UNION PACIFIC CORP

Previous wording

Three months ended March 31, 2025, compared to

Current wording

Three and six months ended June 30, 2025, compared to

Previous wording

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 2024 Annual Report on Form 10-K. During the first three months of 2025, there have not been any significant changes with respect to our critical accounting estimates.

Current wording

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 2024 Annual Report on Form 10-K. During the first six months of 2025, there have not been any significant changes with respect to our critical accounting estimates.

Previous wording

The Company reported earnings of $2.70 per diluted share on net income of $1.6 billion and an operating ratio of 60.7% in the first quarter of 2025 compared to earnings of $2.69 per diluted share on net income of $1.6 billion and an operating ratio of 60.7% for the first quarter of 2024. Freight revenues increased 1% in the first quarter of 2025 compared to the same period in 2024 driven by a 7% volume increase and core pricing gains, largely offset by unfavorable business mix (for example, a relative increase in international intermodal shipments, which have a lower average revenue per car (ARC)), lower fuel surcharge revenues, and one less day due to leap year in 2024. Volume increases were primarily driven by international intermodal and coal, partially offset by weaker demand for automotive and decreased petroleum product shipments.

Current wording

The Company reported earnings of $3.15 per diluted share on net income of $1.9 billion and an operating ratio of 59.0% in the second quarter of 2025 compared to earnings of $2.74 per diluted share on net income of $1.7 billion and an operating ratio of 60.0% for the second quarter of 2024. Freight revenues increased 4% in the second quarter of 2025 compared to the same period in 2024 driven by 4% volume increases and core pricing gains, partially offset by lower fuel surcharge revenues and unfavorable business mix (for example, relative increases in shipments with a lower average revenue per car (ARC), such as coal and intermodal). Volume increases were primarily driven by coal, intermodal, grain and grain products, and industrial chemicals, partially offset by weaker demand for automotive and fertilizer.

Previous wording

Second half of 2024's operating momentum continued as we ran a fluid network in the first quarter of 2025 while handling 7% more volume than last year, including elevated international intermodal business, which was 33% more than first quarter of 2024. Terminal dwell and freight car velocity are key indicators of that fluidity, both improving 6% compared to last year. We continue to utilize our resources effectively as locomotive productivity improved 1% and workforce productivity improved 9% year-over-year. Manifest service performance index and train length improved from the first quarter of 2024, while intermodal service performance index was essentially flat.

Current wording

The second quarter of 2025 continued the trajectory of improved operational performance as reflected in the key service metric results compared to 2024. Freight car velocity increased 10% and terminal dwell improved 7%, while we handled 4% more volume than last year, including an increase of 31% in coal business. We continue to utilize our resources effectively as workforce productivity improved 9% and locomotive productivity improved 5% year-over-year. Both manifest and intermodal service performance index measures improved, while train length increased 2%.

Previous wording

We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volumes (carloads) and ARC. Changes in price, traffic mix, and fuel surcharges drive ARC. Customer incentives, which are primarily provided for shipping to/from specific locations or based on cumulative volumes, are recorded as a reduction to operating revenues. Customer incentives that include variable consideration based on cumulative volumes are estimated using the expected value method, which is based on available historical, current, and forecasted volumes, and recognized as the related performance obligation is satisfied. We recognize freight revenues over time as shipments move from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred.

Current wording

We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volume (carloads) and ARC. Changes in price, traffic mix, and fuel surcharges drive ARC. Customer incentives, which are primarily provided for shipping to/from specific locations or based on cumulative volume, are recorded as a reduction to operating revenues. Customer incentives that include variable consideration based on cumulative volume are estimated using the expected value method, which is based on available historical, current, and forecasted volume, and recognized as the related performance obligation is satisfied. We recognize freight revenues over time as shipments move from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred.

Previous wording

Freight revenues increased 1% in the first quarter of 2025 compared to the same period in 2024 driven by a 7% increase in volumes and core pricing gains, largely offset by unfavorable business mix (for example, a relative increase in international intermodal shipments, which have a lower ARC), lower fuel surcharge revenues, and one less day due to leap year in 2024. Volume increases were primarily driven by international intermodal and coal, partially offset by weaker demand for automotive and decreased petroleum product shipments.

Current wording

Freight revenues increased 4% in the second quarter of 2025 compared to the same period in 2024 driven by 4% volume increases and core pricing gains, partially offset by lower fuel surcharge revenues and unfavorable business mix (for example, relative increases in shipments with a lower ARC, such as coal and intermodal). Volume increases were primarily driven by coal, intermodal, grain and grain products, and industrial chemicals, partially offset by weaker demand for automotive and fertilizer.

Previous wording

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs decreased $100 million to $565 million in the first quarter of 2025 compared to $665 million in the same period of 2024 due to lower fuel prices and the lag impact on fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volumes.

Current wording

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs decreased $100 million to $569 million in the second quarter of 2025 compared to $669 million in the same period of 2024 due to lower fuel prices and the lag impact on fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volume.

Previous wording

Other subsidiary revenues decreased in the first quarter of 2025 compared to 2024 primarily driven by the partial transfer of our commuter operations to Metra and a weaker demand for intermodal shipments at our subsidiary that brokers intermodal and transload logistics services. Accessorial revenues decreased in the first quarter of 2025 compared to 2024 driven by lower intermodal accessorial revenues as a result of our intermodal equipment sale and a one-time contract settlement recognized in the first quarter of 2024.

Current wording

Other subsidiary revenues decreased in the second quarter and six month periods of 2025 compared to 2024 primarily driven by the transfer of commuter operations to Metra and a weaker demand for auto parts shipments at our subsidiary that brokers intermodal and transload logistics services. Accessorial revenues decreased in the second quarter and six month periods of 2025 compared to 2024 driven by lower intermodal accessorial revenues as a result of our intermodal equipment sale. Additionally, the year-to-date comparison was negatively impacted by a one-time contract settlement recognized in the first quarter of 2024.

Previous wording

Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. Freight revenues from bulk shipments increased in the first quarter of 2025 compared to 2024 due to core pricing gains and a 2% volume increase, partially offset by business mix from increased coal shipments and lower fuel surcharge revenues. The volume increase was driven by higher demand for coal used in electricity generation, due to colder weather and higher natural gas prices, and strength in export grain and grain products from increased soybean crush production and strong ethanol demand.

Current wording

Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. Freight revenues from bulk shipments increased in the second quarter and year-to-date periods of 2025 compared to 2024 due to volume growth of 11% and 7%, respectively, and core pricing gains, partially offset by business mix (from increased coal shipments) and lower fuel surcharge revenues. The volume increases for both periods of 2025 were driven by higher demand for coal used in electricity generation due to higher natural gas prices and business wins, strength in grain and grain products from increased exports, soybean crush production, and ethanol demand. Lower food and refrigerated and fertilizer volume partially offset the volume growth.

Previous wording

Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments decreased in the first quarter of 2025 compared to 2024 due to business mix from decreased soda ash and lumber shipments, lower fuel surcharge revenues, and volume declines, partially offset by core pricing gains. Volume decreases in first quarter of 2025 compared to 2024 were driven by decreased shipments of petroleum due to business losses, a weaker global soda ash market, and a soft housing market along with ongoing tariff uncertainties that drove declines in lumber. Partially offsetting some of the volume declines was strength in rock, industrial chemicals, and plastics.

Current wording

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 the second quarter of 2025 compared to 2024 due to core pricing gains and 3% volume increases, partially offset by lower fuel surcharge revenues and business mix from increased rock shipments. Volume increases in the second quarter of 2025 compared to 2024 were driven by strength in industrial chemicals, rock, and soda ash shipments. The volume gains were partially offset by lower iron ore shipments impacted by ongoing tariff uncer tainties, and softness in the paper market. For the year-to-date period, industrial revenues increased 2% driven by core pricing gains and volume growth, partially offset by business mix and lower fuel surcharge revenues. Volume growth from industrial chemicals and rock was partially offset by lower shipments of forest and petroleum products in the first six months of 2025 compared to 2024.

Previous wording

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Premium freight revenues increased in the first quarter of 2025 compared to 2024 due to a 13% rise in volume and core pricing gains, partially offset by business mix and lower fuel surcharge revenues. The volume increase was primarily due to continued elevated U.S. West Coast imports in the first quarter of 2025, reflecting a 33% increase compared to the first quarter of 2024. In addition, business development efforts in domestic intermodal contributed to year-over-year volume growth. Automotive shipments decreased in the first quarter of 2025 compared to 2024 due to reduced production and tariff uncertainties, which offset some of the volume gains from intermodal shipments.

Current wording

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and interna tional. Premium freight revenues decreased in the second quarter of 2025 compared to 2024 driven by lower fuel surcharge revenues and business mix, partially offset by a 1% increase in volume and core pricing gains. For the year-to-date period of 2025 compared to 2024, premium freight revenues were flat as 7% volume increases and core pricing gains were offset by business mix and lower fuel surcharge revenues. The volume increases in the second quarter and year-to-date periods of 2025 were primarily due to continued elevated U.S. West Coast imports in addition to domestic intermodal business development conversions. Automotive shipments decreased in the second quarter and year-to-date periods of 2025 compared to 2024 due to reduced production and tariff uncertainties.

Previous wording

Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which decreased 9% to $719 million in the first quarter of 2025 compared to 2024 driven by a 5% volume decline and a 4% decrease in ARC. Volume declines were driven by lower automotive shipments in both parts and finished vehicles.

Current wording

Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which increased 1% to $751 million in the second quarter of 2025 compared to 2024 driven by volume growth in grain, petroleum products, and intermodal shipments, partially offset by lower automotive related shipments. For the first six months of 2025, Mexico related freight revenues declined 4% on 2% volume decreases driven by lower auto parts and finished vehicles, which more than offset growth in grain, intermodal, and petroleum product shipments.

Previous wording

Operating expenses decreased slightly in the first quarter of 2025 compared to 2024 driven by productivity and lower fuel prices. These decreases were partially offset by volume-related costs, inflation, and higher depreciation.

Current wording

Operating expenses increased slightly in the second quarter and year-to-date periods of 2025 compared to 2024 due to volume-related costs, inflation, a $55 million crew staffing agreement ratification charge, and higher depreciation. These increases were partially offset by productivity, lower fuel prices, and lower casualty costs.

Previous wording

Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. For the first quarter of 2025, expense decreased 1% compared to 2024 due to lower employee levels, partially offset by wage inflation.

Current wording

Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. For the second quarter and six month periods of 2025, compensation and benefits expense increased 5% and 2%, respectively, compared to 2024 due to volume-related costs, a $55 million crew staffing agreement ratification charge, wage inflation, and higher incentive compensation, partially offset by lower employee levels.

Previous wording

Purchased services and materials – Expense for purchased services and materials includes the costs of services purchased from outside contractors and other service providers (including equipment maintenance and contract expense 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 expense; and tools and supplies. Purchased services and materials increased 3% in the first quarter of 2025 compared to 2024, driven by inflation, volume-related costs (including an increase in our active locomotive fleet), and a 2024 favorable contract settlement, partially offset by decreased volume-related drayage costs incurred at one of our subsidiaries.

Current wording

Purchased services and materials – Expense for purchased services and materials includes the costs of services purchased from outside contractors and other service providers (including equipment maintenance and contract expense 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 expense; and tools and supplies. Purchased services and materials was flat in the second quarter of 2025 compared to 2024 driven by decreased volume-related drayage costs incurred at one of our subsidiaries, offset by inflation and volume-related costs (including an increase in our active locomotive fleet). For the year-to-date period, purchased services and materials increased 1% driven by inflation, volume-related costs, and a 2024 favorable contract settlement, partially offset by decreased volume-related drayage costs incurred at one of our subsidiaries.

Previous wording

Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. Depreciation expense was up 3% for the first quarter of 2025 compared to 2024, driven by a higher depreciable asset base.

Current wording

Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. Depreciation expense increased 3% for both the second quarter and year-to-date periods of 2025 compared to 2024 driven by a higher depreciable asset base.

Previous wording

Fuel– Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense decreased in the first quarter of 2025 compared to the same period in 2024 driven by a decrease in locomotive diesel fuel prices and a 1% improvement in the fuel consumption rate (computed as gallons of fuel consumed divided by gross ton-miles in thousands), partially offset by an increase in gross ton-miles. Locomotive diesel fuel prices averaged $2.51 and $2.81 per gallon (including taxes and transportation costs) in the first quarter of 2025 and 2024, respectively.

Current wording

Fuel– Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense decreased in both the second quarter and year-to-date periods of 2025 compared to the same period in 2024 driven by a decrease in locomotive diesel fuel prices and an improvement in the fuel consumption rate (computed as gallons of fuel consumed divided by gross ton-miles in thousands), partially offset by an increase in gross ton-miles. Locomotive diesel fuel prices averaged $2.42 and $2.73 per gallon (including taxes and transportation costs) in the second quarter of 2025 and 2024, respectively. For the year-to-date period, locomotive diesel fuel prices averaged $2.46 per gallon in 2025 compared to $2.77 per gallon in 2024.

Previous wording

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 increased 12% in the first quarter of 2025 compared to 2024, driven by increased car hire for auto racks, inflation, and increased demand in business (mainly intermodal) utilizing freight cars owned by others, partially offset by a reduction in equipment leases.

Current wording

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 increased 5% and 8%, respectively, in the second quarter and year-to-date periods of 2025 compared to 2024 driven by lower equity income, increased car hire for auto racks, increased demand in business (mainly intermodal) utilizing freight cars owned by others, and inflation, partially offset by lower operating equipment lease expense.

Previous wording

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% in the first quarter of 2025 compared to 2024, driven by higher costs associated with destroyed equipment, partially offset by lower bad debt expense and environmental remediation costs.

Current wording

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 decreased 5% and 2%, respectively, in the second quarter and year-to-date periods of 2025 compared to 2024 driven by lower environmental remediation and freight loss and damage costs, partially offset by a 2024 gain on the sale of intermodal equipment.

Previous wording

Other income, net – Other income decreased in the first quarter of 2025 compared to 2024. See Note 6 to the Condensed Consolidated Financial Statements, Item 1, for additional detail.

Current wording

Other income, net – Other income increased in the second quarter and year-to-date periods of 2025 compared to 2024 driven by higher real estate income, partially offset by interest received in 2024 from the IRS on refund claims. See Note 6 to the Condensed Consolidated Financial Statements, Item 1, for additional detail.

Previous wording

Interest expense – Interest expense decreased in the first quarter of 2025 compared to 2024 due to a decreased weighted-average debt level of $31.9 billion in 2025 compared to $32.3 billion in 2024, partially offset by a slightly higher effective interest rate of 4.1% in 2025 compared to 4.0% in 2024.

Current wording

Interest expense – Interest expense increased in the second quarter and year-to-date periods of 2025 compared to 2024 due to a higher weighted-average debt level combined with a slightly higher effective interest rate of 4.1% in 2025 compared to 4.0% in 2024 for both periods. The weighted-average debt levels were $32.8 billion and $31.7 billion for second quarter of 2025 and 2024, respectively, and $32.3 billion and $32.0 billion for the six month period of 2025 and 2024, respectively.

Previous wording

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. Both gross ton-miles and revenue ton-miles increased 3%, in the first quarter of 2025 compared to 2024, while carloadings increased 7% in the first quarter of 2025 compared to 2024. Changes in business mix drove the year-over-year variances between gross ton-miles, revenue ton-miles, and carloads due to increased international intermodal shipments that are generally lighter.

Current wording

Gross and revenue ton-miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by thenumber 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 increased by 7% and 8%, respectively, in the second quarter of 2025, compared to 2024 driven by a 4% increase in carloadings over the same time period. Changes in business mix drove the variances between gross ton-miles, revenue ton-miles, and carloads due to increased coal shipments that are generally heavier. Year-to-date, gross ton-miles, revenue ton-miles, and carloadings all increased 5% compared to the same period of 2024.

Previous wording

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 6% in the first quarter of 2025 compared to 2024 driven by a 6% improvement in terminal dwell.

Current wording

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 10% and 8%, respectively, in the second quarter and six month period of 2025 compared to 2024 driven by improvements in terminal dwell in both periods.

Previous wording

Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. Locomotive productivity increased 1% in the first quarter of 2025 compared to 2024 driven by improved network fluidity and asset utilization despite the increase in active fleet to handle the additional volumes.

Current wording

Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. Locomotive productivity increased 5% and 3% in the second quarter and year-to-date periods of 2025, respectively, driven by improved network fluidity and asset utilization even while the active locomotive fleet increased to handle the additional volume.

Previous wording

Train length – Train length is the average maximum train length on a route measured in feet. Our train length increased 2% in the first quarter of 2025 compared to 2024 due to train length improvement initiatives and increases in international intermodal shipments.

Current wording

Train length – Train length is the average maximum train length on a route measured in feet. Our train length increased 2% in both the second quarter and six month periods of 2025 compared to 2024 due to train length improvement initiatives, specifically driven by increased coal and grain train volume moving on longer trains.

Previous wording

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 was essentially flat in the first quarter of 2025 compared to 2024, while handling 18% more volume. Manifest SPI improved 6 points in the first quarter of 2025 compared to 2024 driven by improved network fluidity.

Current wording

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 improved 6 and 3 points, respectively, in the second quarter and year-to-date periods of 2025 compared to 2024, while we handled 2% and 10% more volume, respectively. Manifest SPI improved 13 and 10 points, respectively, in the second quarter and six month periods of 2025 compared to 2024 driven by improved network fluidity, while we handled higher volume.

Previous wording

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 9% in the first quarter of 2025 as average daily car miles increased 6% and employees decreased 3% compared to 2024. In the first quarter of 2025, we continued to adjust our active train, engine, and yard (TE&Y) workforce to enable responsiveness in an ever-changing demand and operating environment. As a result, we were able to handle 7% more volume with 1% fewer active TE&Y employees.

Current wording

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 9% in both the second quarter and year-to-date periods of 2025 compared to 2024 as average daily car miles increased 6% and employees decreased 3% compared to 2024 for both periods. In the second quarter of 2025, we continued to align our active train, engine, and yard (TE&Y) workforce to meet customer needs in a dynamic demand environment, while maintaining operational fluidity. As a result, we were able to handle 4% and 5% more volume in the second quarter and six month period of 2025, respectively, compared to 2024 with 1% fewer active TE&Y employees in both periods.

Previous wording

Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. Our operating ratio of 60.7% for the first quarter of 2025 was consistent with 2024 driven by core pricing gains and productivity initiatives, offset by the year-over-year impact of the business mix, inflation, the year-over-year impact from lower fuel prices, and other costs.

Current wording

Operating ratio – Operating ratio is our operating expe nses reflected as a percentage of operating revenues. For the second quarter and year-to-date periods of 2025, our operating ratio of 59.0% and 59.8%, respectively, improved 1.0 and 0.6 points, respectively, driven by core pricing gains, productivity initiatives, and volume growth, partially offset by the year-over-year impact of changes in business mix, inflation, a $55 million crew staffing agreement ratification charge, and a 2024 gain on the sale of intermodal equipment. In addition, the year-to-date period was negatively impacted by contract settlements in the first quarter of 2024.

Previous wording

[1]The trailing twelve months income statement information ended March 31, 2025, is recalculated by taking the twelve months ended December 31, 2024, subtracting the three months ended March 31, 2024, and adding the three months ended March 31, 2025.

Current wording

[1]The trailing twelve months income statement information ended June 30, 2025, is recalculated by taking the twelve months ended December 31, 2024, subtracting the six months ended June 30, 2024, and adding the six months ended June 30, 2025.

Previous wording

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 both March 31, 2025, and December 31, 2024, the incremental borrowing rate on operating leases was 3.8%. Pension and OPEB were funded at March 31, 2025, and December 31, 2024.

Current wording

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 June 30, 2025, and December 31, 2024, the incremental borrowing rate on operating leases was 4.0% and 3.8%, respectively. Pension and OPEB were funded at June 30, 2025, and December 31, 2024.

Previous wording

Cash used in investing activities increased in the first three months of 2025 compared to the same period of 2024 driven by the timing of capital investments.

Current wording

Cash used in investing activities increased in the first six months of 2025 compared to the same period of 2024 driven by the timing of capital investments.

Previous wording

[b]Locomotives and freight cars include early lease buyouts of $127 million in 2025 and $96 million in 2024.

Current wording

[b]Locomotives and freight cars include early lease buyouts of $178 million in 2025 and $96 million in 2024.

Previous wording

[c]Weather-related damages for the three months ended March 31, 2025 and 2024, are immaterial.

Current wording

[c]Weather-related damages for the six months ended June 30, 2025 and 2024, are immaterial.

Previous wording

In 2025, we expect our capital plan to be approximately $3.4 billion, consistent with 2024. 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, and investments in certain ramps to efficiently handle volumes from new and existing intermodal customers. 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.

Current wording

In 2025, we expect our capital plan to be approximately $3.4 billion, consistent with 2024. 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, and investments in certain ramps to efficiently handle volume from new and existing intermodal customers. 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.

Previous wording

Cash used in financing activities decreased in the first three months of 2025 compared to the same period of 2024 driven by an increase of debt issued and less debt repaid, partially offset by more share repurchases, including entering into accelerated share repurchase programs.

Current wording

Cash used in financing activities increased in the first six months of 2025 compared to the same period of 2024 driven by more share repurchases, including the 2025 accelerated share repurchase programs, partially offset by an increase of debt issued and less debt repaid.

Previous wording

Free cash flow and cash flow conversion rate are not considered financial measures 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 free cash flow and cash flow conversion rate are important to management and investors in evaluating our financial performance and measures our ability to generate cash without external financing. Free cash flow and cash flow conversion rate should be considered in addition to, rather than as a substitute for, cash provided by operating activities.

Current wording

Free cash flow and cash flow conversion rate are considered non-GAAP financial measures 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 free cash flow and cash flow conversion rate are important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing. Free cash flow and cash flow conversion rate should be considered in addition to, rather than as a substitute for, cash provided by operating activities.

Previous wording

We are continually evaluating our financial condition and liquidity. We analyze a wide range of economic scenarios and the impact on our ability to generate cash. These analyses inform our liquidity plans and activities outlined below and indicate we have sufficient borrowing capacity to sustain an extended period of lower volumes.

Current wording

We are continually evaluating our financial condition and liquidity. We analyze a wide range of economic scenarios and the impact on our ability to generate cash. These analyses inform our liquidity plans and activities outlined below and indicate we have sufficient borrowing capacity to sustain an extended period of lower volume.

Previous wording

During the first quarter of 2025, we generated $2.2 billion of cash provided by operating activities, paid our quarterly dividend, and repurchased $1.4 billion worth of shares under our share repurchase programs, including entering into accelerated share repurchase programs for $1.5 billion ($1.2 billion assigned to the initial delivery of shares). On March 31, 2025, we had $1.4 billion of cash and cash equivalents, $2.0 billion of credit available under our revolving credit facility, and up to $800 million undrawn on the Receivables Facility. In January 2025, we redeemed all $350 million of outstanding 3.25% notes due January 15, 2025. In February 2025, we issued $2.0 billion of debt (see Note 13 to the Condensed Consolidated Financial Statements, Item 1). We have been, and we expect to continue to be, in compliance with our debt covenants.

Current wording

During the second quarter of 2025, we generated $2.3 billion of cash provided by operating activities, repurchased $1.3 billion worth of shares under our share repurchase programs, including amounts assigned to the final delivery of shares under our accelerated share repurchase programs, and paid our quarterly dividend. On June 30, 2025, we had $1.1 billion of cash and cash equivalents, $2.0 billion of credit available under our revolving credit facility, and up to $800 million undrawn on the Receivables Facility. We have been, and we expect to continue to be, in compliance with our debt covenants.

Previous wording

[a]Excludes finance lease obligations of $124 million as well as unamortized discount and deferred issuance costs of ($1,707) million. Includes an interest component of $26,873 million.

Current wording

[a]Excludes finance lease obligations of $122 million as well as unamortized discount and deferred issuance costs of ($1,697) million. Includes an interest component of $26,706 million.

Previous wording

[c]Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $114 million.

Current wording

[c]Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $137 million.