    SECTION 5.  Except as otherwise provided by the Act, these By-Laws may be
altered, amended or repealed at a meeting of the stockholders by a majority 
vote of those present in person or by proxy or at any meeting of the Board of
Directors by a majority vote of the directors then in office.

 FRONT

                        [FRONT OF CERTIFICATE]

NOT MORE THAN                                                    NOT MORE THAN
100,000 SHARES                                                  100,000 SHARES

                     [Engraving of three figures:
                      a land developer holding blueprints;
                      a railroad laborer holding a rail          
COMMON STOCK          carriage wheel; and a chemist             COMMON STOCK
PAR VALUE $2.50       holding a beaker and test tube]          PAR VALUE $2.50

  NUMBER                                                            SHARES
    LX

                                                                   CUSIP
                               UNION PACIFIC                       907818 10 8
                                CORPORATION                        SEE REVERSE
This Certifies                                                     FOR CERTAIN
that            ORGANIZED UNDER THE LAWS OF THE STATE OF UTAH.     DEFINITIONS

                                                                               
                                  [LOGO]            
           * owns

           FULL PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF

           Union Pacific Corporation transferable on the books of said
           Company by the holder hereof or by duly authorized attorney
           on surrender of this Certificate properly assigned.  This
           Certificate is not valid until counter-signed by the Transfer
           Agent and registered by the Registrar.

                In Witness Whereof the said Company has caused this
           Certificate to be signed by its duly authorized officers.

           Dated

           /s/ Carl von Bernuth                      /s/ Dick Davidson
             ------------------                         --------------
             Secretary                                  Chairman

                               CERTIFICATE OF STOCK

           *COUNTERSIGNED AND REGISTERED:
                               HARRIS Trust and Savings BANK
                                        (CHICAGO)       TRANSFER AGENT
                                                        AND REGISTRAR,

           BY                                           AUTHORIZED SIGNATURE.  

 BACK
           
                             [REVERSE OF CERTIFICATE]
                            UNION PACIFIC CORPORATION

     THE COMPANY WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE
A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE
RIGHTS OF THE SHARES OF EACH CLASS OF STOCK AUTHORIZED TO BE ISSUED BY THE
COMPANY.  ANY SUCH REQUEST MAY BE DIRECTED TO THE TRANSFER AGENT NAMED ON THE
FACE HEREOF.

     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as through they were written out in full
according to applicable laws or regulations:

TEN COM    -    as tenants in common
TEN ENT    -    as tenants by the entireties
JT TEN     -    as joint tenants with rights of survivorship and not as
                tenants in common

UNIF GIFT MIN ACT  - . . . . . . .Custodian. . . . . . . . . . . . 
                        (Cust)                       (Minor)
                       under Uniform Gifts to Minors
                       Act . . . . . . . . . . . . . . . . . . . .
                                             (State)

Additional abbreviations may also be used though not in the above list.

     FOR VALUE RECEIVED, ______________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR                                             *
OTHER IDENTIFYING NUMBER OF ASSIGNEE

- ------------------------------------                                        

______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF 
ASSIGNEE.
______________________________________________________________________________

______________________________________________________________________________

________________________________________________________________________Shares
of the capital stock represented by the within Certificate and do hereby
irrevocably constitute and appoint ___________________________________________

______________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named Company 
with full power of substitution in the premises.

Dated,_________________________

                                                   ---------------------------
______________________________________________________________________________

                     THIS SPACE MUST NOT BE COVERED IN ANY WAY

*NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT 
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.          

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                COMPUTATION OF EARNINGS PER SHARE

             (In Thousands, Except Per Share Amounts)
                           (Unaudited)
                                                          Three Months    
                                                         Ended March 31,
                                                       1998          1997
   
Average number of shares outstanding ..........      245,949       245,489 

Average shares issuable on exercise of stock
  options less shares repurchasable from 
  proceeds.....................................        1,750         2,322 
                                                    --------      --------

Total average number of common and common
  equivalent shares............................      247,699       247,811 
                                                    ========      ======== 

Net Income (Loss)..............................     ($61,989)     $127,811 
                                                    ========      ======== 

Earnings per share:

 Basic:
 Net Income (Loss).............................     $  (0.25)     $   0.52 

 Diluted:
 Net Income (Loss).............................     $  (0.25)     $   0.52 

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

        COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                  (In Thousands, Except Ratios)
                           (Unaudited)

                                                          Three Months        
                                                         Ended March 31,      
                                                     1998           1997   
Earnings:
  Income (loss) from continuing operations.......  $(61,989)      $127,811 

  Undistributed equity earnings..................   (10,086)        (7,854)
                                                   --------       --------
            Total................................   (72,075)       119,957 

Income Taxes.....................................   (43,616)        76,856 
                                                   --------       --------
Fixed Charges:
  Interest expense including amortization of
      debt discount..............................   160,898        149,862 

  Portion of rentals representing an interest
      factor.....................................    43,259         49,297 
                                                   --------       --------
            Total................................   204,157        199,159 
                                                   --------       --------
Earnings available for fixed charges.............  $ 88,466       $395,972 
                                                   ========       ======== 

Fixed Charges -- as above........................  $204,157       $199,159 

Interest capitalized.............................        --             -- 
                                                   --------       --------
            Total fixed charges..................  $204,157       $199,159 
                                                   ========       ======== 

Ratio of earnings to fixed charges (Note 4)......       0.4            2.0 
                                                   ========       ======== 

 5

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                     FINANCIAL DATA SCHEDULE

            For the Three Months Ended March 31, 1998
             (In Millions, Except Per Share Amounts)
                           (Unaudited)

 1,000,000

               3-MOS
            DEC-31-1998
                 MAR-31-1998
                               191 
                           0 
                        589 
                           0 
                          309 
                    1384 
                             31937 
                      5704 
                     29078 
               2808 
                             9258 
                  0
                            0
                             690 
                          7428 
       29078 
                                0 
                    2586 
                                  0 
                       2527 
                      26 
                       0 
                   161 
                      105
                          43 
                   62
                         0 
                        0 
                              0 
                          62
                       0.25
                       0.25

  

 5

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                     FINANCIAL DATA SCHEDULE

            For the Year Ended December 31, 1996
             (In Millions, Except Per Share Amounts)
                           (Restated)

 1,000,000

               12-MOS
            DEC-31-1996
                 DEC-31-1996
                               191 
                           0 
                        507 
                           0 
                          304 
                    1347 
                             30097 
                      5053 
                     27927 
               3056 
                             7900 
                  0
                            0
                             686 
                          7539 
       27927 
                                0 
                    8786 
                                  0 
                       7253 
                     101 
                       0 
                   501 
                     1113
                         380 
                  733
                       171 
                        0 
                              0 
                         904
                       4.17
                       4.14

  

 5

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                     FINANCIAL DATA SCHEDULE

              For the Year Ended December 31, 1995
             (In Millions, Except Per Share Amounts)
                             (Restated)

 1,000,000

               12-MOS
            DEC-31-1995
                 DEC-31-1995
                               230 
                           0 
                       1002 
                           0 
                          238 
                    1679 
                             18748 
                      4643 
                     19446 
               1899 
                             6232 
                  0
                            0
                             581 
                          5783 
       19446 
                                0 
                    7486 
                                  0 
                       6145 
                      99 
                       0 
                   450 
                      933
                         314 
                  619
                       327 
                        0 
                              0 
                         946
                       4.62
                       4.60

  

 5

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                     FINANCIAL DATA SCHEDULE

    For the Quarters Ended March 31, June 30, September 30, 1997
             (In Millions, Except Per Share Amounts)
                      (All Periods Restated)

 1,000,000

               3-MOS            6-MOS          9-MOS
            DEC-31-1997      DEC-31-1997    DEC-31-1997
                 MAR-31-1997      JUN-30-1997    SEP-30-1997
                                94              129            202
                           0                0              0
                        699              802            797
                           0                0              0
                          275              290            295
                    1454             1559           1599
                             30476            31105          30994
                      5230             5474           5375
                     28186            28751          28666
               3109             3223           3304
                             8075             8292           8185
                  0                0              0
                            0                0              0
                             688              689            690
                          7551             7669           7794
       28186            28751          28666
                                0                0              0
                    2810             5693           8518
                                  0                0              0
                       2465             4847           7209
                      28               54             96
                       0                0              0
                   150              296            453
                      205              553            921
                          77              209            337
                  128              344            584
                         0                0              0
                        0                0              0
                              0                0              0
                         128              344            584
                       0.52             1.40           2.38
                       0.52             1.39           2.35

  

 5

        UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                     FINANCIAL DATA SCHEDULE

    For the Quarters Ended March 31, June 30, September 30, 1996
             (In Millions, Except Per Share Amounts)
                       (All Periods Restated)

 1,000,000

               3-MOS            6-MOS          9-MOS
            DEC-31-1996      DEC-31-1996    DEC-31-1996
                 MAR-31-1996      JUN-30-1996    SEP-30-1996
                                79               73            148
                           0                0              0
                       1099             1070           1322
                           0                0              0
                          227              220            292
                    1646             1593           2070
                             19006            19205          29444
                      4746             4866           4970
                     19609            19749          29307
               1974             2014           3393
                             6129             5923           8374
                  0                0              0
                            0                0              0
                             582              582            679
                          5854             6014           7346
       19609            19749          29307
                                0                0              0
                    1968             3980           5976
                                  0                0              0
                       1703             3326           4903
                      28               51             75
                       0                0              0
                   117              231            346
                      138              422            754
                          31              129            250
                  107              293            504
                        49              107            171
                        0                0              0
                              0                0              0
                         156              400            675
                       0.76             1.95           3.25
                       0.76             1.94           3.23