1
                                    FORM 10-Q

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

(Mark One)

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

                For the quarterly period ended September 30, 2000

                                     - OR -

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

     For the transition period from ___________________ to ________________

                          Commission file number 1-6075

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

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

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

                                      68179
                                   (Zip Code)

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

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

YES [X]  NO [ ]

        As of October 31, 2000, there were 247,832,401 shares of the
Registrant's Common Stock outstanding.

   2

                            UNION PACIFIC CORPORATION

                            AND SUBSIDIARY COMPANIES

                                      INDEX

                          PART I. FINANCIAL INFORMATION

                                                                                                Page Number
                                                                                                -----------
                                                                                             
Item 1:  Consolidated Financial Statements:

      STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
         For the Three Months Ended September 30, 2000 and 1999................................      1

      STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
         For the Nine Months Ended September 30, 2000 and 1999.................................      2

      STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
         At September 30, 2000 (Unaudited) and December 31, 1999...............................      3

      STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
         For the Nine Months Ended September 30, 2000 and 1999.................................      4

      STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (Unaudited)
         For the Nine Months Ended September 30, 2000..........................................      5

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)...................................    6-15

Item 2:  Management's Discussion and Analysis of Financial Condition and Results of
           Operations..........................................................................    16-23

Item 3:  Quantitative and Qualitative Disclosures about Market Risk............................     24

                           PART II. OTHER INFORMATION

Item 1:  Legal Proceedings.......................................................................  24-26

Item 6:  Exhibits and Reports on Form 8-K........................................................   27

Signature........................................................................................   28

                                       (i)

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PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Three Months Ended September 30, 2000 and 1999
- --------------------------------------------------------------------------------

                             Millions, Except Per Share and Ratios                         2000        1999
                             -------------------------------------                        ------      ------
                                                                                             
OPERATING REVENUES           Rail, trucking and other (Note 2)....................        $3,070      $2,893
                                                                                          ------      ------
OPERATING EXPENSES           Salaries, wages and employee benefits................         1,058       1,099
                             Equipment and other rents............................           352         341
                             Depreciation ........................................           285         271
                             Fuel and utilities  (Note 5) ........................           344         212
                             Materials and supplies...............................           148         149
                             Casualty costs.......................................            92          82
                             Other costs..........................................           221         224
                                                                                          ------      ------
                             Total................................................         2,500       2,378
                                                                                          ------      ------
INCOME                       Operating Income.....................................           570         515
                             Other income (Note 8)................................            17          24
                             Interest expense.....................................          (181)       (184)
                                                                                          ------      ------
                             Income before Income Taxes...........................           406         355
                             Income taxes.........................................          (150)       (137)
                                                                                          ------      ------
                             Income from Continuing Operations....................           256         218
                             Gain on Disposal of Discontinued Operations,
                                 Net of Income Taxes (Note 4).....................            --          27
                                                                                          ------      ------
                             Net Income...........................................        $  256      $  245
                                                                                          ======      ======
EARNINGS PER SHARE           Basic:
(NOTE 7)                         Income from Continuing Operations................        $ 1.04      $ 0.88
                                 Gain on Disposal of Discontinued Operations......            --        0.11
                                 Net Income.......................................        $ 1.04      $ 0.99
                             Diluted:
                                 Income from Continuing Operations................        $ 1.00      $ 0.86
                                 Gain on Disposal of Discontinued Operations......            --        0.10
                                 Net Income.......................................        $ 1.00      $ 0.96
                                                                                          ------      ------
                             Weighted Average Number of Shares (Basic)............         246.5       246.6
                             Weighted Average Number of Shares (Diluted)..........         269.4       270.1
                                                                                          ------      ------
                             Cash Dividends Per Share.............................        $ 0.20      $ 0.20
                                                                                          ------      ------
                             Ratio of Earnings to Fixed Charges (Note 9)..........           2.7         2.5
                                                                                          ------      ------

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

                                      -1-
   4

- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Nine Months Ended September 30, 2000 and 1999
- --------------------------------------------------------------------------------

                             Millions, Except Per Share and Ratios                          2000       1999
                             -------------------------------------                         ------     ------
                                                                                             
OPERATING REVENUES           Rail, trucking and other (Note 2)                             $8,962     $8,406
                                                                                           ------     ------

OPERATING EXPENSES           Salaries, wages and employee benefits....................      3,163      3,232
                             Equipment and other rents................................      1,000        997
                             Depreciation ............................................        850        809
                             Fuel and utilities  (Note 5) ............................        966        603
                             Materials and supplies...................................        459        439
                             Casualty costs...........................................        270        288
                             Other costs..............................................        690        720
                                                                                           ------     ------
                             Total....................................................      7,398      7,088
                                                                                           ------     ------
INCOME                       Operating Income.........................................      1,564      1,318
                             Other income (Note 8)....................................         61         73
                             Interest expense.........................................       (543)      (554)
                                                                                           ------     ------
                             Income before Income Taxes...............................      1,082        837
                             Income taxes.............................................       (397)      (296)
                                                                                           ------     ------
                             Income from Continuing Operations........................        685        541
                             Gain on Disposal of Discontinued Operations,
                                 Net of Income Taxes (Note 4)........................          --         27
                                                                                           ------     ------
                             Net Income...............................................     $  685     $  568
                                                                                           ======     ======
EARNINGS PER SHARE           Basic:
(NOTE 7)                         Income from Continuing Operations....................     $ 2.78     $ 2.19
                                 Gain on Disposal of Discontinued Operations..........         --       0.11
                                 Net Income...........................................     $ 2.78     $ 2.30
                             Diluted:
                                 Income from Continuing Operations....................     $ 2.71     $ 2.17
                                 Gain on Disposal of Discontinued Operations..........         --       0.10
                                 Net Income...........................................     $ 2.71     $ 2.27
                                                                                           ------     ------
                             Weighted Average Number of Shares (Basic)................      246.4      246.5
                             Weighted Average Number of Shares (Diluted)..............      269.4      269.6
                                                                                           ------     ------
                             Cash Dividends Per Share.................................     $ 0.60     $ 0.60
                                                                                           ======     ======
                             Ratio of Earnings to Fixed Charges (Note 9)..............        2.7        2.2
                                                                                           ======     ======

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

                                      -2-
   5

- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
Union Pacific Corporation and Subsidiary Companies
- --------------------------------------------------------------------------------

                                                                                    (Unaudited)
                           Millions of Dollars                                        Sept.30,   Dec. 31,
                                                                                        2000       1999
                                                                                     ---------   ---------
                                                                                           
ASSETS

Current Assets             Cash and temporary investments.......................      $     55   $     175
                           Accounts receivable (Note 5).........................           645         581
                           Inventories..........................................           333         337
                           Current deferred tax asset...........................           114         111
                           Other current assets.................................            93         110
                                                                                      --------   ---------
                           Total................................................         1,240       1,314
                                                                                      --------   ---------
Investments                Investments in and advances to affiliated companies..           625         657
                           Other investments....................................            97          96
                                                                                      --------   ---------
                           Total................................................           722         753
                                                                                      --------   ---------
Properties                 Cost.................................................        35,319      34,370
                           Accumulated depreciation.............................        (7,174)     (6,851)
                                                                                      --------   ---------
                           Net..................................................        28,145      27,519
                                                                                      --------   ---------
Other                      Other assets.........................................           284         302
                                                                                      --------   ---------
                           Total Assets.........................................      $ 30,391   $  29,888
                                                                                      ========   =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities        Accounts payable.....................................      $    585   $     598
                           Accrued wages and vacation...........................           436         409
                           Accrued casualty costs...............................           391         385
                           Income and other taxes...............................           264         256
                           Dividends and interest...............................           251         290
                           Debt due within one year.............................           210         214
                           Other current liabilities............................           612         733
                                                                                      --------   ---------
                           Total................................................         2,749       2,885
                                                                                      --------   ---------
Other Liabilities and      Debt due after one year (Note 6).....................         8,314       8,426
Stockholders' Equity       Deferred income taxes................................         7,082       6,715
                           Accrued casualty costs...............................           846         934
                           Retiree benefit obligations..........................           796         791
                           Other long-term liabilities..........................           552         636
                           Company-obligated Mandatorily Redeemable
                                Convertible Preferred Securities (Note 6).......         1,500       1,500
                           Common stockholders' equity (Page 5).................         8,552       8,001
                                                                                      --------   ---------
                           Total Liabilities and Stockholders' Equity...........      $ 30,391     $29,888
                                                                                      ========   =========

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

                                      -3-
   6

- --------------------------------------------------------------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Nine Months Ended September 30, 2000 and 1999
- --------------------------------------------------------------------------------

                            Millions of Dollars                                           2000        1999
                            -------------------                                          -------     -------
                                                                                            
OPERATING ACTIVITIES        Net Income..............................................     $   685     $   568
                            Less Income from Discontinued Operations................          --          27
                                                                                         -------     -------
                            Income from Continuing Operations.......................         685         541
                            Non-cash charges to income:
                                Depreciation........................................         850         809
                                Deferred income taxes ..............................         359         399
                                Other - net.........................................        (279)       (383)
                            Changes in current assets and  liabilities..............        (182)        101
                                                                                         -------     -------
                            Cash Provided by Operations.............................       1,433       1,467
                                                                                         -------     -------
INVESTING ACTIVITIES        Capital investments.....................................      (1,403)     (1,350)
                            Other - net.............................................         113          43
                                                                                         -------     -------
                            Cash Used in Investing Activities.......................      (1,290)     (1,307)
                                                                                         -------     -------
EQUITY AND FINANCING        Dividends paid..........................................        (150)       (148)
ACTIVITIES                  Debt repaid.............................................        (651)       (591)
                            Net financings..........................................         370         600
                            Other - net.............................................         168           1
                                                                                         -------     -------
                            Cash Used in Equity and Financing Activities............       (263)       (138)
                                                                                         -------     -------
                            Net Change in Cash and Temporary Investments............       (120)          22
                            Cash and Temporary Investments at Beginning
                                of Period...........................................         175         176
                                                                                         -------     -------
                            Cash and Temporary Investments at End of Period.........     $    55     $   198
                                                                                         -------     -------
CHANGES IN CURRENT          Accounts receivable.....................................     $   (64)    $    17
ASSETS AND LIABILITIES      Inventories.............................................           4           8
                            Other current assets....................................          14         119
                            Accounts payable, accrued wages and vacation............          14          66
                            Debt due within one year................................          (4)         25
                            Other current liabilities...............................        (146)       (134)
                                                                                         -------     -------
                            Total                                                        $  (182)    $   101
                                                                                         -------     -------
                            Supplemental cash flow information Cash paid
                                (received) during the year for:

                                  Interest..........................................     $   588     $   577
                                  Income taxes, net.................................          10        (119)
                                                                                         -------     -------

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

                                      -4-
   7

- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (Unaudited)
Union Pacific Corporation and Subsidiary Companies
For the Nine Months Ended September 30, 2000
- --------------------------------------------------------------------------------

                                                                                              Accumulated
                                                [a]                                  [b]        Other
                                              Common      Paid-in-   Retained     Treasury   Comprehensive
Millions of Dollars                           Shares      Surplus    Earnings       Stock       Income        Total
- -------------------                           -------     --------   --------     --------   -------------   -------
                                                                                           
Balance at December 31, 1999 ............     $   691     $ 4,019     $ 5,053      $(1,756)     $    (6)     $ 8,001
                                              -------     -------     -------      -------      -------      -------
Net Income ..............................          --          --         685           --           --          685
Other Comprehensive Income:
   Foreign Currency Translation .........          --          --          --           --            8            8
                                                                                                             -------
Comprehensive Income ....................          --          --          --           --           --          693
                                                                                                             -------
Conversions, exercises of stock
   options, forfeitures and other .......          --           1          --            5           --            6
Dividends declared ($0.60 per share)  ...          --          --        (148)          --           --         (148)
                                              -------     -------     -------      -------      -------      -------
Balance at September 30, 2000 ...........     $   691     $ 4,020     $ 5,590      $(1,751)     $     2      $ 8,552
                                              =======     =======     =======      =======      =======      =======

[a]  Common stock $2.50 par value; 500,000,000 shares authorized; 276,294,217
     shares issued at beginning of period; 276,321,206 shares issued at end of
     period.

[b]  28,443,521 treasury shares at end of period, at cost.

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

                                      -5-
   8

         UNION PACIFIC CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1.    RESPONSIBILITIES FOR FINANCIAL STATEMENTS - The consolidated financial
      statements are unaudited and reflect all adjustments (consisting only of
      normal and recurring adjustments) that are, in the opinion of management,
      necessary for a fair presentation of the financial position and operating
      results for the interim periods presented. The Statement of Consolidated
      Financial Position at December 31, 1999 is derived from audited financial
      statements. The consolidated financial statements should be read in
      conjunction with the consolidated financial statements and notes thereto
      contained in the Union Pacific Corporation's (the Corporation or UPC)
      Annual Report to Shareholders incorporated by reference in the
      Corporation's Annual Report on Form 10-K for the year ended December 31,
      1999. The results of operations for the three and nine months ended
      September 30, 2000 are not necessarily indicative of the results for the
      entire year ending December 31, 2000.

2.    SEGMENTATION - Union Pacific Corporation consists of one reportable
      segment, rail transportation, and UPC's other product lines (Other
      Operations). The rail segment includes the operations of the Corporation's
      wholly owned subsidiary, Union Pacific Railroad Company (UPRR) and UPRR's
      subsidiaries and rail affiliates (the Railroad). Other Operations include
      the trucking product line (Overnite Transportation Company or Overnite),
      as well as the "other" product lines that include technology,
      self-insurance activities, corporate holding company operations, which
      largely support the Railroad, and all appropriate consolidating entries.

           The following table details reportable financial information for
      UPC's rail transportation segment and Other Operations for the three and
      nine months ended September 30, 2000 and 1999:

                                                            Three Months Ended          Nine Months Ended
                                                           ----------------------     ---------------------
                                                           Sept. 30,    Sept. 30,     Sept. 30,   Sept. 30,
                                                             2000          1999          2000        1999
                                                           ---------    ---------     ---------   ---------
                                                                                       
      Net sales and revenues from external customers[a]:

           Rail..................................          $ 2,773       $ 2,606       $ 8,097     $ 7,576
           Trucking..............................              287           277           839         803
           Other[b]..............................               10            10            26          27
                                                           -------       -------       -------     -------
           Consolidated..........................          $ 3,070       $ 2,893       $ 8,962     $ 8,406
                                                           -------       -------       -------     -------
      Net income (loss):
           Rail..................................          $   274       $   234       $   752     $   589
           Trucking..............................               15             8            30          28
           Other[b]..............................              (33)            3           (97)        (49)
                                                           -------       -------       -------     -------
           Consolidated..........................          $   256       $   245       $   685     $   568
                                                           -------       -------       -------     -------
      Assets:
           Rail..................................          $29,488       $28,864       $29,488     $28,864
           Trucking..............................              911           883           911         883
           Other[b]..............................               (8)          106            (8)        106
                                                           -------       -------       -------     -------
           Consolidated..........................          $30,391       $29,853       $30,391     $29,853
                                                           -------       -------       -------     -------

      [a]   The Corporation does not have significant intercompany sales
            activities.

                                      -6-
   9

       [b] Included in the "Other" product line are the results of the corporate
           holding company; Fenix LLC and associated technology companies;
           Wasatch Insurance Limited, a captive insurance company; and all
           necessary consolidating entries. "Other" assets include intercompany
           liabilities related to trucking.

3.   ACQUISITIONS

     SOUTHERN PACIFIC RAIL CORPORATION (SOUTHERN PACIFIC OR SP) - UPC
     consummated the acquisition of Southern Pacific in September 1996. The
     acquisition of SP was accounted for as a purchase and was fully
     consolidated into UPC's results beginning in October 1996.

     Merger Consolidation Activities - In connection with the acquisition and
     continuing integration of UPRR and Southern Pacific's rail operations, UPC
     is in the process of eliminating 5,200 duplicate positions, which are
     primarily employees involved in activities other than train, engine and
     yard activities. In addition, UPC is relocating 4,700 positions, merging or
     disposing of redundant facilities, and disposing of certain rail lines. The
     Corporation is also canceling uneconomical and duplicative SP contracts.

         To date, UPC has eliminated approximately 3,620 positions and relocated
     approximately 4,510 employees due to merger consolidation activities. UPC
     recognized a $958 million pre-tax liability as part of the SP purchase
     price allocation for costs associated with SP's portion of these
     activities. In addition, the Railroad expects to incur between $10 million
     and $30 million over the remaining merger implementation period in pre-tax,
     acquisition-related costs for severing or relocating UPRR employees,
     disposing of certain UPRR facilities, training and equipment upgrading.
     Earnings for the three months ended September 30, 2000 and 1999 included $4
     million and $13 million after-tax, respectively, and for the nine months
     ended September 30, 2000 and 1999, included $15 million and $30 million,
     after-tax, respectively, for acquisition-related costs for UPRR
     consolidation activities.

         The components of the merger liability as of September 30, 2000 were as
     follows:

                                                                            Original   Cumulative    Current
     Millions of Dollars                                                     Reserve    Activity     Reserve
     -------------------                                                    --------   ----------    -------
                                                                                            
     Labor protection related to legislated and contractual obligations...    $361         $361         $--
     Severance costs......................................................     343          271          72
     Contract cancellation fees and facility and line closure costs.......     145          141           4
     Relocation costs.....................................................     109           95          14
                                                                              ----         ----         ---
     Total................................................................    $958         $868         $90
                                                                              ----         ----         ---

         Merger liability activity reflects cash payments for merger
     consolidation activities and reclassification of contractual obligations
     from merger liabilities to contractual liabilities. In addition, where
     merger implementation has varied from the original merger plan, the
     Corporation has adjusted the merger liability and the fair value allocation
     of SP's purchase price to fixed assets to eliminate the variance. Where the
     merger implementation has caused the Corporation to incur more costs than
     were envisioned in the original merger plan, such costs are charged to
     expense in the period incurred. For the three and nine months ended
     September 30, 2000, the Corporation charged $3 million and $9 million,
     respectively, against the merger liability. The Corporation expects that
     the remaining merger payments will be made over the course of the next 15
     months as labor negotiations are completed and implemented, and related
     merger consolidation activities are finalized.

                                      -7-
   10

     MEXICAN RAILWAY CONCESSION - During 1997, the Corporation's rail
     subsidiary, UPRR, and a consortium of partners were granted a 50-year
     concession to operate the Pacific-North and Chihuahua Pacific lines in
     Mexico and a 25% stake in the Mexico City Terminal Company at a price of
     $525 million. The consortium assumed operational control of both lines in
     1998. In March 1999, UPRR purchased an additional 13% ownership interest
     for $87 million from one of its partners. The Railroad now holds a 26%
     ownership share in the consortium. The investment is accounted for under
     the equity method. The Corporation's portion of the consortium's assets and
     liabilities is translated into U.S. dollars using the exchange rate in
     effect at the balance sheet date. The Corporation's portion of the
     consortium's net income is translated into U.S. dollars at weighted-average
     exchange rates prevailing during the year. The resulting translation
     adjustments are reflected within the stockholders' equity component,
     accumulated other comprehensive income.

4.   DISCONTINUED OPERATIONS

     ADJUSTMENT TO 1994 LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS - Net income
     for the third quarter 1999 included a one-time after-tax gain of $27
     million, net of taxes of $16 million, from the adjustment of a liability
     established in connection with the discontinued operations of a former
     subsidiary.

5.   FINANCIAL INSTRUMENTS

     STRATEGY AND RISK - The Corporation and its subsidiaries use derivative
     financial instruments in limited instances and for other than trading
     purposes to manage risk related to changes in fuel prices and interest
     rates. The Corporation uses swaps, futures and/or forward contracts to
     mitigate the downside risk of adverse price and rate movements; however,
     the use of these instruments also limits future gains from favorable
     movements. The purpose of these programs is to protect the Corporation's
     operating margins and overall profitability from adverse fuel price changes
     or interest rate fluctuations. The Corporation manages its overall exposure
     to fluctuations in interest rates by adjusting the proportion of fixed and
     floating rate debt instruments within its debt portfolio over a given
     period. 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 each as debt
     matures or as incremental borrowings are required. The Corporation also
     obtains additional flexibility in managing interest costs and the interest
     rate mix within its debt portfolio by issuing callable fixed-rate debt
     securities.

     MARKET AND CREDIT RISK - The Corporation addresses market risk related to
     these instruments by selecting instruments whose value fluctuations highly
     correlate with the underlying item being hedged. Credit risk related to
     derivative financial instruments, which is minimal, is managed by requiring
     high credit standards for counterparties and periodic settlements. The
     total credit risk associated with the Corporation's counterparties was $16
     million at September 30, 2000. The Corporation has not been required to
     provide collateral; however, UPC has received collateral relating to its
     hedging activity where the concentration of credit risk was substantial.

     DETERMINATION OF FAIR VALUE - The fair market values of the Corporation's
     derivative financial instrument positions at September 30, 2000 and
     December 31, 1999, detailed below, were determined based upon current fair
     market values as quoted by recognized dealers or developed based upon the
     present value of expected future cash flows discounted at the applicable
     U.S. Treasury rate and swap spread.

                                      -8-
   11

         The following is a summary of the Corporation's derivative financial
     instruments at September 30, 2000 and December 31, 1999:

     Millions                                                                September 30,     December 31,
     Except Percentages and Average Commodity Prices                             2000             1999
     -----------------------------------------------                         -------------     ------------
                                                                                         
     Interest Rate Hedging:
          Amount of debt hedged........................................      $          --     $         54
          Percentage of total debt portfolio...........................                 --                1%
     Rail Fuel Hedging:
          Number of gallons hedged for the remainder of 2000...........                 32              126
          Percentage of forecasted 2000 fuel consumption hedged........                  9%              10%
          Average price of 2000 hedges outstanding (per gallon)[a].....      $        0.40     $       0.40
     Trucking Fuel Hedging:
          Number of gallons hedged for the remainder of 2000...........                  1                5
          Percentage of forecasted 2000 fuel consumption hedged........                  9%              10%
          Average price of 2000 hedges outstanding (per gallon)[a].....      $        0.39     $       0.39
                                                                             -------------     ------------

     [a]Excluding taxes, transportation costs and regional pricing spreads.

         The asset and liability positions of the Corporation's outstanding
     derivative financial instruments at September 30, 2000 and December 31,
     1999 were as follows:

                                                                             September 30,     December 31,
     Millions of Dollars                                                          2000             1999
     -------------------                                                     -------------     -------------
                                                                                         
     Interest Rate Hedging:
          Gross fair market asset position...............................    $          --     $          56
          Gross fair market (liability) position.........................               --                (1)
     Rail Fuel Hedging:
          Gross fair market asset position...............................               16                22
          Gross fair market (liability) position.........................               --                --
     Trucking Fuel Hedging:
          Gross fair market asset position...............................               --                 1
          Gross fair market (liability) position.........................               --                --
                                                                             -------------     -------------
     Total net asset position............................................    $          16     $          78
                                                                             -------------     -------------

         The Corporation's use of derivative financial instruments had the
     following impact on pre-tax income for the three and nine months ended
     September 30, 2000 and 1999:

                                                                           Three Months      Nine Months
                                                                          Ended Sept. 30    Ended Sept.30,
                                                                         ----------------   --------------
     Millions of Dollars                                                 2000       1999     2000     1999
     -------------------                                                 -----      -----   -----     ----
                                                                                         
     Increase in interest expense from interest rate hedging.........    $  --      $  --   $  --     $  1
     Decrease in fuel expense from Rail fuel hedging.................      (15)       (26)    (35)      (7)
     Decrease in fuel expense from Trucking fuel hedging.............       (1)        (1)     (2)      --
                                                                         -----      -----   -----     ----
     (Increase) in pre-tax income....................................    $ (16)     $ (27)  $ (37)    $ (6)
                                                                         -----      -----   -----     ----

     SALE OF RECEIVABLES - The Railroad has sold, on a revolving basis, an
     undivided percentage ownership interest in a designated pool of accounts
     receivable to third parties through a bankruptcy-remote subsidiary

                                      -9-
   12

     (the Subsidiary). The Subsidiary is collateralized by a $66 million note
     from UPRR. The amount of receivables sold fluctuates based upon the
     availability of the designated pool of receivables and is directly affected
     by changing business volumes and credit risks. At September 30, 2000 and
     December 31, 1999, accounts receivable are presented net of $603 million
     and $576 million, respectively, of receivables sold.

6.   DEBT

     CREDIT FACILITIES - On September 30, 2000, the Corporation had $2.0 billion
     in revolving credit facilities of which $1.0 billion expires in 2001, with
     the remaining $1.0 billion expiring in 2005. The facilities, which were
     entered into during March 2000, are designated for general corporate
     purposes and replaced a $2.8 billion facility due to expire in 2001.

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

     SHELF REGISTRATION STATEMENT - Under currently effective shelf registration
     statements, the Corporation may issue, from time to time, any combination
     of debt securities, preferred stock, or warrants for debt securities or
     preferred stock in one or more offerings. At September 30, 2000, the
     Corporation had $600 million remaining for issuance under the shelf
     registration. The Corporation has no immediate plans to issue equity
     securities.

     SIGNIFICANT NEW BORROWINGS - During June 2000, the Corporation issued $250
     million of floating rate debt under its shelf registration statement with a
     maturity date of July 1, 2002. The proceeds from the issuance of this debt
     were used for repayment of debt and other general corporate purposes.
     During September 2000, UPRR entered into capital leases covering new
     locomotives. The related capital lease obligations totaled approximately
     $170 million and are included in the Statements of Consolidated Financial
     Position as debt.

7.   EARNINGS PER SHARE - The following table provides a reconciliation between
     basic and diluted earnings per share for the three and nine months ended
     September 30, 2000 and 1999:

                                      -10-
   13

                                                                      Three Months Ended Sept. 30,
                                                                      ----------------------------
Millions, Except Per Share Amounts                                      2000               1999
- ----------------------------------                                    ---------          ---------
                                                                                   
Income Statement Data:
     Income from continuing operations .......................          $   256          $   218
Income available to common stockholders from continuing
       operations ............................................              256              218
     Gain on disposal of discontinued operations .............               --               27
                                                                        -------          -------
     Net income available to common stockholders - Basic .....              256              245
     Dilutive effect of interest associated with the CPS .....               14               14
                                                                        -------          -------
     Net income available to common stockholders - Diluted ...          $   270          $   259
                                                                        -------          -------
Weighted-Average Number of Shares Outstanding:
     Basic ...................................................            246.5            246.6
     Dilutive effect of common stock equivalents .............             22.9             23.5
                                                                        -------          -------
     Diluted .................................................            269.4            270.1
                                                                        -------          -------
Earnings Per Share:
     Basic:
       Income from continuing operations .....................          $  1.04          $  0.88
       Gain on disposal of discontinued operations ...........               --             0.11
                                                                        -------          -------
     Net income ..............................................          $  1.04          $  0.99
                                                                        -------          -------
     Diluted:
       Income from continuing operations .....................          $  1.00          $  0.86
       Gain on disposal of discontinued operations ...........               --             0.10
                                                                        -------          -------
     Net income ..............................................          $  1.00          $  0.96

                                                                        Nine Months Ended Sept. 30,
                                                                        ---------------------------
Millions, Except Per Share Amounts                                        2000              1999
- ----------------------------------                                      --------          ---------
                                                                                    
Income Statement Data:
     Income from continuing operations .......................          $    685          $    541
Income available to common stockholders from
       continuing operations .................................               685               541
     Gain on disposal of discontinued operations .............                --                27
                                                                        --------          --------
     Net income  available to common stockholders - Basic ....               685               568
     Dilutive effect of interest associated with the CPS .....                44                44
                                                                        --------          --------
     Net income available to common stockholders - Diluted ...          $    729          $    612
                                                                        --------          --------
Weighted-Average Number of Shares Outstanding:
     Basic ...................................................             246.4             246.5
     Dilutive effect of common stock equivalents .............              23.0              23.1
                                                                        --------          --------
     Diluted .................................................             269.4             269.6
                                                                        --------          --------
Earnings Per Share:
     Basic:
       Income from continuing operations .....................          $   2.78          $   2.19
       Gain on disposal of discontinued operations ...........                --              0.11
                                                                        --------          --------
     Net income ..............................................          $   2.78          $   2.30
                                                                        --------          --------
     Diluted:
       Income from continuing operations .....................          $   2.71          $   2.17
       Gain on disposal of discontinued operations ...........                --              0.10
                                                                        --------          --------
     Net income ..............................................          $   2.71          $   2.27
                                                                        --------          --------

                                      -11-
   14

8.   OTHER INCOME - Other income included the following for the three and nine
     months ended September 30, 2000 and 1999:

                                                Three Months Ended Sept. 30,     Nine Months Ended Sept. 30,
                                                ----------------------------     ----------------------------
     Millions of Dollars                          2000                 1999       2000                  1999
     -------------------                        -------              -------     ------                ------
                                                                                           
     Net gain on asset dispositions...          $    15              $   18      $   37                $   36
     Rental income....................               14                  16          43                    41
     Interest income..................                2                   2           7                    10
     Other - net......................              (14)                (12)        (26)                  (14)
                                                -------              -------     ------                ------
     Total............................          $    17              $   24      $   61                $   73
                                                -------              -------     ------                ------

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

10.  COMMITMENTS AND CONTINGENCIES - There are various claims and lawsuits
     pending against the Corporation and certain of its subsidiaries. The
     Corporation is also subject to federal, state and local environmental laws
     and regulations, pursuant to which it is currently participating in the
     investigation and remediation of numerous sites. In addition, the
     Corporation and its subsidiaries also periodically enter into financial and
     other commitments in connection with their businesses, and have retained
     certain contingent liabilities upon the disposition of formerly owned
     operations. It is not possible at this time for the Corporation to
     determine fully the effect of all unasserted claims on its consolidated
     financial condition, results of operations or liquidity; however, to the
     extent possible, where unasserted claims can be estimated and where such
     claims are considered probable, the Corporation has recorded a liability.
     The Corporation does not expect that any known lawsuits, claims,
     environmental costs, commitments or guarantees will have a material adverse
     effect on its consolidated financial condition, results of operations or
     liquidity. Certain potentially significant contingencies relating to the
     Corporation's and its subsidiaries' businesses are detailed below.

     Customer Claims - Some customers have submitted claims for damages related
     to shipments delayed by the Railroad as a result of congestion problems in
     1997 and 1998, and certain customers have filed lawsuits seeking relief
     related to such delays. Some customers also asserted that they have the
     right to cancel contracts as a result of alleged material breaches of such
     contracts by the Railroad. The Corporation accrued amounts for these claims
     in 1997 and 1998. No additional amounts were accrued in 1999 or the nine
     months ended September 30, 2000.

     Environmental Issues - For environmental sites where remediation costs can
     be reasonably determined, and where such remediation is probable, the
     Corporation has recorded a liability.

     Shareholder Lawsuits - UPC and certain of its directors and officers (who
     are also directors of the Railroad) are defendants in two purported class
     actions that have been consolidated into one proceeding (the Class Action).
     The consolidated complaint alleges, among other things, that UPC violated
     the federal securities laws by failing to disclose material facts and
     making materially false and misleading statements concerning the service,
     congestion and safety problems encountered following UPC's acquisition of
     Southern Pacific in 1996. These lawsuits were filed in late 1997 in the
     United States District Court for the Northern District of Texas and seek to
     recover unspecified amounts of damages. Management believes that the
     plaintiffs' claims are without merit and has been defending them
     vigorously. The defendants moved to dismiss this action, and the motion was
     briefed and submitted to the Court for decision in 1998. In February 2000,
     prior

                                      -12-
   15

     to a ruling on the motion, the parties jointly advised the Court that they
     were engaged in discussions concerning the possible settlement of the
     action and asked the Court to defer ruling on the motion to dismiss pending
     the outcome of these discussions. The Court entered an order dated February
     29, 2000 agreeing to such deferral, subject to the motion of either party
     to reactivate the action and the pending motion to dismiss at any time.

         In addition to the Class Action, a purported derivative action was
     filed on behalf of UPC and the Railroad in September 1998 in the District
     Court for Tarrant County, Texas, naming as defendants the then-current and
     certain former directors of UPC and the Railroad and, as nominal
     defendants, UPC and the Railroad (the Derivative Action and together with
     the Class Action, the Actions). The Derivative Action alleges, among other
     things, that the named directors breached their fiduciary duties to UPC and
     the Railroad by approving and implementing the Southern Pacific merger
     without informing themselves of its impact or ensuring that adequate
     controls were put in place and by causing UPC and the Railroad to make
     misrepresentations about the Railroad's service problems to the financial
     markets and regulatory authorities. The individual defendants also believe
     that these claims are without merit and have defended them vigorously.

         In December 1998, UPC's Board of Directors established a special
     litigation committee consisting of three independent directors to review
     the plaintiff's allegations under the Derivative Action to determine
     whether it was in UPC's best interest to pursue them. In February 1999, the
     committee rendered its report, in which it unanimously concluded that
     further prosecution of the Derivative Action on behalf of UPC and the
     Railroad was not in the best interest of either such company. Accordingly,
     UPC and the Railroad filed a motion with the Court to dismiss the
     Derivative Action.

         Prior to any ruling on the motions to dismiss the Class Action and the
     Derivative Action, counsel for UPC, the Railroad and certain officers and
     directors of UPC and the Railroad entered into a Memorandum of
     Understanding (the MOU), dated June 28, 2000, with counsel for the
     plaintiffs in the Class Action and Derivative Action, providing for the
     settlement of the Actions. The MOU provides, among other things, that the
     Class Action will be settled for $34,025,000 in cash (the Settlement
     Payment), the full amount of which will be covered by UPC's insurance
     carriers. Counsel for the plaintiffs in the Class Action will apply to the
     court for any award of their fees and expenses, to be paid out of the
     Settlement Payment. The MOU also provides that, in settlement of the
     Derivative Action, UPC will adopt certain additional procedures which will
     reinforce its continuing effort to ensure both the effective implementation
     of its merger with Southern Pacific and its ongoing commitment to rail
     safety. In addition, in the event of any proposed merger or other
     transaction involving consolidation of UPC and a rail system of greater
     than 1,000 miles in length of road, UPC will commission a study, to be
     completed in advance of any formal application to a U.S., Canadian or
     Mexican federal regulatory board, to analyze prospective safety and
     congestion-related issues. As part of the terms of the Derivative Action
     settlement, counsel for the plaintiffs will receive such fees and expenses
     as may be awarded by the Court, up to an aggregate amount of $975,000. Such
     amount will also be fully covered by UPC's insurance carriers.

         On October 12, 2000, counsel for the respective parties in the Class
     Action and the Derivative Action entered into definitive Stipulations of
     Compromise and Settlement (the Stipulations), providing for the settlement
     of the Actions on the terms described above, subject to court approval. By
     order dated October 17, 2000, the court in which the Class Action is
     pending preliminarily approved the settlement of that Action and scheduled
     a hearing for December 13, 2000, on the question of whether the proposed
     settlement should be approved as fair, reasonable and adequate to the
     members of the class, and the amount of fees, expenses and disbursements to
     be awarded to plaintiffs' counsel. By order dated October 23, 2000, the

                                      -13-
   16

     court in which the Derivative Action is pending preliminarily approved the
     settlement of that Action and scheduled a hearing, also for December 13,
     2000, on the question of whether the proposed settlement of that action is
     fair, reasonable and in the best interest of UPC, its shareholders and the
     Railroad and the amount of fees, expenses and disbursements to be awarded
     to plaintiff's counsel. As of October 26, 2000, pursuant to the court
     orders in each of the Actions, notice of the proposed settlements and
     fairness hearings were mailed to those UPC shareholders affected by the
     Actions.

         The settlement of each of the Actions is subject to, among other
     conditions, the entry of a final judgment approving each settlement by the
     respective courts in which each Action is pending. Notwithstanding the
     existence of the MOU, the Stipulations, and the court orders preliminarily
     approving the proposed settlements, there can be no assurances that a
     definitive settlement will be consummated with respect to either Action.
     UPC, the Railroad and the individual defendants named in the Actions
     entered into the MOU and Stipulations solely for the purpose of avoiding
     the further expense, inconvenience, burden and uncertainty of the Actions,
     and their decision to do so is not an admission or concession or evidence
     of any liability or wrongdoing on the part of any party to either Action,
     which liability and wrongdoing have consistently been, and continue to be,
     denied.

11.  ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial Accounting
     Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative
     Instruments and Hedging Activities" (FAS 133), that would have been
     effective January 1, 2000. In June 1999, the FASB issued Statement No. 137,
     "Accounting for Derivatives Instruments and Hedging Activities-Deferral of
     the Effective Date of FASB Statement No. 133" postponing the effective date
     for implementing FAS 133 to fiscal years beginning after June 15, 2000. In
     June 2000, the FASB issued Statement No. 138, "Accounting for Certain
     Derivative Instruments and Certain Hedging Activities" (FAS 138). FAS 138
     addresses certain issues related to the implementation of FAS 133, but does
     not change the basic model of FAS 133 or further delay the implementation
     of FAS 133. Management has determined that FAS 133 and FAS 138 will
     increase the volatility of the Corporation's asset, liability and equity
     (comprehensive income) positions as the change in the fair market value of
     all financial instruments the Corporation uses for fuel or interest rate
     hedging purposes will, upon adoption of FAS 133 and FAS 138, be recorded in
     the Corporation's Statement of Financial Position (Note 5). In addition, to
     the extent fuel hedges are ineffective due to pricing differentials
     resulting from the geographic dispersion of the Corporation's operations,
     income statement recognition of the ineffective portion of the hedge
     position will be required. Management does not anticipate that the final
     adoption of FAS 133 and FAS 138 will have a material impact on UPC's
     consolidated financial statements.

         In December 1999, the Securities and Exchange Commission issued Staff
     Accounting Bulletin 101 (SAB 101), "Revenue Recognition". SAB 101 provides
     additional guidance on revenue recognition criteria and related disclosure
     requirements. This SAB is effective beginning in the fourth quarter of
     2000. When the SAB becomes effective, it will require implementation as of
     the beginning of the current fiscal year. If the impact is material, the
     SAB requires retroactive application to all periods presented. Management
     is currently assessing the impact that SAB 101 will have on the
     Corporation's consolidated financial statements.

                                      -14-
   17

         In September 2000, the FASB issued Statement No. 140, "Accounting for
     Transfers and Servicing of Financial Assets and Extinguishments of
     Liabilities" (FAS 140), replacing FAS 125. FAS 140 revises criteria for
     accounting for securitizations, other financial asset transfers and
     collateral, and introduces new disclosures. FAS 140 is effective for fiscal
     2000 in respect to the new disclosure requirements and amendments of the
     collateral provisions originally presented in FAS 125. All other provisions
     are effective for transfers of financial assets and extinguishments of
     liabilities occurring after March 31, 2001. The provisions are to be
     applied prospectively with certain exceptions. Management is currently
     assessing the impact that FAS 140 will have on the Corporation's
     consolidated financial statements.

                                      -15-
   18

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

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
                              RESULTS OF OPERATIONS

           THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
                 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999

Union Pacific Corporation (UPC or the Corporation) consists of one reportable
segment, rail transportation, and UPC's other product lines (Other Operations).
The rail segment includes the operations of Union Pacific Railroad Company
(UPRR), its subsidiaries and rail affiliates (collectively, the Railroad). Other
Operations include the trucking product line (Overnite Transportation Company or
Overnite), as well as the "other" product lines that include technology and
self-insurance activities, corporate holding company operations, which largely
support the Railroad, and all appropriate consolidating entries (see Note 2 to
the Consolidated Financial Statements).

CONSOLIDATED

NET INCOME - Net income for the three- and nine-month periods ended September
30, 2000 increased 4% to $256 million ($1.00 per diluted share) and increased
21% to $685 million ($2.71 per diluted share), respectively, compared to $245
million ($0.96 per diluted share) and $568 million ($2.27 per diluted share) for
the comparable periods in 1999. These increases resulted primarily from revenue
growth and productivity gains at the Railroad, partially offset by higher fuel
prices. Net income for the third quarter of 1999 included a one-time after-tax
gain of $27 million ($0.10 per diluted share) from the adjustment of a liability
established in connection with the discontinued operations of a former
subsidiary.

OPERATING REVENUES - Operating revenues increased $177 million (6%) and $556
million (7%) for the three- and nine-month periods ended September 30, 2000,
respectively, over the comparable periods in 1999. These gains reflect higher
revenues in five of the six business groups at the Railroad as well as increased
revenue at Overnite.

OPERATING EXPENSES - For the three- and nine-month periods ended September 30,
2000, operating expenses increased $122 million (5%) and $310 million (4%),
respectively, over the comparable periods in 1999. These increases resulted from
higher fuel prices and higher volume-related costs at the Railroad but were
partially offset by continued improvements in productivity and service levels.
Operating expense comparisons by category for the three- and nine-month periods
ending September 30, 2000 and 1999 are discussed below. The factors primarily
responsible for the increase or decrease in each category are substantially the
same for both the three- and nine-month periods, except as noted.

     Salaries, wages, and employee benefits declined as lower employment levels
and improved productivity at the Railroad and Overnite more than offset higher
rail volume and inflation. Equipment and other rents expense increased in the
third quarter primarily as a result of higher rail volumes. Year to date,
equipment and other rents expense increased due to higher rail volume and higher
contract transportation costs at Overnite, partially offset by improved car
cycle times and lower rental rates at the Railroad. Depreciation expense
increased as a result of the Railroad's capital program in 1999 and the first
nine months of 2000. Fuel and utilities costs were higher due to significantly
higher fuel prices and increased volume. For the third quarter, materials and
supplies expense remained flat with productivity and cost reductions offsetting
inflation, higher

                                      -16-
   19

volume-related repair costs and more locomotive overhauls. Casualty costs were
higher in the third quarter due to non-recurring items at the Railroad in 1999.
Casualty costs decreased over the nine-month period primarily due to lower
personal injury expenses. Other costs decreased slightly for the three-month
period due to improved productivity and better cost control, partially offset by
higher state and local taxes and volume-related costs. For the nine-month
period, other costs decreased as productivity, joint facility and cost control
offset higher volume costs and state and local taxes.

OPERATING INCOME - Operating income increased $55 million (11%) and $246 million
(19%) for the three- and nine-month periods ended September 30, 2000,
respectively, over the comparable periods in 1999, as revenue growth and
productivity gains at the Railroad and Overnite more than offset higher fuel
prices and rail volume costs.

NON-OPERATING ITEMS - Non-operating expense, net, increased $4 million (3%) and
$1 million for the three and nine months ended September 30, 2000, respectively.
For the third quarter, the increases were primarily the result of lower income
from real estate sales and lower lease income, partially offset by lower
interest expense. Year to date, higher losses from miscellaneous items offset
lower interest expense. Income taxes for the three- and nine-month periods of
2000 increased $13 million (9%) and $101 million (34%) over the comparable
periods of 1999 as a result of higher pre-tax income levels. Year-to-date taxes
for the Railroad in 1999 include a one-time $19 million after-tax gain related
to prior-year tax settlements.

RAIL SEGMENT

NET INCOME - Rail operations reported net income of $274 million and $752
million for the three and nine months ended September 30, 2000, respectively,
compared to net income of $234 million for the third quarter of 1999 and $589
million for the nine month period in 1999. The increases resulted primarily from
higher commodity and other revenue, combined with productivity gains, partially
offset by higher fuel prices and volume-related costs.

OPERATING REVENUES - Rail operating revenues increased $167 million (6%) to a
record $2.8 billion and $521 million (7%) to a record $8.1 billion for the
three- and nine-month periods ended September 30, 2000, respectively, over the
comparable periods in 1999. Revenue carloads increased 4% and 5%, respectively,
for the three- and nine-month periods over the comparable periods in 1999. Other
revenue gains were the result of higher subsidiary revenues and reduced billing
claims from customers and other railroads.

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

  Three Months Ended Sept. 30,                                     Nine Months Ended Sept. 30,
  ---------------------------       %       Commodity Revenue      ---------------------------       %
   2000                 1999     Change         In Millions          2000                1999     Change
  ------               ------    ------     -----------------      -------             -------    -------
                                                                                
  $  363               $  367       (1)     Agricultural           $ 1,047             $ 1,042      --
     280                  239       17      Automotive                 877                 767      14
     412                  398        3      Chemicals                1,248               1,195       4
     586                  560        5      Energy                   1,605               1,656      (3)
     502                  492        2      Industrial Products      1,519               1,416       7
     506                  459       10      Intermodal               1,418               1,273      11

  ------               ------      ---                             -------             -------     ---
  $2,649               $2,515        5      Total                  $ 7,714             $ 7,349       5
  ------               ------      ---                             -------             -------     ---

                                      -17-
   20

                                Revenue Carloads
                                  In Thousands

                                                                                           
             217             233         (7)     Agricultural                       651           670        (3)
             196             167         18      Automotive                         609           521         17
             237             238         --      Chemicals                          713           696          2
             513             478          7      Energy                           1,432         1,403          2
             363             365         (1)     Industrial Products              1,094         1,045          5
             767             719          7      Intermodal                       2,181         2,026          8
           -----           -----        ---                                       -----         -----        ---
           2,293           2,200          4      Total                            6,680         6,361          5
           -----           -----        ---                                       -----         -----        ---

                                 Average Revenue
                                     Per Car

                                                                                       
          $1,673          $1,576          6     Agricultural                 $1,607        $1,555          3
           1,425           1,430         --     Automotive                    1,439         1,472         (2)
           1,738           1,673          4     Chemicals                     1,752         1,717          2
           1,141           1,172         (3)    Energy                        1,120         1,181         (5)
           1,383           1,350          2     Industrial Products           1,389         1,356          2
             661             638          4     Intermodal                      650           628          4
          ------          ------        ---                                  ------        ------        ---
          $1,155          $1,144          1     Total                        $1,155        $1,155         --
          ------          ------        ---                                  ------        ------        ---

Agricultural - Agricultural revenue decreased in the third quarter of 2000 and
was flat for the nine-month period over the comparable periods in 1999. Carloads
decreased primarily due to reduced market demand for wheat and corn and a lack
of producer selling in anticipation of higher prices. Revenue was up for fresh
fruits and vegetables primarily as a result of new express train service from
northern California to eastern markets. Average revenue per car increased for
the quarter and year to date primarily due to an increase in longer haul traffic
and slower growth in shorter haul, lower average revenue per car traffic.

Automotive - Automotive revenue and carloads increased for both the three- and
nine-month periods of 2000 over the comparable periods in 1999. The
year-over-year gain resulted from strong demand for finished vehicles and
materials. Average revenue per car decreased slightly principally due to an
increase in lower average revenue per car materials moves utilizing containers,
rather than boxcars.

Chemicals - Chemicals revenue increased for both the three- and nine-month
periods of 2000 over the comparable periods in 1999. Third quarter gains were
driven primarily by increases in average revenue per car for soda ash,
fertilizer and liquid and dry shipments and selected price increases. Carload
volume in the third quarter declined slightly due to a softening economy and
higher inventories at end-user locations. Year-to-date gains were driven by
improved service levels, customer plant expansions and economic strength in the
first half of the year. Domestic soda ash, plastics and liquid and dry chemicals
showed the highest gains in revenue.

Energy - Energy revenue increased in the third quarter and decreased for the
nine-month period of 2000 over the comparable periods in 1999. The third quarter
growth was driven by an increase in carloads. For the nine-month period, revenue
decreased due to lower average revenue per car as a result of contract pricing
provisions with certain major customers. Carloads increased in the third quarter
due to market share gains and high demand due to hot summer weather in the south
and southwest. For the nine-month period, the increase in carloads in the third
quarter was partially offset by lower demand at utilities in the first six
months of 2000 due to high inventory levels caused by Y2K concerns and mild
winter weather.

                                      -18-
   21

Industrial Products - Industrial Products revenue increased for both the three-
and nine-month periods of 2000 over the comparable periods in 1999 due to
stronger commodity demand and improved service. Carloads decreased slightly in
the third quarter due to a softening economy and declines in government
shipments, recyclables, and stone, partially offset by higher steel carloads.
Year to date, carloads increased over the comparable period in 1999 primarily
due to strong domestic steel demand and the effects of a growing economy on
lumber, cement, scrap metal, and paperboard. Increases in average revenue per
car were due to gains in high average revenue per car steel and lumber moves and
selected price increases.

Intermodal - Intermodal revenue increased for both the three- and nine-month
periods of 2000 over the comparable periods in 1999. Third quarter revenue
carloads and revenue were both quarterly records. Third quarter and year-to-date
gains were driven by improved service and strong growth in imports from Asia.
Average revenue per car increased primarily as a result of price increases.

OPERATING EXPENSES - Operating expenses increased $119 million (6%) and $270
million (4%) for the three- and nine-month periods ended September 30, 2000,
respectively. Operating expense comparisons by category for the three- and
nine-month periods ending September 30, 2000 and 1999 are discussed below. The
factors primarily responsible for the increase or decrease in each category are
substantially the same for both the three- and nine-month periods, except as
noted.

Salaries, Wages and Employee Benefits - Costs decreased $38 million (4%) and $76
million (3%) for the three- and nine-month periods, respectively, over the
comparable periods in 1999. Wage inflation and volume-related costs were more
than offset by lower expenses from decreased workforce levels, higher train crew
productivity and lower crew training expenses.

Equipment and Other Rents - Expenses increased $10 million (3%) and decreased $7
million (1%) for the three- and nine-month periods, respectively. The third
quarter increase was due primarily to higher volume-related costs, partially
offset by lower prices. For the nine-month period, the decrease was attributable
to improvements in car cycle times, lower prices, and increased car rents from
other railroads. Higher volume costs partially offset the year-to-date
decreases.

Depreciation - Depreciation increased $13 million (5%) and $39 million (5%) for
the three- and nine-month periods, respectively, over comparable periods in
1999, as a result of the Railroad's capital program in 1999 and the first nine
months of 2000. Capital spending was $1.4 billion in the nine months ended
September 30, 2000 compared to $1.3 billion in the nine months ended September
30, 1999.

Fuel and Utilities - Expenses were up $127 million (64%) and $346 million (61%)
for the three- and nine-month periods, respectively. Higher fuel prices added
$115 million of expense in the third quarter and $304 million of expense in the
first nine months of 2000 over comparable periods in 1999. Volume costs added $7
million for the third quarter and $22 million for the first nine months of 2000
compared to 1999. The Railroad hedged approximately 10% of its fuel consumption
for both the three- and nine-month periods, which decreased fuel costs by $15
million and $35 million, respectively. As of September 30, 2000, expected fuel
consumption for the remaining three months of 2000 is 9% hedged at 40 cents per
gallon excluding taxes, transportation costs and regional pricing spreads (see
Note 5 to the Consolidated Financial Statements).

                                      -19-
   22

Materials and Supplies - Expenses remained flat for the three-month period and
increased $20 million (5%) for the nine-month period. In the third quarter, cost
reductions and operating efficiencies offset higher volume-related costs and
inflation. Year-to-date expenses were higher than 1999 due to higher locomotive
overhauls and volume-related increases in car and locomotive repairs.

Casualty Costs - Expenses increased $11 million (16%) and decreased $15 million
(6%) for the three- and nine- month periods, respectively. Third quarter 1999
expenses were favorably affected by an insurance refund and lower personal
injury expenses. Year-to-date 2000 casualty costs were also favorably affected
by lower personal injury expenses.

Other Costs - Expenses decreased $4 million (2%) and $37 million (6%) for the
three- and nine-month periods, respectively, compared to comparable periods in
1999. Cost control and productivity gains offset volume-related cost increases
and higher state and local taxes in both time periods.

OPERATING INCOME - Operating income increased $48 million (9%) to $563 million
and $251 million (19%) to $1,567 million for the three and nine months ended
September 30, 2000, respectively. The operating ratio for the third quarter of
2000 was 79.7%, 0.5 percentage points better than 1999's 80.2% operating ratio.
The operating ratio for the first nine months of 2000 was 80.6%, 2.0 percentage
points better than 1999's 82.6%. NON-OPERATING ITEMS - Non-operating expense,
net, decreased $5 million (4%) and $20 million (5%) for the three and nine
months ended September 30, 2000, respectively. Third quarter and year-to-date
improvements were primarily the result of lower interest expense, partially
offset by lower income from real estate sales and lower miscellaneous other
income. Income taxes increased $13 million (9%) for the third quarter and $108
million (34%) for the first nine months of 2000 reflecting higher income levels
and a one-time, $19 million after-tax gain in the second quarter of 1999 related
to prior year tax settlements.

OTHER OPERATIONS

TRUCKING PRODUCT LINE

NET INCOME - Trucking net income was $15 million and $30 million, for the three-
and nine-month periods ended September 30, 2000, respectively, up from $8
million (88%) and $28 million (7%) for the comparable periods in 1999. The
increase in net income in the third quarter was primarily due to increased
revenue partially offset by higher fuel prices and a 7% decrease in volume.
Compared to the same period in 1999, year-to-date net income was adversely
affected by higher expenses associated with diesel fuel prices and the effects
of a job action by the International Brotherhood of Teamsters (Teamsters).

OPERATING REVENUES - For the three- and nine-month periods ended September 30,
2000, trucking revenues increased $10 million (4%) to $287 million and $36
million (4%) to $839 million, respectively, over the comparable periods in 1999.
The growth resulted primarily from a fuel surcharge and general rate increases
instituted in September of 1999 and August 2000. Revenue growth was achieved
despite a 7% and 6% decline in volume in the third quarter and year-to-date
periods of 2000, respectively, over comparable periods in 1999.

OPERATING EXPENSES - For the three- and nine-month periods ended September 30,
2000, operating expenses decreased $2 million (1%) to $267 million and increased
$32 million (4%) to $802 million, respectively, over the comparable periods in
1999. For the third quarter, salaries, wages and employee benefit costs
decreased $5 million (3%) to $164 million as lower volume, fewer employees and
productivity gains more than offset

                                      -20-
   23

wage and benefit inflation. For the nine-month period, salaries, wages and
employee benefits were essentially flat as wage and benefit inflation was offset
by lower volume, lower employee levels and productivity. Fuel and utilities
costs increased $5 million (38%) for the quarter and $18 million (51%) for the
nine-month period. This increase was a result of higher fuel prices (92 cents
per gallon in the third quarter of 2000 compared to 57 cents in the third
quarter of 1999) partially offset by lower volume-related consumption. Nine
percent of estimated remaining 2000 fuel purchases are hedged at an average of
39 cents per gallon excluding taxes, transportation costs and regional pricing
spreads (see Note 5 to the Consolidated Financial Statements). Equipment and
other rents increased $2 million (8%) for the quarter and $9 million (14%) for
the nine-month period over 1999 due to increased purchased transportation costs.
For the three- and nine-month periods, other expenses decreased $3 million (8%)
and increased $4 million (4%), respectively. The third quarter decrease is
primarily due to lower cargo loss and damage expenses and expenses related to
the Teamsters' job action. The year-to-date increase is primarily due to higher
security, legal and travel expenses related to the Teamsters' activity.

OPERATING INCOME - Trucking operations generated operating income of $20 million
in the three-month period and $37 million for the first nine months of 2000
compared to $8 million and $33 million for the comparable periods in 1999. The
third quarter operating ratio decreased to 93.2% in 2000 from 97.1% in 1999. The
year-to-date operating ratio decreased to 95.6% in 2000 from 95.9% in 1999.

OTHER PRODUCT LINES

Other operations include the technology product lines and self-insurance
activities, as well as the corporate holding company operations and all
necessary consolidating entries (see Note 2 to the Consolidated Financial
Statements). For the three- and nine-month periods ended September 30, 2000,
operating income decreased $5 million and $9 million, respectively, reflecting
start up and product development costs at Fenix LLC and associated technology
companies and slightly increased expenses at the corporate holding company.

              CHANGES IN FINANCIAL CONDITION AND OTHER DEVELOPMENTS

FINANCIAL CONDITION - During the first nine months of 2000, cash provided by
operations was $1,433 million, compared to $1,467 million in 1999. Higher net
income was more than offset by volume-related increases in working capital and
higher environmental and casualty related spending.

     Cash used in investing activities was $1,290 million during the first nine
months of 2000, compared to $1,307 million in 1999. Capital spending in 2000 was
approximately $53 million higher than 1999 but was more than offset by the
receipt of a cash dividend from an affiliate in 2000 and the 1999 purchase of an
additional 13% ownership interest in the consortium operating the Pacific-North
and Chihuahua Pacific lines in Mexico for $87 million.

     Cash used by equity and financing activities was $263 million in the first
nine months of 2000, compared to $138 million in 1999. This increase in usage is
the result of higher debt repayments ($651 million in 2000 compared to $591
million in 1999) and lower net borrowings ($538 million in 2000 versus $601
million in 1999).

     Including the Convertible Preferred Stock as an equity instrument, the
ratio of debt to total capital employed was 45.9% at September 30, 2000 and
47.6% at December 31, 1999.

                                      -21-
   24

FINANCING ACTIVITIES

CREDIT FACILITIES - As of September 30, 2000, the Corporation had $2.0 billion
in revolving credit facilities, of which $1.0 billion expires in 2001, with the
remaining $1.0 billion expiring in 2005. The facilities, which were entered into
during March 2000, are designated for general corporate purposes and replaced a
$2.8 billion facility due to expire in 2001.

SHELF REGISTRATION - Under currently effective shelf registration statements,
the Corporation may issue, from time to time, up to $600 million in the
aggregate of any combination of debt securities, preferred stock or warrants for
debt securities or preferred stock in one or more offerings. The Corporation has
no immediate plans to issue equity securities.

SIGNIFICANT NEW BORROWINGS - During June 2000, the Corporation issued $250
million of floating rate debt under its shelf registration statement with a
maturity date of July 1, 2002. The proceeds from the issuance of this debt were
used for repayment of debt and other general corporate purposes. During
September 2000, UPRR entered into capital leases covering new locomotives. The
related capital lease obligations totaled approximately $170 million and are
included in the Statements of Consolidated Financial Position as debt.

                                  OTHER MATTERS

COMMITMENTS AND CONTINGENCIES - There are various claims and lawsuits pending
against the Corporation and certain of its subsidiaries. In addition, the
Corporation and its subsidiaries are subject to various federal, state and local
environmental laws and are currently participating in the investigation and
remediation of various sites. A discussion of certain claims, lawsuits,
guarantees and contingencies is set forth in Note 10 to the Consolidated
Financial Statements, which is incorporated herein by reference.

ACCOUNTING PRONOUNCEMENTS - In June 1998, the Financial Accounting Standards
Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133), that would have been effective January 1,
2000. In June 1999, the FASB issued Statement No. 137, "Accounting for
Derivatives Instruments and Hedging Activities-Deferral of the Effective Date of
FASB Statement No. 133" postponing the effective date for implementing FAS 133
to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued
Statement No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities" (FAS 138). FAS 138 addresses certain issues related to the
implementation of FAS 133, but does not change the basic model of FAS 133 or
further delay the implementation of FAS 133. Management has determined that FAS
133 and FAS 138 will increase the volatility of the Corporation's asset,
liability and equity (comprehensive income) positions as the change in the fair
market value of all financial instruments the Corporation uses for fuel or
interest rate hedging purposes will, upon adoption of FAS 133 and FAS 138, be
recorded in the Corporation's Statement of Financial Position (Note 5). In
addition, to the extent fuel hedges are ineffective due to pricing differentials
resulting from the geographic dispersion of the Corporation's operations, income
statement recognition of the ineffective portion of the hedge position will be
required. Management does not anticipate that the final adoption of FAS 133 and
FAS 138 will have a material impact on UPC's consolidated financial statements.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101 (SAB 101), "Revenue Recognition". SAB 101 provides
additional guidance on revenue recognition criteria and related disclosure
requirements. This SAB is effective beginning in the fourth quarter of 2000.
When the SAB

                                      -22-
   25

becomes effective, it will require implementation as of the beginning of the
current fiscal year. If the impact is material, the SAB requires retroactive
application to all periods presented. Management is currently assessing the
impact that SAB 101 will have on the Corporation's consolidated financial
statements.

     In September 2000, the FASB issued Statement No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
(FAS 140), replacing FAS 125. FAS 140 revises criteria for accounting for
securitizations, other financial asset transfers and collateral, and introduces
new disclosures. FAS 140 is effective for fiscal 2000 in respect to the new
disclosure requirements and amendments of the collateral provisions originally
presented in FAS 125. All other provisions are effective for transfers of
financial assets and extinguishments of liabilities occurring after March 31,
2001. The provisions are to be applied prospectively with certain exceptions.
Management is currently assessing the impact that FAS 140 will have on the
Corporation's consolidated financial statements.

                             CAUTIONARY INFORMATION

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

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

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

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

                                      -23-
   26

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided
in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Disclosure concerning market risk-sensitive instruments is set forth in Note 5
to the Consolidated Financial Statements included in Item 1 of Part I of this
Report and is incorporated herein by reference.

PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The discussion of certain legal proceedings affecting the Corporation and/or
certain of its subsidiaries set forth in Note 10 to the Consolidated Financial
Statements included in Item 1 of Part I of this Report is incorporated herein by
reference. In addition to those matters, the following proceedings, or
developments in proceedings presently pending, arose or occurred during the
third quarter of 2000.

ENVIRONMENTAL MATTERS - As previously reported, the U.S. Environmental
Protection Agency (EPA) had brought a civil action against certain subsidiaries
of Southern Pacific, which have been merged into the Railroad, in the U.S.
District Court for the District of Colorado alleging violation of the Clean
Water Act and the Oil Pollution Act. The complaint identified seven incidents
involving the alleged release of hazardous substances into the waters of the
United States and sought civil penalties of $25,000 per day and unspecified
injunctive relief to prevent future violations. Six of the seven incidents were
related to derailments dating back to 1992. Six of the incidents involved
alleged releases from ruptured locomotive fuel tanks and an incident in 1996
involved an alleged release of sulfuric acid near the Tennessee Pass. During the
third quarter of 2000, a final settlement was negotiated with the EPA disposing
of the action. The Railroad agreed to pay a civil penalty in the amount of
$800,000 and to take various measures to prevent or mitigate the impact of
future incidents, including clean up of right of way, rock slide prevention
measures and a geologic study.

SHAREHOLDER LAWSUITS - UPC and certain of its directors and officers (who are
also directors of the Railroad) are defendants in two purported class actions
that have been consolidated into one proceeding (the Class Action). The
consolidated complaint alleges, among other things, that UPC violated the
federal securities laws by failing to disclose material facts and making
materially false and misleading statements concerning the service, congestion
and safety problems encountered following UPC's acquisition of Southern Pacific
in 1996. These lawsuits were filed in late 1997 in the United States District
Court for the Northern District of Texas and seek to recover unspecified amounts
of damages. Management believes that the plaintiffs' claims are without merit
and has been defending them vigorously. The defendants moved to dismiss this
action, and the motion was briefed and submitted to the Court for decision in
1998. In February 2000, prior to a ruling on the motion, the parties jointly
advised the Court that they were engaged in discussions concerning the possible
settlement of the action and asked the Court to defer ruling on the motion to
dismiss pending the outcome of these discussions. The Court entered an order
dated February 29, 2000 agreeing to such deferral, subject to the motion of
either party to reactivate the action and the pending motion to dismiss at any
time.

     In addition to the Class Action, a purported derivative action was filed on
behalf of UPC and the Railroad in September 1998 in the District Court for
Tarrant County, Texas, naming as defendants the then-current and certain former
directors of UPC and the Railroad and, as nominal defendants, UPC and the
Railroad (the Derivative Action and together with the Class Action, the
Actions). The Derivative Action alleges, among other things, that the named
directors breached their fiduciary duties to UPC and the Railroad by approving
and

                                      -24-
   27

implementing the Southern Pacific merger without informing themselves of its
impact or ensuring that adequate controls were put in place and by causing UPC
and the Railroad to make misrepresentations about the Railroad's service
problems to the financial markets and regulatory authorities. The individual
defendants also believe that these claims are without merit and have defended
them vigorously.

     In December 1998, UPC's Board of Directors established a special litigation
committee consisting of three independent directors to review the plaintiff's
allegations under the Derivative Action to determine whether it was in UPC's
best interest to pursue them. In February 1999, the committee rendered its
report, in which it unanimously concluded that further prosecution of the
Derivative Action on behalf of UPC and the Railroad was not in the best interest
of either such company. Accordingly, UPC and the Railroad filed a motion with
the Court to dismiss the Derivative Action.

     Prior to any ruling on the motions to dismiss the Class Action and the
Derivative Action, counsel for UPC, the Railroad and certain officers and
directors of UPC and the Railroad entered into a Memorandum of Understanding
(the MOU), dated June 28, 2000, with counsel for the plaintiffs in the Class
Action and Derivative Action, providing for the settlement of the Actions. The
MOU provides, among other things, that the Class Action will be settled for
$34,025,000 in cash (the Settlement Payment), the full amount of which will be
covered by UPC's insurance carriers. Counsel for the plaintiffs in the Class
Action will apply to the court for any award of their fees and expenses, to be
paid out of the Settlement Payment. The MOU also provides that, in settlement of
the Derivative Action, UPC will adopt certain additional procedures which will
reinforce its continuing effort to ensure both the effective implementation of
its merger with Southern Pacific and its ongoing commitment to rail safety. In
addition, in the event of any proposed merger or other transaction involving
consolidation of UPC and a rail system of greater than 1,000 miles in length of
road, UPC will commission a study, to be completed in advance of any formal
application to a U.S., Canadian or Mexican federal regulatory board, to analyze
prospective safety and congestion-related issues. As part of the terms of the
Derivative Action settlement, counsel for the plaintiffs will receive such fees
and expenses as may be awarded by the Court, up to an aggregate amount of
$975,000. Such amount will also be fully covered by UPC's insurance carriers.

     On October 12, 2000, counsel for the respective parties in the Class Action
and the Derivative Action entered into definitive Stipulations of Compromise and
Settlement (the Stipulations), providing for the settlement of the Actions on
the terms described above, subject to court approval. By order dated October 17,
2000, the court in which the Class Action is pending preliminarily approved the
settlement of that Action and scheduled a hearing for December 13, 2000, on the
question of whether the proposed settlement should be approved as fair,
reasonable and adequate to the members of the class, and the amount of fees,
expenses and disbursements to be awarded to plaintiffs' counsel. By order dated
October 23, 2000, the court in which the Derivative Action is pending
preliminarily approved the settlement of that Action and scheduled a hearing,
also for December 13, 2000, on the question of whether the proposed settlement
of that action is fair, reasonable and in the best interest of UPC, its
shareholders and the Railroad and the amount of fees, expenses and disbursements
to be awarded to plaintiff's counsel. As of October 26, 2000, pursuant to the
court orders in each of the Actions, notice of the proposed settlements and
fairness hearings were mailed to those UPC shareholders affected by the Actions.

     The settlement of each of the Actions is subject to, among other
conditions, the entry of a final judgment approving each settlement by the
respective courts in which each Action is pending. Notwithstanding the existence
of the MOU, the Stipulations, and the court orders preliminarily approving the
proposed settlements, there can be no assurances that a definitive settlement
will be consummated with respect to either Action. UPC, the Railroad and the
individual defendants named in the Actions entered into the MOU and Stipulations
solely

                                      -25-
   28

for the purpose of avoiding the further expense, inconvenience, burden and
uncertainty of the Actions, and their decision to do so is not an admission or
concession or evidence of any liability or wrongdoing on the part of any party
to either Action, which liability and wrongdoing have consistently been, and
continue to be, denied.

                                      -26-
   29

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  EXHIBITS

              12(a)   -    Computation of ratio of earnings to fixed charges for
                           the Three Months Ended September 30, 2000.

              12(b)   -    Computation of ratio of earnings to fixed charges for
                           the Nine Months Ended September 30, 2000.

              27      -    Financial data schedule.

         (b)  REPORTS ON FORM 8-K

              On July 7, 2000, UPC filed a Current Report on Form 8-K announcing
              developments in certain litigation.

              On July 27, 2000, UPC filed a Current Report on Form 8-K
              announcing UPC's financial results for the second quarter of 2000.

              On October 19, 2000, UPC filed a Current Report on Form 8-K
              announcing UPC's financial results for the third quarter of 2000.

                                      -27-
   30

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:  November 14, 2000

                                        UNION PACIFIC CORPORATION
                                        (Registrant)

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

                                      -28-
   31

                                  INDEX TO EXHIBITS

Exhibit No.    Description
- -----------    -----------
            
12(a)          Computation of ratio of earnings to fixed charges for the
               Three Months Ended September 30, 2000.

12(b)          Computation of ratio of earnings to fixed charges for the
               Nine Months Ended September 30, 2000.

27             Financial data schedule.

   1

                                                                   EXHIBIT 12(a)

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                   (UNAUDITED)

                                                                           Three Months Ended Sept. 30,
                                                                           ----------------------------
Millions of Dollars Except Ratios                                          2000                   1999
- ---------------------------------                                          -----                  -----
                                                                                            
Earnings
     Income from continuing operations ..........................          $ 256                  $ 218
     Undistributed equity earnings ..............................            (16)                   (14)
                                                                           -----                  -----
     Total ......................................................            240                    204
                                                                           -----                  -----
Income Taxes ....................................................            150                    137
                                                                           -----                  -----

Fixed Charges:
     Interest expense including amortization of debt discount ...            181                    184
     Portion of rentals representing an interest factor .........             45                     49
                                                                           -----                  -----
Total fixed charges .............................................            226                    233
                                                                           -----                  -----
Earnings Available for Fixed Charges ............................          $ 616                  $ 574
                                                                           =====                  =====
Ratio of earnings to fixed charges (Note 9) .....................            2.7                    2.5
                                                                           =====                  =====

   1

                                                                   EXHIBIT 12(b)

               UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

               COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                  (UNAUDITED)

                                                                                   Nine Months Ended Sept. 30,
                                                                                -----------------------------
Millions of Dollars Except Ratios                                                 2000                  1999
- ---------------------------------                                               -------               -------
                                                                                                
Earnings
     Income from continuing operations ..........................               $   685               $   541
     Undistributed equity earnings ..............................                    44                   (33)
                                                                                -------               -------
     Total ......................................................                   729                   508
                                                                                -------               -------
Income Taxes ....................................................                   397                   296
                                                                                -------               -------
Fixed Charges:
     Interest expense including amortization of debt discount ...                   543                   554
     Portion of rentals representing an interest factor .........                   131                   141
                                                                                -------               -------
Total fixed charges .............................................                   674                   695
                                                                                -------               -------
Earnings Available for Fixed Charges ............................               $ 1,800               $ 1,499
                                                                                =======               =======
Ratio of earnings to fixed charges (Note 9) .....................                   2.7                   2.2
                                                                                =======               =======

  

 5
 1,000,000

                   9-MOS
                          DEC-31-2000
                               SEP-30-2000
                                              55
                                         0
                                      645
                                         0
                                        333
                                 1,240
                                          35,319
                                   7,174
                                  30,391
                            2,749
                                          8,314
                                0
                                          0
                                           691
                                       7,861
                    30,391
                                              0
                                 8,962
                                                0
                                    7,398
                                     0
                                     0
                                 543
                                  1,082
                                       397
                                685
                                       0
                                      0
                                            0
                                       685
                                     2.78
                                     2.71