NORFOLK SOUTHERN CORP

Previous wording

Throughout the first half of 2025, we have remained focused on managing what we can control, including providing safe and reliable service for our customers while continuing efforts to drive productivity in our organization. During the quarter, we delivered revenue growth that helped drive improved financial performance amid ongoing macroeconomic uncertainty. We were able to handle additional volumes while generating improvements in labor productivity and fuel efficiency. Additionally, we continued to experience recoveries related to the Eastern Ohio Incident (as defined further and described in Note 12 in the Notes to Consolidated Financial Statements) in excess of incremental expenses, which further benefited our financial results. For the second quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 62.2%, and an adjusted operating ratio of 63.4% (see our non-GAAP reconciliations beginning on page 28). We remain committed to being a safe, productive, resilient, and efficient railroad with industry-competitive margins.

Current wording

Our third quarter financial results reflected continued improvements in labor productivity and fuel efficiency while also delivering revenue growth driven by increased automotive and chemicals traffic. Significantly impacting the comparison of our financial results to the prior year is the absence of $380 million in gains on sales of railway lines that occurred in 2024. Additionally, net benefits related to the Eastern Ohio Incident (as defined further and described in Note 15 in the Notes to Consolidated Financial Statements) were lower in the current year. For the third quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 64.6%, and an adjusted operating ratio of 63.3% (see our non-GAAP reconciliations beginning on page 29). We remain committed to being a safe, productive, resilient, and efficient railroad with industry-competitive margins.

Previous wording

The following tables adjust our GAAP financial results for the second quarter and first six months of 2025 and 2024 to exclude restructuring and other charges and the effects of the Incident. The adjusted results for the second quarter and first six months of 2024 also exclude shareholder advisory costs and a deferred income tax adjustment. The income tax effects of these non-GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding these items. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation from, or as a substitute for, the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.

Current wording

The following tables adjust our GAAP financial results for the third quarter and first nine months of 2025 to exclude Merger-related expenses, restructuring and other charges, and the overall impact on operating expenses resulting from costs and recoveries associated with the Incident. The following tables adjust our GAAP financial results for the third quarter and first nine months of 2024 to exclude gains on railway line sales, restructuring and other charges, and costs and recoveries associated with the Incident. Additionally, the adjusted results for the first nine months of 2024 exclude shareholder advisory costs and a deferred income tax adjustment. The income tax effects of these non-GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding these items. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation from, or as a substitute for, the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.

Previous wording

In the table below, references to the results for the second quarters of 2025 and 2024 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the tables above.

Current wording

In the table below, references to the results for the third quarters of 2025 and 2024 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the tables above.

Previous wording

In the table below, references to the results for the first six months of 2025 and 2024 and related comparisons use the adjusted, non-GAAP results from the reconciliation in the tables above.

Current wording

In the table below, references to the results for the first nine months of 2025 and 2024 and related comparisons use the adjusted, non-GAAP results from the reconciliation in the tables above.

Previous wording

Railway operating revenues increased $66 million and $55 million in the second quarter and first six months, respectively. The table below reflects the components of the revenue change by major commodity group ($ in millions).

Current wording

Railway operating revenues increased $52 million and $107 million in the third quarter and first nine months, respectively. The table below reflects the components of the revenue change by major commodity group ($ in millions).

Previous wording

Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $203 million and $259 million in the second quarters of 2025 and 2024, respectively, and $405 million and $519 million for the first six months of 2025 and 2024, respectively. The decrease in fuel surcharge revenues is driven by lower fuel commodity prices.

Current wording

Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $208 million and $238 million in the third quarters of 2025 and 2024, respectively, and $613 million and $757 million for the first nine months of 2025 and 2024, respectively. The decrease in fuel surcharge revenues is driven by lower fuel commodity prices.

Previous wording

Merchandise revenues increased in both periods due to higher volume. Volume growth in the second quarter was partially offset by lower average revenue per unit, driven by lower fuel surcharge revenue. The first six months experienced increased average revenue per unit, driven by increased pricing and favorable mix partially offset by lower fuel surcharge revenue.

Current wording

Merchandise revenues increased in both periods due to higher volume and increased average revenue per unit, driven by increased pricing and favorable mix partially offset by lower fuel surcharge revenue.

Previous wording

Chemicals volume rose in both periods, primarily due to increased sand and natural gas liquids shipments. Sand volume increased due to strong demand to support natural gas drilling. Natural gas liquids volume rose due to increased demand for product bound for export markets.

Current wording

Chemicals volume rose in both periods, primarily due to increased natural gas liquids and sand shipments, where the mix of traffic had an unfavorable impact on revenue per unit. Natural gas liquids volume rose due to increased demand for product bound for export markets. Sand volume increased due to strong demand to support natural gas drilling.

Previous wording

Metals and construction volume increased in the second quarter but decreased for the first six months. Scrap metal and iron and steel volume increased in both periods due to stronger demand. Additionally, volume increased in the second quarter due to higher empty equipment repositioning. Volume declined in aggregates and coil steel for both periods, driving the decline in the first six months. Weather-related impacts negatively impacted shipments of aggregates and coil steel volume decreased due to lower demand.

Current wording

Metals and construction volume increased in the third quarter but was flat for the first nine months. Scrap metal and iron and steel volume increased in both periods due to stronger demand. Weather-related impacts earlier in the year negatively impacted shipments of aggregates.

Previous wording

Automotive volumes increased in both periods, driven by shippers increasing volume in anticipation of potential changes to tariffs and growth with existing customers.

Current wording

Automotive volumes increased in both periods, driven by shippers increasing volume in anticipation of potential changes to tariffs, growth with existing customers and the absence of customer production issues seen in the prior year.

Previous wording

Domestic volume decreased in the second quarter but was flat for the first six months. While domestic volume was positively impacted during both periods by shippers increasing volume in anticipation of potential changes to tariffs, these increases were offset by reduced premium shipments related to economic uncertainties. Additionally, the second quarter was impacted by reduced traffic originating from the West coast. International volume rose in both periods primarily driven by new business with existing customers, including increased volume in anticipation of potential changes to tariffs.

Current wording

Domestic volume decreased in both periods driven by reduced traffic originating on the West Coast and reduced premium shipments. International volume was flat in the third quarter but increased for the first nine months primarily driven by increased volume during the first six months in anticipation of potential changes to tariffs.

Previous wording

Coal revenues declined in both periods due to lower average revenue per unit, driven by reduced pricing, adverse mix, and lower fuel surcharge revenue, partially offset by higher volume.

Current wording

Coal revenues declined in both periods due to lower average revenue per unit, driven by reduced pricing, adverse mix, and lower fuel surcharge revenue. Volume decreased in the third quarter but increased for the first nine months.

Previous wording

Utility tonnage increased in both periods due to higher electricity demand and higher natural gas prices. Export tonnage increased in the second quarter, as prior year volumes were negatively impacted by the temporary closure of the Baltimore port in 2024. Export tonnage in the second quarter and first six months of 2025 was negatively impacted by unfavorable coal pricing. Domestic metallurgical and industrial coal tonnage rose in both periods as a result of increased demand.

Current wording

Utility tonnage increased in both periods due to higher electricity demand and higher natural gas prices. Export tonnage decreased in both periods due to soft global demand and unfavorable seaborne coal pricing. Domestic metallurgical tonnage decreased in the third quarter due to customer outages. Industrial coal tonnage increased for the first nine months as a result of increased demand.

Previous wording

Compensation and benefits expense decreased in both periods as follows:

Current wording

Compensation and benefits expense increased in both periods as follows:

Previous wording

•health and welfare benefits (down $11 million for the quarter and $23 million for the first six months),

Current wording

•health and welfare benefits (down $9 million for the quarter and $32 million for the first nine months),

Previous wording

•employee activity levels (down $28 million for the quarter and $68 million for the first six months),

Current wording

•employee activity levels (down $8 million for the quarter and $76 million for the first nine months), and

Previous wording

Average rail headcount for the quarter was down by approximately 970 compared with the second quarter of 2024.

Current wording

Average rail headcount for the quarter was down by approximately 510 compared with the third quarter of 2024.

Previous wording

Purchased services includes the costs of services purchased from external vendors and contractors, including the net costs of operating joint facilities with other railroads. Expense decreased in both periods driven by network performance improvements and productivity initiatives, partially offset by higher intermodal lift costs and, for the first six months, increased weather-related response costs.

Current wording

Purchased services includes the costs of services purchased from external vendors and contractors, including the net costs of operating joint facilities with other railroads. These expenses increased in the third quarter but decreased in the first nine months. The third quarter increase was due to higher derailment-related and bridge repair expenses. The decrease in the first nine months was driven by productivity initiatives, partially offset by higher intermodal lift costs and weather-related response costs.

Previous wording

Equipment rents, which includes our cost of using equipment (mostly freight cars) owned by other railroads or private owners less the rent paid to us for the use of our equipment, increased in both periods due to higher automotive equipment expense as a result of higher volumes, partially offset by lower short-term locomotive resource costs for the first six months.

Current wording

Equipment rents, which includes our cost of using equipment (mostly freight cars) owned by other railroads or private owners less the rent paid to us for the use of our equipment, increased in both periods due to higher automotive equipment expense resulting from higher volumes.

Previous wording

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations decreased in both periods. Locomotive fuel price decreased in both periods (down 15% in the second quarter and 13% for the first six months). Locomotive fuel consumption was flat in the second quarter and down 2% for the first six months.

Current wording

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations increased in the third quarter, but decreased in the first nine months. Locomotive fuel price increased 11% in the third quarter, but decreased 6% for the first nine months. Locomotive fuel consumption decreased in both periods (down 1% in the third quarter and 2% for the first nine months).

Previous wording

Materials expense increased in both periods due to higher expenses related to intermodal and engineering material consumption.

Current wording

Materials expense increased in both periods due to higher expenses related to intermodal and engineering material consumption while the third quarter also reflected increased locomotive material consumption.

Previous wording

Claims expense includes costs related to personal injury, property damage, and environmental matters. Claims expense increased in both periods as a result of higher expenses related to personal injury case development, increased accident-related costs, and higher insurance premiums. Additionally, for the first six months, expenses incurred on environmental matters, unrelated to the Incident, were higher and included costs related to weather events in the first quarter. The increases in both periods were partially offset by a favorable third-party settlement for recovery of previously incurred costs.

Current wording

Claims expense includes costs related to personal injury, property damage, and environmental matters. Claims expense was higher in both periods as a result of increased expenses associated with environmental matters unrelated to the Incident, personal injury case development, and insurance premiums.

Previous wording

During the second quarter of 2025, we recorded $10 million in expenses primarily related to the restructuring of certain technology functions. During the first six months of 2024, we recorded $96 million in expense associated with our voluntary and involuntary separation programs that reduced our management workforce, as well as costs associated with the appointment of our new chief operating officer.

Current wording

Restructuring and other charges in 2025 includes expenses associated with the rationalization of certain software development projects that had not been placed into service and the restructuring of certain technology functions, including severance costs for impacted employees. Restructuring and other charges in 2024 includes expenses associated with our voluntary and involuntary separation programs that reduced our management workforce, expenses associated with the rationalization of certain software development projects that had not been placed into service, costs associated with the appointment of our new chief operating officer, and the disposition of an asset class. We incurred expenses of $12 million and $60 million in the third quarters of 2025 and 2024, respectively, and $22 million and $156 million for the first nine months of 2025 and 2024, respectively.

Previous wording

During the second quarters of 2025 and 2024, insurance and other recoveries exceeded additional Incident-related expenses by $47 million and $65 million, respectively. For the first six months of 2025, our recoveries exceeded additional Incident-related expenses by $232 million whereas we incurred expenses of $527 million for costs associated with the Incident, net of recoveries, for the same period last year. Recoveries collected exceeded incremental cash expenditures by $234 million for the first six months of 2025, while cash expenditures attributable to the Incident, net of recovery proceeds, were $133 million for the first six months of 2024, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows. For further details regarding the Incident, see Note 12 in the Notes to Consolidated Financial Statements.

Current wording

Eastern Ohio incident activity during the third quarters of 2025 and 2024 pertained to insurance and other recoveries that exceeded additional Incident-related expenses by $11 million and $159 million, respectively. For the first nine months of 2025, our recoveries exceeded additional Incident-related expenses by $243 million whereas we incurred expenses of $368 million for costs associated with the Incident, net of recoveries, for the same period last year. Recoveries collected exceeded incremental cash expenditures by $227 million for the first nine months of 2025, while cash expenditures attributable to the Incident, net of recovery proceeds, were $32 million for the first nine months of 2024, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows. For further details regarding the Incident, see Note 15 in the Notes to Consolidated Financial Statements.

Previous wording

Other income– net increased $7 million in the second quarter and $20 million for the first six months. Both periods were impacted by the absence of costs associated with shareholder matters incurred in 2024 and a $20 million curtailment gain on our other postretirement benefit plan in 2024.

Current wording

Other income– net decreased $11 million in the third quarter, but increased $9 million for the first nine months. Both periods were impacted by lower returns on COLI and higher pension and postretirement benefits expense, partially offset by higher interest income. The first nine months also reflect the absence of costs associated with shareholder matters incurred in 2024 and a $20 million curtailment gain on our other postretirement benefit plan in 2024.

Previous wording

The effective tax rate for the second quarter and first six months of 2025 was 23.0% and 23.2% compared with 21.9% and 18.9% for the same periods last year. Both periods in 2024 reflect a $13 million deferred income tax benefit due to a change in a state corporate income tax rate, while the first six months also includes a $27 million deferred income tax benefit, which was the result of a subsidiary restructuring.

Current wording

The effective tax rate for both the third quarter and first nine months of 2025 was 23.1% compared with 23.0% and 21.3% for the same periods last year. The rate for the first nine months of 2024 reflects a $13 million deferred income tax benefit due to a change in state corporate income tax rate and a $27 million deferred income tax benefit from subsidiary restructuring.

Previous wording

On July 4, 2025, OBBBA was signed into law. The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of business interest expense, and expensing of domestic research costs. FASB ASC 740 “Income Taxes” requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted. The Company is evaluating the impact of OBBBA but expects that the primary effect will be a shift between current and deferred taxes.

Current wording

On July 4, 2025, OBBBA was signed into law. The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of business interest expense, and expensing of domestic research costs. FASB ASC 740 “Income Taxes” requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted. The primary effect of OBBBA was a reclassification from current to deferred taxes.

Previous wording

Cash provided by operating activities, our principal source of liquidity, was $2.0 billion for the first six months of 2025, compared with $1.9 billion for the same period of 2024. The increase reflects improved operating results. We had negative working capital of $760 million and $357 million at June 30, 2025 and December 31, 2024, respectively, with the increase driven in part by COLI loan repayments. Cash and cash equivalents totaled $1.3 billion at June 30, 2025.

Current wording

Cash provided by operating activities, our principal source of liquidity, was $3.3 billion for the first nine months of 2025, compared with $3.1 billion for the same period of 2024. The increase reflects improved operating results. We had negative working capital of $488 million and $357 million at September 30, 2025 and December 31, 2024, respectively. Our negative working capital position improved as compared to June 30, 2025, and we expect to accumulate cash and cash equivalents throughout the period in which the Merger is subject to review and approval. Cash and cash equivalents totaled $1.4 billion at September 30, 2025.

Previous wording

Cash used in investing activities was $1.4 billion for the first six months of 2025, compared with $2.6 billion for the same period last year. The decrease was driven by the prior year acquisition of the assets of the Cincinnati Southern Railway (CSR), partially offset by an increase in COLI loan repayments in the current year.

Current wording

Cash used in investing activities was $1.9 billion for the first nine months of 2025, compared with $2.8 billion for the same period last year. The decrease was driven by the prior year acquisition of the assets of the Cincinnati Southern Railway (CSR) and lower property additions in the current year, which was partially offset by lower proceeds from property sales and other transactions and increased COLI loan repayments.

Previous wording

Cash used in financing activities was $930 million for the first six months of 2025, compared with $217 million for the same period last year. The increase reflects increased repurchases of Common Stock and lower proceeds from borrowing. We repurchased $456 million of Common Stock, inclusive of excise taxes, during the first six months of 2025, while we did not repurchase any Common Stock during the same period last year. As of June 30, 2025, $6.4 billion remains authorized by our Board of Directors for future repurchase activity. The timing and volume of future share repurchases will be guided by our assessment of market conditions and other pertinent factors. Repurchases may be executed in the open market, through derivatives, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) and Rule 10b-18 under the Securities and Exchange Act of 1934. Any near-term purchases under the program are expected to be made with internally-generated cash, cash on hand, or proceeds from borrowings.

Current wording

Cash used in financing activities was $1.6 billion for the first nine months of 2025, compared with $903 million for the same period last year. The increase reflects increased repurchases of Common Stock and lower proceeds from borrowing, partially offset by lower debt repayments. We repurchased $534 million of Common Stock, inclusive of excise taxes paid, during the first nine months of 2025, while we did not repurchase any Common Stock during the same period last year. As of September 30, 2025, $6.3 billion remains authorized by our Board of Directors for future repurchase activity. With limited exceptions, the Merger Agreement prohibits the Company from repurchasing shares of its common stock without approval by Union Pacific. As a result, the Company has suspended share repurchase activities.

Previous wording

In addition, we have investments in general purpose COLI policies and have the ability to borrow against these policies. We had no amounts borrowed against these policies at June 30, 2025 and $605 million borrowed at December 31, 2024. Our remaining borrowing capacity was $600 million and $40 million at June 30, 2025 and December 31, 2024, respectively.

Current wording

In addition, we have investments in general purpose COLI policies and have the ability to borrow against these policies. We had no amounts borrowed against these policies at September 30, 2025 and $605 million borrowed at December 31, 2024. Our remaining borrowing capacity was approximately $600 million and $40 million at September 30, 2025 and December 31, 2024, respectively.

Previous wording

Our debt-to-total capitalization ratio was 54.0% at June 30, 2025 and 54.6% at December 31, 2024. We expect cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations. In addition, we believe our currently-available borrowing capacity, access to additional financing, and ability to decrease shareholder distributions, provide additional flexibility to meet our ongoing obligations. There have been no material changes to the information on future contractual obligations, including those that may have material cash requirements, contained in our Form 10-K for the year ended December 31, 2024, with the exception of additional senior notes (see Note 9) and over $400 million of additional unconditional purchase obligations, which extend through 2030.

Current wording

Our debt-to-total capitalization ratio was 53.0% at September 30, 2025 and 54.6% at December 31, 2024. We expect cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations. In addition, we believe our currently-available borrowing capacity, access to additional financing, and ability to decrease shareholder distributions provide additional flexibility to meet our ongoing obligations, subject to certain restrictions on the incurrence of additional indebtedness under the Merger Agreement. There have been no material changes to the information on future contractual obligations, including those that may have material cash requirements, contained in our Form 10-K for the year ended December 31, 2024, with the exception of additional senior notes (see Note 12) and over $600 million of additional unconditional purchase obligations, which extend through 2030.

Previous wording

•a significant cybersecurity incident or other disruption to our technology infrastructure; and

Current wording

•a significant cybersecurity incident or other disruption to our technology infrastructure;

Previous wording

•the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between Union Pacific and the Company providing for the acquisition of the Company by Union Pacific (the “Transaction”); the possibility that the Transaction does not close when expected or at all because required Surface Transportation Board, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Transaction); the risk that the combined company will not realize expected benefits, cost savings, accretion, synergies and/or growth from the Transaction, or that such benefits may take longer to realize or be more costly to achieve than expected; disruption to the Company’s business as a result of the announcement and pendency of the Transaction; the costs associated with the anticipated length of time of the pendency of the Transaction, including the restrictions contained in the definitive merger agreement on the ability of the Company to operate its business outside the ordinary course during the pendency of the Transaction; the diversion of the Company’s management’s attention and time from ongoing business operations and opportunities on merger-related matters; and reputational risk and potential adverse reactions of Union Pacific’s or the Company’s customers, suppliers, employees, labor unions or other business partners, including those resulting from the announcement or completion of the Transaction.

Current wording

•the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the Company or Union Pacific to terminate the Merger Agreement;