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 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.

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 along the Gulf Coast and Great Lakes.

Previous 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.

Current wording

Our performance in the third quarter reflected revenue growth that drove an increase in earnings. Higher fuel prices significantly impacted both railway operating revenues and expenses in the quarter. Our financial results were further impacted by lower gains from property sales, the absence of insurance recoveries related to the Eastern Ohio incident, and higher merger-related expenses. For the third quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 67.4%, and an adjusted operating ratio of 65.4% (see our non-GAAP reconciliations beginning on page 26). 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 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.

Current wording

Income from railway operations, net income, and diluted earnings per share increased in the third quarter but decreased for the first nine months. Railway operating revenues were higher in both periods, driven by increased average revenue per unit, reflecting higher fuel surcharge revenue, and increased volume. Railway operating expenses increased in both periods, reflecting inflationary pressures inclusive of higher fuel costs, increased merger-related expenses, and lower gains from property sales. The absence of insurance recoveries related to the Eastern Ohio incident recognized in 2025 influenced both periods and significantly contributed to the decline in income from railway operations, net income, and diluted earnings per share for the first nine months of 2026.

Previous 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.

Current wording

The following tables adjust our GAAP financial results for the third quarters and first nine months of 2026 and 2025 to exclude merger-related expenses and the overall impact on operating expenses resulting from costs and recoveries associated with the Incident. The adjusted results for the third quarter of 2025 and first nine months of 2026 and 2025 also exclude restructuring and other charges. 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 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 third quarters of 2026 and 2025 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the previous tables.

Previous wording

In the table below, references to the results for the first six months 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 first nine months 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 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.

Current wording

On an adjusted basis, income from railway operations, net income, and diluted earnings per share increased in the third quarter and first nine 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, inflation, and lower gains from property sales.

Previous 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).

Current wording

Railway operating revenues increased $423 million and $783 million in the third quarter and first nine months, respectively. The table below reflects the components of the revenue change by major commodity group ($ 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 $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.

Current wording

Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $468 million and $208 million in the third quarters of 2026 and 2025, respectively, and $1.1 billion and $613 million for the first nine 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

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.

Current wording

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

Previous 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.

Current wording

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

Previous 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.

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 due to lower volumes through East Coast ports as a result of congestion at Asian ports and ocean carriers redeploying capacity to West Coast ports.

Previous wording

Coal revenues increased in both periods due to higher volumes and increased fuel surcharge revenue. The increase for the first six months was partially offset by reduced pricing.

Current wording

Coal revenues increased in both periods due to increased average revenue per unit, driven by increased fuel surcharge revenue, and higher volume. The increase for the first nine months was partially offset by reduced pricing.

Previous wording

Utility tonnage decreased in the second quarter but increased for the first six months. The decline in the second quarter was primarily due to increased natural gas and renewables production. The increase for the first six months was driven by higher natural gas prices and restocking of customer inventories. Export tonnage increased in both periods due to increased global demand for export thermal coal volumes driven by higher coal production and supportive seaborne coal pricing. Domestic metallurgical tonnage decreased in both periods due to idled customer facilities and reduced equipment availability. Industrial coal tonnage increased in both periods as a result of increased demand.

Current wording

Utility tonnage decreased in the third quarter but increased for the first nine months. The third quarter decline was primarily due to customer plant outages and service disruptions. The increase for the first nine months was driven by higher winter natural gas prices and restocking of customer inventories earlier in the year. Export tonnage increased in both periods due to increased metallurgical coal production and supportive seaborne coal pricing. Domestic metallurgical tonnage decreased in both periods due to idled customer facilities. Industrial coal tonnage increased in both periods as a result of increased market share.

Previous wording

•health and welfare benefits (up $5 million for the quarter and $12 million for the first six months),

Current wording

•health and welfare benefits (up $6 million for the quarter and $18 million for the first nine months),

Previous wording

•overtime (up $6 million for both the quarter and first six months),

Current wording

•overtime (up $6 million for the quarter and $12 million for the first nine months),

Previous wording

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

Current wording

•incentive and stock-based compensation (down $7 million for the quarter and $11 million for the first nine months),

Previous wording

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

Current wording

•employee activity levels (down $3 million for the quarter and $15 million for the first nine months), and

Previous wording

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

Current wording

Average rail headcount for the quarter was down by 160 compared with the third 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 in both periods primarily due to higher technology-related costs, elevated expenses associated with intermodal and automotive operations, and increased Conrail expenses.

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 and increased expenses associated with intermodal operations.

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 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.

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 short-term locomotive resource costs and greater time-and-mileage expense.

Previous 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.

Current wording

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, increased in both periods primarily 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

Materials expense increased in both periods primarily due to higher locomotive maintenance costs.

Current wording

Materials expense increased in both periods primarily due to higher locomotive and intermodal materials cost.

Previous 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.

Current wording

Claims expense includes costs related to personal injury, property damage, and environmental matters. Claims expense increased in both periods. The increase in the third quarter was primarily due to higher personal injury expenses and accident-related costs. The increase for the first nine months reflected higher accident-related costs and the absence of a prior year favorable third-party settlement, partially offset by lower expenses related to personal injury case development.

Previous 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.

Current wording

Other expense increased in both periods primarily due to lower gains from operating property sales, partially offset by insurance recoveries unrelated to the Incident. The increase for the first nine months was also partially offset by lower allowances for losses. Gains from the sales of operating property totaled $1 million and $85 million in the third quarter of 2026 and 2025, respectively, and $19 million and $142 million for the first nine months of 2026 and 2025, respectively.

Previous 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.

Current wording

Merger-related expenses primarily relate to costs associated with employee retention agreements, third-party advisor fees, and legal fees that totaled $42 million and $15 million in the third quarters of 2026 and 2025, respectively, and $145 million and $15 million for the first nine months of 2026 and 2025, respectively.

Previous wording

Restructuring and other charges were $6 million in 2026 related to severance costs associated with organizational changes. During 2025, we recorded $10 million in expenses primarily related to the restructuring of certain technology functions.

Current wording

Restructuring and other charges were $6 million in 2026 related to severance costs associated with organizational changes. During 2025, we recorded expenses of $12 million in the third quarter and $22 million for the first nine months, primarily related to the rationalization of certain software development projects and the restructuring of certain technology functions.

Previous 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.

Current wording

Eastern Ohio incident expenses were $28 million in the third quarter of 2026, whereas recoveries exceeded additional Incident-related expenses by $11 million in the third quarter of 2025. For the first nine months of 2026, we incurred expenses of $53 million for costs associated with the Incident, whereas recoveries exceeded additional Incident-related expenses by $243 million for the first nine months of 2025. Cash payments attributable to the Incident were $345 million during the first nine months of 2026, while insurance recoveries collected exceeded payments by $227 million during the first nine 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 $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.

Current wording

Other income– net increased $7 million in the third quarter and $19 million for the first nine months primarily due to higher pension and postretirement benefits, partially offset by lower returns on COLI.

Previous 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.

Current wording

Cash provided by operating activities, our principal source of liquidity, was $2.7 billion for the first nine months of 2026, compared with $3.3 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 $356 million and $577 million at September 30, 2026 and December 31, 2025, respectively. Cash and cash equivalents totaled $1.6 billion and $1.5 billion at September 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

Cash used in investing activities was $1.1 billion for the first nine months of 2026, compared with $1.9 billion for the same period last year. The decrease was driven by the absence of COLI loan repayments that occurred in 2025, coupled with higher proceeds from property sales and other transactions and lower property additions in the current year. For 2026, we expect property additions to approximate $2.1 billion.

Previous 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.

Current wording

Cash used in financing activities was $1.5 billion for the first nine months of 2026, compared with $1.6 billion for the same period last year. The decrease reflects lower repurchases of Common Stock, partially offset by lower proceeds from borrowing and higher debt repayments. We did not repurchase any Common Stock during the first nine months of 2026, while we repurchased $534 million during the same period last year. As of September 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

In April 2026, we entered into a non-cancellable finance lease of an office building in replacement of a previous operating lease. The lease term is for five years and includes options to renew, purchase, or sell the building at the end of the lease. We recorded a right-of-use asset of $117 million and a finance lease liability of $115 million, based on the initial five-year term. The lease contains a residual value guarantee of approximately $499 million for the total construction cost of the building. We determined no amounts are probable of being owed under the guarantee and, as such, were not included in the measurement of the finance lease liability.

Current wording

In April 2026, we entered into a non-cancellable finance lease for an office building in replacement of a previous operating lease. The lease term is for five years and includes options to renew, purchase, or sell the building at the end of the lease. We recorded a right-of-use asset of $117 million and a finance lease liability of $115 million, based on the initial five-year term. The lease contains a residual value guarantee of approximately $499 million for the total construction cost of the building. We determined no amounts are probable of being owed under the guarantee and, as such, were not included in the measurement of the finance lease liability.

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, 2026 and December 31, 2025. Our remaining borrowing capacity was approximately $590 million and $595 million at June 30, 2026 and December 31, 2025, 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, 2026 and December 31, 2025. Our remaining borrowing capacity was approximately $575 million and $595 million at September 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

Our debt-to-total capitalization ratio was 49.8% at September 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

Certain statements in this report, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations, are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “project,” “consider,” “predict,” “potential,” “feel,” or other comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, beliefs, and projections. While we believe these expectations, assumptions, estimates, beliefs, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond our control. The following important factors, including those discussed under “Risk Factors” in our latest Form 10-K as well as our subsequent filings with the Securities and Exchange Commission, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements:

Current wording

Certain statements in this report, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations, are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “project,” “consider,” “predict,” “potential,” “feel,” or other comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, beliefs, and projections. While we believe these expectations, assumptions, estimates, beliefs, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond our control. The following important factors, including those discussed or defined under “Risk Factors” in our latest Form 10-K as well as our subsequent filings with the Securities and Exchange Commission, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements: