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 2025 Annual Report on Form 10-K. During the first six months of 2026, 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 2025 Annual Report on Form 10-K. During the first nine months of 2026, there have not been any significant changes with respect to our critical accounting estimates.

Previous wording

The Company reported earnings of $3.36 per diluted share on net income of $2.0 billion and an operating ratio of 59.7% in the second quarter of 2026 compared to 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. Freight revenues increased 12% in the second quarter of 2026 compared to the same period in 2025 as higher fuel surcharge revenues, 2% volume growth, and core pricing 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 19% increase in domestic intermodal combined with higher grain and grain products and plastics carloads, offsetting the impact of lower international intermodal carloads and coal carloads, which declined 14% and 17%, respectively, compared to the second quarter of 2025.

Current wording

The Company reported earnings of $3.49 per diluted share on net income of $2.1 billion and an operating ratio of 59.1% in the third quarter of 2026 compared to 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. Freight revenues increased 15% in the third quarter of 2026 compared to the third quarter of 2025 as higher fuel surcharge revenues, 6% volume growth, and core pricing gains more than offset the impact of unfavorable business mix (from higher intermodal carloads). Continued strong intermodal and grain and grain products shipments coupled with increased metals and minerals and energy and specialized market shipments more than offset declines in coal shipments.

Previous wording

Operating expenses increased 13% compared to the second quarter of 2025 primarily due to 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 18 to the Condensed Consolidated Financial Statements, Item 1), and higher 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 9% to $2.8 billion reflecting top-line growth, while the operating ratio of 59.7% deteriorated 0.7 points primarily resulting from the impact of higher fuel prices compared to the second quarter of 2025.

Current wording

Operating expenses increased 15% compared to the third quarter of 2025 as locomotive fuel prices climbed to record levels amidst continued supply chain pressures, increasing average price per gallon 64% compared to last year. Volume-related costs, inflation, and higher depreciation also increased and were partially offset by productivity and lower acquisition-related expenses (see Note 18 to the Condensed Consolidated Financial Statements, Item 1). Operating income increased 15% to $2.9 billion, driven by top-line growth, while the operating ratio improved 0.1 points to 59.1% despite the headwind from higher fuel prices compared to the third quarter of 2025.

Previous wording

Freight revenues increased 12% in the second quarter of 2026 compared to the same period in 2025 driven by higher fuel surcharge revenues, 2% carload growth, and core pricing gains, which offset a slightly unfavorable business mix (from an increase in shipments with lower ARC, such as domestic intermodal). Increased domestic intermodal, 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 more than offset lower international intermodal and automotive shipments.

Current wording

Freight revenues increased 15% in the third quarter of 2026 compared to the same period in 2025 driven by higher fuel surcharge revenues, 6% carload growth, and core pricing gains, which more than offset an unfavorable business mix (from an increase in shipments with lower ARC, such as intermodal). Higher intermodal shipments, which increased 11% in the third quarter compared to one year ago, combined with strong metals and minerals, energy and specialized markets, and grain and grain products shipments were partially offset by lower coal shipments. Year-to-date 2026 freight revenues increased 10% compared to 2025 due to higher fuel surcharge revenues, 3% volume growth, and core pricing gains, partially offset by business mix (from increased intermodal shipments). Higher grain and grain products, intermodal, metals and minerals, and industrial chemicals and plastics shipments more than offset lower coal and automotive shipments.

Previous wording

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs increased to $1.0 billion in the second quarter of 2026 compared to $569 million in the same period of 2025 due to higher fuel prices and higher volume, partially offset by the fuel price lag impact.

Current wording

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs increased to $1.2 billion in the third quarter of 2026 compared to $602 million in the same period of 2025 due to higher fuel prices and increased volume.

Previous wording

Other subsidiary revenues increased in the second quarter of 2026 compared to 2025 due to higher demand for shipments at our subsidiary that brokers intermodal and transload logistics services, partially 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 second quarter and year-to-date 2026 compared to 2025 driven by higher container, intermodal accessorial, and demurrage revenues.

Current wording

Other subsidiary revenues increased in the third quarter of 2026 compared to 2025 due to higher demand for shipments at our subsidiary that brokers intermodal and transload logistics services, partially offset by lower revenues from the sale of a portion of revenue-generating assets in late 2025 from our technology subsidiary. Additionally, in the year-to-date period, other subsidiary revenues were negatively impacted from the transfer of commuter operations to Metra. Accessorial revenues increased in the third quarter and year-to-date periods of 2026 compared to 2025 driven by higher container, intermodal accessorial, and demurrage revenues.

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 7% in the second quarter on 1% fewer carloads as higher fuel surcharge revenues, core pricing gains, and business mix (from lower coal shipments) more than offset the volume decline. Decreased coal shipments from lower natural gas prices, milder weather, and mine maintenance and outages in the second quarter of 2026, more than offset increased export grain and continued growth in renewable fuels and associated feedstock shipments. For the year-to-date periods of 2026 compared to 2025, freight revenues from bulk shipments increased 9% due to volume growth of 5% from increased export grain shipments, higher fuel surcharge revenues, and core pricing gains, partially offset by business mix (from lower food and refrigerated shipments).

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 10% in the third quarter of 2026 compared to 2025 driven by higher fuel surcharge revenues and core pricing gains on essentially flat volume. Lower wheat and soybean meal volume, lower coal shipments due to low natural gas prices and elevated plant inventories, and lower fertilizer shipments offset continued export grain strength in addition to higher renewable fuels, ethanol, and associated feedstock shipments. For the year-to-date periods of 2026 compared to 2025, freight revenues from bulk shipments increased 9% from higher fuel surcharge revenues, 3% volume growth from higher grain and grain product shipments, and core pricing gains, partially offset by business mix (from lower food and refrigerated carloads).

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 8% in the second quarter of 2026 compared to 2025, respectively, due to higher 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 mix, contributed to the 7% increase in industrial freight revenues year-to-date 2026. Industrial carloads improved 3% and 4% in the second quarter 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 was partially offset by reduced soda ash export shipments.

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 of 2026 compared to 2025 due to increased volume, core pricing gains, and higher fuel surcharge revenues, partially offset by business mix (from higher plastics and rock shipments). While all industrial business teams contributed to the 6% volume increase for the third quarter of 2026 compared to 2025, increased domestic steel, construction project-related material, and plastics demand in addition to business development efforts for higher petroleum and lumber shipments primarily drove the growth. Year-to-date carloads improved 4% as increased demand for industrial chemicals and plastics and construction project-related materials coupled with business development efforts, more than offset reduced soda ash export shipments.

Previous wording

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and interna tional. Premium freight revenues increased 21% in the second quarter of 2026 compared to 2025 driven by higher fuel surcharge revenues,4% higher volume, core pricing gains, and business mix (from lower 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 essentially 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 lower international intermodal shipments) more than offset the volume decline. Year-to-date 2026 intermodal volume decreased 3% compared to 2025 driven by a 21% reduction in international intermodal carloads as a result of elevated U.S. West Coast imports in the first half of 2025, which more than offset domestic intermodal growth. Automotive shipments decreased 3%in the year-to-date periods of 2026 compared to 2025 due to lower production as a result of weaker finished vehicle demand.

Current wording

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Premium freight revenues increased 21% and 12%, respectively, in the third quarter and year-to-date periods of 2026 compared to 2025 driven by higher fuel surcharge revenues, volume growth, and core pricing gains, partially offset by business mix (from higher intermodal shipments). In the third quarter of 2026, intermodal volume increased 11% with continued strong domestic intermodal growth driven by business development and reduced truck market capacity, as well as, higher international intermodal carloads due to improving U.S. West Coast import volume and business development efforts. In addition, automotive shipments improved 2% in the third quarter of 2026 due to higher auto parts shipments resulting from business development efforts. Year-to-date 2026 intermodal volume increased 2% compared to 2025 as a 13% increase in domestic intermodal shipments more than offset a 12% decline in international intermodal carloads as a result of elevated U.S. West Coast imports in the first half of 2025. Automotive shipments decreased 1% in the year-to-date periods of 2026 compared to 2025 from lower production as a result of weaker finished vehicle demand, which offset business development efforts.

Previous wording

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

Current wording

Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which increased 9%, to $820 million, in the third quarter of 2026 driven by fuel surcharge revenues and 4% volume growth from increased intermodal, finished vehicles, and construction-related shipments, partially offset by lower grain and forest product shipments. For the year-to-date period of 2026, Mexico freight revenues increased 7% to $2.4 billion compared to 2025 driven by higher fuel surcharge revenues and volume growth. Increased intermodal, finished vehicles, and grain products shipments more than offset lower petroleum, auto parts, beverage, and metals shipments, resulting in 4% volume growth.

Previous wording

Operating expenses increased 13% and 8%, respectively, compared to the second quarter and year-to-date periods of 2025 due to higher fuel prices, inflation, volume-related costs, acquisition-related expenses (see Note 18 to the Condensed Consolidated Financial Statements, Item 1), and higher depreciation expense. These increases were partially offset by productivity and positively impacted by a $55 million crew staffing agreement ratification charge in 2025.

Current wording

Operating expenses increased 15% compared to the third quarter of 2025 due to higher fuel prices, volume-related costs, inflation, and higher depreciation expense, which was partially offset by productivity and lower acquisition-related expenses (see Note 18 to the Condensed Consolidated Financial Statements, Item 1). For the year-to-date period of 2026, operating expenses increased 10% due to higher fuel prices, inflation, volume-related costs, depreciation, and acquisition-related expenses. These increases were partially offset by productivity and positively impacted by a $55 million crew staffing agreement ratification charge in 2025.

Previous wording

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

Current wording

Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. Compensation and benefits expense increased 4% and 2% for the third quarter and the year-to-date period of 2026 compared to 2025, respectively, as wage inflation, higher incentive compensation, and training costs were partially offset by lower employee levels. Additionally, the year-to-date comparison was positively impacted by a $55 million 2025 crew staffing agreement ratification charge.

Previous wording

Fuel– Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense increased in both the second quarter and year-to-date periods of 2026 compared to the same periods in 2025 driven by higher locomotive diesel fuel prices and increased gross ton-miles, partially offset by 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 $3.86 and $3.27 per gallon (including taxes and transportation costs) in the second quarter and year-to-date periods of 2026 compared to $2.42 and $2.46 per gallon in the corresponding periods of 2025.

Current wording

Fuel– Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment as well as the associated taxes and transportation costs. Fuel expense increased in both the third quarter and year-to-date periods of 2026 compared to the same periods in 2025 driven by higher locomotive diesel fuel prices and increased gross ton-miles, partially offset by improvement in the fuel consumption rate (computed as gallons of fuel consumed divided by gross ton-miles in thousands), which improved 2% in both respective periods. Locomotive diesel fuel prices averaged $4.21 and $3.59 per gallon in the third quarter and year-to-date periods of 2026, respectively, compared to $2.56 and $2.49 per gallon in the corresponding respective periods of 2025.

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 10% and 9%, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025 driven by acquisition-related expenses, inflation, and increased intermodal and subsidiary volume-related costs.

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 9% in the third quarter and year-to-date period of 2026 compared to 2025 driven by higher subsidiary and intermodal volume-related costs and inflation. For the third quarter of 2026, lower acquisition-related costs more than offset the increased costs associated with maintaining a higher active fleet. Year-to-date, increased acquisition-related costs contributed to a portion of the year-to-date expense increase.

Previous wording

Depreciation – The majority of depreciation expense relates to road property, including rail, ties, ballast, and other track material. Depreciation expense increased 4% for both the second quarter and year-to-date periods of 2026 compared to 2025 driven by a higher depreciable asset base.

Current wording

Depreciation – The majority of depreciation expense relates to road property, including rail, ties, ballast, and other track material. Depreciation expense increased 4% for both the third quarter and year-to-date periods of 2026 compared to 2025 driven by a higher depreciable asset base.

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 decreased 7% and 8%, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025 driven by lower operating equipment lease expense and lower car hire expense as improved cycle times more than offset 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.

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 3% and 6%, respectively, in the third quarter and year-to-date periods of 2026 compared to 2025 driven by lower operating equipment lease expense and lower car hire expense from shorter haul length and volume-related incentives. These declines were partially offset by increased demand in business (primarily intermodal and construction project-related materials) utilizing freight cars owned by others and favorable 2025 contract settlements. Year-to-date, improved cycle times also contributed to lower equipment and other rents expense, although it was partially offset by lower equity income compared to 2025.

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 13% and 7%, respectively, in the second 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 taxes. The year-to-date 2026 period was also impacted by lower personal injury costs, which were partially offset by higher bad debt expense.

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 increased 1% and 5%, respectively, in the third quarter and year-to-date periods of 2026 compared to 2025 driven by higher environmental and destroyed equipment casualty costs and other general expenses, which were partially offset by lower personal injury costs, property tax expense, and bad debt expenses. The year-to-date period of 2026 was also impacted by higher damaged freight costs.

Previous wording

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

Current wording

Other income, net – Other income decreased in both the third quarter and year-to-date periods of 2026 compared to 2025 driven by higher non-operating property environmental remediation costs and lower real estate income, partially offset by increased interest income. See Note 6 to the Condensed Consolidated Financial Statements, Item 1, for additional detail.

Previous wording

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

Current wording

Interest expense – Interest expense decreased in both the third quarter and year-to-date periods of 2026 compared to 2025 due to lower weighted-average debt levels, partially offset by higher effective interest rates. The effective interest rate was 4.3% for the third quarter of 2026 and 4.2% for the year-to-date period of 2026 compared to 4.1% for both respective 2025 periods. The weighted-average debt levels were $30.3 billion and $32.2 billion for the third quarter of 2026 and 2025, respectively, and $30.8 billion and $32.2 billion for the nine month period of 2026 and 2025, respectively.

Previous wording

Income tax expense – Income tax expense increased 29% and 16%, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025. The increase in income tax expense in both periods is driven by the impact of $115 million in lower deferred tax expense in the second quarter of 2025 from legislation enacted in the state of Kansas to modify the corporate income tax apportionment and higher pre-tax income, partially offset by the second quarter of 2026 changes in state tax laws and other state tax matters resulting in a $27 million reduction of our deferred tax expense. Our effective tax rates were 22.0% and 18.9% for the second quarter of 2026 and 2025, respectively, and 22.8% and 21.1% for the six month period of 2026 and 2025, respectively.

Current wording

Income tax expense – Income tax expense increased 23% and 19%, respectively, in the third quarter and year-to-date periods of 2026 compared to 2025. The increase in income tax expense in both periods is driven by higher pre-tax income and lower deferred tax adjustments. In the year-to-date period of 2026, changes in state tax laws and other state tax matters in the second quarter resulted in a $27 million reduction in deferred tax expense. Comparatively, the year-to-date period of 2025 included a $115 million reduction in deferred tax expense in the second quarter from legislation enacted in the state of Kansas to modify the corporate income tax apportionment. Our effective tax rates were 23.8% and 22.9% for the third quarter of 2026 and 2025, respectively, and 23.2% and 21.7% for the nine month period of 2026 and 2025, respectively.

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 both increased 2% in the second 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 increased 1%. The variances in gross ton-miles, revenue ton-miles, and carloads was driven by changes in business mix due to higher grain shipments that are generally heavier and decreased 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 increased 4% while revenue ton-miles increased 5% in the third quarter of 2026 compared to 2025 and corresponding carloads increased 6%. 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 increased 3%. The variance in gross ton-miles, revenue ton-miles, and carloads was driven by changes in business mix. In the third quarter of 2026, business mix was impacted by higher intermodal shipments, which are generally lighter, while the year-to-date business mix was affected by higher grain 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 5% and 7%, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025 driven by a decrease in terminal dwell combined with train speed improvement 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 1% and 5%, respectively, in the third quarter and year-to-date periods of 2026 compared to 2025 driven by reduced terminal dwell combined with improved train speed in both periods.

Previous wording

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

Current wording

Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. In the third quarter of 2026, locomotive productivity remained consistent with 2025 as the active fleet increased 2% to support 4% higher gross ton-miles while maintaining network fluidity and asset efficiency. For the year-to-date period, locomotive productivity improved 2% compared to 2025, with a 1% smaller active fleet handling 3% more gross ton-miles.

Previous wording

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

Current wording

Train length – Train length is the average maximum train length on a route measured in feet. Train length increased 2% in the third quarter and year-to-date periods of 2026 compared to 2025 due to train length improvement initiatives, including optimization of the transportation plan and mainline capacity investments, enabling us to efficiently handle increasing carload volume.

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 declined 4 points and was unchanged, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025. Manifest SPI declined 2 points while improving 1 point, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025. The lower SPI results were driven by comparison against a higher benchmark standard.

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. For the third quarter and year-to-date periods of 2026, both SPI measures declined compared to the respective 2025 period as a result of a comparison against a higher benchmark standard. Intermodal SPI declined 6 points and 2 points, respectively, in the third quarter and year-to-date periods of 2026 compared to 2025 while manifest SPI declined 7 points and 3 points, respectively.

Previous wording

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 5% and 6%, respectively, in the second quarter and year-to-date periods of 2026 compared to 2025. Increased average daily car miles, which grew 1% in each period, combined with 3% and 4% lower employee levels in the second quarter and year-to-date periods, respectively, drove the improvement. Demonstrating our commitment to meet customer demands while maintaining operational fluidity, we continually align our active train, engine, and yard (TE&Y) workforce.

Current wording

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 5% in the third quarter and year-to-date periods of 2026, respectively, compared to 2025. Lower employee levels, which declined 1% and 3%, respectively, combined with higher average daily car miles enabled the improvement. We continually align our active train, engine, and yard (TE&Y) workforce to meet customer demands while operating a fluid network.

Previous wording

Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. For the second quarter and year-to-date periods of 2026, our operating ratio of 59.7% 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, productivity initiatives, and the positive comparison from the $55 million crew staffing agreement ratification charge in 2025.

Current wording

Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. For the third quarter of 2026, our operating ratio of 59.1% improved 0.1 points as top-line growth from increased volume and core pricing gains, productivity, and lower acquisition-related costs offset the impact of higher fuel costs and inflation. The year-to-date 2026 operating ratio of 59.7% deteriorated 0.1 points as the impact of higher fuel prices, inflation, and acquisition-related expenses more than offset core pricing gains, productivity initiatives, and the positive comparison from the $55 million crew staffing agreement ratification charge in 2025.

Previous wording

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

Current wording

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

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(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 June 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 June 30, 2026, and December 31, 2025.

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(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 September 30, 2026, and December 31, 2025, the incremental borrowing rate on operating leases was 4.2% and 4.0%, respectively. Pension and OPEB were funded at September 30, 2026, and December 31, 2025.

Previous wording

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

Current wording

Cash provided by operating activities increased 18% in the first nine months of 2026 compared to the same period of 2025 driven by lower income taxes paid and higher net income.

Previous wording

Cash used in investing activities increased 12% in the first six months of 2026 compared to the same period of 2025 driven by the net purchases and maturities of short-term investments.

Current wording

Cash used in investing activities increased 24% in the first nine months of 2026 compared to the same period of 2025 driven by net purchases and maturities of short-term investments.

Previous wording

[b]Locomotives and freight cars include early lease buyouts of $241 million in 2026 and $178 million in 2025.

Current wording

[b]Locomotives and freight cars include early lease buyouts of $320 million in 2026 and $311 million in 2025.

Previous wording

[c]Weather-related damages for the six months ended June 30, 2026 and 2025, are immaterial.

Current wording

[c]Weather-related damages for the nine months ended September 30, 2026 and 2025, are immaterial.

Previous wording

In 2026, we expect our capital plan to be approximately $3.3 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 through technology. This includes terminal investments supporting our manifest network and intermodal ramps to efficiently handle new and existing 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.

Current wording

In 2026, we expect our capital plan to be approximately $3.5 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 through technology. This includes terminal investments supporting our manifest network and intermodal ramps to efficiently handle new and existing 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.

Previous wording

Cash used in financing activities increased 17% in the first six 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.

Current wording

Cash used in financing activities decreased 13% in the first nine months of 2026 compared to the same period of 2025 driven by the pause of our share repurchases as part of the pending acquisition of Norfolk Southern, partially offset by a decrease in debt issued.

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, 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.

Current wording

See Note 14 of the Condensed Consolidated Financial Statements, Item 1, for a description of our financing arrangements, 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 six months ended June 30, 2026, we generated $5.5 billion of cash provided by operating activities and paid our quarterly dividends. In 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 repurchases. On June 30, 2026, we had $1.6 billion of cash and cash equivalents, $500 million of short-term investments, $2.0 billion of credit available under our revolving credit facility, and $600 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 nine months ended September 30, 2026, we generated $8.3 billion of cash provided by operating activities and paid our quarterly dividends. Our quarterly dividend increased from $1.38 per share to $1.42 per share in the third quarter of 2026. In 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 repurchases. On September 30, 2026, we had $2.2 billion of cash and cash equivalents, $875 million of short-term investments, $2.0 billion of credit available under our revolving credit facility, and $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

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, 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.

Current wording

We have contractual obligations that may affect our financial condition as described in the notes to the Condensed Consolidated Financial Statements and as referenced in the table below, as well as commitments related to the pending acquisition of Norfolk Southern, which are described in Note 18 of the Condensed Consolidated Financial Statements, Item 1, but not included in the table below. 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.

Previous wording

[a]Excludes finance lease obligations of $80 million as well as unamortized discount and deferred issuance costs of ($1,659) million. Includes an interest component of $25,403 million.

Current wording

[a]Excludes finance lease obligations of $68 million as well as unamortized discount and deferred issuance costs of ($1,648) million. Includes an interest component of $24,985 million.

Previous wording

[c]Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $100 million.

Current wording

[c]Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $91 million.