<PAGE>   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 March 31, 2001

                                     - OR -

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

   For the transition period from___________________ to _____________________

                          Commission file number 1-6146

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

             DELAWARE                                       94-6001323
  (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 April 30, 2001 the Registrant had outstanding 7,130 shares of
Common Stock, $10 par value, and 620 shares of 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.


<PAGE>   2





                         UNION PACIFIC RAILROAD COMPANY
                                      INDEX



                          PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Item 1:  Consolidated Financial Statements:                                                Page Number
                                                                                           -----------
<S>      <C>                                                                               <C>
         CONSOLIDATED STATEMENTS OF  INCOME (Unaudited)
               For the Three Months Ended March 31, 2001 and 2000.......................         1

         CONSOLIDATED STATEMENTS OF  FINANCIAL POSITION
               At March 31, 2001 (Unaudited) and December 31, 2000......................         2

         CONSOLIDATED STATEMENTS OF  CASH FLOWS (Unaudited)
               For the Three Months Ended March 31, 2001 and 2000.......................         3

         CONSOLIDATED STATEMENT OF CHANGES IN COMMON
         SHAREHOLDERS' EQUITY (Unaudited)
               For the Three Months Ended March 31, 2001................................         4

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited).........................        5-9

Item 2:  Management's Narrative Analysis of the Results of Operations...................       10-13

Item 3:  Quantitative and Qualitative Disclosures About Market Risk.....................        13


                                    PART II. OTHER INFORMATION

Item 1:  Legal Proceedings..............................................................        14

Item 6:  Exhibits and Reports on Form 8-K...............................................        14

Signatures..............................................................................        15
</TABLE>


                                       (i)

<PAGE>   3



PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements


CONSOLIDATED STATEMENTS OF  INCOME (Unaudited)

Union Pacific Railroad Company and Consolidated Subsidiary and Affiliate
Companies

For the Three Months Ended March 31


<TABLE>
<CAPTION>
                     Millions of Dollars, Except Ratios                           2001        2000
                                                                               ----------  ---------
<S>                                                                            <C>         <C>
OPERATING REVENUES   Rail...................................................   $    2,655  $   2,630
                                                                               ----------  ---------
OPERATING EXPENSES   Salaries, wages and employee benefits..................          894        884
                     Equipment and other rents..............................          307        289
                     Depreciation...........................................          279        269
                     Fuel and utilities  ...................................          333        293
                     Materials and supplies.................................          123        144
                     Casualty costs.........................................           86         84
                     Other costs............................................          184        202
                                                                               ----------  ---------
                     Total..................................................        2,206      2,165
                                                                               ----------  ---------
INCOME               Operating Income.......................................          449        465
                     Other income - net.....................................           29         20
                     Interest expense.......................................         (147)      (151)
                                                                               ----------  ---------
                     Income before Income Taxes.............................          331        334
                     Income taxes...........................................         (122)      (120)
                                                                               ----------  ---------
                     Net Income.............................................   $      209  $     214
                     Ratio of Earnings to Fixed Charges.....................          3.0        3.1
                                                                               ----------  ---------
</TABLE>

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



                                      -1-
<PAGE>   4





CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Union Pacific Railroad Company and Consolidated Subsidiary and Affiliate
Companies

<TABLE>
<CAPTION>
                                                                                       (Unaudited)
                                                                                         March 31,     Dec. 31,
                           Millions of Dollars                                              2001         2000
                                                                                         ----------    ----------
<S>                                                                                      <C>           <C>
ASSETS
Current Assets            Cash and temporary investments .............................   $       47    $       88
                          Accounts receivable - net ..................................          443           393
                          Inventories ................................................          323           347
                          Current deferred tax asset .................................           30            30
                          Other current assets .......................................          118           121
                                                                                         ----------    ----------
                          Total ......................................................          961           979
                                                                                         ----------    ----------
Investments               Investments in and advances to affiliated companies ........          657           644
                          Other investments ..........................................           88            84
                                                                                         ----------    ----------
                          Total ......................................................          745           728
                                                                                         ----------    ----------
Properties                Cost .......................................................       34,784        34,613
                          Accumulated depreciation ...................................       (6,958)       (6,881)
                                                                                         ----------    ----------
                          Net ........................................................       27,826        27,732
                                                                                         ----------    ----------
Other                     Other assets ...............................................          132           142
                                                                                         ----------    ----------
                          Total Assets ...............................................   $   29,664    $   29,581
                                                                                         ----------    ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities        Accounts payable ...........................................  $      428    $      558
                           Accrued wages and vacation .................................         396           388
                           Accrued casualty costs .....................................         355           345
                           Income and other taxes .....................................         263           220
                           Debt due within one year ...................................         203           207
                           Interest ...................................................          71            82
                           Other current liabilities ..................................         653           712
                                                                                         ----------    ----------
                           Total ......................................................       2,369         2,512
                                                                                         ----------    ----------
Other Liabilities and      Intercompany borrowing from UPC ............................       5,215         5,082
Shareholders' Equity       Third-party debt due after one year ........................       2,347         2,397
                           Deferred income taxes ......................................       7,766         7,705
                           Accrued casualty costs .....................................         782           811
                           Retiree benefits obligations ...............................         632           632
                           Other long-term liabilities ................................         399           440
                           Redeemable preference shares ...............................          23            23
                           Commitments and contingencies
                           Common shareholders' equity ................................      10,131         9,979
                                                                                         ----------    ----------
                           Total Liabilities and Shareholders' Equity .................  $   29,664    $   29,581
                                                                                         ----------    ----------
</TABLE>

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


                                      -2-
<PAGE>   5




CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Union Pacific Railroad Company and Consolidated Subsidiary and Affiliate
Companies

For the Three Months Ended March 31

<TABLE>
<CAPTION>
                             Millions of Dollars                                               2001         2000
                                                                                            ----------    ----------
<S>                          <C>                                                            <C>           <C>
OPERATING ACTIVITIES         Net Income .................................................   $      209    $      214
                             Non-cash charges to income:
                                 Depreciation ...........................................          279           269
                                 Deferred income taxes ..................................           62            87
                                 Other - net ............................................         (108)          (73)
                             Changes in current assets and  liabilities .................         (166)          (84)
                                                                                            ----------    ----------
                             Cash Provided by Operating Activities ......................          276           413
                                                                                            ----------    ----------
INVESTING ACTIVITIES         Capital investments ........................................         (355)         (359)
                             Proceeds from sale of assets and other investing
                              activities ................................................            9            79
                                                                                            ----------    ----------
                             Cash Used in Investing Activities ..........................         (346)         (280)
                                                                                            ----------    ----------
FINANCING ACTIVITIES         Debt repaid ................................................          (50)          (40)
                             Dividends paid to parent ...................................          (54)          (57)
                             Advances from affiliated companies - net ...................          133           (76)
                                                                                            ----------    ----------
                             Cash Provided by (Used in) Financing Activities ............           29          (173)
                                                                                            ----------    ----------
                             Net Change in Cash and Temporary Investments ...............   $      (41)   $      (40)
                             Cash and Temporary Investments at Beginning of
                              Period ....................................................           88            83
                                                                                            ----------    ----------
                             Cash and Temporary Investments at End of Period ............   $       47    $       43
                                                                                            ----------    ----------
CHANGES IN CURRENT           Accounts receivable ........................................   $      (50)   $      (20)
ASSETS AND LIABILITIES       Inventories ................................................           24            14
                             Other current assets .......................................            3           (16)
                             Accounts, wages and vacation payable .......................         (122)          (27)
                             Debt due within one year ...................................           (4)           14
                             Other current liabilities ..................................          (17)          (49)
                                                                                            ----------    ----------
                             Total ......................................................   $     (166)   $      (84)
                                                                                            ----------    ----------
SUPPLEMENTAL CASH            Cash paid (received) during the year for:
FLOW INFORMATION                  Interest ..............................................   $      161    $      165
                                  Income taxes - net ....................................          (26)           13
                                                                                            ----------    ----------
</TABLE>


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

                                      -3-
<PAGE>   6





CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY (Unaudited)
Union Pacific Railroad and Consolidated Subsidiary and Affiliate Companies
For the Three Months Ended March 31, 2001


<TABLE>
<CAPTION>
                                                                                          Accumulated Other
                                                                                      Comprehensive Income (Loss)
                                                                             -------------------------------------------
                                                                              Minimum      Foreign
                                         [a]     [b]                          Pension     Currency
                                       Common  Class A-  Paid-in-  Retained  Liability   Translation  Derivative
 Millions of Dollars                   Shares  Shares    Surplus   Earnings  Adjustment  Adjustments  Adjustments  Total   Total
                                       ------  -------  --------  ---------  ----------  -----------  -----------  -----  -------
<S>                                    <C>     <C>      <C>       <C>        <C>         <C>          <C>          <C>    <C>
Balance at December 31, 2000 ........  $   --  $    --  $  4,782  $   5,197  $       (2) $        2   $       --   $  --  $ 9,979
                                       ------  -------  --------  ---------  ----------  ----------   ----------   -----  -------
Net Income ..........................      --       --        --        209          --          --           --      --      209
Other Comprehensive Income
(Loss), net of tax:
     Minimum Pension Liability
        Adjustment ..................      --       --        --         --          --          --           --      --       --
     Foreign Currency Translation
        Adjustments .................      --       --        --         --          --          (4)          --      (4)      (4)
     Derivative  Adjustments ........      --       --        --         --          --          --            1       1        1
                                                                                                                          -------
Comprehensive Income ................      --       --        --         --          --          --           --      --      206
Dividends declared ..................      --       --        --        (54)         --          --           --      --      (54)
                                       ------  -------  --------  ---------  ----------  ----------   ----------   -----  -------
Balance at March 31, 2001 ...........  $   --  $    --  $  4,782  $   5,352  $       (2) $       (2)  $        1   $  (3) $10,131
                                       ------  -------  --------  ---------  ----------  ----------   ----------   -----  -------
</TABLE>


[a]      Common stock, $10.00 par value; 9,200 shares authorized, 4,465
         outstanding.

[b]      Class A stock, $10.00 par value; 800 shares authorized, 388
         outstanding.

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


                                       -4-
<PAGE>   7





    UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY AND AFFILIATE
                                   COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


1.       RESPONSIBILITIES FOR FINANCIAL STATEMENTS - Union Pacific Railroad
         Company (the Registrant), a Class I railroad incorporated in Delaware
         and a wholly-owned subsidiary of Union Pacific Corporation (the
         Corporation or UPC), together with a number of wholly-owned and
         majority-owned subsidiaries, certain affiliates and various
         minority-owned companies (collectively, the Company or Railroad),
         operates various railroad and railroad-related businesses. The
         Company's rail operations include for all periods the operations of
         Union Pacific Railroad Company, a Utah corporation and predecessor to
         the Registrant (UPRR), and the rail operating subsidiaries of Southern
         Pacific Rail Corporation (Southern Pacific or SP). The consolidated
         financial statements of 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
         presented. The consolidated financial statements should be read in
         conjunction with the consolidated financial statements and notes
         thereto contained in the Company's Annual Report on Form 10-K for the
         year ended December 31, 2000. The results of operations for the three
         months ended March 31, 2001 are not necessarily indicative of the
         results for the year ending December 31, 2001. Certain prior year
         amounts have been reclassified to conform to the 2001 financial
         statement presentation.

2.       ACQUISITIONS

         SOUTHERN PACIFIC - UPC consummated the acquisition of Southern Pacific
         in September 1996. Southern Pacific was acquired for $4.1 billion
         (sixty percent of the outstanding Southern Pacific common shares were
         converted into UPC common stock, and the remaining 40% of the
         outstanding shares were acquired for cash). UPC's investment in
         Southern Pacific was subsequently pushed down to the Railroad. The
         acquisition of Southern Pacific has been accounted for using the
         purchase method and was fully consolidated into the Company's results
         beginning October 1996.

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

         Merger Liabilities - In 1996, the Company recognized a $958 million
         pre-tax liability in the SP purchase price allocation for costs
         associated with SP's portion of these activities. Merger liability
         activity reflected cash payments for merger consolidation activities
         and reclassification of contractual obligations from merger liabilities
         to contractual liabilities. In addition, where merger implementation
         has varied from the original merger plan, the Company 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 Company to incur more costs than were
         envisioned in the original merger plan, such costs are charged to
         expense in the period incurred. For the three months ended March 31,
         2001, the Company charged $2 million against the merger liability. The
         remaining merger payments will be made during 2001 as labor
         negotiations are completed and implemented, and related merger
         consolidation activities are finalized.


                                      -5-
<PAGE>   8




         The components of the merger liability as of March 31, 2001 were as
         follows:

<TABLE>
<CAPTION>
                                                                     Original    Cumulative  Mar. 31, 2001
      Millions of Dollars                                            Liability    Activity     Liability
                                                                    ----------   ----------  -------------
<S>                                                                 <C>          <C>          <C>
Labor protection related to legislated and contractual
     obligations ................................................   $      361   $      361   $       --
Severance and related costs .....................................          343          273           70
Contract cancellation fees and facility and line
     closure costs ..............................................          145          141            4
Relocation costs ................................................          109           96           13
                                                                    ----------   ----------   ----------
Total ...........................................................   $      958   $      871   $       87
                                                                    ----------   ----------   ----------
</TABLE>

3.       FINANCIAL INSTRUMENTS

         ADOPTION OF STANDARD - Effective January 1, 2001, the Company adopted
         Financial Accounting Standards Board Statement No. 133, "Accounting for
         Derivative Instruments and Hedging Activities" (FAS 133) and Financial
         Accounting Standards Board Statement No. 138, "Accounting for Certain
         Derivative Instruments and Certain Hedging Activities" (FAS 138). FAS
         133 and FAS 138 requires that the changes in fair value of all
         derivative financial instruments the Company uses for fuel hedging
         purposes be recorded in the Company's consolidated statements of
         financial position. In addition, to the extent fuel hedges are
         ineffective due to pricing differentials resulting from the geographic
         dispersion of the Company's operations, income statement recognition of
         the ineffective portion of the hedge position will be required. The
         adoption of FAS 133 and FAS 138 resulted in the recognition of a $2
         million asset on January 1, 2001. Activity through March 31, 2001, is
         disclosed within the following narrative and tables.

         STRATEGY AND RISK - The Company uses derivative financial instruments
         in limited instances and for other than trading purposes to manage risk
         as it relates to changes in fuel prices. The Company uses swaps,
         futures and/or forward contracts to mitigate the downside risk of
         adverse price movements and hedge the exposure to variable cash flows.
         The use of these instruments also limits future gains from favorable
         price movements. The purpose of this program is to protect the
         Company's operating margins and overall profitability from adverse fuel
         price changes.

         MARKET AND CREDIT RISK - The Company addresses market risk related to
         these derivative financial instruments by selecting instruments whose
         value fluctuations highly correlate with the underlying item being
         hedged. Credit risk related to derivative financial instruments, which
         is minimal, is managed by requiring high credit standards for
         counterparties and periodic settlements. The total credit risk
         associated with the Company's counterparties was $2 million at both
         March 31, 2001 and December 31, 2000. The Company has not been required
         to provide collateral; however, the Company 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 Company's
         derivative financial instrument positions at March 31, 2001 and
         December 31, 2000 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.

         FUEL STRATEGY - Fuel costs are a significant portion of the Company's
         total operating expenses. As a result of the significance of fuel costs
         and the historical volatility of fuel prices, the Company periodically
         uses swaps, futures and/or forward contracts to mitigate the impact of
         adverse fuel price changes.


                                      -6-
<PAGE>   9


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

<TABLE>
<CAPTION>
     Millions                                                             March 31,   December 31,
     Except Percentages and Average Commodity Prices                        2001          2000
                                                                         ----------   ------------
<S>                                                                      <C>          <C>
Fuel Hedging:
     Number of gallons hedged for the remainder of 2001 [a] ..........           76           101
     Percentage of forecasted 2001 fuel consumption hedged ...........            8%            8%
     Average price of 2001 hedges outstanding (per gallon) [b] .......   $     0.68    $     0.68
                                                                         ----------    ----------
</TABLE>


         [a]      Fuel hedging transactions expire December 31, 2001.

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

                  The asset and liability positions of the Company's outstanding
         derivative financial instruments at March 31, 2001 and December 31,
         2000 are as follows:

<TABLE>
<CAPTION>
                                                                March 31,    December 31,
     Millions of Dollars                                           2001           2000
                                                               ------------   ------------
<S>                                                            <C>            <C>
Fuel Hedging:
     Gross fair market asset position ......................   $          2   $          2
     Gross fair market (liability) position ................             --             --
                                                               ------------   ------------
Total net asset position ...................................   $          2   $          2
                                                               ------------   ------------
</TABLE>

                  These positions will be reclassified from accumulated other
         comprehensive income to fuel expense over the next nine months as fuel
         is consumed.

                  The Company's use of derivative financial instruments for fuel
         hedging decreased fuel costs by $2 million and $10 million for the
         three months ended March 31, 2001 and March 31, 2000, respectively. At
         March 31, 2001, there was no ineffectiveness recorded within fuel
         expense for fuel hedging.

         SALE OF RECEIVABLES - The Railroad has sold, on a revolving basis, an
         undivided percentage ownership interest in a designated pool of
         accounts receivable to third parties through a bankruptcy-remote
         subsidiary (the Subsidiary). The Subsidiary is collateralized by a $66
         million note from the Registrant. 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 March 31, 2001 and December 31, 2000, accounts
         receivable are presented net of $600 million of receivables sold.

4.       CAPITAL STOCK - The number of shares shown in the Common Stock section
         of the Consolidated Statement of Changes in Common Shareholders' Equity
         on page 4 excludes 2,665 shares of Common Stock and 232 shares of Class
         A Stock owned by Southern Pacific, an affiliate of the Registrant,
         whose results are included in the company's consolidated financial
         statements.

                                      -7-
<PAGE>   10




5.       OTHER INCOME - Other income included the following for the three months
         ended March 31, 2001 and March 31, 2000:

<TABLE>
<CAPTION>
                                                             Three Months Ended March 31,
                                                             ----------------------------
     Millions of Dollars                                          2001          2000
     -------------------                                       ----------    ----------
<S>                                                            <C>           <C>
Net gain on non-operating asset dispositions ...............   $       17    $       10
Rental income ..............................................           17            14
Interest income ............................................            1             1
Other - net ................................................           (6)           (5)
                                                               ----------    ----------
Total ......................................................   $       29    $       20
                                                               ----------    ----------
</TABLE>


6.       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.

7.       COMMITMENTS AND CONTINGENCIES - There are various claims and lawsuits
         pending against the Company and certain of its subsidiaries. The
         Company is also subject to federal, state and local environmental laws
         and regulations, pursuant to which it is currently participating in the
         investigation and remediation of numerous sites. For environmental
         sites where remediation costs can be reasonably determined, and where
         such remediation is probable, the Company has recorded a liability. At
         March 31, 2001, the Company had accrued $173 million for estimated
         future environmental costs and believes it is reasonably possible that
         actual environmental costs may differ from such estimate. In addition,
         the Company and its subsidiaries periodically enter into financial and
         other commitments in connection with their businesses. It is not
         possible at this time for the Company 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 Company has recorded a liability. The Company does not
         expect that any known lawsuits, claims, environmental costs,
         commitments, contingent liabilities or guarantees will have a material
         adverse effect on its consolidated financial condition, results of
         operations or liquidity.

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



                                      -8-
<PAGE>   11




9.       WORK FORCE REDUCTION PLAN - Prompted by signs of an economic slowdown,
         the Corporation's Board of Directors approved a work force reduction
         plan (the Plan) in the fourth quarter of 2000. The Plan calls for the
         elimination of approximately 2,000 Railroad positions during 2001. The
         positions will be eliminated through a combination of attrition,
         subsidized early retirement and involuntary layoffs and will affect
         agreement and non-agreement employees across the entire 23-state
         Railroad system. As of March 31, 2001, 776 positions had been
         identified for elimination in accordance with the Plan. Approximately
         450 of those eliminations will be made through subsidized early
         retirements and involuntary layoffs with the remainder coming through
         attrition.

                  The Company accrued $115 million pre-tax or $72 million
         after-tax in the fourth quarter of 2000 for costs related to the Plan.
         The expense was charged to salaries, wages and employee benefits in the
         Company's 2000 consolidated statement of income. Plan liability
         activity in 2001 of $17 million reflected severance benefits paid in
         cash or reclassified to contractual liabilities for future payments
         to employees severed in the current period.

                  Plan liability activity reflects severance for approximately
         half of the 450 eliminations through March 31, 2001. The remaining
         termination benefits related to early retirements are expected to be
         reflected in the second quarter as the early retirement program is
         completed. The components of the Plan liability and 2001 activity are
         as follows:

<TABLE>
<CAPTION>
                                                       Original      Cumulative    March 31, 2001
     Millions of Dollars                               Liability      Activity        Liability
                                                     ------------   ------------   --------------
<S>                                                  <C>            <C>            <C>
Severance and related costs ......................   $        115   $         17   $           98
                                                     ------------   ------------   --------------
</TABLE>




                                      -9-
<PAGE>   12




ITEM 2.    MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

           UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY
                             AND AFFILIATE COMPANIES
                              RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000


Union Pacific Railroad Company (the Registrant), a Class I railroad incorporated
in Delaware and a wholly owned subsidiary of Union Pacific Corporation (the
Corporation or UPC), together with a number of wholly owned and majority-owned
subsidiaries, certain affiliates and various minority-owned companies
(collectively, the Company or Railroad), operates various railroad and
railroad-related businesses.

NET INCOME - First quarter 2001 net income of $209 million decreased $5 million
(2%) compared to the first quarter of 2000. Higher fuel prices, wage inflation,
and rent expense were partially offset by higher commodity revenue, productivity
gains and higher other income.

OPERATING REVENUES - Rail operating revenues increased $25 million (1%) to a
first-quarter record $2.7 billion on 1% commodity revenue gain.

         The following tables summarize the year-over-year changes in rail
commodity revenue, revenue carloads and average revenue per car by commodity
type:


<TABLE>
<CAPTION>
Commodity Revenue                Three Months Ended March 31,
                                 ----------------------------
In Millions of Dollars               2001          2000           Change
                                 ------------   ------------   ------------
<S>                              <C>            <C>                       <C>
Agricultural .................   $        370   $        350              6%
Automotive ...................            276            290             (5%)
Chemicals ....................            390            412             (5%)
Energy .......................            593            529             12%
Industrial Products ..........            472            492             (4%)
Intermodal ...................            450            441              2%
                                 ------------   ------------   ------------
Total ........................   $      2,551   $      2,514              1%
                                 ------------   ------------   ------------
</TABLE>

<TABLE>
<CAPTION>
Revenue Carloads                 Three Months Ended March 31,
                                 ----------------------------
In Thousands                         2001           2000          Change
                                 ------------   ------------   ------------
<S>                              <C>            <C>            <C>
Agricultural .................            219            221             (1%)
Automotive ...................            185            199             (7%)
Chemicals ....................            219            232             (5%)
Energy .......................            537            480             12%
Industrial Products ..........            336            355             (5%)
Intermodal ...................            683            687             (1%)
                                 ------------   ------------   ------------
Total ........................          2,179          2,174             --%
                                 ------------   ------------   ------------
</TABLE>


                                      -10-
<PAGE>   13


<TABLE>
<CAPTION>
                                 Three Months Ended March 31,
                                 ----------------------------
Average Revenue Per Car ......       2001          2000           Change
                                 ------------   ------------   ------------
<S>                              <C>            <C>                       <C>
Agricultural .................   $      1,687   $      1,582              7%
Automotive ...................          1,486          1,456              2%
Chemicals ....................          1,779          1,777             --
Energy .......................          1,106          1,103             --
Industrial Products ..........          1,405          1,387              1%
Intermodal ...................            659            642              3%
                                 ------------   ------------   ------------
Total ........................   $      1,171   $      1,156              1%
                                 ------------   ------------   ------------
</TABLE>


Agricultural - Revenue increased despite a slight carload decline. Carloads
decreased primarily due to weak export demand for corn. Partially offsetting
these declines were strong domestic wheat shipments as well as export demand to
Mexico and Gulf ports. Average revenue per car was up $105 primarily due to a
mix of longer-haul business and selective price increases.

Automotive - Carloads decreased due to weak consumer demand for finished
vehicles and high supplier inventories. Materials carloads were also down due to
lower production levels. Average revenue per car increased 2% due to greater use
of boxcars, rather than containers, to support materials shipments and a lower
mix of lower average revenue per car materials shipments.

Chemicals - Carloads decreased due to a slowing economy that reduced demand for
plastics and liquid and dry chemicals. High natural gas prices reduced
production and demand for plastics and fertilizer. Fertilizer carloads were
further reduced due to poor weather in March 2001.

Energy - The Railroad recorded its best quarter ever for revenue, carloads, and
average trains per day out of the Southern Powder River Basin. The growth was
the result of high utility demand and market share gains. Cool winter weather
and higher natural gas prices reduced utility stockpiles compared to a year ago.
Delays due to severe weather partially offset these increases.

Industrial Products - Carloads were lower due to an economic slowdown that
decreased demand for lumber, construction materials and consumer goods. A weak
domestic steel industry also contributed to the decline. Stone carloads were
lower as adverse weather in the Southwest resulted in reduced demand for highway
construction materials. Average revenue per car increased slightly as a result
of declines in lower average revenue per car stone shipments and selected price
increases.

Intermodal - Revenue set a first-quarter record due primarily to an increase in
average revenue per car. Carloads decreased slightly as the softening economy
reduced demand for domestic intermodal shipments. The domestic decline was
partially offset by growth in import carloads from Asia. Average revenue per car
increased as a result of demand-driven price increases.

OPERATING EXPENSES - Operating expenses increased $41 million (2%), reflecting
higher fuel prices, inflation, and higher rent expense partially offset by
improved productivity and cost control initiatives.

Salaries, Wages, and Employee Benefits - Labor costs increased $10 million (1%)
reflecting wage and benefit increases. Partially offsetting these cost increases
were fewer employees and higher train crew productivity.


                                      -11-
<PAGE>   14


Equipment and Other Rents - Expenses increased $18 million (6%) due primarily to
increased cycle times. Lower automotive carloads were a driver of the increased
cycle time as excess cars were temporarily stored at assembly plants and
unloading facilities. Locomotive leases also increased rent expense as more
units were leased in the first quarter of 2001 compared to 2000.

Depreciation - Expenses increased $10 million (4%), reflecting the 2000 and
first quarter 2001 capital programs. Capital spending totaled $355 million in
the first quarter 2001 compared to $359 million in 2000.

Fuel and Utilities - Expenses increased $40 million (14%), driven by higher fuel
prices and utilities expense. In the first quarter 2001, 32% of the Railroad's
fuel consumption was hedged at an average of 69 cents per gallon (excluding
taxes, transportation charges, and regional pricing spreads), lowering fuel
costs by $2 million. For the first quarter 2000, fuel consumption was 10% hedged
at 40 cents per gallon, which resulted in a $10 million decrease in fuel
expense. As of March 31, 2001, projected fuel consumption for the remainder of
2001 is 8% hedged at 68 cents per gallon (see note 3 to the consolidated
financial statements).

Materials and Supplies - Costs decreased $21 million (15%), reflecting decreases
in locomotive overhauls and running repairs as well as freight car repairs.

Casualty Costs - Costs increased $2 million (2%) due to slightly higher
settlement costs.

Other Costs - Costs decreased $18 million (9%), reflecting productivity gains
and cost control initiatives.

OPERATING INCOME - Operating income decreased $16 million (3%) to $449 million
for the first quarter of 2001. The operating ratio in 2001 was 83.1%, 0.8
percentage points higher than 2000's 82.3%.

NON-OPERATING ITEMS - Non-operating expense decreased $13 million (10%) in 2001
due to lower interest expense, higher real estate sales and other miscellaneous
items. Income taxes increased $2 million in 2001 over the same period in 2000
reflecting lower state incentive credits partially offset by the tax impact of
lower income before income taxes.

                                  OTHER MATTERS

COMMITMENTS AND CONTINGENCIES - There are various claims and lawsuits pending
against the Company and certain of its subsidiaries. In addition, the Company
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 7 to the consolidated
financial statements, which is incorporated herein by reference.

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


                                      -12-
<PAGE>   15




                             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 Company) are or will be, forward-looking within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934. These
forward-looking statements include, without limitation, statements regarding:
expectations as to operational improvements; expectations as to cost savings,
revenue growth and earnings; the time by which certain objectives will be
achieved; estimates of costs relating to environmental remediation and
restoration; proposed new products and services; expectations that claims,
lawsuits, environmental costs, commitments, contingent liabilities, labor
negotiations or agreements, or other matters will not have a material adverse
effect on the Company's consolidated financial position, results of operations
or liquidity; and statements concerning projections, predictions, expectations,
estimates or forecasts as to the Company'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 Company 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 Company 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 Company does update one or more
forward-looking statements, no inference should be drawn that the Company will
make additional updates with respect thereto or with respect to other
forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided
in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
Disclosure concerning market risk-sensitive instruments is set forth in note 3
to the consolidated financial statements included in Item 1 of Part I of this
Report and is incorporated herein by reference.


                                      -13-
<PAGE>   16




PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ENVIRONMENTAL MATTERS - As previously reported, in March 1998, the Railroad
received notice that the Railroad and Clean Harbors, a waste disposal firm, were
the subjects of a criminal investigation by the Environmental Protection Agency
(EPA) and the Federal Bureau of Investigation. Tank cars containing hazardous
waste billed to Clean Harbors' transload facility in Sterling, Colorado were
held in the Railroad's Sterling, Colorado rail yard for periods longer than ten
days prior to placement in Clean Harbors' facility, allegedly in violation of
hazardous waste regulations. The Railroad cooperated with the investigation and
responded to grand jury subpoenas. A finding of violation could have resulted in
significant criminal or civil penalties. The EPA has notified the Railroad
verbally that the investigation has been concluded and that no charges will be
brought against the Railroad. The EPA also instructed the Railroad to retrieve
the documents it produced in response to the subpoenas. The documents have been
retrieved. Although no written confirmation has been received, the Railroad
anticipates no further legal action.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (A)  EXHIBITS

              12 -- Computation of ratio of earnings to fixed charges.

         (B)  REPORTS ON FORM 8-K

              On January 18, 2001, the Registrant filed a Current Report on Form
              8-K announcing UPC's financial results for the fourth quarter of
              2000.

              On April 26, 2001, the Registrant filed a Current Report on Form
              8-K announcing UPC's financial results for the first quarter of
              2001.



                                      -14-
<PAGE>   17




                                   SIGNATURES


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


Dated: May 15, 2001



                                     UNION PACIFIC RAILROAD COMPANY
                                     (Registrant)

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




                                      -15-
<PAGE>   18





           UNION PACIFIC RAILROAD COMPANY AND CONSOLIDATED SUBSIDIARY
                             AND AFFILIATE COMPANIES

                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER          DESCRIPTION OF EXHIBITS FILED WITH THIS STATEMENT
    -------         -------------------------------------------------
<S>                 <C>
      12            Computation of ratio of earnings to fixed charges
</TABLE>