UNP 10-K & 10-Q changes, risk factors and insider trading

We urge you to consider carefully the factors described below and the risks that they present for our operations as well as the risks addressed in other reports and materials that we file with the SEC and the other information included or incorporated by reference in this Form 10-K. When the factors, events, and contingencies described below or elsewhere in this Form 10-K materialize, our business, reputation, financial condition, results of operations, cash flows, or prospects can be materially adversely affected. In such case, the trading price of our common stock could decline, and you could lose part or all of your investment. SomeThe ofdisclosures thein factors,this events,section reflect our beliefs and contingenciesopinions discussedas belowto mayfactors havethat occurredcould materially and adversely affect us in the past,future. References to past events are provided by way of example only and the disclosures below are not representationsintended to be a complete listing or a representation as to whether or not thesuch factors, events, or contingenciesfactors have occurred in the past,past butor aretheir provided because future occurrenceslikelihood of suchoccurring factors,in events,the or contingencies could have a material adverse effect.future. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our business, reputation, financial condition, results of operations, cash flows, and prospects.

WeThe Relyability onto Technologyupdate andor Technologymaintain Improvementstechnology incould Ouradversely Businessaffect Operationsour operations – We rely on information technology in all aspects of our business, including technology systems operated by us (whether created by us or purchased), under control of third parties, and open-source software. If we do not have sufficient capital or do not deploy sufficient capital in a timely manner to acquire, develop, or implement new technology or maintain or upgrade current systems, such as Positive Train Control (PTC), NetControl, or the latest version of our transportation control systems, we may suffer a rail service outage or competitive disadvantage within the rail industry and with companies providing other modes of transportation service, which could have a material adverse effect on our results of operations, financial condition, and liquidity.

A Significantsignificant Portionportion of Ourour Revenuesrevenues Involvesinvolves Transportationtransportation of Commoditiescommodities to and from Internationalinternational Marketsmarkets – Although revenues from our operations are attributable to transportation services provided in the U.S., a significant portion of our revenues involves the transportation of commodities to and from international markets, including Mexico, Canada, and Southeast Asia, by various carriers and, at times, various modes of transportation. Significant and sustained interruptions of trade with Mexico, Canada, or countries in Southeast Asia, including China, could adversely affect customers and other entities that, directly or indirectly, purchase or rely on rail transportation services in the U.S. as part of their operations, and any such interruptions, including international armed conflictsconflicts, such as the Russia-Ukraine and Israel-Hamas wars, could have a material adverse effect on our results of operations, financial condition, and liquidity. Any one or more of the following could cause a significant and sustained interruption of trade with Mexico, Canada, or countries in Southeast Asia: (a) a deterioration of security for international trade and businesses; (b) the adverse impact of new laws, rules, and regulations or the interpretation or enforcement of laws, rules, and regulations by government entities, courts, or regulatory bodies, including the United States-Mexico-Canada Agreement (USMCA) or other international trade agreements; (c) actions of taxing authorities that affect our customers doing business in or with foreign countries; (d) any significant adverse economic developments, such as extended periods of high inflation, material disruptions in the banking sector or in the capital markets of these foreign countries, and significant changes in the valuation of the currencies of these foreign countries that could materially affect the cost or value of imports or exports; (e) shifts in patterns of international trade, including as a result of changes to international trade agreements or policies, that adversely affect import and export markets; (f) a material reduction in foreign direct investment in these countries; and (g) public health crises, including the outbreak of pandemic or contagious disease, such as the coronavirus and its variant strains (COVID). Changes to trade policy both U.S. and foreign, including imposition of tariffs on imports, could cause demand for shipping from international markets to decrease, and if the declines are significant enough, it could have a material adverse effect on our results of operations, financial condition, and liquidity.

We Areare Dependentdependent on Certaincertain Keykey Supplierssuppliers of Locomotiveslocomotives and Railrail – Due to the capital-intensive nature and sophistication of locomotive equipment, parts, and maintenance, potential new suppliers face high barriers to entry. Therefore, if oneany of theour two domestic suppliers of locomotives discontinues manufacturing locomotives, supplying parts, or providing maintenance for any reason, including bankruptcy or insolvency or the inability to manufacture locomotives that meet efficiency or regulatory emissions standards, we could experience significant cost increases and reduced availability of the locomotives that are necessary for our operations. Additionally, we utilize a limited number of steel producers that meet our rail specifications. Rail is critical to our operations for rail replacement programs, maintenance, and for adding additional network capacity, new rail and storage yards, and expansions of existing facilities. This industry similarly has high barriers to entry, and if there is any significant consolidations or mergers in this industry, or one of these suppliers discontinues operations for any reason, including bankruptcy or insolvency, we could experience both significant cost increases for rail purchases and difficulty obtaining sufficient rail for maintenance and other projects. Changes to trade agreements or policies that result in increased tariffs on goods imported into the United States could also result in significant cost increases for rail purchases and difficulty obtaining sufficient rail.

We Areare Subjectsubject to Significantsignificant Governmentalgovernmental Regulationregulation – We are subject to governmental regulation by a significant number of federal, state, and local authorities covering a variety of health, safety, labor, employment, environmental, economic (as discussed below), tax, social, and other matters. Many laws and regulations require us to obtain and maintain various licenses, permits, and other authorizations, and we cannot guarantee that we will continue to be able to do so. Our failure to comply with applicable laws and regulations could have a material adverse effect on us as a result of litigation or proceedings by private parties, governments, or regulators, including and in addition to those described in Note 17 to the Consolidated Financial Statements entitled "Commitments and Contingencies." Governments or regulators may change the legislative or regulatory frameworks that we operate in without providing us any recourse to address any adverse effects on our business, including, without limitation, regulatory determinations or rules regarding dispute resolution, increasing the amount of our traffic subject to common carrier regulation, business relationships with other railroads, use of embargoes, calculation of our cost of capital or other inputs relevant to computing our revenue adequacy, the prices we charge, changes in tax rates, enactment of new tax laws or tariffs, and revision in tax regulations. Significant legislative activity in Congress or regulatory activity by other government branches or agencies, such as the STB, could expand regulation of railroad operations and pricing for rail services, which could reduce the viability of capital spending on our rail network, facilities, and equipment, and increase our costs for purchased goods and services. Such legislative or regulatory activity, or recent tariff activity imposed in the U.S. and retaliatory tariffs implemented in other countries, could have a material adverse effect on our results of operations, financial condition, and liquidity. During fiscal year 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and materials. Several countries also implemented or proposed retaliatory tariffs on imports from the U.S., as well as other barriers to trade. Incremental import tariffs adversely affected demand for our services and increased our costs for purchased goods and services during fiscal year 2025 and may continue to do so in 2026. In addition, retaliatory tariffs by regions outside the U.S., currently in effect or adopted in the future, may impact demand for our services and our costs for purchased goods and services.

We Faceface Competitioncompetition from Otherother Railroadsrailroads and Otherother Transportationtransportation Providersproviders – We face competition from other railroads, motor carriers, ships, barges, and pipelines. Our main railroad competitor is Burlington Northern Santa Fe LLC. Its primary subsidiary, BNSF Railway Company (BNSF), operates parallel routes in many of our main traffic corridors. In addition, we operate in corridors served by other railroads and motor carriers. Motor carrier competition exists in all three of our commodity groups. Because of the proximity of our routes to major inland and Gulf Coast waterways, barges can be particularly competitive, especially for grain and bulk commodities in certain areas where we operate. In addition to price competition, we face competition with respect to transit times, quality, and reliability of service from motor carriers and other railroads. Motor carriers in particular cangenerally have an advantage over railroads with respect to transit times and timeliness of service. Additionally, we must build or acquire and maintain our rail system, while trucks, barges, and maritime operators are able to use public rights-of-way maintained by public entities. Any of the following could also affect the competitiveness of our transportation services for some or all of our commodities, which could have a material adverse effect on our results of operations, financial condition, and liquidity: (a) improvements or expenditures materially increasing the quality or reducing the costs of these alternative modes of transportation, such as autonomous or more fuel efficient trucks, (b) legislation that eliminates or significantly increases the existing size or weight limitations applied to motor carriers, or (c) legislation or regulatory changes that impose operating restrictions or requirements on railroads or that adversely affect the profitability of some or all railroad traffic. Many movements face product or geographic competition where our customers can use different products (e.g., natural gas instead of coal, sorghum instead of corn) or commodities from different locations (e.g., grain from states or countries that we do not serve, crude oil from different regions). Sourcing different commodities or different locations allows shippers to substitute different carriers, and such competition may reduce our volumes or constrain prices. Additionally, any future consolidation of the rail industry could materiallyresult affectin ourincreased competitivecompetition environment.among industry participants.

We Maymay Bebe Affectedaffected by Climateclimate Changechange and Marketmarket or Regulatoryregulatory Responsesresponses to Climateclimate Changechange – Climate change, including the impact of global warming and transition risks involving policy, legal risks, and market risks, could have a material adverse effect on our results of operations, financial condition, and liquidity on both a long-term and near-term basis. Restrictions, caps, taxes, or other controls on emissions of GHGs,greenhouse gases (GHGs), including diesel exhaust, could significantly increase our operating costs. Restrictions on emissions could also affect our customers that (a) use commodities that we carry to produce energy, (b) use significant amounts of energy in producing or delivering the commodities we carry, or (c) manufacture or produce goods that consume significant amounts of energy or burn fossil fuels, including chemical producers, farmers and food producers, and automakers and other manufacturers. Significant cost increases, government regulation, or changes of consumer preferences for goods or services relating to alternative sources of energy, emissions reductions, and GHG emissions can materially affect the markets for the commodities we carry and demand for our services, which in turn could have a material adverse effect on our results of operations, financial condition, and liquidity. Government incentives encouraging the use of alternative sources of energy, including modifications or elimination of such incentives, also can affect certain of our customers and the markets for certain of the commodities we carry in a manner that could unpredictably alter our traffic patterns or reduce demand.

Our efforts to achieve emission reduction targets or aspirations could significantly increase our operational costs and capital expenditures. In addition, stakeholder expectations regarding some of these matters may be evolving and there may be differing views among stakeholders, which could harm our reputation or increase our costs. Our ability to meet such targets or aspirations can depend on significant technological advancements, including, for example, suitable alternative fuels and zero-emissions locomotives, and when such technological advancements will take place, if at all, and whether they will be readily available on commercially reasonable terms is currently unknown. There can be no assurances we will achieve our emission reduction targets or aspirations, or that the associated costs will not be higher than expected, or that the regulatory landscape will not have a negative impact on our results of operations, financial condition, and liquidity. Government mandates may lead to the premature adoption of unproven and unreliable technology, which could negatively affect operational reliability, customer serviceservice, and supply chain continuity.

We Areare Affectedaffected by Fluctuatingfluctuating Fuelfuel Pricesprices – Fuel costs constitute a significant portion of our transportation expenses. Diesel fuel prices can be subject to dramatic fluctuations, and significant price increases could have a material adverse effect on our operating results. Although we currently are able to recover a significant amount of our fuel expenses from our customers through revenues from fuel surcharges, we cannot be certain that we will always be able to mitigate rising or elevated fuel costs through our fuel surcharges. Additionally, future market conditions or legislative or regulatory activities could adversely affect our ability to apply fuel surcharges or adequately recover increased fuel costs through fuel surcharges. As fuel prices fluctuate, our fuel surcharge programs trail such fluctuations in fuel prices by approximately two months and are from time-to-time a significant source of quarter-over-quarter and year-over-year volatility, particularly in periods of rapidly changing prices. International, political, and economic factors, events and conditions, including international armed conflicts such as the Russia-Ukraine and Israel-Hamas wars, and other geopolitical tensions in the Middle East,East and elsewhere, affect the volatility of fuel prices and supplies. Weather can also affect fuel supplies and limit domestic refining capacity. A severe shortage of, or disruption to, domestic fuel supplies could have a material adverse effect on our results of operations, financial condition, and liquidity. Alternatively, lower fuel prices could have a negative impact on certain commodities we transport, such as coal and domestic drilling-related shipments, which could have a material adverse effect on our results of operations, financial condition, and liquidity.

•Safety – 2024Building wason the foundation and commitment to our safety culture, 2025 furthered our progress towards world-class safety. With a transformational yearfocus on ourfour journey to becoming the safest railroad. Our strategy is broken into fourcentral pillars – Injury Prevention, Leverage Technology, Situational Awareness Testing, and Peer-to-Peer Engagement.Engagement, we are cultivating a safety-focused mindset so all of our employees return home safely each day.

Injury Prevention efforts focus on specific, critical tasks to reduce the risk of injury or derailment. These critical tasks are those where any form of non-compliance can result in a serious injury. Training is keyvital to helpingteach our employees understand how to safely execute those critical tasks safely.in order to reduce the risk of injury or derailment.

We areBy Leveraging TechnologyTechnology, we seek to eliminate or automate activities with the most risk. We have more thanOver 7,000 wayside detectors that monitor freight cars and locomotives in real time, generating 1672 million data points daily to proactively identify and mitigate risks. We are building safer trains with our proprietary Physics Train Builder technology, which allows us to evaluate train and route characteristics to enable proactive intervention by our Operating Practices Command Center to prevent derailments. We utilize our autonomous geometry car fleet to inspect 500,000 miles of track annually. This technology and the data it provides enable us to direct investments and resources in the right place, helping to significantly reduce track-caused derailments over the last 10 years.

Situational Awareness Testing (a program we call COMMIT) is our program that observes, tests, and coaches our employees to promote understanding and compliance with our work rules. ThisCOMMIT goes beyond thetraditional classroom,classroom learning, with an emphasis on beingin-the-field in the fieldtraining with the employees asactively they are performing the activities that runrunning the railroad.

Peer-to-Peer Engagement is drivingdrives employee ownership through engagement with our safety programs. ThisOur isculture our culture,embodies a personal commitment to do our jobs with a passion for safety so everyone goes home safely.safe. Employees are encouraged to speak up if they see unsafe behaviors.

The focus on these four pillars iscontinues drivingto drive improvement, resulting in our best-ever personal injury and derailment incident rate annual safety results. OurCompared to 2024, our personal injury rate (the number of reportable injuries for every 200,000 employee-hours worked) isof down0.68 23%decreased 24% and our derailment incident rate (the number of reportable derailment incidents per million train miles) downof 20%1.75 comparedimproved to 2023 results.19%.

•Financial Resultsresults – Core pricing gains, strong productivity, and 3%1% volume growth positively impacted our financial results.results and offset the impact of inflation, negative business mix, and acquisition-related costs. Operating income of $9.7$9.8 billion increased 7%1% from 2023,2024, and our operating ratio wasimproved 59.9%,10 improving 2.4basis points fromto 2023.59.8% in 2025. Net income of $6.7$7.1 billion translated into earnings of $11.09$11.98 per diluted share, upimproving 6%8% from 2023.the prior year.

We generated $9.3 billion of cash provided by operating activities, yielded free cash flow of $2.8$2.3 billion after reductions of $3.3$3.8 billion for cash used in investing activities and $3.2 billion in dividends paid. Both cashCash provided by operating activities andwas freepositively cash flow were higherimpacted by $384 million$0.3 billion due to paymentsthe inenactment 2023of relatedH.R.1 toand backthe wagesreinstatement forof agreements100% reachedbonus with our labor unions.depreciation.

•Safety – Our goal is to be an industry leader in safety, and weWe are committed to our goal of world-class safety and are continuously findingidentifying newareas waysin towhich we can enhance safety. In 2025,2026, we will continue toour focus remains on our four pillars of safety. Critical safety tasks will be reinforced. Training thatto engagesengage both new and experienced employees is fundamental to our success. Critical safety tasks will be reinforced and enhanced by adding critical-thinking scenarios to the classroom curriculum. We will continue using a comprehensive safety management approach utilizing technology, hazard identification and risk assessments, employee engagement, training, quality control, and targeted capital investments. In addition, we will continue to collect and utilize data with the goal of identifying and mitigating exposure to risk, detect rail defects, improve or close grade crossings, and educate the public and law enforcement agencies about crossing safety through a combination of our own programs (including risk assessment strategies), industry programs, and local community activities across the network. SafetyOur culture is paramountingrained with a safety-first mindset, critical to theour successsuccess, ofboth the railroadoperationally and deeplyfinancially, ingrained inand our culture, and thisfocus will not changedeviate in 2025.2026.

•Business Volumesvolumes – MacroeconomicWe expect macroeconomic uncertainties remain to persist in 20252026, thatand those uncertainties could have a material impact on our 20252026 financial and operating results. Current forecasts for 20252026 industrial production showis aforecasted slightto increasebe versusessentially 2024.flat with 2025, coupled with reduced expectations for housing starts and light vehicle sales. Lower international intermodal business, largely due to the resumption of historical trade patterns, is expected to negatively impact volumes. However, higher coal demand, from elevated natural gas prices and increased coal-fired electricity production, is expected to positively impact volumes. In addition, other factors, such as impositiongeopolitical ofinstability higher tariffs andor changes in domestictrade andpolicies foreign monetary policythat may affect economic activity and demand for rail transportation; natural gas prices, weather conditions, and demand for other energy sources may impact the coal market; crude oil prices and spreads may drive demand for petroleum products and drilling materials; available truck capacity could impact our intermodal business; and international trade agreements could promote or hinder trade. Lower coal demand, resulting from ongoing competitive energy dynamics and reduced coal-fired electricity production, and lower international intermodal business, due to the west coast volume surge in 2024, are expected to negatively impact volumes. Additionally, the way our customers are affected by and respond to the implementation of new tariffs may influence our volume levels and traffic flows. Fuel prices may continue to fluctuate in the current economic environment. As prices fluctuate, there will be a timing impact on earnings, as our fuel surcharge programs trail increases or decreases in fuel prices by approximately two months. Regardless of macroeconomic or other external factors, we will focus remain focused on operating a safesafe, railroadfluid, and efficient rail network while delivering the service we sold to our customers as well as effective asset utilization, cost control, and seekingcapitalizing on new business opportunities.

Freight revenues of $23.2 billion increased 1%2% year-over-yearfrom to $22.8 billion2024 driven by core pricing gains and a 3%1% increase in volumes and core pricing gains,volumes, partially offset by lower fuel surcharge revenues and negativetraffic mix of traffic (for example, a relative increase in internationalcoal intermodaland rock shipments, which have a lower ARC, combined with a decline in lumber shipments, which have a higher ARC). and lower fuel surcharge revenues. Volume increases were primarily driven by international intermodal andcoal, grain and grain productproducts, industrial chemicals and plastics, and rock shipments, partially offset by weaker demand for coalautomotive and rockenergy and specialized markets shipments.

Our fuel surcharge programs generated freight revenues of $2.6$2.3 billion and $3.0$2.6 billion in 20242025 and 2023,2024, respectively. Fuel surcharge revenues in 20242025 decreased $0.4 billion$218 million due to a 15% decrease inlower fuel prices and the lag impact of fluctuating fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volumes.

In 2024,2025, other subsidiary revenues decreased compared to 20232024 primarilydue driven by a weaker demand for intermodal shipments at our subsidiary that brokers intermodal and transload logistics services andto the partial transfer of our commuter operations to Metra. Accessorial revenues decreased in 20242025 compared to 20232024 drivenas bya result of lower intermodal accessorialcontainer revenues becausedue ofto ouran intermodal equipment sale,sale and a one-time contract settlement, both of which occurred in 2024, partially offset by ahigher one-timeintermodal contractaccessorial settlement.revenues.

Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. Freight revenues from bulk shipments decreasedincreased in 20242025 compared to 20232024 due to lower6% higher volumes and core pricing gains, partially offset by negative mix, from increased coal shipments, and lower fuel surcharge revenues,revenues. partiallyBulk offsetvolume by positive mix, from decreased coal shipments, and core pricing gains. Volumes declined 4%growth compared to 20232024 was driven by reducedincreased use of coal in electricity generation becausedue ofto lowhigher natural gas prices,prices coalcoupled firedwith plantbusiness capacity,wins, andin mildaddition winter weather, partially offset byto, strength in export grain to Mexico and severalsoybean othercrush grainproduction. products. Additionally, theThese volume declinesgains were partially offset by increased fertilizer shipments due to strong demand and a 2023 customer outage. Volumes for coal and renewables andreduced food and refrigeratedbeverage shipments were negatively impacted by outages and service challenges due to repeated snow events in Wyoming and flooding in California in the first quarter of 2023 positively impacting the year-over-year comparisons.shipments.

Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments increased in 20242025 versus 20232024 due to core pricing gains and positivehigher volumes, partially offset by a negative mix of traffictraffic, from decreased short haulincreased rock shipmentsand lower lumber shipments, and lower fuel surcharge revenues. Volumes increased petroleum1% shipments,compared to 2024 due to stronger demand for rock, plastics, and industrial chemicals shipments partially offset by lower fueliron surchargeore revenues(as a result of tariff uncertainties), petroleum, and lowerlumber volumes. Volumes decreased 1% compared to 2023 driven by lower demand for rock, due to weather, high inventories, and softness in Southern markets, and decreased sand shipments due to the use of local sources, partially offset by strength in petroleum, industrial chemicals, and plastics.carloads.

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Freight revenues from premium shipments increaseddecreased in 2025 driven by higher volumes and core pricing gains, partially offset by lower fuel surcharge revenuesrevenues, negative business mix from reduced automotive shipments, and negativelower mix.volumes, Startingpartially inoffset theby thirdcore quarterpricing ofgains. 2024, international intermodal experiencedThe heavy demand due tofrom increased U.S. West Coast imports,imports acontinued resultinto the first half of freight shifting from the East Coast and Canadian ports2025 due to uncertainty related to labortrade negotiations,policies, drivingresulting in first half international intermodal volumes up over17%. 30%Traffic shifted back to historical trade patterns in the second half of the2025 yearand international intermodal volumes decreased 24% compared to the second half of 2023.2024, Inresulting addition,in 6% lower international intermodal volumes for 2025. Strong domestic intermodal volumes helped to offset the decline in international shipments as a result of business development efforts in domestic intermodal drove volume growth in 2024 compared to 2023.wins. Automotive shipments were flatdown 4% year-over-year asdue businessto developmenttariff winsuncertainties werein offsetthe byfirst markethalf weaknessof 2025 and unplannedreduced manufacturer production decreases.from softer consumer demand.

Mexico Businessbusiness – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which amountedequated to $3.0$2.9 billion in 2024,2025, updown 8%1% compared to 2023,2024, driven by a 3%2% volumes increase and a 4% increasereduction in ARC.ARC Thepartially volume increases were drivenoffset by 2% higher volumes. Compared to 2024, intermodal and grain and grain productproducts shipmentsvolumes increased and finished vehicle shipments,were partially offset by lower automotiveauto parts and finished vehicle shipments.

Compensation and Benefitsbenefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. In 2024,2025, expenses increasedwere 2%essentially flat compared to 20232024 due to wage inflation, whichincreased includes the impact of labor agreements to modernize work rules and improve availability,volumes, higher incentive compensation, and increased crew needs associated with labor agreements and increased volumes,agreements, partially offset by 4%3% lower employee levels. Train,Active train, engine, and yard (TE&Y) force levels weredecreased flat3% comparedin 2025 on 1% increased carloads due to 2023 as improved network fluidity allowed us to handle a 3% increase in volumes and the increased needs associated with labor agreements without increasing the size of that workforce.fluidity.

Purchased Servicesservices and Materialsmaterials – Expense for purchased services and materials includes the costs of services purchased from outside contractors and other service providers (including equipment maintenance and contract expenses incurred by our subsidiaries for external transportation services); materials used to maintain the Railroad’s lines, structures, and equipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers; leased automobile maintenance expenses; and tools and supplies. Purchased services and materials decreasedincreased 4% in 20242025 compared to 20232024 driven by declinesinflation in(including tariff-related material expenses), acquisition-related expenses, and higher locomotive maintenance expense duewas topartially aoffset smaller active fleet asby productivity improvedand year-over-year,lower decreased volume-related drayage costexpenses incurred at one ofby our subsidiaries,subsidiaries. andThe comparison was also negatively impacted by a favorable contract settlement,settlement partiallyin offset by inflation and volume-related costs.2024.

Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense decreased compared to 20232024 due to a 6% decrease in locomotive diesel fuel prices, whichdeclining averagedfrom an average of $2.64 per gallon (including taxes and transportation costs) in 2024 compared to $3.09$2.49 per gallon in 2023,2025, resulting in a $0.4$138 billionmillion decrease in expense (excluding any impact from decreasedincreased volumes year-over-year), and a 1% improvement to the fuel consumption rate in 2024 (computed as gallons of fuel consumed divided by gross ton-miles),. Gross-ton miles increased 3% in 2025 and partially offset bythe aimpact 1%of increaselower infuel grossprices ton-miles.and improved fuel consumption rate.

Equipment and Otherother Rentsrents – Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expenses, offset by equity income from certain equity method investments. Equipment and other rents expense decreased 3%1% compared to 20232024 due to lower operating equipment lease expense, which included favorable contract settlements in 2025, and reduced car hire expense as favorable haul length and improved cycle times,times partially offset byinflation and costs associated with increased demand in commodities utilizing freight cars owned by othersothers. Higher other rental expense and inflation.lower equity income partially offset the favorable expense drivers.

Other – Other expenses include state and localproperty taxes; freight, equipment, and property damage; utilities; insurance; personal injury; environmental; employee travel; telephone and cellular; computer software; bad debt; and other general expenses. Other expenses decreasedincreased 8%4% in 2024 2025 compared to 2023  2024 driven by lowerthe personalnegative injurycomparison costs,from a 2024 gain on the sale of intermodal equipment, in addition to, higher personal injury costs, and aproperty 2023 write-off,taxes, partially offset by higherlower environmental and freight loss and damage and other casualty cost.costs.

Other Income,income, net – Other income decreasedincreased $279 million in 20242025 compared to 2023 2024 driven by a $107$295 million in higher real estate transactionincome, including $250 million in 2023industrial andpark lowerland incomesales. fromThe otherhigher real estate transactions,income was partially offset by interest received in 2024 from the IRS on refund claims. See Note 6 to the Financial Statements and Supplementary Data, Item 8, for additional detail.

Interest Expenseexpense – Interest expense decreasedincreased 3% in 20242025 compared to 2023 2024 due to aan decreasedincreased weighted-average debt level of $31.6$32.1 billion in 2024 2025 from $33.2$31.6 billion in 2023.2024. TheIn addition, the effective interest rate wasof 4.1% in 2025 increased from 4.0% in both periods.2024.

Income Taxtax Expenseexpense – Income tax expense increaseddecreased in 2024 2025 compared to 20232024. driven by higherWhile pre-tax income was higher in 20242025, andthe higherincrease was more than offset by a $115 million reduction in deferred tax expense reductionsresulting infrom 2023,newly partiallyenacted offsetKansas bylegislation, along with the benefitfavorable impact of purchased federal tax credits induring 2024.the year. In 2024, the states of Louisiana and Arkansas enacted legislation to reduce their corporate income tax rates for future years resulting in a $34 million reduction of our deferred tax expense. In 2023, the states of Nebraska, Iowa, Kansas, and Arkansas enacted legislation to reduce their corporate income tax rates for future years resulting in a $114 million reduction of our deferred tax expense. Our effective tax rates for 20242025 and 20232024 were 23.3%22.1% and 22.5%,23.3%, respectively.

Gross and Revenuerevenue Ton-Mileston-miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of tariff miles. In 2024,2025, gross ton-miles increased 1%3% and revenue ton-miles decreasedincreased 1%,4% whileon 1% higher carloadings were up 3% year-over-year. Changes in commodity mix drove the year-over-year variances between gross ton-miles, revenue ton-miles, and carloads due to lowerhigher coal shipments, which are heavier, and increased international intermodal shipments that are lighter.heavier.

Freight Carcar Velocityvelocity – Freight car velocity measures the average daily miles per car on our network. The two key drivers of this metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals (average terminal dwell time). FreightCompared to 2024, freight car velocity increased 2%8% driven by record terminal dwelldwell, levels.which Thealso 2023improved metrics were negatively impacted by operational challenges caused by weather in the first quarter8%, and 3% higher average train crew shortages in some locations in the first half of 2023, positively impacting the year-over-year comparison.speeds.

Locomotive Productivityproductivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower. Locomotive productivity improved 5%3% in 20242025 compared to 2023 2024 driven by improved network fluidity and asset utilization despite maintaining a buffer in 2024 to flex the fleet size as we experienced and subsequently recovered from certain weather events and reacted to higher volume levels.utilization.

Train Lengthlength – Train length is the average maximum train length on a route measured in feet. Our train length increased 1%2% compared to 20232024 due to train length improvement initiatives and increases in international intermodal shipments, which generally move on longer trains, partially offset by declines in coal train length.length, coinciding with increased shipments.

Service Performanceperformance Indexindex (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance over the last three years. Measuring our performance relative to a historical benchmark demonstrates our focus on continuously improving service for our customers, and we believe it is a better indicator of service performance than the previously disclosed trip plan compliance. SPI does not replace the service commitments we have contractually agreed to with a small number of customers. SPI is calculated for intermodal and manifest products. Intermodal SPI improved 29 points,points atas thewe sameadjusted timeto shifting international volumeintermodal surged.customer demand during 2025. Manifest SPI improved 411 points in 2024 2025 compared to 2023.2024 while handling more volume.

Workforce Productivityproductivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 6%7% in 20242025 as average daily car miles increased 2%3% andwhile employees decreased 4%3% compared to 2023.2024. OurWe adequately aligned our active TE&Y workforce increased to support carload demand and increased crew needs associated with labor agreements that went into effect in the third quarter of 2023. In addition, we arewhile maintaining an adequate training pipeline to provide a capacity buffer to enable responsiveness in an ever-changing demand and operating environment.

Operating Ratioratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. Our operating ratio of 59.9%59.8% improved 2.40.1 points compared to 20232024 driven by productivity initiatives, core pricing gains,gains and theproductivity year-over-year impact from lower fuel prices,initiatives, partially offset by inflationthe impact of negative business mix, inflation, and otheracquisition-related costs.expenses. In addition, operating ratio year-over-year comparison was positivelynegatively impacted by 2024 contract settlements, a 2024 gain on the sale of intermodal equipment, and lowerhigher labor agreement ratification charges than in 2023.2025.

Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post-retirement benefit) obligations) to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on present value of operating leases) is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the Company’s ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At December 31, 2025, 2024, 2023, and 2022,2023, the incremental borrowing rate on operating leases was 4.0%, 3.8%, 3.6%, and 3.3%,3.6%, respectively. Pension and OPEB were funded at December 31, 2025, 2024, 2023, and 2022.2023.

During 2024,2025, we generated $9.3 billion of cash provided by operating activities, paid down $1.3$1.4 billion of long-term debt, paid $3.2 billion in dividends, and repurchased shares totaling $1.5$2.7 billion. We also announced the pending acquisition of Norfolk Southern described in Note 20 to the Financial Statements and Supplementary Data, Item 8, and paused our share repurchase program. We have been, and we expect to continue to be, in compliance with our debt covenants.

Our principal sources of liquidity include cash and cash equivalents, our Receivables Facility, our revolving credit facility, as well as, the availability of commercial paper and other sources of financing through the capital markets. On December 31, 2025, we had $1.3 billion of cash and cash equivalents, $250 million of short-term investments, $2.0 billion of committed credit available under our revolving credit facility, and up to $600 million undrawn on the Receivables Facility. As of December 31, 2025, none of the revolving credit facility was drawn, and we did not draw on our revolving credit facility at any time during 2024.2025. Our access to the Receivables Facility may be reduced or restricted if our bond ratings fall to certain levels below investment grade. If our bond rating were to deteriorate, it could have an adverse impact on our liquidity. Access to commercial paperpaper, as well asas, other capital market financing is dependent on market conditions. Deterioration of our operating results or financial condition due to internal or external factors could negatively impact our ability to access capital markets as a source of liquidity. Access to liquidity through the capital markets is also dependent on our financial stability. We expect that we will continue to have access to liquidity through any or all of the following sources or activities: (a) increasing the utilization of our Receivables Facility, (b) issuing commercial paper, (c) entering into bank loans, outside of our revolving credit facility, or (iv) issuing bonds or other debt securities to public or private investors based on our assessment of the current condition of the credit markets. The Company’s $2.0 billion revolving credit facility is intended to support the issuance of commercial paper by UPC and also serves as an additional source of liquidity to fund short-term needs. The Company currently does not intend to makeborrow any borrowings underfrom this facility.

[d]Includes estimated other post-retirement,post-retirement medical,medical and life insurance payments,payments and payments made under the unfunded pension plan for the next ten years.

[e]Represents total obligations, including an interest component of $9 million.

Cash provided by operating activities increaseddecreased in 20242025 compared to 20232024 due primarily to $384 milliontiming of payments in 2023 related to backtaxing wages for agreements reached with our labor unionsauthorities and increasedpurchased nettax income.credits.

Cash flow conversion is defined as cash provided by operating activities less cash used in capital investments as a ratio of net income. Cash flow conversion rate is not considered a financial measure under GAAP by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe cash flow conversion rate is important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing. Cash flow conversion rate should be considered in addition to, rather than as a substitute for, cash provided by operating activities. The following table reconciles cash provided by operating activities (GAAP measure) to cash flow conversion rate (non-GAAP measure):

Cash used in investing activities in 20242025 decreasedincreased compared to 20232024 primarily driven by lesshigher capital investments and the purchase of short term investments, partially offset by higher proceeds from asset sales, including a sale of intermodal equipment. Roughly half of the year-over-year decrease in capital investments is attributable to the 2023 purchase of a small trucking and transload operator and related real estate assets.sales.

The following table detaildetails cash capital investments for the years ended December 31:

Capital Plan – In 2025,2026, we expect our capital plan to be approximately $3.4$3.3 billion, consistent with 2024.billion. We plan to continue to make investments to support our growth strategy, improve the safety, resiliency, and operational efficiency of the network, harden our infrastructure, and replace older assets, including modernization of our locomotive fleet and acquiring freight cars to support replacement and growth opportunities. In addition, the plan includes investments in growth-related projects to drive more carloads to the network and enhance productivity. This includes siding construction and extension projects, terminal investments supporting our manifest network,network and invest in certainintermodal ramps to efficiently handle volumes from new and existing intermodalcustomers, customers.along with siding investments (extensions and new), and second mainline track projects. The capital plan may be revised if business conditions warrant or if laws or regulations affect our ability to generate sufficient returns on these investments.

Cash used in financing activities increaseddecreased in 20242025 compared to 20232024 driven by an increase of debt issued and a decrease in debt repaid, partially offset by an increase in share repurchases and a decrease in debt issued, partially offset by a decrease in the repayment of commercial paper.repurchases.

See Note 14 to the Financial Statements and Supplementary Data, Item 8, for a description of all our outstanding financing arrangements and significant new borrowings, and Note 18 to the Financial Statements and Supplementary Data, Item 8, for a description of our share repurchase programs.programs, and Note 20 to the Financial Statements and Supplementary Data, Item 8, for the pending acquisition of Norfolk Southern.

Interest Ratesrates – At both December 31, 2025, and 2024, we did not have variable-rate debt.

Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a hypothetical 1% decrease in interest rates as of December 31, 2025, and 2024, and totals an increase of approximately $3.2 billion and $3.0 billion to the fair value of our debt at December 31, 2024.2025, and 2024, respectively. We estimated the fair values of our fixed-rate debt by considering the impact of the hypothetical interest rates on quoted market prices and current borrowing rates.

Tax Ratesrates – Our deferred tax assets and liabilities are measured based on current tax law. Future tax legislation, such as a change in the federal corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity. For example, as of December 31, 2025, a future, permanent 1% increase in our federal income tax rate would increase our deferred tax liability by approximately $525$550 million. Similarly, a future, permanent 1% decrease in our federal income tax rate would decrease our deferred tax liability by approximately $550 million. As of December 31, 2024, a permanent 1% increase or decrease in our federal income tax rate would have correspondingly increased or decreased our deferred tax liability by approximately $525 million.million, respectively.

Three and six months ended MarchJune 31,30, 2026, compared to

three and six months ended MarchJune 31,30, 2025

The preparation of these financial statements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ materially from actual results, the impact on the Condensed Consolidated Financial Statements may be material. Our critical accounting estimates are available in Item 7 of our 2025 Annual Report on Form 10-K. During the first threesix months of 2026, there have not been any significant changes with respect to our critical accounting estimates.

The Company reported earnings of $2.87$3.36 per diluted share on net income of $1.7$2.0 billion and an operating ratio of 60.5%59.7% in the firstsecond quarter of 2026 compared to earnings of $2.70$3.15 per diluted share on net income of $1.6$1.9 billion and an operating ratio of 60.7%59.0% in the firstsecond quarter of 2025. Freight revenues increased 4%12% in the firstsecond quarter of 2026 compared to the same period in 2025 as core pricing gains, higher fuel surcharge revenues, 2% volume growth, and businesscore mixpricing gains more than offset the impact of unfavorable business mix (from higher domestic intermodal carloads). Second quarter of 2026 volume growth was attributable to a 1%19% reduction in volume. Higher carloadsincrease in domestic intermodal,intermodal coal,combined grain,with higher grain and industrialgrain chemicalsproducts and plastics werecarloads, moreoffsetting thanthe offsetimpact byof lower international intermodal carloads and coal carloads, which declined 28%14% inand 17%, respectively, compared to the firstsecond quarter of 2026, and fewer automotive shipments.2025.

Operating expenses increased 3%13% compared to the firstsecond quarter of 2025 primarily due to inflation, higher fuel prices, as we experienced a 60% increase in the average price per gallon compared to last year as a result of supply chain pressures. Inflation, volume-related costs, acquisition-related expenses (see Note 1718 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation,depreciation also drove increased operating expenses, which were partially offset by a favorable comparison for a $55 million 2025 crew staffing agreement ratification charge and productivity. Operating income increased 4%9% to $2.5$2.8 billion,billion andreflecting top-line growth, while the operating ratio of 60.5%59.7% improveddeteriorated 0.20.7 points,points reflectingprimarily top-lineresulting growthfrom andthe productivityimpact gainsof higher fuel prices compared to the firstsecond quarter of 2025.

Freight revenues increased 4% on 1% lower carloads12% in the firstsecond quarter of 2026 compared to the same period in 2025 driven by higher fuel surcharge revenues, 2% carload growth, and core pricing gains, higherwhich fuel surcharge revenue, andoffset a moreslightly favorableunfavorable business mix (decreasesfrom an increase in shipments with lower ARC, such as internationaldomestic intermodal). Higher carloads inIncreased domestic intermodal, coal,grain grain,and grain products, and plastics shipments were partially reduced by lower international intermodal and coal carloads. Year-to-date 2026 freight revenues increased 8% compared to 2025 due to higher fuel surcharge revenues, core pricing gains, 1% volume growth, and slightly favorable business mix. Higher domestic intermodal, grain and grain products, and industrial chemicals and plastics shipments were more than offset by lower international intermodal carloads and automotive shipments.

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs increased to $608$1.0 millionbillion in the firstsecond quarter of 2026 compared to $565$569 million in the same period of 2025 due to higher fuel prices,prices whichand werehigher volume, partially offset by the fuel price lag impact (it generally takes up to two months for changing fuel prices to affect fuel surcharge recoveries) and lower volumes.impact.

Other subsidiary revenues decreasedincreased in the firstsecond quarter of 2026 compared to 2025 primarily driven by the transfer of commuter operationsdue to Metra, lowerhigher demand for auto part shipments at our subsidiary that brokers intermodal and transload logistics services, andpartially offset by lower revenues from the sale of a portion of revenue-generating assets in late 2025 from our technology subsidiary. Additionally, other subsidiary revenues were negatively impacted in the year-to-date period from the transfer of commuter operations to Metra. Accessorial revenues increased in the firstsecond quarter and year-to-date 2026 compared to 2025 driven by increasedhigher storagecontainer, intermodal accessorial, and intermodal accessorialdemurrage revenues.

Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments increased 5%8% in the firstsecond quarter of 2026 compared to 20252025, respectively, due to increasedhigher volumes,fuel surcharge revenues, core pricing gains, and higher volume, partially offset by business mix (from higher plastics and lower soda ash shipments). Higher volume, core pricing gains, and higher fuel surcharge revenues, partially offset by business mixmix, (fromcontributed higherto rockthe shipments7% increase in industrial freight revenues year-to-date 2026. Industrial carloads improved 3% and lower lumber shipments). The 4% quarterlyin carloadthe improvementsecond wasquarter and year-to-date periods of 2026 compared to 2025, respectively, driven by increased demand for industrial chemicals and plastics and construction project-related materials coupled with business development efforts, which morewas thanpartially offset by reduced shipmentssoda fromash continuedexport weak lumber demand.shipments.

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Premium freight revenues decreasedincreased 5%21% in the firstsecond quarter of 2026 compared to 2025 driven by 9%higher fuel surcharge revenues, 4% higher volume, core pricing gains, and business mix (from lower volumes,international intermodal shipments). Second quarter of 2026 intermodal volume increased 4% driven by strong domestic intermodal growth, which was up 19% in the quarter due to business development and reduced truck market capacity, offsetting lower international intermodal carloads. In addition, automotive shipments were partiallyessentially unchanged in the second quarter of 2026 as higher shipments of finished vehicles from business development efforts were offset by lower auto parts shipments. For the year-to-date period of 2026 compared to 2025, premium freight revenues increased 7% on 3% lower volume as higher fuel surcharge revenues, core pricing gains, and business mix (from reducedlower international intermodal shipments). Firstmore quarterthan ofoffset the volume decline. Year-to-date 2026 intermodal volumesvolume weredecreased down3% 9%compared to 2025 driven by a 28%21% reduction in international intermodal carloads as a result of elevated U.S. West Coast imports in the first quarterhalf of 20252025, thatwhich didmore not recur, partiallythan offset by continued strong domestic intermodal growth. Automotive shipments decreased 6%3% in the firstyear-to-date quarterperiods of 2026 compared to 2025 due to lower production as a result of weaker finished vehicle demand.

Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which increased 1%10% to $729$828 million in the firstsecond quarter of 2026 and 6% to $1.6 billion year-to-date compared to 2025 driven by 3%volume growth of 5% and 4%, respectively, higher fuel surcharge revenues, and core pricing gains. For the second quarter, volume growth duewas attributable to increased intermodal, finished vehicles, and grain products shipments, partially offset by lower beverage, steel,petroleum and automotivegrain shipments. Lower auto parts and beverage shipments also impacted the year-to-date 2026 period.

Operating expenses increased 3%13% and 8%, respectively, compared to the firstsecond quarter and year-to-date periods of 2025 due to inflation, higher fuel prices, inflation, volume-related costs, acquisition-related expenses (see Note 1718 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation expense. These increases were partially offset by productivity.productivity and positively impacted by a $55 million crew staffing agreement ratification charge in 2025.

Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. For the first quarter of 2026, compensationCompensation and benefits expense increaseddecreased 1% for the second quarter and was essentially unchanged in the first six months of 2026 compared to 2025 due toas wage inflation and higher incentive compensation costs,costs which was partiallywere offset by lower expense from a $55 million 2025 crew staffing agreement ratification charge and 3% and 4%, respectively, lower employee levels.

Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense increased in both the firstsecond quarter and year-to-date periods of 2026 compared to the same periodperiods in 2025 driven by an increase inhigher locomotive diesel fuel prices and increased gross ton-miles, partially offset by 4% improvement in the fuel consumption rate (computed as gallons of fuel consumed divided by gross ton-miles in thousands)., which improved 1% and 2%, respectively. Locomotive diesel fuel prices averaged $2.69$3.86 and $2.51$3.27 per gallon (including taxes and transportation costs) in the firstsecond quarter and year-to-date periods of 2026 compared to $2.42 and 2025,$2.46 respectively.per gallon in the corresponding periods of 2025.

Equipment and other rents – Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expense, offset by equity income from certain equity method investments. Equipment and other rents expense decreased 9%7% and 8%, respectively, in the firstsecond quarter and year-to-date periods of 2026 compared to 2025 driven by lower operating equipment lease expense and lower car hire expense attributable toas improved cycle times andmore lower operating equipment lease expense, partiallythan offset by lower equity income. Additionally, increased demand in business (primarily intermodal and construction project-related materials) utilizing freight cars owned by others offset a portion of the second quarter 2026 car hire expense decline.

Other – Other expense includes state and local taxes; freight, equipment, and property damage; utilities; insurance; personal injury; environmental remediation; employee travel; telephone and cellular; computer software; bad debt; and other general expenses. Other expense increased 1%13% and 7%, respectively, in the firstsecond quarter and year-to-date periods of 2026 compared to 2025 driven by higher casualty costs from damaged freight and equipment in addition to increased environmental costs, other general expenses, and property damagetaxes. costs,The propertyyear-to-date taxes,2026 andperiod badwas debtalso expense. These increases are partially offsetimpacted by lower personal injury costs.costs, which were partially offset by higher bad debt expense.

Other income, net – Other income increaseddecreased in both the firstsecond quarter and year-to-date periods of 2026 compared to 2025 driven by higherlower real estate income. See Note 6 to the Condensed Consolidated Financial Statements, Item 1, for additional detail.

Interest expense – Interest expense decreased slightlyin inboth the firstsecond quarter and year-to-date periods of 2026 compared to 2025 as a result of lower weighted-average debt levels.levels, partially offset by higher effective interest rates. The effective interest rate was 4.1%4.2% for both periods.periods in 2026 compared to 4.1% for the same periods in 2025. The weighted-average debt levels were $31.4$30.5 billion and $31.9$32.8 billion for firstthe second quarter of 2026 and 2025, respectively, and $31.0 billion and $32.3 billion for the six month period of 2026 and 2025, respectively.

Gross and revenue ton-miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of rate miles. Gross ton-miles and revenue ton-miles both increased 4% and 7%, respectively,2% in the firstsecond quarter of 2026 compared to 2025, consistent with the increase in carloads over the same time period. For the year-to-date period of 2026 compared to 2025, gross ton-miles increased 3% and revenue ton-miles increased 5% while corresponding carloads decreasedincreased 1%. Changes in business mix drove theThe variances betweenin gross ton-miles, revenue ton-miles, and carloads was driven by changes in business mix due to higher coal and grain shipments that are generally heavier and decreased intermodal shipments that are generally lighter.

Freight car velocity – Freight car velocity measures the average daily miles per car on our network. The two key drivers of this metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals (average terminal dwell time). Freight car velocity increased 9%5% and 7%, respectively, in the firstsecond quarter and year-to-date periods of 2026 compared to 2025 driven by an 11%a decrease in terminal dwell andcombined anwith 8%train speed improvement in trainboth speed.periods.

Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. Locomotive productivity increased 6%1% and 4%, respectively, in the firstsecond quarter and year-to-date periods of 2026, driven by improvedcontinued network fluidity and asset utilization as the average active fleet decreased 4%1% and 3%, respectively, even as gross ton-miles increased.increased during both periods.

Train length – Train length is the average maximum train length on a route measured in feet. Even with lower international intermodal volumes, trainTrain length increased 3%2% in the firstsecond quarter and year-to-date periods of 2026 compared to 2025 due to train length improvement initiatives, specifically driven by proprietary technology and mainline capacity investments.investments and optimization of the transportation plan, which enabled us to handle more carloads.

Service performance index (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance over the last three years. Measuring our performance relative to a historical benchmark demonstrates our focus on continuously improving service for our customers. Our SPI is calculated for intermodal and manifest products. Intermodal SPI improveddeclined 4 points and was unchanged, respectively, in the firstsecond quarter and year-to-date periods of 2026 compared to 2025. Manifest SPI improveddeclined 52 points while improving 1 point, respectively, in the firstsecond quarter and year-to-date periods of 2026 compared to 2025. The improvements inlower SPI areresults were driven by thecomparison continuedagainst network fluidity as we adjusted to changing customer demand fora higher grainbenchmark shipments, reduced intermodal shipments, and continued strong coal carloads.standard.

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 7%5% and 6%, respectively, in the firstsecond quarter and year-to-date periods of 2026 compared to 2025,2025. asIncreased average daily car milesmiles, increasedwhich grew 1% whilein each period, combined with 3% and 4% lower employee levels declinedin 5%the comparedsecond quarter and year-to-date periods, respectively, drove the improvement. Demonstrating our commitment to 2025.meet Wecustomer demands while maintaining operational fluidity, we continually align our active train, engine, and yard (TE&Y) workforce to meet customer demands in a dynamic economic environment, while maintaining operational fluidity. As a result, our active TE&Y decreased 4% during the first quarter of 2026 on a 1% reduction in carload levels compared to the same period in 2025.workforce.

Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. For the firstsecond quarter and year-to-date periods of 2026, our operating ratio of 60.5% improved 0.2 points driven by productivity initiatives59.7% and 60.1% deteriorated 0.7 and 0.3 points, respectively, as the impact of higher fuel prices, inflation, and acquisition-related expenses more than offset core pricing gains, partiallyproductivity offset by inflationinitiatives, and acquisition-relatedthe expenses.positive comparison from the $55 million crew staffing agreement ratification charge in 2025.

[1]The trailing twelve months income statement information ended MarchJune 31,30, 2026, is recalculated by taking the twelve months ended December 31, 2025, subtracting the threesix months ended MarchJune 31,30, 2025, and adding the threesix months ended MarchJune 31,30, 2026.

Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post-retirement benefit) obligations) to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on present value of operating leases) is considered a non-GAAP financial measure by SEC Regulation G and Item 10(e) of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the Company’s ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At MarchJune 31,30, 2026, and December 31, 2025, the incremental borrowing rate on operating leases was 4.1% and 4.0%, respectively. Pension and OPEB were funded at MarchJune 31,30, 2026, and December 31, 2025.

Cash provided by operating activities increased 10%21% in the first threesix months of 2026 compared to the same period of 2025 driven by lower income taxes paid and higher net income.

Cash used in investing activities increased 5%12% in the first threesix months of 2026 compared to the same period of 2025 driven by anthe increasenet inpurchases earlyand leasematurities buyouts.of short-term investments.

[c]Weather-related damages for the threesix months ended MarchJune 31,30, 2026 and 2025, are immaterial.

Cash used in financing activities increased 17% in the first threesix months of 2026 compared to the same period of 2025 driven by a decrease in debt issued and increase in debt repaid, partially offset by the pause of our share repurchases as part of the pending acquisition of Norfolk Southern.

During the firstsix quartermonths ofended June 30, 2026, we generated $2.4$5.5 billion of cash provided by operating activities and paid our quarterly dividend.dividends. In the third quarter of 2025, we announced the pending acquisition of Norfolk Southern described in Note 1718 of the Condensed Consolidated Financial Statements, Item 1, and paused our share repurchases. On MarchJune 31,30, 2026, we had $735$1.6 millionbillion of cash and cash equivalents, $300$500 million of short-term investments, $2.0 billion of credit available under our revolving credit facility, and up to $600 million undrawn on the Receivables Facility. We have been, and we expect to continue to be, in compliance with our debt covenants.

As described in the notes to the Condensed Consolidated Financial Statements and as referenced in the table below, we have contractual obligations that may affect our financial condition.condition, including commitments related to the pending acquisition of Norfolk Southern described in Note 18 of the Condensed Consolidated Financial Statements, Item 1. Based on our assessment of the underlying provisions and circumstances of our contractual obligations, other than the risks that we and other similarly situated companies face with respect to the condition of the capital markets, as of the date of this filing, there is no known trend, demand, commitment, event, or uncertainty that is reasonably likely to occur that would have a material adverse effect on our consolidated results of operations, financial condition, or liquidity. In addition, our commercial obligations, financings, and commitments described below are customary transactions that are like those of other comparable corporations, particularly within the transportation industry.

The following table identifies material contractual obligations as of MarchJune 31,30, 2026: