UNION PACIFIC CORP

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 six 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 nine months of 2025, there have not been any significant changes with respect to our critical accounting estimates.

Previous 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.

Current wording

The Company reported earnings of $3.01 per diluted share on net income of $1.8 billion and an operating ratio of 59.2% in the third quarter of 2025 compared to earnings of $2.75 per diluted share on net income of $1.7 billion and an operating ratio of 60.3% in the third quarter of 2024. Freight revenues increased 3% on slightly negative carloads in the third quarter of 2025 compared to the same period in 2024 driven by core pricing gains and a more favorable business mix, partially offset by lower fuel surcharge revenue. Increased carloads in coal, industrial chemicals and plastics, and grain and grain products were offset by lower international intermodal carloads, which declined 17% in the third quarter of 2025.

Previous wording

Operating expenses increased slightly compared to the second quarter of 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. Compared to second quarter of last year, operating income increased 5% to $2.5 billion and operating ratio of 59.0%improved 1.0 point, reflecting top-line growth, solid operational performance, and productivity gains.

Current wording

Operating expenses slightly increased compared to the third quarter of 2024 due to inflation, acquisition-related expenses (see Note 18 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation. These increases were partially offset by productivity, lower casualty costs, and lower fuel prices. Compared to third quarter of last year, operating income increased 6% to $2.5 billion, and the operating ratio of 59.2%improved 1.1 points, reflecting top-line growth, solid operational performance, and productivity gains.

Previous 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.

Current wording

We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volume (carloads) and average revenue per car (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 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.

Current wording

Freight revenues increased 3% on slightly negative carloads in the third quarter of 2025 compared to the same period in 2024 as a result of core pricing gains and a more favorable business mix, partially offset by lower fuel surcharge revenue. Increased carloads in coal, industrial chemicals and plastics, and grain and grain products were offset by lower international intermodal carloads, which declined 17% in the third quarter of 2025. For the year-to-date period of 2025, freight revenues also increased 3% driven by core pricing gains and 3% volume growth, partially offset by unfavorable business mix (for example, relative increases in shipments with lower ARC such as intermodal and coal) and lower fuel surcharge revenues. Increased shipments of intermodal, coal, and grain and grain products were partially offset by lower automotive shipments.

Previous 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.

Current wording

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs decreased $33 million to $602 million in the third quarter of 2025 compared to $635 million in the same period of 2024 due the lag impact on fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries) and lower volumes, partially offset by higher fuel prices. For the year-to-date period of 2025, freight revenues from fuel surcharge programs declined $233 million compared to 2024 driven by lower fuel prices and the related price lag impact, partially offset by higher volume levels.

Previous 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.

Current wording

Other subsidiary revenues decreased in the third quarter and year-to-date 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 increased in the third quarter 2025 compared to 2024 driven by improved intermodal accessorial revenues. For the year-to-date period, accessorial revenues decreased due to the sale of our intermodal equipment in the second quarter of 2024, resulting in lower intermodal accessorial revenues, and the comparison period was also 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 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.

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

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 third quarter and year-to-date periods of 2025 compared to 2024 due to core pricing gains and volume increases, partially offset by business mix and lower fuel surcharge revenues. Quarterly increases in plastics, industrial chemicals, and steel carloads more than offset the reduced iron ore (as a result of tariff uncertainties) and government carloads. Year-to-date volume growth in industrial chemicals, rock, and plastics was partially offset by lower iron ore, petroleum products, waste shipments, and lumber.

Previous 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.

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 2% in the third quarter of 2025 compared to 2024 driven by 5% lower volumes, partially offset by business mix and core pricing gains. Third quarter of 2025 intermodal volumes were down 5% driven by a 17% reduction in international intermodal carloads, partially offset by strong domestic intermodal growth. In 2024, international intermodal benefited from heavy demand due to a trade flow shift from the East Coast and Canadian ports to the West Coast that have now shifted back tohistorical trade patterns. Automotive shipments decreased in the third quarter of 2025 compared to 2024 due to reduced production. For the year-to-date period of 2025 compared to 2024, premium freight revenues were flat as 3% volume increases and core pricing gains were offset by lower fuel surcharge revenues and business mix. Year-to-date intermodal volumes are up 4% driven by strong domestic intermodal growth in addition to elevated U.S. West Coast imports in the first half of 2025. Automotive shipments decreased in the year-to-date periods of 2025 compared to 2024 due to reduced production and tariff uncertainties in the first half of the year.

Previous 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.

Current wording

Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which increased 4% to $752 million in the third quarter of 2025 compared to 2024 driven by 4% volume growth due to increased intermodal and grain shipments, partially offset by lower beverage and steel shipments. For the year-to-date period of 2025, Mexico related freight revenues declined 2% on essentially flat volume driven by lower auto parts, finished vehicles, and beverage carloads, which offset growth in intermodal, grain, and petroleum product shipments.

Previous 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.

Current wording

Operating expenses slightly increased compared to the third quarter and year-to-date periods of 2024 due to inflation, acquisition-related expenses (see Note 18 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation. These increases were partially offset by productivity and lower fuel prices.

Previous 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.

Current wording

Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. For the third quarter of 2025, compensation and benefits expense decreased 1% compared to 2024 due to lower employee levels, partially offset by wage inflation and higher incentive compensation. For the year-to-date period, compensation and benefits expense increased 1% compared to 2024 due to wage inflation, volume-related costs, a $55 million crew staffing agreement ratification charge, 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 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.

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 increased 6% and 3%, respectively, in the third quarter and year-to-date periods of 2025 compared to 2024 driven by acquisition-related expenses, inflation, and an increase in derailment related expenses, offset by lower costs associated with improved locomotive productivity. The year-to-date period was also impacted by higher volume related cost and a 2024 favorable contract settlement.

Previous 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.

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 third 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 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.

Current wording

Fuel– Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense increased in the third quarter of 2025 compared to the same period in 2024 driven by an increase in gross ton-miles, partially offset 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). For the year-to-date period of 2025, fuel expense decreased compared to 2024 driven by lower fuel prices and an improvement in the fuel consumption rate, partially offset by increased gross ton-miles. Locomotive diesel fuel prices averaged $2.56 and $2.60 per gallon (including taxes and transportation costs) in the third quarter of 2025 and 2024, respectively. For the year-to-date period, locomotive diesel fuel prices averaged $2.49 per gallon in 2025 compared to $2.71 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 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.

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 decreased 11% in the third quarter of 2025 driven by favorable contract settlements, improved cycle times, and lower car hire related to the year-over-year decline in international intermodal demand, partially offset by lower equity income. The year-to-date period of 2025 compared to 2024 increased 2% driven by increased car hire for autoracks, higher demand for business utilizing freight cars owned by others (mainly intermodal), inflation, and lower equity income, 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 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.

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 1% in the third 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 higher state and local taxes. The year-to-date period was also negatively impacted by the 2024 gain on the sale of intermodal equipment.

Previous 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.

Current wording

Other income, net – Other income increased in the third quarter and year-to-date periods of 2025 compared to 2024 driven by higher real estate income. The year-to-date period of 2025 was also negatively impacted by the interest received in the second quarter of 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 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.

Current wording

Interest expense – Interest expense increased in the third quarter and year-to-date periods of 2025 compared to 2024 as a result of higher effective interest rates and higher weighted-average debt levels. The effective interest rate for both 2025 periods was 4.1% compared to 4.0% for both periods in 2024. The weighted-average debt levels were $32.2 billion and $31.4 billion for third quarter of 2025 and 2024, respectively, and $32.2 billion and $31.8 billion for the year-to-date periods of 2025 and 2024, respectively.

Previous wording

Income tax expense – Income tax expense decreased 14% and 7% in the second quarter and year-to-date periods of 2025, respectively, compared to 2024. In the second quarter of 2025, the state of Kansas enacted legislation modifying the corporate income tax apportionment formula for future years resulting in a $115 million reduction of our deferred tax expense. In the second quarter of 2024, the state of Arkansas enacted legislation to reduce its corporate income tax rate for future years resulting in an $8 million reduction of our deferred tax expense. Our effective tax rates were 18.9% and 23.4% for the second quarter of 2025 and 2024, respectively, and 21.1% and 23.4% for the six month period of 2025 and 2024, respectively.

Current wording

Income tax expense – Income tax expense increased 2% in the third quarter of 2025 compared to 2024 due to higher pre-tax income and decreased 4% in the year-to-date period compared to 2024. In the second quarter of 2025, the state of Kansas enacted legislation modifying the corporate income tax apportionment formula for future years resulting in a $115 million reduction of our deferred tax expense. In the second quarter of 2024, the state of Arkansas enacted legislation to reduce its corporate income tax rate for future years resulting in an $8 million reduction of our deferred tax expense. Our effective tax rates were 22.9% and 23.7% for the third quarter of 2025 and 2024, respectively, and 21.7% and 23.5% for the year-to-date periods of 2025 and 2024, respectively.

Previous wording

We report a number of key performance measures weekly to the Surface Transportation Board (STB). We provide these on our website at https://investor.unionpacific.com/key-performance-metrics.

Current wording

We report a number of key performance measures weekly to the STB. We provide these on our website at https://investor.unionpacific.com/key-performance-metrics.

Previous 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.

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 3% and 5%, respectively, in the third quarter of 2025 compared to 2024, while corresponding carloads were flat. For the year-to-date period, gross ton-miles, revenue ton-miles, and carloads increased 4%, 5%, and 3%, respectively, compared to 2024. Changes in business mix drove the variances between gross ton-miles, revenue ton-miles, and carloads due to higher coal shipments that are generally heavier.

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 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.

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 8% and 7%, respectively, in the third quarter and year-to-date periods of 2025 compared to 2024 driven by improvements in terminal dwell and train speed.

Previous 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.

Current wording

Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. Locomotive productivity increased 4% and 3% in the third quarter and year-to-date periods of 2025, respectively, driven by improved network fluidity and asset utilization.

Previous 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.

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 third quarter and year-to-date 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 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.

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 12 and 7 points, respectively, in the third quarter and year-to-date periods of 2025 compared to 2024, while we adjusted to changing intermodal demand levels as volumes were down 5% during the third quarter and up 4% for the year-to-date period. Manifest SPI improved 11 points in both the third quarter and year-to-date 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 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.

Current wording

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 6% in the third quarter and 8% in the year-to-date periods of 2025 compared to 2024, respectively, as average daily car miles increased 2% and 5%, respectively, while employees decreased 4% and 3%, respectively, compared to 2024. We continually 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, our active TE&Y decreased 4% during the third quarter of 2025 on slightly negative volume levels compared to the same period in 2024. For the year-to-date period of 2025, we were able to handle 3% more volume with 2% fewer active TE&Y employees over the same period.

Previous 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.

Current wording

Operating ratio – Operating ratio is our operating expe nses reflected as a percentage of operating revenues. For the third quarter of 2025, our operating ratio of 59.2% improved 1.1 points driven by productivity initiatives and core pricing gains, partially offset by inflation, and acquisition-related expenses. For the year-to-date period of 2025 compared to 2024, our operating ratio improved 0.8 points to 59.6% as a result of core pricing gains, productivity, and volume growth which more than offset the impact of unfavorable business mix, inflation, the year-over-year impact of changes in fuel price, a crew staffing agreement ratification charge in the second quarter of 2025, and acquisition-related expenses. In addition, the year-to-date period was negatively impacted by a gain on the sale of intermodal equipment in the second quarter of 2024 and contract settlements in the first quarter of 2024.

Previous 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.

Current wording

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

Previous wording

Cash provided by operating activities increased in the first six months of 2025 compared to the same period of 2024 driven by higher net income and lower income taxes paid.

Current wording

Cash provided by operating activities increased in the first nine months of 2025 compared to the same period of 2024 driven by higher net income and lower income taxes paid.

Previous wording

On July 4, 2025, H.R.1 was enacted that makes key elements of the 2017 Tax Cuts and Jobs Act permanent, including provisions for 100% bonus depreciation on qualified property and fully expensing internally developed software, which will have a favorable impact to our future cash provided by operating activities.

Current wording

On July 4, 2025, H.R.1 was enacted that makes key elements of the 2017 Tax Cuts and Jobs Act permanent, including provisions for 100% bonus depreciation on qualified property and fully expensing internally developed software, which has favorable impacts to our current and future cash provided by operating activities.

Previous 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.

Current wording

Cash used in investing activities increased in the first nine months of 2025 compared to the same period of 2024 driven by the timing of capital investments, including an increase in early lease buyouts, and lower proceeds from a 2024 sale of intermodal equipment.

Previous wording

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

Current wording

[b]Locomotives and freight cars include early lease buyouts of $311 million in 2025 and $96 million in 2024.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Cash used in financing activities increased in the first nine 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

See Note 14 of the Condensed Consolidated Financial Statements, Item 1, for a description of all our outstanding financing arrangements and significant new borrowings and Note 16 of the Condensed Consolidated Financial Statements, Item 1, for a description of our share repurchase programs.

Current wording

See Note 14 of the Condensed Consolidated Financial Statements, Item 1, for a description of all our outstanding financing arrangements and significant new borrowings, Note 16 of the Condensed Consolidated Financial Statements, Item 1, for a description of our share repurchase programs, and Note 18 of the Condensed Consolidated Financial Statements, Item 1, for the pending acquisition of Norfolk Southern.

Previous 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.

Current wording

During the third quarter of 2025, we generated $2.5 billion of cash provided by operating activities and paid our quarterly dividend. Also within the third quarter of 2025, we announced the pending acquisition of Norfolk Southern described in Note 18 of the Condensed Consolidated Financial Statements, Item 1, and paused our share repurchase program. On September 30, 2025, we had $808 million of cash and cash equivalents, $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.

Previous 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.

Current wording

[a]Excludes finance lease obligations of $108 million as well as unamortized discount and deferred issuance costs of ($1,688) million. Includes an interest component of $26,248 million.

Previous wording

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

Current wording

[c]Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $125 million.