NORFOLK SOUTHERN CORP

Previous wording

Since 1827, Norfolk Southern Corporation and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Our dedicated team members deliver a wide variety of commodities annually for our customers, from agriculture products to consumer goods, and help them reduce carbon emissions by shipping via rail. We have the most extensive intermodal network in the eastern U.S. Our network serves a majority of the country's population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports in the Gulf Coast and Great Lakes.

Current wording

Since 1827, Norfolk Southern Corporation and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Our dedicated team members deliver a wide variety of commodities annually for our customers, from agriculture to consumer products, and help them reduce carbon emissions by shipping via rail. We have the most extensive intermodal network in the eastern U.S. Our network serves a majority of the country's population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports in the Gulf Coast and Great Lakes.

Previous wording

On July 28, 2025, we entered into a Merger Agreement with Union Pacific, marking a transformational step toward creating America’s first transcontinental railroad – an outcome we believe will unlock new opportunities for our customers, employees, and the broader U.S. economy. By integrating two complementary networks, we believe the merged company will be positioned to deliver more efficient, reliable, and sustainable freight service across the nation. Details of the proposed transaction are further described in Note 1.

Current wording

On July 28, 2025, we entered into a Merger Agreement with Union Pacific, marking a transformational step toward creating America’s first transcontinental railroad – an outcome we believe will unlock new opportunities for our customers, employees, and the broader U.S. economy. By integrating two complementary networks, we believe the merged company will be positioned to deliver more efficient, reliable, and sustainable freight service across the nation. See Note 1 for additional information on the proposed transaction.

Previous wording

Our first-quarter performance reflected disciplined cost control despite headwinds from rising fuel costs. Our year-over-year results were impacted by incremental Merger-related expenses and the absence of insurance recoveries related to the Eastern Ohio Incident. Nevertheless, we continued to drive improvements in labor productivity and fuel efficiency. For the first quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 70.7%, and an adjusted operating ratio of 68.7% (see our non-GAAP reconciliations beginning on page 24). We remain committed to being a safe, productive, resilient, and efficient railroad with industry-competitive margins.

Current wording

Our second-quarter performance reflected strong volume growth which led to overall improvements in our adjusted financial results. Higher fuel prices had a significant impact on both railway operating revenues and expenses in the quarter. Our year-over-year results were also impacted by the absence of insurance recoveries related to the Eastern Ohio incident and incremental merger-related expenses. For the second quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 67.6%, and an adjusted operating ratio of 65.5% (see our non-GAAP reconciliations beginning on page 25). We remain committed to being a safe, productive, resilient, and efficient railroad with industry-competitive margins.

Previous wording

Income from railway operations, net income, and diluted earnings per share decreased, the result of higher railway operating expenses, primarily related to the absence of insurance recoveries related to the Eastern Ohio Incident recognized in the prior year. Our financial results were further impacted by Merger-related expenses, inflation, and higher fuel prices, partially offset by productivity savings and an increase in average revenue per unit, primarily driven by favorable mix.

Current wording

Income from railway operations, net income, and diluted earnings per share decreased in both periods, the result of higher railway operating expenses, primarily related to the absence of insurance recoveries related to the Eastern Ohio incident recognized in the prior year. Our financial results were further impacted by higher fuel prices, merger-related expenses, and inflation. These effects were partially offset by higher railway operating revenues, driven by increased average revenue per unit, primarily driven by higher fuel surcharge revenue, and increased volume.

Previous wording

The following tables adjust our GAAP financial results for the first quarters of 2026 and 2025 to exclude the effects of the Incident. First quarter 2026 results are also adjusted to exclude Merger-related expenses. 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

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 first quarters of 2026 and 2025 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the previous tables.

Current wording

In the table below, references to the results for the second quarters of 2026 and 2025 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the previous tables.

Previous wording

On an adjusted basis, income from railway operations decreased due to higher railway operating expenses. The increase in adjusted railway operating expenses reflects inflation and higher fuel prices, partially offset by productivity savings and an increase in average revenue per unit, primarily driven by favorable mix.

Current wording

On an adjusted basis, income from railway operations increased in the second quarter and first six months due to higher railway operating revenues, driven by higher average revenue per unit, primarily driven by increased fuel surcharge revenue, and increased volume. Partially offsetting the increase in revenues were higher adjusted railway operating expenses, reflecting higher fuel prices and inflation.

Previous wording

Railway operating revenues increased $5 million compared with the same period last year. The table below reflects the components of the revenue change by major commodity group ($ in millions).

Current wording

Railway operating revenues increased $355 million and $360 million in the second quarter and first six months, respectively. The table below reflects the components of the revenue change by major commodity group ($ in millions).

Previous wording

Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $210 million and $202 million in the first quarters of 2026 and 2025, respectively. Fuel surcharge revenues for the remainder of the year are expected to increase based on current 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 $415 million and $203 million in the second quarters of 2026 and 2025, respectively, and $625 million and $405 million for the first six months of 2026 and 2025, respectively. Fuel surcharge revenues for the remainder of the year are expected to increase compared to the prior year based on current fuel commodity prices.

Previous wording

Agriculture, forest and consumer products volume declined primarily due to lower pulpboard and corn shipments, partially offset by higher feed and fertilizer volume. Pulpboard volume decreased as a result of unplanned customer downtime resulting from severe winter weather. Corn volume declined due to reduced demand for shipments to the southeast compared to the prior year. These declines were partially offset by higher feed volume, reflecting gains in soymeal and corn germ meal shipments, and increased fertilizer volume driven by lower phosphate commodity prices early in the year.

Current wording

Agriculture, forest and consumer products volume declined in both periods, primarily due to lower corn shipments, partially offset by higher ethanol shipments. Corn volume declined due to reduced shipments to the Southeast compared to the prior year, while ethanol volume benefited from increased demand.

Previous wording

Chemicals volume rose primarily due to higher shipments of natural gas liquids, inorganic chemicals, crude oil, and sand. Natural gas liquids volume rose due to increased domestic and export demand. Inorganic chemical volume increased, driven by rock salt restocking resulting from severe winter weather. Crude oil volume increased compared to the prior year, which was impacted by tariff-related uncertainty. Sand volume increased due to strong demand to support natural gas drilling.

Current wording

Chemicals volume rose in both periods primarily due to higher shipments of natural gas liquids, sand, and petroleum products. Natural gas liquids and petroleum products volume rose due to increased domestic and export demand, while sand shipments increased due to strong demand to support natural gas drilling.

Previous wording

Metals and construction volume decreased primarily driven by lower aggregate shipments as a result of severe winter weather conditions.

Current wording

Metals and construction volume decreased in both periods primarily driven by lower aggregate shipments as a result of idled customer facilities, partially offset by increased cement and coil shipments due to increased demand.

Previous wording

Automotive volume increased driven by growth with existing customers, partially offset by production downtime and model discontinuations for certain manufacturers.

Current wording

Automotive volume was flat in the second quarter but increased in the first six months driven by growth with existing customers, with offsetting impacts driven by production downtime and model discontinuations for certain manufacturers.

Previous wording

Intermodal revenues decreased due to lower volume, partially offset by higher average revenue per unit, driven by increased pricing.

Current wording

Intermodal revenues were higher in both periods due to increased average revenue per unit, driven by increased fuel surcharge revenue and pricing, and higher volume.

Previous wording

Domestic volume decreased as a result of lower premium demand. International volume declined in the current period as the prior year benefited from elevated volume related to anticipated tariff changes.

Current wording

Domestic volume increased in both periods as a result of an increase in freight demand and constrained truck capacity. International volume declined in both periods as the prior year benefited from elevated volume related to anticipated tariff changes.

Previous wording

Compensation and benefits expense increased slightly as follows:

Current wording

Compensation and benefits expense increased in both periods as follows:

Previous wording

•incentive and stock-based compensation (down $24 million),

Current wording

•incentive and stock-based compensation (up $20 million for the quarter but down $4 million for the first six months),

Previous wording

•employee activity levels (down $11 million), and

Current wording

•employee activity levels (down $1 million for the quarter and $12 million for the first six months), and

Previous wording

Average rail headcount for the quarter was down by approximately 320 compared with the first quarter of 2025.

Current wording

Average rail headcount for the quarter was down by approximately 320 compared with the second quarter of 2025.

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 increased primarily due to higher costs associated with severe winter weather and technology-related 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. Expense increased in both periods primarily due to higher technology-related costs, elevated expenses associated with intermodal and automotive operations, and increased Conrail expenses.

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 due to higher automotive equipment expenses driven by higher volumes as well as lower earnings from our investment in TTX.

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 primarily due to higher time and mileage expense. The first six months also contained higher automotive equipment expenses driven by higher volumes as well as lower earnings from our investment in TTX.

Previous wording

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, increased due to higher locomotive fuel prices. We expect fuel expense for the remainder of the year to increase based on current fuel commodity prices.

Current wording

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, increased in both periods due to higher locomotive fuel prices. We expect fuel expense for the remainder of the year to increase compared to the prior year based on current fuel commodity prices.

Previous wording

Depreciation expense increased due to a higher asset base.

Current wording

Depreciation expense increased in both periods due to a higher asset base.

Previous wording

Claims expense includes costs related to personal injury, property damage, and environmental matters. Claims expense decreased primarily due to lower personal injury expense and reduced costs related to environmental matters unrelated to the Incident.

Current wording

Claims expense includes costs related to personal injury, property damage, and environmental matters. Claims expense increased in the second quarter but decreased for the first six months. The increase in the second quarter was primarily due to higher accident-related costs and the absence of a cost recovery settlement, partially offset by lower expenses related to personal injury case development. The decrease for the first six months reflected lower expenses related to personal injury case development, partially offset by the absence of a favorable third-party settlement and higher accident-related costs.

Previous wording

Other expense increased primarily due to lower gains from operating property sales. Gains from the sales of operating property totaled $17 million and $23 million in the first quarter of 2026 and 2025, respectively.

Current wording

Other expense decreased in both periods primarily due to lower allowances for losses and increased insurance recoveries not related to the Incident, partially offset by lower gains from operating property sales. Gains from the sales of operating property totaled $1 million and $34 million in the second quarter of 2026 and 2025, respectively, and $18 million and $57 million in the first six months of 2026 and 2025, respectively.

Previous wording

Merger-related expenses primarily relate to costs associated with employee retention agreements, third-party advisor fees, and legal fees and were $52 million in the first quarter.

Current wording

Merger-related expenses in 2026 primarily relate to costs associated with employee retention agreements, third-party advisor fees, and legal fees that totaled $51 million in the second quarter and $103 million for the first six months.

Previous wording

Eastern Ohio incident expenses were $10 million in the first quarter of 2026. In the first quarter of 2025, insurance and other recoveries exceeded additional Incident-related expenses by $185 million. Cash payments attributable to the Incident were $300 million during the first three months of 2026, while insurance recoveries collected exceeded payments by $58 million during the first three months of 2025, 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.

Current wording

Eastern Ohio incident expenses were $15 million in the second quarter of 2026, whereas recoveries exceeded additional Incident-related expenses by $47 million in the second quarter of 2025. For the first six months of 2026, we incurred expenses of $25 million for costs associated with the Incident, whereas recoveries exceeded additional Incident-related expenses by $232 million for the first six months of 2025. Cash payments attributable to the Incident were $322 million during the first six months of 2026, while insurance recoveries collected exceeded payments by $234 million during the first six months of 2025, 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 13.

Previous wording

Other income– net increased $4 million primarily due to higher pension and postretirement benefits and higher interest income, partially offset by lower returns on COLI.

Current wording

Other income– net increased $8 million in the second quarter and $12 million for the first six months primarily due to higher pension and postretirement benefits, partially offset by lower returns on COLI.

Previous wording

The effective tax rate for the first three months of 2026 was 23.5% compared with 23.3% for the same period last year.

Current wording

The effective tax rate for the second quarter and first six months of 2026 was 23.5% for both periods, as compared with 23.0% and 23.2%, respectively, for the same periods last year. The increase over prior year is primarily due to non-deductible merger-related expenses.

Previous wording

Cash provided by operating activities, our principal source of liquidity, was $344 million for the first three months of 2026, compared with $950 million for the same period of 2025. The decrease was driven by higher cash payments related to the Incident and higher cash paid for income taxes. We had negative working capital of $311 million and $577 million at March 31, 2026 and December 31, 2025, respectively. Cash and cash equivalents totaled $1.3 billion and $1.5 billion at March 31, 2026 and December 31, 2025, respectively.

Current wording

Cash provided by operating activities, our principal source of liquidity, was $1.4 billion for the first six months of 2026, compared with $2.0 billion for the same period of 2025. The decrease was driven by higher cash payments related to the Incident. We had negative working capital of $569 million and $577 million at June 30, 2026 and December 31, 2025, respectively. Cash and cash equivalents totaled $1.1 billion and $1.5 billion at June 30, 2026 and December 31, 2025, respectively.

Previous wording

Cash used in investing activities was $213 million for the first three months of 2026, compared with $1.0 billion for the same period last year. The decrease was driven by the absence of COLI loan repayments and lower property additions, partially offset by higher proceeds from property sales and other transactions.

Current wording

Cash used in investing activities was $629 million for the first six months of 2026, compared with $1.4 billion for the same period last year. The decrease was driven by the absence of COLI loan repayments that occurred in 2025, coupled with lower property additions and higher proceeds from property sales and other transactions in the current year.

Previous wording

Cash used in financing activities was $320 million for the first three months of 2026, compared with $564 million for the same period last year. The decrease reflects lower repurchases of Common Stock. We did not repurchase any Common Stock during the first three months of 2026, while we repurchased $248 million during the same period last year. As of March 31, 2026, $6.3 billion remains authorized by our Board of Directors for repurchase. 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.

Current wording

Cash used in financing activities was $1.2 billion for the first six months of 2026, compared with $930 million for the same period last year. The increase reflects lower proceeds from borrowing and higher debt repayments, partially offset by lower repurchases of Common Stock. We did not repurchase any Common Stock during the first six months of 2026, while we repurchased $456 million during the same period last year. As of June 30, 2026, $6.3 billion remains authorized by our Board of Directors for repurchase. 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

We have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2026. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at March 31, 2026 and $397 million at December 31, 2025.

Current wording

In May 2026, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2027. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at June 30, 2026 and $397 million at December 31, 2025.

Previous wording

We have an agreement that provides us the ability to issue up to $800 million of unsecured commercial paper and is backed by our credit agreement. The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants. At both March 31, 2026 and December 31, 2025, we had no outstanding commercial paper.

Current wording

We have in place an agreement that provides us the ability to issue up to $800 million of unsecured commercial paper and is backed by our credit agreement. The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants. At both June 30, 2026 and December 31, 2025, we had no outstanding commercial paper, and we are in compliance with all of its covenants.

Previous wording

Our debt-to-total capitalization ratio was 52.0% at March 31, 2026 and 52.4% at December 31, 2025. 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, ability to reduce shareholder distributions, and ability to moderate or defer property additions provide additional flexibility to meet our ongoing obligations in the short- and long-term, subject to certain restrictions on incurring 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, 2025, with the exception of approximately $300 million of additional unconditional purchase obligations, which extend through 2030.

Current wording

Our debt-to-total capitalization ratio was 50.6% at June 30, 2026 and 52.4% at December 31, 2025. 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, ability to reduce shareholder distributions, and ability to moderate or defer property additions provide additional flexibility to meet our ongoing obligations in the short- and long-term, subject to certain restrictions on incurring 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, 2025, with the exception of approximately $300 million of additional unconditional purchase obligations, which extend through 2030.

Previous wording

•our ability to complete the Mergers with Union Pacific;

Current wording

•our ability to complete the merger with Union Pacific;

Previous wording

•the possibility that the Mergers do not close when expected or at all because required Surface Transportation Board review and approval, or other approvals and other conditions to close 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 Mergers);

Current wording

•the possibility that the merger does not close when expected or at all because the required Surface Transportation Board review and approval, or other approvals and other conditions to close 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 merger);

Previous wording

•the risk that the combined company will not realize expected benefits, cost savings, accretion, synergies and/or growth from the Mergers, or that such benefits may take longer to realize or be more costly to achieve than expected;

Current wording

•the risk that the combined company will not realize expected benefits, cost savings, accretion, synergies and/or growth from the merger, or that such benefits may take longer to realize or be more costly to achieve than expected;

Previous wording

•disruption to the Company’s business as a result of the announcement and pendency of the Mergers, including the restrictions contained in the Merger Agreement on the ability of the Company to operate its business outside the ordinary course during the pendency of the Mergers;

Current wording

•disruption to the Company’s business as a result of the announcement and pendency of the merger, including the restrictions contained in the Merger Agreement on the ability of the Company to operate its business outside the ordinary course during the pendency of the merger;

Previous wording

•the possibility that the Mergers may be more expensive to complete than anticipated, including as a result of unexpected factors or events; and

Current wording

•the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; and