<COVER>

                                FORM 10-Q   
      
                              UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549-1004

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                       EXCHANGE ACT OF 1934                 
                                   
For the quarterly period ended September 30, 1997

                                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 1-01324

                  UNION PACIFIC RAILROAD COMPANY
      (Exact name of Registrant as specified in its charter)

             UTAH                                 13-6400825
(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) 271-5000
       (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, 1997, the Registrant had outstanding 62,220,244 shares
of its Common Stock, $10 par value, and 5,410,456 shares of its Class A Stock,
$10 par value.
          
     THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.



<INDEX>
                   UNION PACIFIC RAILROAD COMPANY
                              INDEX


                  PART I.  FINANCIAL INFORMATION
                                 


                                                                   Page Number
                                                                   -----------

ITEM 1:   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:                          

       CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION -
          At September 30, 1997 and December 31, 1996. . . . . . .        1-2

       CONDENSED STATEMENT OF CONSOLIDATED INCOME AND 
          RETAINED EARNINGS - For the Three Months and Nine 
          Months Ended September 30, 1997 and 1996 . . . . . . . .          3

       CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS - For
           the Nine Months Ended September 30, 1997 and 1996 . . .          4

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. . . .        5-8
                                                          
       MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF
          OPERATIONS . . . . . . . . . . . . . . . . . . . . . . .       9-11




                   PART II.  OTHER INFORMATION
                                 
ITEM 1:   LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . .      11-14

ITEM 5:   CHANGES IN SECURITIES AND USE OF PROCEEDS  . . . . . . .         14

ITEM 6:   EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . .         14

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . .         15
            
<PAGE 1>

PART I - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


           UNION PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES
           CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
                                 
                           (Millions of Dollars)
                                (Unaudited)
                                  

                                            September 30,   December 31,
ASSETS                                           1997          1996
------                                     -------------- --------------

Current Assets:
  Cash and temporary investments . . . . .    $    56           $    78
  Accounts receivable - net. . . . . . . .        509               298
  Due from affiliated companies - net. . .      1,884             1,763
  Material and supplies  . . . . . . . . .        260               236
  Other current assets . . . . . . . . . .        187               168
                                             ---------         ---------
                                                                    
     Total Current Assets. . . . . . . . .      2,896             2,543
                                             ---------         ---------
                                                          
Investments:
  Investments in and advances to
     affiliated companies (Note 3) . . . .        390               367
  Other investments. . . . . . . . . . . .        151               159
                                             ---------         ---------
     Total Investments . . . . . . . . . .        541               526
                                             ---------         ---------

Properties (Note 2):
  Road . . . . . . . . . . . . . . . . . .     15,412            14,703
  Equipment  . . . . . . . . . . . . . . .      5,992             5,662
  Other  . . . . . . . . . . . . . . . . .         72                71 
                                             ---------         ---------
     Total Properties. . . . . . . . . . .     21,476            20,436

     Accumulated depreciation  . . . . . .     (5,419)           (4,914)
                                             ---------         ---------

     Properties - Net. . . . . . . . . . .     16,057            15,522
                                             ---------         ---------

Intangible and Other Assets. . . . . . . .        201               156
                                             ---------         ---------

  Total Assets . . . . . . . . . . . . . .    $19,695           $18,747
                                             =========         =========
                                             
                                             

<PAGE 2>
                                             
    UNION  PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY COMPANIES
          CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION
         (Millions of Dollars, Except Share and Per Share Amounts)
                              (Unaudited)



                                                       
                                             September 30,    December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY              1997            1996
------------------------------------         -------------  --------------
                                                       
Current Liabilities:
  Accounts payable . . . . . . . . . . . .       $   397        $   436
  Accrued wages and vacation . . . . . . .           354            288
  Income and other taxes payable . . . . .           279            196
  Casualty and other reserves. . . . . . .           242            274
  Debt due within one year . . . . . . . .           187             93
  Interest payable . . . . . . . . . . . .            52             43
  Other current liabilities. . . . . . . .           356            287
                                                ---------       --------

     Total Current Liabilities . . . . . .         1,867          1,617
                                                ---------       --------
                                                                                
Debt Due After One Year. . . . . . . . . .         1,361          1,418
                                                ---------       --------

Deferred Income Taxes  . . . . . . . . . .         4,597          4,306
                                                ---------       --------

Due to UPC - Long-Term . . . . . . . . . .         3,273          3,086
                                                ---------       --------       
Retiree Benefits Obligation  . . . . . . .           495            483
                                                ---------       --------

Other Liabilities (Note 6) . . . . . . . .         1,364          1,442
                                                ---------       --------

Stockholder's Equity (Note 2):
  Common stock - $10.00 par value; 
     92,000,000 shares authorized 
     and 62,220,244 outstanding in 
     1997 and 1996 . . . . . . . . . . . .           622            622
  Class A stock - $10.00 par value; 
     8,000,000 shares authorized
     and 5,410,456 outstanding
     in both 1997 and 1996  . .. . . . . .            54             54
  Capital surplus. . . . . . . . . . . . .         2,608          2,608
  Retained earnings. . . . . . . . . . . .         3,454          3,111
                                                ---------       --------
     Total Stockholder's Equity. . . . . .         6,738          6,395
                                                ---------       --------
     Total Liabilities and
       Stockholder's Equity. . . . . . . .       $19,695        $18,747
                                                =========       ========     
                                                
<PAGE 3>

          UNION PACIFIC RAILROAD COMPANY AND SUBSIDIARY COMPANIES

      CONDENSED STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
   For The Three Months and Nine Months Ended September 30, 1997 and 1996


                           (Millions of Dollars)
                                (Unaudited)


                                 Three Months Ended        Nine Months Ended  
                                    September 30,            September 30, 
                                   1997        1996         1997        1996    
                               ----------------------   --------------------- 

Operating Revenues (Note 2). .    $1,999      $1,713       $6,097      $5,115
                                  ------      -------      ------      ------

Operating Expenses:
  Salaries, wages and 
     employee benefits . . . .        652        533        1,948       1,653
  Equipment and other 
     rents . . . . . . . . . .        256        185          746         562
  Depreciation and 
     amortization. . . . . . .        198        151          585         459
  Fuel and utilities 
     (Note 4). . . . . . . . .        180        148          599         459
  Materials and supplies . . .         98         94          312         294
  Other costs. . . . . . . . .        236        182          756         569
                                    ------    -------      ------      ------  
     Total . . . . . . . . . .      1,620      1,293        4,946       3,996
                                    ------    -------      ------      ------  
Operating Income . . . . . . .        379        420        1,151       1,119
Other Income - Net . . . . . .         96         68          184         149
Interest Expense (Note 4). . .        (90)       (97)        (289)       (292)
                                    ------    -------      -------     -------
Income Before Income Taxes . .        385        391        1,046         976   

Income Taxes (Note 5). . . . .       (148)      (143)        (388)       (327)
                                    ------     ------      -------     -------

Net Income . . . . . . . . . .     $  237     $  248       $  658      $  649
                                   =======    =======      =======     ======= 

Retained Earnings: 
  Beginning of period. . . . .     $3,322     $2,762       $3,111      $4,139
  Net income . . . . . . . . .        237        248          658         649
  Dividends. . . . . . . . . .       (105)       (96)        (315)     (1,874)
                                    ------    -------      -------     -------

  End of Period. . . . . . . .     $3,454     $2,914       $3,454      $2,914
                                   =======    ======       =======     =======

<PAGE 4>                                   


        UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY COMPANIES
                CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
            For the Nine Months Ended September 30, 1997 and 1996
                             (Millions of Dollars)
                                  (Unaudited)
   

                                                   1997             1996      
                                                 -------          -------

Cash from Operations:                                    

  Net Income . . . . . . . . . . . . . . . .      $  658           $  649      

  Non-Cash Charges to Income:
     Depreciation and amortization . . . . .         585              459
     Deferred income taxes . . . . . . . . .         145               85
     Other - net . . . . . . . . . . . . . .         (94)             881
  Changes in Current Assets and Liabilities.        (126)            (742)    
                                                  -------          -------

     Cash from Operations. . . . . . . . . .       1,168            1,332
                                                  -------          -------
                                                         
Investing Activities:

  Capital Investments. . . . . . . . . . . .      (1,190)            (875)
  Other - Net (Note 3) . . . . . . . . . . .         197               46
                                                  -------          -------

  Cash Used in Investing Activities. . . . .        (993)            (829)
                                                  -------          -------

Equity and Financing Activities:

  Debt Repaid  . . . . . . . . . . . . . . .        (128)            (273)
  Financings   . . . . . . . . . . . . . . .         180              351
  Cash Dividends Paid to Parent. . . . . . .        (315)            (289)
  Advances to (from) Affiliated Companies - 
     Net . . . . . . . . . . . . . . . . . .          66             (259)
                                                  -------          -------

     Cash Used in Equity and Financing 
       Activities .. . . . . . . . . . . . .        (197)            (470)
                                                  -------          -------

                                                         
     Net Increase(Decrease)in Cash and 
       Temporary Investments . . . . . . . .      $  (22)          $   33
                                                  =======          =======
                                                  
                                                  
<PAGE 5>

     UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY COMPANIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 
                                (Unaudited)


1.   RESPONSIBILITIES FOR FINANCIAL STATEMENTS: The condensed consolidated
     financial statements of Union Pacific Railroad Company (the Company) are
     unaudited and reflect all adjustments (consisting only of normal and
     recurring adjustments) that are, in the opinion of management, necessary 
     for a fair presentation of the financial position and operating results 
     for the interim periods. The condensed consolidated financial statements 
     should be read in conjunction with the consolidated financial statements 
     and notes thereto, and the unaudited pro forma combined financial 
     statements and notes thereto, both contained in the Company's Annual 
     Report on Form 10-K for the year ended December 31, 1996.  The results 
     of operations for the three months and nine months ended September 30, 
     1997 are not necessarily indicative of the results for the year ending 
     December 31, 1997.  

2.   ACQUISITIONS AND REORGANIZATION
     Missouri Pacific Railroad Company (MPRR): On January 1, 1997, MPRR was 
     merged with and into the Company (the MPRR Merger), with the Company 
     continuing as the surviving entity.  Immediately prior to the MPRR 
     Merger, MPRR was a wholly-owned, direct subsidiary of Union Pacific 
     Corporation (the Corporation) and the Company was at that time and 
     currently is a wholly-owned, indirect subsidiary of the Corporation.  
     As a result of the MPRR Merger, all of the outstanding capital shares 
     of MPRR, which consisted of 920 shares of MPRR Common Stock and 80 shares 
     of MPRR Class A Stock, were converted into 19,152,560 shares of the 
     Company's Common Stock and 1,665,440 shares of the Company's Class A 
     Stock, respectively. In addition, in connection with the MPRR Merger, 
     the 38,867,393 shares of the Company's Common Stock outstanding 
     immediately prior to the MPRR Merger were converted into 35,758,008 
     shares of the Company's Common Stock and 3,109,392 shares of the 
     Company's Class A Stock. 

     The Denver and Rio Grande Western Railroad Company (DRGW) and SPCSL Corp.
     (SPCSL):  On June 30, 1997, DRGW and SPCSL were merged with and into the
     Company (the DRGW and SPCSL Mergers), with the Company continuing as the
     surviving entity.  Immediately prior to the DRGW and SPCSL Mergers, 
     DRGW and SPCSL were wholly-owned, direct subsidiaries of Southern Pacific
     Transportation Company (SPT), and the Company and SPT were at that time 
     and are currently wholly-owned, indirect subsidiaries of the Corporation.  
     As a result of the DRGW and SPCSL Mergers, all of the outstanding capital 
     shares of DRGW, which consisted of 6,331 shares of DRGW Common Stock, and 
     SPCSL, which consisted of 1,000 shares of SPCSL Common Stock, were 
     converted into 2,908,488 and 316,756 shares of the Company's Common Stock 
     and 252,912 and 27,544 shares of the Company's Class A Stock, 
     respectively.

     St. Louis and Southwestern Railway Company (SSW):   On September 30, 
     1997, SSW was merged with and into SSW Merger Corp, with SSW Merger Corp 
     continuing as the surviving entity.  Immediately thereafter SSW Merger 
     Corp was merged with and into the Company (collectively, the SSW Merger), 
     with the Company continuing as the surviving entity.  Immediately prior 
     to the SSW Merger, SSW was a wholly-owned, direct subsidiary of SPT and 
     the Company and SPT were at that time and are currently wholly-owned, 
     indirect subsidiaries of the Corporation.  As a result of the SSW Merger, 
     all of the outstanding shares of SSW Common Stock, which consisted of 
     173,300 shares were ultimately converted into 4,084,432 shares of the 
     Company's Common Stock and 355,168 shares of the Company's Class A Stock.


<PAGE 6>


     The MPRR Merger, the DRGW and SPCSL Mergers and the SSW Merger 
     (collectively, the Affiliated Mergers) have been accounted for in a 
     manner similar to a pooling-of-interests combination of entities under 
     common control.  As a result of the Affiliated Mergers, statements of 
     financial positions for the Company, MPRR, DRGW, SPCSL and SSW were 
     combined, as of January 1, 1997 with an increase in Common Stock, 
     Class A Stock, capital surplus and retained earnings of $233 million, 
     $54 million, $1,534 million and $718 million, respectively.  

     The Condensed Statement of Consolidated Income and the Condensed 
     Statement of Consolidated Cash Flows for the three months and nine 
     months ended September 30, 1996 present the Company's results of 
     operations and cash flows for such periods as if the MPRR Merger had 
     occurred on January 1, 1996. The Condensed Statement of Consolidated 
     Financial Position as of December 31, 1996 presents the Company's 
     financial position as of such date as though the Affiliated Mergers 
     had occurred on December 31, 1996.  The Condensed Statement of
     Consolidated Income and the Condensed Statement of Consolidated Cash 
     Flows for the three months and nine months ended September 30, 1997 
     present the Company's results of operations and cash flows for such 
     periods as if the Affiliated Mergers had all occurred on January 1, 1997.

     These financial statements include DRGW, SPCSL and SSW's portion of the
     allocated purchase price paid by the Corporation to acquire Southern 
     Pacific Rail Corporation.

     Southern Pacific Rail Corporation (Southern Pacific or SP):  In September
     1996, the Corporation consummated the acquisition of Southern Pacific by
     acquiring the remaining 75% of Southern Pacific common shares not 
     previously owned by the Corporation for a combination of cash and the 
     Corporation's Common Stock.

     The business combination with Southern Pacific has been accounted for as 
     a purchase by the Corporation; however, SP's results (except for DRGW, 
     SPCSL and SSW) are not currently included in the Company's results. 
     The combination of Southern Pacific's rail operations with the Company's 
     rail operations is expected to be completed with the merger of the 
     Company and SPT in early 1998 and is expected to be accounted for in a 
     manner similar to a pooling of interest.  The Company and SP operate as 
     a unified rail system which is hereinafter referred to as the Railroad.

     In connection with the integration of the Company's and Southern Pacific's
     rail operations, the Company expects to incur approximately $370 million 
     in acquisition-related costs through 1999 for severing or relocating the
     Company's employees, disposing of certain of the Company's facilities,
     training and equipment upgrading.  These costs will be charged to 
     expense as incurred.  Results for the three months and nine months ended 
     September 30, 1997 include $10 million and $46 million, respectively, in 
     one-time, acquisition-related operating costs, net of tax.  

3.   MEXICAN RAILWAY CONCESSION:  On June 26, 1997, the Railroad and a 
     consortium of partners were granted the 50-year concession for the 
     Pacific North and Chihuahua Pacific lines in Mexico, and a 25 percent 
     stake in the Mexico City Terminal Company at a price of $525 million.  
     The Railroad holds a 13 percent ownership share, and has accounted for 
     its interest by the equity method.  The consortium plans to assume 
     operational control of both lines in late 1997.

4.   FINANCIAL INSTRUMENTS:
     Risk Management: The Company uses derivative financial instruments in 
     limited instances to manage fuel price and interest rate risks.  Where 
     the Company has fixed interest rates or fuel prices through the use of 
     swaps, futures or
     
<PAGE 7>
     
     forward contracts, the Company has mitigated the downside risk of adverse
     price and rate movements; however, it has also limited future gains from
     favorable movements.  

     The Company addresses market risk related to these instruments by 
     selecting instruments whose value fluctuations correlate highly with the 
     underlying item being hedged.  Credit risk related to derivative financial 
     instruments, which is minimal, is managed by requiring minimum credit 
     standards for counterparties and periodic settlements.  The total risk 
     associated with the Company's counterparties was $13 million at 
     September 30, 1997.  The Company has not been required to provide, nor 
     has it received any collateral relating to its hedging activity.  

     The fair market values of the Company's derivative financial instrument
     positions at September 30, 1997, were determined based upon current fair
     market values as quoted by recognized dealers or developed based on the
     present value of future cash flows discounted at the applicable U.S. 
     treasury rate and swap spread. 

     Fuel: Over the past three years, fuel costs approximated 10% of the
     Railroad's total operating expenses.  As a result of the significance of 
     the fuel costs and the historical volatility of fuel prices, the Company, 
     as a participant in the Railroad's fuel hedging program, periodically 
     uses swaps, futures and forward contracts to mitigate the impact of fuel 
     price volatility.  The intent of this program is to protect the Railroad's
     operating margins and overall profitability from adverse fuel price 
     changes.  At September 30, 1997, the Railroad had hedged 40% and 12% of 
     its estimated remaining diesel fuel consumption for 1997 and 1998, 
     respectively, at $0.52 and $0.53 per gallon, respectively, on a Gulf 
     Coast basis.  In addition, the Railroad had outstanding swap agreements 
     covering its fuel purchases in 1997 and 1998 of $156 million, with gross 
     and net asset positions of $13 million.  Fuel hedging increased third 
     quarter 1997 fuel expense by $1 million and lowered third quarter 1996 
     fuel costs by $9 million.  Fuel hedging increased the Railroad's nine 
     month 1997 fuel expense by $1 million and lowered the Company's nine 
     month 1996 fuel costs by $19 million.  

     Interest Rates: The Company controls its overall risk to fluctuations in
     interest rates by managing the proportion of fixed and floating rate debt
     instruments within its debt portfolio over a given period.  Derivatives 
     are used in limited circumstances as one of the tools to obtain the 
     targeted mix.  The mix of fixed and floating rate debt is largely managed 
     through the issuance of targeted amounts of such debt as debt maturities 
     occur or as incremental borrowings are required.  The Company also 
     obtains additional flexibility in managing interest cost and the 
     interest rate mix within its debt portfolio by issuing callable fixed 
     rate debt securities.  At September 30, 1997, the Company had outstanding 
     interest rate swaps on $113 million of notional principal amount of debt 
     (7% of the total debt portfolio, excluding obligations to the 
     Corporation) with gross and net fair market value liability positions 
     of $8 million. These contracts mature over the next one to eight years. 
     Interest rate hedging activity increased interest expense in the third 
     quarter of both 1996 and 1997 by $1 million.  Interest rate hedging 
     activity increased interest expense in the first nine months of both 1997 
     and 1996 by $3 million.

5.   INCOME TAXES: In the first quarter of 1996, the Company reached a 
     settlement with the Appeals Office of the Internal Revenue Service for 
     tax years 1978 through 1982.  The settlement resulted in a tax refund of 
     $21 million.

6.   COMMITMENTS AND CONTINGENCIES: There are various claims and lawsuits 
     pending against the Company.  Certain customers have submitted claims 
     for damages related to shipments delayed in transit, while others have 
     indicated an intention to submit claims for damages arising out of 
     delays as a result of congestion problems.  The nature of the damages 
     
<PAGE 8>
     
     sought include, but are not limited to, loss or damages to lading, 
     alternative transportation charges, additional production costs, lost 
     business and lost profits.  In addition, some customers have asserted 
     that they have the right to cancel contracts as a result of alleged 
     material breaches of such contracts by the Company.  The Federal 
     Railroad Administration has also indicated that it may take enforcement 
     actions against the Company based upon an in-depth inquiry and review 
     of safety practices.

     The Company is also subject to Federal, state and local environmental 
     laws and regulations, and is currently participating in the investigation 
     and remediation of numerous sites.  Where the remediation costs can be 
     reasonably determined, and where such remediation is probable, the 
     Company has recorded a liability.  In addition, the Company periodically 
     enters into financial and other commitments and provides guarantees for 
     specific financial and contractual obligations of its subsidiaries and 
     affiliates.

     It is not impossible at this time for the Company to fully determine the
     effect of all unasserted claims on its consolidated financial condition,
     results of operations or liquidity; however, the Company does not expect 
     that any known lawsuits, claims, environmental costs, commitments or 
     guarantees will have a material adverse effect on its financial 
     condition or operating results.

7.   ACCOUNTING PRONOUNCEMENTS: In June 1997, the Financial Accounting 
     Standards Board (FASB) issued statement No. 130, "Reporting Comprehensive 
     Income," that will be effective in 1998.  The Company anticipates minimal 
     impact from this Statement.  

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

8.   RATIO OF EARNINGS TO FIXED CHARGES: The ratio of earnings to fixed charges
     has been computed on a total enterprise basis.  Earnings represent income
     from continuing operations less equity in undistributed earnings of
     unconsolidated affiliates, plus income taxes and fixed charges.  Fixed
     charges represent interest, amortization of debt premium, and the 
     estimated interest portion of rental charges.
     
<PAGE 9>     
     
     
     UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY COMPANIES
        MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

     Nine Months Ended September 30, 1997 Compared to September 30, 1996



Recent Mergers:  On January 1, 1997, Missouri Pacific Railroad Company (MPRR) 
was merged with and into Union Pacific Railroad Company (the Company), with 
the Company continuing as the surviving corporation (the MPRR Merger).  The 
MPRR Merger has been accounted for in a manner similar to a pooling-of-interest
combination of entities under common control (see Note 2 of the Condensed
Consolidated Financial Statements).  As a result of the MPRR Merger, the
Company's results of operations for the three and nine months ended September 
30, 1996 have been combined with MPRR's results of operations as though the 
MPRR Merger had occurred on January 1, 1996.  The following narrative analysis 
of the Company's results of operations compares actual financial information 
for the Company for the nine months ended September 30, 1997 with financial 
information for the Company and MPRR on a combined basis for the nine months 
ended September 30, 1996.

Also, on June 30, 1997, The Denver and Rio Grande Western Railway Company 
(DRGW)and SPCSL Corp. (SPCSL) were merged with and into the Company, with the 
Company continuing as the surviving corporation (the DRGW/SPCSL Mergers).  On 
September 30, 1997, the St. Louis and Southwestern Railroad Company (SSW) was 
merged into SSW Merger Corp, with SSW Merger continuing as the surviving 
entity and immediately thereafter, SSW Merger was merged into the Company with 
the Company continuing as the surviving entity (collectively, the SSW Merger 
and together with the DRGW/SPCSL Mergers, the Affiliated Mergers).  The 
Affiliated Mergers have also been accounted for in a manner similar to a 
pooling-of-interest combination of entities under common control.  As a result 
of the Affiliated Mergers, the Company's results of operations for the period 
ended September 30, 1997 have been combined with the results of DRGW, SPCSL 
and SSW as though the Affiliated Mergers had occurred on January 1, 1997.   
DRGW, SPCSL and SSW operations are not included in the September 30, 1996 
operating results discussed below since common control was not effective 
until September 11, 1996.  

Railroad Operations:  Third quarter 1997 rail operations were disrupted by
service and congestion issues.  The Company's congestion problems started in 
the Gulf Coast area during the summer and spread throughout the system as the
Railroad shifted resources to help mitigate the problem in the Gulf Coast. 
Factors leading to the system congestion include crew shortages and necessary
track maintenance on Southern Pacific Rail Corporation lines, washouts due to
severe weather and congestion in the major Texas/Mexico gateways.

The cost of the congestion-related problems was approximately $100 million, 
after tax, which reflected the combined results of lost business and higher 
operating costs.  Fourth quarter 1997 operations and financial performance  
will be more severely affected by congestion-related problems than in the 
third quarter--including lower revenue and incremental costs associated with
the implementation of the Service Recovery Plan--significantly reducing the 
Company's financial results for the period.  As a result, earnings for all of
1997 are expected to be less than 1996 restated results, and there may well
be a net loss for the fourth quarter 1997.  There can be no assurance that
these problems will not continue to impact the Company during the first 
quarter of 1998.

The Service Recovery Plan:  To restore service to acceptable levels, the 
Company implemented a Service Recovery Plan (the Plan) in early October 1997.  
The Plan is focused on reducing the number of cars on the system and 
restoring system velocity, which will result in more reliable service to 
customers.  Although the Company expects that the Plan will relieve current 
congestion problems across the system by late 1997, a prolonged service 
recovery could have an adverse material effect on the Company's future earnings 
and cash flow.  

<PAGE 10>

The Plan includes a number of temporary steps currently underway to reduce the
number of trains operating over the system and to improve system velocity and
service levels.  These steps include: diverting trains from congested Southern
Corridor routes to less congested alternatives; temporarily transferring 
business to several other railroads including Kansas City Southern, Burlington 
Northern and Santa Fe Railway Company and Norfolk Southern Corporation; 
combining shorter trains; reducing the number of locomotives in use on local 
and maintenance-of-way service; accelerating the delivery of new locomotives; 
adding manpower and capacity at locomotive repair shops; moving switching 
activities from all of the major congested yards to other locations; 
transferring switching to shortline railroads; hiring additional train and 
engine employees; and taking a number of actions to use train crews more 
efficiently in congested terminals.

Status Report - Through mid-November 1997, the Company has made ongoing 
progress on reducing car inventories on the system and improving system 
velocity.  These results are being reported weekly to the Surface 
Transportation Board.  Based upon results to date, the Company anticipates 
that service levels will continue to improve through the last quarter of 1997. 

Results of Operations
Net income increased to $658 million for 1997.  Operating income increased to
$1,151 million in 1997 from $1,119 million in 1996.  Operating revenues for the
Company increased $982 million (19%) to $6.1 billion, reflecting a 25% increase
in carloadings due to the integration of DRGW, SPCSL and SSW operations.  The
integration of DRGW, SPCSL and SSW business drove carloading gains in 
intermodal (54%), energy (19%), automotive (30%), chemicals (17%), 
industrial products (10%) and agricultural products (10%).

Operating expenses increased $950 million compared to 1996 to $4.95 billion. 
Salaries and wages increased $295 million due to the addition of DRGW, SPCSL and
SSW expenses, higher traffic volumes and one-time merger implementation costs. 
Equipment and other rents increased $184 million due to higher cycle times,
incremental cars being made available for grain customers and additional DRGW, 
SPCSL and SSW expenses.  Fuel and utilities increased $140 million due to the
integration of DRGW, SPCSL and SSW and higher volumes.  Depreciation expense
increased $126 million because of continued capital spending programs for track
and roadway investment and the addition of DRGW, SPCSL and SSW asset bases to
depreciation expense and the re-evaluation of said assets in accounts for the
Southern Pacific acquisition.  Other costs increased $187 million due to the
addition of DRGW, SPCSL and SSW and other volume-related contract costs for
maintenance, drayage and other third-party costs.

Other income increased $35 million, largely due to the sale of the Railroad's
signboard business.  Interest expense decreased $3 million, the result of debt
refinancing activities.  Income taxes increased $61 million, reflecting higher
operating and other income and the absence of a 1996 tax settlement (see Note 5
to the Condensed Consolidated Financial Statements).

Other Developments

Federal Railroad Administration (FRA) Review - The Company suffered three 
severe accidents in mid-1997.  As a result of these incidents, the FRA reviewed 
the Company's operations and made several recommendations, including creating 
a joint committee of the Company's management, labor and the FRA to review 
and monitor all aspects of safety, adding an executive position for safety 
reporting directly to the President, creating a safety hotline (direct to the 
President), re-evaluating all existing training programs and increasing the 
monitoring of train crew performance, crew fatigue and crew scheduling.  All 
such FRA proposals have been implemented by the Company.  The Company has also 
proposed a guaranteed time-off program for train and engine employees.

<PAGE 11>

During the last week of October, 1997, the Company experienced two additional
train collisions in Texas, which resulted in non-fatal injuries to train crew
employees.  As a result of these incidents, the FRA sent additional inspectors
to Texas and other states to monitor the Company's operations.

Derailments in 1997 have cost the Company approximately $67 million in capital
and operating expense.  During the first nine months of 1996 pro forma 
derailment costs were $87 million.  This decrease reflects safety improvements 
year-to-date over the same pro forma period last year, including a 10% decline 
in derailments.  

Cautionary Information
Certain information included in this report contains, and other materials filed
or to be filed by the Company 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 Company) contain or will contain, forward-looking 
statements within the meaning of the Securities Act of 1933, as amended, and 
the Securities Exchange Act of 1934, as amended.  Such forward-looking 
information may include, without limitation, statements that the Company does 
not expect that lawsuits, claims, environmental costs, commitments, guarantees, 
contingent liabilities, labor negotiations or other matters will have a 
material adverse effect on the Company's consolidated financial condition, 
results of operations or liquidity and other similar expressions concerning 
matters that are not historical facts, and projections as to the Company's 
financial results.  Such forward-looking information is or will be based on 
information then available and is or will be subject to risks and uncertainties 
that could cause actual results to differ materially from those expressed in 
the statements.  Important factors that could cause such differences include 
but are not limited to whether the Service Recovery Plan, referred to above, 
achieves its goals, industry competition and regulatory developments, natural 
events such as floods and earthquakes, the effects of adverse general economic 
conditions, fuel price changes and the ultimate outcome of environmental 
investigations or proceedings and other types of claims and litigation.

PART II.  OTHER INFORMATION                                      

Item 1.  Legal Proceedings
         -----------------
   
Southern Pacific Acquisition: As previously reported in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 (the "1996 10-K"),
various appeals have been filed with respect to the Surface Transportation
Board's ("STB") August 12, 1996 decision (the "Decision") approving the
acquisition of control of Southern Pacific Rail Corporation and its rail
affiliates (collectively, "SP") by the Corporation and its affiliates.  All of
the appeals have been consolidated.  On April 23, 1997, the City of Wichita and
Sedgwick County, Kansas, moved to withdraw their petition for review, and the
Court granted their motion on April 30, 1997.  On August 11, 1997, the Court
established a briefing schedule under which briefs for petitioners and 
supporting intervenors were due on October 10, 1997, the brief for respondents 
is due December 9, 1997, briefs for intervenors supporting respondents are 
due December 30, 1997, and reply briefs are due January 20, 1998.  
On August 18, 1997, Geneva Steel Company moved to withdraw its petitions for 
review, and the Court granted its motion on September 8, 1997.  On October 3, 
1997, the Corporation and its affiliates moved to dismiss their petitions for 
review, and the Court granted their motion on October 7, 1997.  On October 6, 
1997, Kansas City Southern Railway Company ("KCS") moved to dismiss its 
petitions for review; on October 7, 1997, Texas Mexican Railway Company 
("Tex Mex") moved to dismiss its petition for review; and on October 10, 1997, 
the United Transportation Union-General Committee of Adjustment (GO 401) moved 
to dismiss its petition for review.  The Court granted these motions on 
October 22, 1997.  The Company believes that it is unlikely that the 
disposition of these appeals will have a material impact on its results of 
operations.

<PAGE 12>

On May 7, 1997, the STB served a decision commencing the first annual proceeding
to implement the oversight condition it had imposed in the Decision.  The
Corporation and its affiliates, and the Burlington Northern and Santa Fe Railway
Company ("BNSF"), filed reports required by the STB on July 1, 1997.  BNSF and
other parties filed comments on August 1, 1997.  The Corporation and its
affiliates, and others, filed replies on August 20, 1997.  On October 27, 1997,
the STB served a decision containing its findings and recommendations based on
the record compiled in the first oversight proceeding.  The STB concluded that
the merger, as conditioned, had thus far not caused any substantial competitive
harm, and it rejected various requested adjustments to the merger conditions. 
The STB ordered the Corporation and BNSF to continue to report quarterly on
merger implementation, and to provide a comprehensive summary presentation in 
the next progress report due on July 1, 1998.  The STB order requires interested
parties to file comments concerning the next annual oversight proceeding on
August 14, 1998, and replies are due September 1, 1998.

Bottleneck Proceedings:   As previously reported in the 1996 10-K, on August 27,
1996, the STB initiated a proceeding asking for arguments and evidence on the
issue of whether it should modify its existing regulations regarding the
prescription of, and challenge to, rates for rail service involving a segment
that is served by only one railroad between an interchange point and an
exclusively-served shipper facility (i.e., a bottleneck segment).  The STB
proceeding also referred to pending motions to dismiss three individual 
complaint proceedings filed by shippers challenging a class rate charged for 
the movement of coal, two of which named the Company and Southern Pacific 
Transportation Company ("SPT") as a party thereto.  Neither complaint 
proceeding individually involved a significant exposure for reparations.  
However, if existing regulation of bottleneck movements were changed, future 
revenue from such movements, including those covered by the complaint 
proceedings, could be substantially reduced.  On December 31, 1996, the STB 
served a decision which generally reaffirmed earlier rulings regarding a rail 
carrier's obligation to provide rates for bottleneck segments and assured the 
right of rail carriers to differentially price traffic.  It also dismissed 
the two complaint proceedings in which the Company and SPT were defendants.  
On April 30, 1997, the STB served a decision generally declining to reconsider 
its December 31, 1996 decision, but clarifying that in certain circumstances 
a "bottleneck" destination carrier that does not serve the origin for a 
traffic movement may be required to provide a separately-challengeable common 
carrier rate for the "bottleneck" portion of the movement.  The STB decisions 
are pending on appeal before the Eighth Circuit Court of Appeals, and oral 
argument has been scheduled for November 18, 1997.

Rail Service Proceedings:  Recently, the Company has been experiencing serious
congestion problems, especially on SP lines in the Gulf Coast area but also
affecting other lines of the system.  In late September 1997, following an
intense analysis and planning effort, the Company adopted a comprehensive 
Service Recovery Plan.   The objective of this Plan is to return service to 
normal within 90 days.  The Service Recovery Plan involves additional 
expenditures on locomotives and personnel and the diversion of traffic to 
other carriers, among other measures.

The Company has reported to the STB in the ongoing oversight proceeding 
regarding the UP/SP merger concerning the recent service problems and the 
Service Recovery Plan. On October 2, 1997, the STB initiated a proceeding 
entitled Ex Parte No. 573, Rail Service in the Western United States 
("Ex Parte No. 573"), to provide interested persons the opportunity to report 
on the status of rail service in the western United States and to review 
proposals for solving the service problems that exist.  The STB directed 
interested parties to file written statements by October 23, 1997, and held a 
hearing on October 27, 1997.  The Corporation filed a written submission and 
made an oral presentation at the STB hearing reporting further on its Service 
Recovery Plan and the progress that is being made in implementing it.  
A number of shippers, shipper organizations, public bodies and other railroads 
also submitted both written and oral testimony.  Some participants in the 
proceeding asked the STB to allow the Service Recovery Plan

<PAGE 13>


time to work, while others requested that the STB take more active measures 
to remedy service problems.

In addition, on October 21, 1997, the Society of the Plastics Industry, the
National Industrial Transportation League and the Chemical Manufacturers
Association filed a joint petition asking the STB to issue an emergency directed
service order designed to remedy the Company's recent service problems, but
without specifying any specific action.  The Corporation filed a response
opposing the joint petition on October 24, 1997.

On October 31, 1997, the STB issued an emergency service order that it described
as an outgrowth of the STB proceedings in Ex Parte No. 573.  The service order,
which by its terms expires in 30 days, imposes several temporary measures
designed to allow Tex Mex to divert some traffic off of the Company in order to
reduce congestion on the Company's lines in Houston, Texas.  The STB also 
directed the Company, as the Company had offered, to suspend rail transportation
service contract obligations of all shippers at Houston that wish to route
shipments over the Tex Mex instead of the Company during the period of the
service order.  The service order also requires the Corporation to report to the
STB regarding service issues raised at the hearing in Ex Parte No. 573. The STB
rejected the more intrusive proposals that had been presented in connection with
the Ex Parte No. 573 proceedings so as not to impede the implementation of the
Service Recovery Plan.  The STB indicated that it will hold a further hearing on
December 3, 1997, at which time the Corporation will be required to address the
progress it has made in addressing the recent service problems, after which the
STB will determine whether an extension of the service order is required and
whether any additional actions are necessary.

Two railroad competitors of the Company, BNSF and KCS, proposed that they be 
sold or given access to, or granted the right to control, various Company 
assets as a purported remedy for the Company's service problems.  While the 
Company has sought and received constructive assistance from other carriers to 
deal with the congestion problems, the Company declined to agree to the BNSF 
and KCS proposals on the grounds that they would worsen the problem, are 
legally unjustified, and are aimed at obtaining competitive advantages that 
were rejected by the STB in the UP/SP merger proceeding.  

Some customers have submitted claims for damages related to shipments delayed in
transit while other customers have indicated an intention to submit claims for
damages arising out of delays to their shipments as a result of the congestion
problems.  The nature of the damages sought include, but are not limited to, 
loss or damages to lading, alternative transportation charges, additional 
production costs, lost business and lost profits.  In addition, some customers 
have asserted that they have the right to cancel contracts as a result of 
alleged material breaches of such contracts by the Company.  It is not possible 
at this time to assess the likelihood or magnitude of such liability or the 
likelihood that any of such contracts could be canceled by particular 
customers.  Each claim actually submitted to the Company is being reviewed and 
resolved on the basis of the Company's contractual relationship with the 
customer asserting the claim.  As part of this process and the Service Recovery 
Plan, the Company has offered to waive shippers' contract obligations for the 
duration of the congestion crisis on a case-by-case basis, wherever routing 
traffic over other railroads or other modes would assist the shipper and not 
worsen the congestion on the Company.

The Company experienced a number of serious accidents in July and August 1997,
although most overall safety measures continue to improve.  In August and
September 1997, the Federal Railroad Administration ("FRA") conducted an 
in-depth inquiry into the Company's safety practices and made a number of 
recommendations for improvements.  Such recommendations include creating a   
joint committee of management, labor and the FRA to review and monitor all 
aspects of safety, adding an executive position for safety reporting directly 
to the President, creating a safety hotline (direct to the President), 
re-evaluating all existing training programs and increasing the monitoring of 
train crew performance, crew fatigue

<PAGE 14>

and crew scheduling.  All such recommendations have been implemented.  The 
FRA has indicated that it may take enforcement actions against the Company.

During the last week of October, 1997, the Company experienced two additional
train collisions in Texas, which resulted in non-fatal injuries to train crew
employees.  As a result of these incidents, the FRA sent additional inspectors
to Texas and other states to monitor the Company's operations.  The Company 
also agreed voluntarily to introduce a guaranteed time-off program for 3,500 
train and engine employees which would ensure that every such employee has two 
consecutive calendar days off after working 14 consecutive calendar days.  
This program is pending approval by the joint management, labor and FRA 
committee formed to examine and adopt safety initiatives.  Once adopted, this 
program is expected to be expanded to the rest of the Company's system by 
mid-December.

Item 5.  Changes in Securities and Use of Proceeds

In connection with the merger of the St. Louis and Southwestern Railway Company
("SSW") into SSW Merger Corp and the merger of SSW Merger Corp into the Company
on  September 30, 1997, the 173,300 shares of SSW Common Stock outstanding
immediately prior to such mergers, which were held by SPT, were ultimately
converted into 4,084,432 shares of the Company's Common Stock and 355,168 
shares of the Company's Class A Stock.  The foregoing issuances of the 
Company's Common Stock and Class A Stock were made in reliance upon the 
exemption from registration set forth in Section 4(2) of the Securities Act 
of 1933, as amended.
     
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
        
       (a) Exhibits
           --------
           3  - Amendments to the Amended and Restated Articles of
                Incorporation of Union Pacific Railroad Company, effective
                September 30, 1997

           12 - Computation of Ratio of Earnings to Fixed Charges

           27 - Financial Data Schedule.
                
       (b) Reports on Form 8-K
           ------------------- 
      
           Current report filed on October 10, 1997 describing the Company's
           congestion, safety issues and Service Recovery Plan.    
                      
<PAGE 15>                      
                      
                      
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on this 14th day of November, 1997.




                               UNION PACIFIC RAILROAD COMPANY
                               ------------------------------
                                        (REGISTRANT)



                               By  /s/ Joseph E. O'Connor Jr.          
                                  ---------------------------
                                  Joseph E. O'Connor, Jr.
                                  Chief Accounting Officer




                               By  /s/ John J. Koraleski            
                                  ----------------------
                                  John J. Koraleski
                                  Executive Vice President - 
                                  Finance & Administration









                 
         UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY COMPANIES

                                EXHIBIT INDEX



Exhibit No.                     Description              
-----------                     -----------
 

 3                 Amendments to the amended and restated articles of
                   incorporation of Union Pacific Railroad Company,
                   effective September 30, 1997

 12                Computation of ratio of earnings to
                   fixed charges

 27                Financial data schedule