10q10k10q10k.net

What changed in Union Pacific Corporation's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Union Pacific Corporation's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+274 added−215 removedSource: 10-K (2026-02-06) vs 10-K (2025-02-07)

Top changes in Union Pacific Corporation's 2025 10-K

274 paragraphs added · 215 removed · 174 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

31 edited+1 added−5 removed52 unchanged
Biggest changeTherefore, converting freight transportation from truck to rail typically results in an immediate reduction in our customers' scope 3 GHG emissions. Competition – see “ We Face Competition from Other Railroads and Other Transportation Providers ” in the Risk Factors in Item 1A of this report.
Biggest changeAccording to the AAR, moving freight by rail instead of truck reduces GHG emissions as freight railroads are, on average, three to four times more fuel efficient than trucks. Therefore, converting freight transportation from truck to rail typically results in an immediate reduction in our customers' scope 3 GHG emissions.
Sustainable Future – Union Pacific believes it is important that we act as environmental stewards, reducing greenhouse gas (GHG) emissions and supporting the transition to a more sustainable future. While we work to further reduce our environmental footprint, it is important to note that railroads already are one of the most fuel-efficient means of transportation.
Sustainable future – Union Pacific believes it is important that we act as environmental stewards, reducing greenhouse gas (GHG) emissions and supporting the transition to a more sustainable future. While we work to further reduce our environmental footprint, it is important to note that railroads are already one of the most fuel-efficient means of transportation.
Transportation of these products accounted for 37% of our freight revenues in 2024. Commercial, residential, and governmental infrastructure investments drive shipments of steel, aggregates, cement, and wood products. Industrial and light manufacturing plants receive steel, nonferrous materials, minerals, and other raw materials.
Transportation of these products accounted for 37% of our freight revenues in 2025. Commercial, residential, and governmental infrastructure investments drive shipments of steel, aggregates, cement, and wood products. Industrial and light manufacturing plants receive steel, nonferrous materials, minerals, and other raw materials.
The peak shipping seasons for these commodities can vary considerably each year depending upon various factors, including the strength of domestic and 6 Table of Contents international economies and currencies; consumer demand; the strength of harvests, which can be adversely affected by severe weather; market prices for agricultural products; and supply chain disruptions.
The peak shipping seasons for these commodities can vary considerably each year depending upon various factors, including the strength of domestic and international economies and currencies; consumer demand; the strength of harvests, which can be adversely affected by severe weather; market prices for agricultural products; and supply chain disruptions.
Additionally, various state and local agencies have jurisdiction over disposal of hazardous waste and seek to regulate movement of hazardous materials in ways not preempted by federal law. Environmental Regulation – We are subject to extensive federal and state environmental statutes and regulations pertaining to public health and the environment.
Additionally, various state and local agencies have jurisdiction over disposal of hazardous waste and seek to regulate movement of hazardous materials in ways not preempted by federal law. 9 Table of Contents Environmental regulation – We are subject to extensive federal and state environmental statutes and regulations pertaining to public health and the environment.
Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail systems, and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient, and environmentally responsible manner.
Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail systems, and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to customers by delivering products in a safe, reliable, fuel-efficient, and environmentally responsible manner.
We have 32,880 route miles, connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors to key Mexican and Canadian gateways.
We have 32,889 route miles, connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors to key Mexican and Canadian gateways.
Then, we focus on training and development, which includes courses and programs designed to help our employees grow into new roles and/or learn a new skill in their current role so that we can retain our workforce over time. 7 Table of Contents Providing competitive compensation and meaningful benefits is key to attracting and retaining talented employees.
Then, we focus on training and development, which includes courses and programs designed to help our employees grow into new roles and/or learn a new skill in their current role so that we can retain our workforce over time. Providing competitive compensation and meaningful benefits is key to attracting and retaining talented employees.
Domestic business includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents and logistics companies) as well as truckload carriers. We are the largest automotive carrier west of the Mississippi River and operate or access 39 vehicle distribution centers.
Domestic business includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents and logistics companies) as well as truckload carriers. We are the largest automotive carrier west of the Mississippi River and operate or access more than 40 vehicle distribution centers.
Premium – In 2024, Premium shipments generated 31% of Union Pacific’s total freight revenues. Premium includes finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international.
Premium – In 2025, Premium shipments generated 30% of Union Pacific’s total freight revenues. Premium includes finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international.
Reportable derailment incidents are defined as any occurrence where a wheel of a locomotive or rail car falls off the track and causes damage to track, equipment, or structures above the Federal Railroad Administration (FRA) reporting threshold, regardless of ownership ($12,000 for 2024 and $12,400 for 2025) per million train miles.
Reportable derailment incidents are defined as any occurrence where a wheel of a locomotive or rail car falls off the track and causes damage to track, equipment, or structures above the Federal Railroad Administration (FRA) reporting threshold, regardless of ownership ($12,400 for 2025 and $12,600 for 2026).
Key Suppliers – see “ We Are Dependent on Certain Key Suppliers of Locomotives and Rail ” in the Risk Factors in Item 1A of this report. Available Information – Our Internet website is www.up.com.
Competition – see “ We Face Competition from Other Railroads and Other Transportation Providers ” in the Risk Factors in Item 1A of this report. Key suppliers – see “ We Are Dependent on Certain Key Suppliers of Locomotives and Rail ” in the Risk Factors in Item 1A of this report. Available information – Our Internet website is www.up.com.
In 2024, we generated freight revenues totaling $22.8 billion from the following three commodity groups: 2024 Freight Revenues Bulk – The Company's Bulk shipments consist of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. In 2024, this group generated 32% of our freight revenues.
In 2025, we generated freight revenues totaling $23.2 billion from the following three commodity groups: 2025 Freight Revenues Bulk – The Company's Bulk shipments consist of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. In 2025, this group generated 33% of our freight revenues.
Freight rail leads other forms of surface transportation when it comes to minimizing GHG emissions, and we expect rail will continue to play a critical role in mitigating and abating the impacts of climate change. According to the AAR, moving freight by rail instead of truck reduces GHG emissions by up to 75%.
Freight rail leads other forms of surface transportation when it comes to minimizing GHG emissions, and we expect rail will continue to play a critical role in mitigating and abating the impacts of climate change.
We also participate in the National Joint Terrorism Task Force, a multi-agency effort established by the U.S. Department of Justice and the FBI to combat and prevent terrorism. We work with the Coast Guard, U.S. Customs and Border Protection (CBP), and the Military Transport Management Command, which monitor shipments entering the UPRR rail network at U.S. border crossings and ports.
Department of Justice and the FBI to combat and prevent terrorism. We work with the Coast Guard, U.S. Customs and Border Protection (CBP), and the Military Transport Management Command, which monitor shipments entering the UPRR rail network at U.S. border crossings and ports.
Seasonality – Some of the commodities we carry have peak shipping seasons, reflecting either or both the nature of the commodity (such as certain agricultural and food products that have specific growing and harvesting seasons) and the demand cycle for the commodity (such as intermodal traffic that generally peaks during the third quarter to meet back-to-school and holiday-related demand for consumer goods during the fourth quarter).
In addition to transporting finished vehicles, the Company provides expedited handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U.S., and Canada. 6 Table of Contents Seasonality – Some of the commodities we carry have peak shipping seasons, reflecting either or both the nature of the commodity (such as certain agricultural and food products that have specific growing and harvesting seasons) and the demand cycle for the commodity (such as intermodal traffic that generally peaks during the third quarter to meet back-to-school and holiday-related demand for consumer goods during the fourth quarter).
Additionally, an ongoing assessment program has been implemented to proactively and regularly evaluate the effectiveness of our cybersecurity program to identify and mitigate emerging risks.
Additionally, an ongoing assessment program has been implemented to proactively and regularly evaluate the effectiveness of our cybersecurity program to identify and mitigate emerging risks. These efforts have been validated by the TSA, confirming our adherence to their standards.
The STB also continues to explore changes to the methodology for determining railroad revenue adequacy, the possible uses of revenue adequacy in regulating railroad rates, 9 Table of Contents and ways to regulate service, including by use of emergency service orders.
The STB is reviewing proposed rulemaking in various areas, including reciprocal switching and commodity exemptions. The STB also continues to explore changes to the methodology for determining railroad revenue adequacy, the possible uses of revenue adequacy in regulating railroad rates, and ways to regulate service, including by use of emergency service orders.
Personal injuries and derailment incidents that meet reportable criteria are reported to the FRA. Our 2024 personal injury rate of 0.90 improved 23%, and our derailment incident rate of 2.17 improved 20% versus 2023.
Personal injuries and derailment incidents that meet reportable criteria are reported to the FRA. Our 2025 personal injury rate of 0.68 improved 24%, and our derailment incident rate of 1.75 improved 19% versus 2024.
The STB has jurisdiction over rates charged on certain regulated rail traffic; common carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of rail common carriers.
The STB has jurisdiction over rates charged on certain regulated rail traffic; common carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of rail common carriers (see Note 20 to the Financial Statements and Supplementary Data, Item 8, for information regarding the pending acquisition of Norfolk Southern).
Union Pacific works with 13 major rail unions, representing approximately 84% of our workforce. Pursuant to the Railway Labor Act (RLA), a federal statute enacted in 1926, our collective bargaining agreements are subject to modification every five years. Existing agreements remain in effect until new agreements are ratified or until the RLA procedures are exhausted.
Pursuant to the Railway Labor Act (RLA), a federal statute enacted in 1926, our collective bargaining agreements are subject to modification every five years. Existing agreements remain in effect until new agreements are ratified or until the RLA procedures are exhausted. The RLA is designed to bring the railroads and unions to agreement without disruptions to rail transportation.
Railroad Security – Our security efforts consist of a wide variety of measures, including employee training, engagement with our customers, training of emergency responders, and partnerships with numerous federal, state, and local government agencies.
We are focused on effectively managing workforce levels to the demands of the business and improving quality of life for our employees. Railroad security – Our security efforts consist of a wide variety of measures, including employee training, engagement with our customers, training of emergency responders, and partnerships with numerous federal, state, and local government agencies.
The RLA is designed to bring the railroads and unions to agreement without disruptions to rail transportation. Local negotiations began on January 1, 2025, related to years 2025-2029. Our Culture: At Union Pacific, the How Matters – high ethical standards guide the decisions we make and action we take to protect our employees, communities, and customers.
We have concluded the majority of our local negotiations, which began on January 1, 2025, related to years 2025-2029. There are two negotiations ongoing at one of our subsidiaries. Our culture: At Union Pacific, The How Matters – high ethical standards guide the decisions we make and action we take to protect our employees, communities, and customers.
The Railroad’s extensive franchise accesses six vehicle assembly plants and connects to West Coast ports, all six major Mexico gateways, and the Port of Houston to accommodate both import and export shipments. In addition to transporting finished vehicles, the Company provides expedited handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U.S., and Canada.
The Railroad’s extensive franchise accesses six vehicle assembly plants and connects to West Coast ports, all six major Mexico gateways, and the Port of Houston to accommodate both import and export shipments.
These efforts have been validated by the TSA, confirming our adherence to their standards. 8 Table of Contents In conjunction with the Association of American Railroads (AAR), we sponsor Ask Rail, a mobile application that provides first responders with secure links to electronic information, including commodity and emergency response information required by emergency personnel to respond to accidents and other situations.
In conjunction with the Association of American Railroads (AAR), we sponsor Ask Rail, a mobile application that provides first responders with secure links to electronic information, including commodity and emergency response information required by emergency personnel to respond to accidents and other situations. We also participate in the National Joint Terrorism Task Force, a multi-agency effort established by the U.S.
Benefits vary based on the applicable collective bargaining agreement or an employee’s management status. The final stage of the employee journey is a fulfilling retirement, which is enabled during their Union Pacific career through our compensation and benefit programs, particularly contributions to 401(k) plans and the employee stock purchase plan (ESPP).
The final stage of the employee journey is a fulfilling retirement, which is enabled during their Union Pacific career through our compensation and benefit programs, particularly contributions to 401(k) plans and the employee stock purchase plan (ESPP). 7 Table of Contents Our Board of Directors evaluates our non-union compensation plans and reviews recommendations from the Compensation and Talent Committee, while collective bargaining agreements govern compensation for our union employees.
Cooperation with Customers and Trade Association s – Through TransCAER (Transportation Community Awareness and Emergency Response), we work with the AAR, the American Chemistry Council, the American Petroleum Institute, and other chemical trade groups to provide communities with preparedness tools, including the training of emergency responders.
We were the first railroad in the U.S. to be named a partner in CBP’s Customs-Trade Partnership Against Terrorism, a partnership designed to develop, enhance, and maintain effective security processes throughout the global supply chain. 8 Table of Contents Cooperation with customers and trade association s – Through TransCAER (Transportation Community Awareness and Emergency Response), we work with the AAR, the American Chemistry Council, the American Petroleum Institute, and other chemical trade groups to provide communities with preparedness tools, including the training of emergency responders.
The process begins with recruitment, where we strive to attract the most talented employees to join our team.
We view it as imperative to invest in our employees with meaningful benefit offerings, developmental experiences, and career opportunities. The process begins with recruitment, where we strive to attract the most talented employees to join our team.
Talent is critical - our ability to recruit and retain employees is directly tied to our railroad’s success, as proven by our strong retention rate, our robust offerings, benefits, and work environment that creates meaningful family-supporting careers. We are focused on effectively managing workforce levels to the demands of the business and improving quality of life for our employees.
The median annual compensation for all employees employed as of December 31, 2025, was $107,889 (excluding the CEO). Talent is critical - our ability to recruit and retain employees is directly tied to our railroad’s success, as proven by our 2025 retention rate of 89%, our robust benefit offerings, and work environment that creates meaningful family-supporting careers.
The Employee Journey: From recruitment to retirement and milestones in between, we are relentlessly focused on supporting and engaging employees throughout their Union Pacific journey. We view it as imperative to invest in our employees with meaningful benefit offerings, developmental experiences, and career opportunities.
All of this supports our safety strategy and improves the quality of decision-making, problem-solving, and strategic thinking. The employee journey: From recruitment to retirement and milestones in between, we are relentlessly focused on supporting and engaging employees throughout their Union Pacific journey.
Made up of management and craft professionals, we are focused on attracting, retaining, and developing talent across our entire system. As of December 31, 2024, the Company employed 32,439 employees. Our workforce includes five generations from Traditionalists (born before 1946) to Generation Z (born after 1998). The average age is 46.9 with an average tenure of 16.2 years.
Made up of management and craft professionals, we are focused on attracting, retaining, and developing talent across our entire system. We employed an average of 29,287 employees during 2025. Union Pacific works with 13 major rail unions, representing approximately 83% of our workforce.
Removed
All of this supports our safety strategy and improves the quality of decision-making, problem-solving, and strategic thinking. Union Pacific’s commitment, today and for the future, is to further improve and strengthen performance through our workforce, where everyone is treated fairly, differences are valued, and talent is recognized and rewarded.
Added
Benefits vary based on the applicable collective bargaining agreement or an employee’s management status.
Removed
Union Pacific intends to maintain its standards of hiring and promoting based on merit, while aspiring to reach 40% people of color and double our female representation to 11% in our workforce by 2030. As of December 31, 2024, workforce representation of people of color and females was 34.3% and 5.2%, respectively.
Removed
Our Board of Directors evaluates our non-union compensation plans and reviews recommendations from the Compensation and Talent Committee, while collective bargaining agreements govern compensation for our union employees. The median annual compensation for all employees employed as of December 31, 2024, was $103,190 (excluding the CEO).
Removed
We were the first railroad in the U.S. to be named a partner in CBP’s Customs-Trade Partnership Against Terrorism, a partnership designed to develop, enhance, and maintain effective security processes throughout the global supply chain.
Removed
The STB is reviewing proposed rulemaking in various areas, including reciprocal switching and commodity exemptions, and has finalized rules creating new procedures for smaller rate complaints that are being reviewed in appellate courts.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

19 edited+75 added−3 removed68 unchanged
Biggest changeSignificant legislative activity in Congress or regulatory activity by other government branches or agencies, such as the STB, could expand regulation of railroad operations and pricing for rail services, which could reduce the viability of capital spending on our rail network, facilities, and equipment, and have a material adverse effect on our results of operations, financial condition, and liquidity. 12 Table of Contents We May Be Subject to Various Claims and Lawsuits That Could Result in Significant Expenditures – As a railroad with operations in densely populated urban areas and a vast rail network, we are exposed to the potential for various claims and litigation related to labor and employment, personal injury, property damage, environmental liability, and other matters.
Biggest changeIn addition, retaliatory tariffs by regions outside the U.S., currently in effect or adopted in the future, may impact demand for our services and our costs for purchased goods and services. 12 Table of Contents We may be subject to various claims and lawsuits that could result in significant expenditures – As a railroad with operations in densely populated urban areas and a vast rail network, we are exposed to the potential for various claims and litigation related to labor and employment, personal injury, property damage, environmental liability, and other matters.
Additionally, we utilize a limited number of steel producers that meet our specifications. Rail is critical to our operations for rail replacement programs, maintenance, and for adding additional network capacity, new rail and storage yards, and expansions of existing facilities.
Additionally, we utilize a limited number of steel producers that meet our rail specifications. Rail is critical to our operations for rail replacement programs, maintenance, and for adding additional network capacity, new rail and storage yards, and expansions of existing facilities.
If we do not have sufficient capital or do not deploy sufficient capital in a timely manner to acquire, develop, or implement new technology or maintain or upgrade current systems, such as Positive Train Control (PTC) or the latest version of our transportation control systems, we may suffer a rail service outage or competitive disadvantage within the rail industry and with companies providing other modes of transportation service, which could have a material adverse effect on our results of operations, financial condition, and liquidity.
If we do not have sufficient capital or do not deploy sufficient capital in a timely manner to acquire, develop, or implement new technology or maintain or upgrade current systems, such as Positive Train Control (PTC), NetControl, or the latest version of our transportation control systems, we may suffer a rail service outage or competitive disadvantage within the rail industry and with companies providing other modes of transportation service, which could have a material adverse effect on our results of operations, financial condition, and liquidity.
International, political, and economic factors, events and conditions, including international armed conflicts such as the Russia-Ukraine and Israel-Hamas wars, and other geopolitical tensions in the Middle East, affect the volatility of fuel prices and supplies. Weather can also affect fuel supplies and limit domestic refining capacity.
International, political, and economic factors, events and conditions, including international armed conflicts such as the Russia-Ukraine and Israel-Hamas wars, and other geopolitical tensions in the Middle East and elsewhere, affect the volatility of fuel prices and supplies. Weather can also affect fuel supplies and limit domestic refining capacity.
Any one or more of the following could cause a significant and sustained interruption of trade with Mexico, Canada, or countries in Southeast Asia: (a) a deterioration of security for international trade and businesses; (b) the adverse impact of new laws, rules, and regulations or the interpretation or enforcement of laws, rules, and regulations by government entities, courts, or regulatory bodies, including the United States-Mexico-Canada Agreement (USMCA) or other international trade agreements; (c) actions of taxing authorities that affect our customers doing business in or with foreign countries; (d) any significant adverse economic developments, such as extended periods of high inflation, material disruptions in the banking sector or in the capital markets of these foreign countries, and significant changes in the valuation of the currencies of these foreign countries that could 11 Table of Contents materially affect the cost or value of imports or exports; (e) shifts in patterns of international trade, including as a result of changes to international trade agreements or policies, that adversely affect import and export markets; (f) a material reduction in foreign direct investment in these countries; and (g) public health crises, including the outbreak of pandemic or contagious disease, such as the coronavirus and its variant strains (COVID).
Any one or more of the following could cause a significant and sustained interruption of trade with Mexico, Canada, or countries in Southeast Asia: (a) a deterioration of security for international trade and businesses; (b) the adverse impact of new laws, rules, and regulations or the interpretation or enforcement of laws, rules, and regulations by government entities, courts, or regulatory bodies, including the United States-Mexico-Canada Agreement (USMCA) or other international trade agreements; (c) actions of taxing authorities that affect our customers doing business in or with foreign countries; (d) any significant adverse economic developments, such as extended periods of high inflation, material disruptions in the banking sector or in the capital markets of these foreign countries, and significant changes in the valuation of the currencies of these foreign countries that could materially affect the cost or value of imports or exports; (e) shifts in patterns of international trade, including as a result of changes to international trade agreements or policies, that adversely affect import and export markets; (f) a material reduction in foreign direct investment in these countries; and (g) public health crises, including the outbreak of pandemic or contagious disease, such as the coronavirus and its variant strains (COVID).
Therefore, if one of the domestic suppliers of locomotives discontinues manufacturing locomotives, supplying parts, or providing maintenance for any reason, including bankruptcy or insolvency or the inability to manufacture locomotives that meet efficiency or regulatory emissions standards, we could experience significant cost increases and reduced availability of the locomotives that are necessary for our operations.
Therefore, if any of our two domestic suppliers of locomotives discontinues manufacturing locomotives, supplying parts, or providing maintenance for any reason, including bankruptcy or insolvency or the inability to manufacture locomotives that meet efficiency or regulatory emissions standards, we could experience significant cost increases and reduced availability of the locomotives that are necessary for our operations.
Additionally, a pandemic or other public health crises also may affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations. Financial Risks We Are Affected by Fluctuating Fuel Prices – Fuel costs constitute a significant portion of our transportation expenses.
Additionally, a pandemic or other public health crises also may affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations. 14 Table of Contents Financial risks We are affected by fluctuating fuel prices – Fuel costs constitute a significant portion of our transportation expenses.
In addition to price competition, we face competition with respect to transit times, quality, and reliability of service from motor carriers and other railroads. Motor carriers in particular can have an advantage over railroads with respect to transit times and timeliness of service.
In addition to price competition, we face competition with respect to transit times, quality, and reliability of service from motor carriers and other railroads. Motor carriers in particular generally have an advantage over railroads with respect to transit times and timeliness of service.
Restrictions, caps, taxes, or other controls on emissions of GHGs, including diesel exhaust, could significantly increase our operating costs.
Restrictions, caps, taxes, or other controls on emissions of greenhouse gases (GHGs), including diesel exhaust, could significantly increase our operating costs.
Government incentives 13 Table of Contents encouraging the use of alternative sources of energy also can affect certain of our customers and the markets for certain of the commodities we carry in a manner that could unpredictably alter our traffic patterns or reduce demand.
Government incentives encouraging the use of alternative sources of energy, including modifications or elimination of such incentives, also can affect certain of our customers and the markets for certain of the commodities we carry in a manner that could unpredictably alter our traffic patterns or reduce demand.
We May Be Affected by Climate Change and Market or Regulatory Responses to Climate Change – Climate change, including the impact of global warming and transition risks involving policy, legal risks, and market risks, could have a material adverse effect on our results of operations, financial condition, and liquidity on both a long-term and near-term basis.
Additionally, any future consolidation of the rail industry could result in increased competition among industry participants. 13 Table of Contents We may be affected by climate change and market or regulatory responses to climate change – Climate change, including the impact of global warming and transition risks involving policy, legal risks, and market risks, could have a material adverse effect on our results of operations, financial condition, and liquidity on both a long-term and near-term basis.
General Risk Factors We Are Affected by General Economic Conditions – Prolonged, severe adverse domestic and global macroeconomic conditions or disruptions of financial and credit markets, including, for example, the cycles of recessionary fears, inflationary pressures, changes in interest rates, and/or related monetary policy actions by governments in response to inflation, may affect the producers and consumers of the commodities we carry and may have a material adverse effect on our access to liquidity, results of operations, and financial condition.
General risk factors We are affected by general economic conditions – Prolonged, severe adverse domestic and global macroeconomic conditions or disruptions of financial and credit markets, including, for example, the cycles of recessionary fears, inflationary pressures, changes in interest rates, and/or related monetary policy actions by governments in response to inflation, may affect the producers and consumers of the commodities we carry and may have a material adverse effect on our access to liquidity, results of operations, and financial condition. 19 Table of Contents We may be affected by acts of terrorism, war, or risk of war – Our rail lines, facilities, and equipment, including rail cars carrying hazardous materials, could be direct targets or indirect casualties of terrorist attacks.
From time to time we also experience other operational or service challenges related to network capacity, dramatic and unplanned fluctuations in our customers’ demand for rail service with respect to one or more commodities or operating regions, or other events that could negatively impact our operational efficiency, any or all of which could have a material adverse effect on our results of operations, financial condition, and liquidity. 10 Table of Contents We Transport Hazardous Materials – We transport certain hazardous materials and other materials, including crude oil, ethanol, and toxic inhalation hazard (TIH) materials, such as chlorine, that pose certain risks in the event of a release or combustion.
From time to time we also experience other operational or service challenges related to network capacity, dramatic and unplanned fluctuations in our customers’ demand for rail service with respect to one or more commodities or operating regions, or other events that could negatively impact our operational efficiency, any or all of which could have a material adverse effect on our results of operations, financial condition, and liquidity.
An accident or other incident on our network, at our facilities, or at the facilities of our customers involving the release or combustion of hazardous materials can involve significant costs and claims for personal injury, property damage, and environmental penalties and remediation in excess of our insurance coverage for these risks, which could harm our reputation or have a material adverse effect on our results of operations, financial condition, and liquidity.
An accident or other incident on our network, at our facilities, or at the facilities of our customers involving the release or combustion of hazardous materials can involve significant costs and claims for personal injury, property damage, and environmental penalties and remediation in excess of our insurance coverage for these risks, which could harm our reputation or have a material adverse effect on our results of operations, financial condition, and liquidity. 10 Table of Contents The ability to update or maintain technology could adversely affect our operations – We rely on information technology in all aspects of our business, including technology systems operated by us (whether created by us or purchased), under control of third parties, and open-source software.
Alternatively, lower fuel prices could have a negative impact on certain commodities we transport, such as coal and domestic drilling-related shipments, which could have a material adverse effect on our results of operations, financial condition, and liquidity. 14 Table of Contents We Rely on Capital Markets – Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad, we rely on the capital markets to provide some of our capital requirements.
Alternatively, lower fuel prices could have a negative impact on certain commodities we transport, such as coal and domestic drilling-related shipments, which could have a material adverse effect on our results of operations, financial condition, and liquidity.
Sourcing different commodities or different locations allows shippers to substitute different carriers, and such competition may reduce our volumes or constrain prices. Additionally, any future consolidation of the rail industry could materially affect our competitive environment.
Sourcing different commodities or different locations allows shippers to substitute different carriers, and such competition may reduce our volumes or constrain prices.
An imposition of tariffs on imports or other changes to U.S. trade policy could cause demand for shipping from international markets to decrease, and if the declines are significant enough, it could have a material adverse effect on our results of operations, financial condition, and liquidity.
Changes to trade policy both U.S. and foreign, including imposition of tariffs on imports, could cause demand for shipping from international markets to decrease, and if the declines are significant enough, it could have a material adverse effect on our results of operations, financial condition, and liquidity. 11 Table of Contents We are dependent on certain key suppliers of locomotives and rail – Due to the capital-intensive nature and sophistication of locomotive equipment, parts, and maintenance, potential new suppliers face high barriers to entry.
We utilize long-term debt instruments, bank financing, and commercial paper, and we pledge certain amount of our receivables as collateral for credit.
We rely on capital markets – Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad, we rely on the capital markets to provide some of our capital requirements. We utilize long-term debt instruments, bank financing, and commercial paper, and we pledge certain amount of our receivables as collateral for credit.
Some of the factors, events, and contingencies discussed below may have occurred in the past, and the disclosures below are not representations as to whether or not the factors, events, or contingencies have occurred in the past, but are provided because future occurrences of such factors, events, or contingencies could have a material adverse effect.
References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
Removed
We Rely on Technology and Technology Improvements in Our Business Operations – We rely on information technology in all aspects of our business, including technology systems operated by us (whether created by us or purchased), under control of third parties, and open-source software.
Added
The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future.
Removed
We Are Dependent on Certain Key Suppliers of Locomotives and Rail – Due to the capital-intensive nature and sophistication of locomotive equipment, parts, and maintenance, potential new suppliers face high barriers to entry.
Added
We transport hazardous materials – We transport certain hazardous materials and other materials, including crude oil, ethanol, and toxic inhalation hazard (TIH) materials, such as chlorine, that pose certain risks in the event of a release or combustion.
Removed
We May Be Affected by Acts of Terrorism, War, or Risk of War – Our rail lines, facilities, and equipment, including rail cars carrying hazardous materials, could be direct targets or indirect casualties of terrorist attacks.
Added
Significant legislative activity in Congress or regulatory activity by other government branches or agencies, such as the STB, could expand regulation of railroad operations and pricing for rail services, which could reduce the viability of capital spending on our rail network, facilities, and equipment, and increase our costs for purchased goods and services.
Added
Such legislative or regulatory activity, or recent tariff activity imposed in the U.S. and retaliatory tariffs implemented in other countries, could have a material adverse effect on our results of operations, financial condition, and liquidity. During fiscal year 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and materials.
Added
Several countries also implemented or proposed retaliatory tariffs on imports from the U.S., as well as other barriers to trade. Incremental import tariffs adversely affected demand for our services and increased our costs for purchased goods and services during fiscal year 2025 and may continue to do so in 2026.
Added
Pending acquisition risks The mergers are subject to conditions, some or all of which may not be satisfied or completed on a timely basis, if at all.
Added
Failure to complete the mergers could have material adverse effects on our business — On July 28, 2025, the Company, Norfolk Southern, Ruby Merger Sub 1 Corporation, and Ruby Merger Sub 2 LLC, entered into an agreement and plan of merger (the merger agreement).
Added
The completion of the mergers (as defined in the merger agreement) is subject to a number of conditions, including, among others, the receipt of the requisite regulatory approvals, which make the completion of the mergers and timing thereof uncertain.
Added
Also, either the Company or Norfolk Southern may terminate the merger agreement if the mergers have not been consummated by January 28, 2028, which is referred to as the end date (subject to an automatic extension in certain circumstances), except that this right to terminate the merger agreement will not be available to any party whose failure to perform any obligation under the merger agreement has been the primary cause of the failure of the mergers to be consummated on or before that date.
Added
If the mergers are not completed, our ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the mergers, we will be subject to a number of risks, including the following: • the market price of our common stock could decline; • we could owe substantial termination fees to Norfolk Southern under certain circumstances; • time, resources, and costs committed by our management team to matters relating to the mergers could otherwise have been devoted to pursuing other beneficial opportunities; • we may experience negative reactions from the financial markets or from customers, suppliers, employees, labor unions, or other business partners; and • we will be required to pay our respective costs relating to the mergers, such as legal, accounting, and printing fees, whether or not the mergers are completed.
Added
In addition, if the mergers are not completed, we could be subject to litigation related to any failure to complete the mergers or related to any enforcement proceeding commenced against us to perform our obligations under the merger agreement, and whether or not any such litigation has any merit, the cost of defending such litigation may be significant.
Added
The materialization of any of these risks could adversely impact our ongoing business. 15 Table of Contents Similarly, delays in the completion of the mergers could, among other things, result in additional transaction costs, loss of revenues, or other negative effects associated with uncertainty about completion of the mergers.
Added
The merger agreement contains provisions that limit our ability to pursue alternatives to the mergers, and, in specified circumstances, could require us to pay substantial termination fees to Norfolk Southern — The merger agreement contains certain provisions that restrict our ability to initiate, solicit, knowingly encourage, or, subject to certain exceptions, engage in discussions or negotiations with respect to, or approve or recommend, any alternative proposal.
Added
In some circumstances, upon termination of the merger agreement in connection with an alternative proposal, we may be required to pay a termination fee of $2.5 billion to Norfolk Southern.
Added
These provisions could discourage a potential acquiror of us or alternative merger partner that might have an interest in acquiring all or a significant portion of the Company or pursuing an alternative acquisition transaction with us from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per-share value than the per-share value proposed to be realized in the mergers.
Added
In particular, a termination fee, if applicable, could result in a potential acquiror of us or alternative merger partner proposing to pay a lower price to our shareholders than it might otherwise have proposed to pay absent such a fee.
Added
If the merger agreement is terminated in accordance with its terms, and we or Norfolk Southern seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger agreement.
Added
The mergers are subject to the receipt of the requisite regulatory approvals, which requisite regulatory approvals may never be obtained, therefore preventing completion of the mergers.
Added
In addition, in granting such approvals, regulatory authorities may impose conditions that could have a significant adverse effect on the Company, Norfolk Southern, or the combined company and the expected benefits of the mergers therefore preventing completion of the mergers — Before the mergers may be completed, the requisite regulatory approvals must have been obtained, including the approval, authorization, or exemption by the U.S.
Added
Surface Transportation Board (STB) of the mergers and other transactions contemplated by the merger agreement within the jurisdiction of the STB. The terms and conditions of the approvals that are granted may impose requirements, concessions, limitations, or costs or place restrictions on the conduct of the combined company’s business.
Added
Subject to the terms and conditions of the merger agreement, the Company and Norfolk Southern have each agreed to use their reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with each other in doing, all things necessary, proper, or advisable to cause the conditions to closing set forth in the merger agreement to be satisfied and to consummate and make effective the mergers and the other transactions contemplated by the merger agreement prior to the end date, except that we are not required to take, or commit to take, or agree to or accept any “materially burdensome regulatory condition” (as defined in the merger agreement).
Added
For purposes of the foregoing, “reasonable best efforts” includes, among others, (i) proposing, negotiating, committing to, and effecting, by consent decree, hold separate order, or otherwise, the sale, divestiture, license, hold separate, or disposition of any and all of the share capital or other equity interest, assets, products, or businesses of the Company or of Norfolk Southern and its subsidiaries and (ii) otherwise taking or committing to take any actions that after the first effective time (as defined in the merger agreement) would limit our freedom of action with respect to, or our ability to retain, or otherwise agreeing to any restriction, requirement, or limitation with respect to our assets, products, or businesses, in each case as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order, or other order that would otherwise have the effect of preventing or delaying the closing.
Added
The STB and other regulatory and governmental authorities may impose requirements, concessions, and other conditions on the granting of such approvals. If such regulatory and governmental authorities seek to impose such requirements, concessions, or conditions, lengthy negotiations may ensue among such authorities, the Company and Norfolk Southern.
Added
Such requirements, concessions, and conditions and the process of obtaining regulatory approvals could have the effect of delaying completion of the mergers and such requirements, concessions, and conditions may not be identified or satisfied for an extended period of time.
Added
Such requirements, concessions and conditions may also impose additional costs or limitations on the combined company following the completion of the mergers and the parties have agreed to accept such requirements, concessions, and conditions, even if significant, subject to the agreed-upon materially burdensome regulatory condition limitation in favor of us.
Added
These requirements, concessions, and conditions may therefore reduce the anticipated benefits of the mergers, including synergies, which could also have a significant adverse effect on the combined company’s business and cash flows and results of operations, and we cannot predict what, if any, requirements, concessions, and conditions may be required by regulatory or governmental authorities whose approvals are required.
Added
The requisite regulatory approvals may not be obtained at all, may not be obtained in a timely fashion, and may contain conditions on the completion of the mergers.
Added
In January 2026, the STB announced its finding that the major merger application filed by the Company and Norfolk Southern was incomplete, as a result of which the STB rejected the application without prejudice.
Added
The decision does not result in the dismissal of the mergers, and the Company is permitted to file a revised application, which will commence a new review by the STB for completeness.
Added
If we experience further delays as a result of the STB’s review process or we are unable to obtain other 16 Table of Contents regulatory approvals on a timely basis, any such delays may increase our costs and reduce the anticipated benefits of the mergers, which could also have a significant adverse effect on the combined company’s business.
Added
In addition, under existing law, our railroad competitors and customers, Norfolk Southern’s railroad competitors and customers, and other interested parties may intervene to oppose the STB application or seek protective conditions in the event approval by the STB is granted, which might affect the decision of the STB, delay the approval process, or reduce the anticipated benefits of the mergers.
Added
Furthermore, if the STB does not provide final approval or imposes conditions on its approval in a final order, and the Company and Norfolk Southern decide to appeal such final order from the STB, any such appeal might not be resolved for a substantial period of time after the entry of such order by the STB.
Added
The Company and Norfolk Southern are each subject to business uncertainties and contractual restrictions while the mergers are pending, which could adversely affect both our business and operations and the combined company’s business and operations — In connection with the pendency of the mergers, some customers, suppliers, and other persons with whom the Company or Norfolk Southern has a business relationship have or may delay or defer certain business decisions or terminate, change, or renegotiate their relationships with us or Norfolk Southern, as the case may be, as a result of the mergers, which could negatively affect our or Norfolk Southern’s respective revenues, earnings, and cash flows, as well as the market price of our common stock, regardless of whether the mergers are completed.
Added
Under the terms of the merger agreement, each of the Company and Norfolk Southern is subject to certain restrictions on the conduct of its business prior to completing the first merger (as defined in the merger agreement), which may adversely affect its ability to execute certain of its business strategies, including, in the case of Norfolk Southern, the ability in certain cases to enter into or amend contracts, acquire or dispose of assets, incur indebtedness, incur capital expenditures, settle litigation, amend organizational documents, declare dividends, enter new business lines, and invest in third parties.
Added
Such limitations could adversely affect each party’s businesses and operations prior to the completion of the mergers. Each of the risks described above may be exacerbated by delays or other adverse developments with respect to the completion of the mergers.
Added
Uncertainties associated with the mergers may cause a loss of management personnel and other key employees, and the Company and Norfolk Southern may have difficulty attracting and motivating management personnel and other key employees, and combining cultures between the two companies could be challenging, which could adversely affect the future business and operations of the combined company — The Company and Norfolk Southern are dependent on the experience and industry knowledge of their respective management personnel and other key employees to execute their business plans.
Added
The combined company’s success after the completion of the mergers will depend in part upon our ability, and Norfolk Southern’s ability, to attract, motivate, and retain key management personnel and other key employees as well as develop a singular culture framed in the strategy of Safety, Service, and Operational Excellence.
Added
Prior to completion of the mergers, our current and prospective employees, and Norfolk Southern’s current and prospective employees, may experience uncertainty about their roles within the combined company following the completion of the mergers, which may have an adverse effect on our ability, and Norfolk Southern’s ability, to attract, motivate, or retain management personnel and other key employees.
Added
In addition, no assurance can be given that the combined company will be able to attract, motivate, or retain management personnel and other key employees of the Company and Norfolk Southern to the same extent that the Company and Norfolk Southern have previously been able to attract or retain employees.
Added
We may and have been a target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the mergers from being completed, whether or not such lawsuits have any merit — Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements.
Added
Even if the lawsuits are without merit, defending against or otherwise resolving these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.
Added
Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the mergers, then that injunction may delay or prevent the mergers from being completed, or from being completed within the expected timeframe, which may adversely affect our business, financial position, and results of operation.
Added
Completion of the mergers may trigger change in control or other provisions in certain agreements to which Norfolk Southern or its subsidiaries are a party, which may have an adverse impact on the combined company’s business and results of operations — The completion of the mergers may trigger change in control and other provisions in certain agreements to which Norfolk Southern or its subsidiaries are a party.
Added
If the Company and Norfolk Southern are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages.
Added
Even if the Company and Norfolk Southern are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Norfolk Southern or the combined company.
Added
Any of the foregoing or similar developments may have an adverse impact on the combined company’s business and results of operations. 17 Table of Contents The combined company may be unable to successfully integrate the businesses of the Company and Norfolk Southern and realize the anticipated benefits of the mergers — The success of the mergers will depend, in part, on the combined company’s ability to successfully combine the businesses of the Company and Norfolk Southern, which currently operate as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation, and operational efficiencies, from the combination.
Added
If the combined company is unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully, or at all, or may take longer to realize than expected and the value of its common stock may be harmed.
Added
Additionally, as a result of the mergers, rating agencies may take negative actions against the combined company’s credit ratings, which may increase the combined company’s financing costs, including in connection with any financing of the mergers. The mergers involve the integration of Norfolk Southern’s business with our existing business, which is a complex, costly, and time-consuming process.
Added
Neither the Company nor Norfolk Southern have previously completed a transaction comparable in size or scope to the mergers.
Added
The integration of the two (2) companies may result in material challenges, including, without limitation: • the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the mergers; • managing a larger combined company; • creating, implementing, and executing a unified business strategy, and operational, financial, and managerial control with respect to the combined entity; • the inherent risk and complexity of integrating railroad operations, including operating, information technology, safety, and managerial systems and processes, particularly on a large scale, in the context of ongoing business operations and customer commitments; • maintaining employee morale and attracting, motivating, and retaining management personnel and other key employees; • the possibility of faulty assumptions underlying expectations regarding the integration process; • retaining existing business and operational relationships and attracting new business and operational relationships; • consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures, and policies; • coordinating geographically separate organizations; • unanticipated changes in federal or state laws or regulations or international trade agreements, including additional regulatory scrutiny or additional regulatory requirements as a result of the transaction or the size, scope, and complexity of the combined company’s business operations; and • unforeseen expenses or delays associated with the mergers.
Added
Many of these factors will be outside of the combined company’s control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues, and diversion of management’s time and energy, which could materially affect the combined company’s financial position, results of operations, and cash flows.
Added
The Company and Norfolk Southern have operated, and until completion of the mergers will continue to operate, independently.
Added
The Company and Norfolk Southern are currently permitted to conduct only limited planning for the integration of the two (2) companies following the mergers and have not yet determined the exact nature of how the businesses and operations of the two (2) companies will be combined after the mergers.
Added
The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized.
Added
The future results of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following the completion of the mergers — Following the completion of the mergers, the size of the combined company’s business will be significantly larger than the current size of our business.
Added
The combined company’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement operational, managerial, financial, and strategic initiatives that address not only the integration of two (2) independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity.
Added
There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, and other benefits currently anticipated from the mergers. 18 Table of Contents The combined company is expected to incur substantial expenses related to the completion of the mergers and the integration of the Company and Norfolk Southern — The combined company is expected to incur substantial expenses in connection with the completion of the mergers and the integration of the Company and Norfolk Southern.
Added
There are a large number of processes, policies, procedures, operations, technologies, and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing, and benefits. In addition, our business and Norfolk Southern’s business will continue to maintain a presence in Omaha, Nebraska and Atlanta, Georgia, respectively.

… 17 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+1 added−2 removed17 unchanged
Biggest changeThe Internal Cybersecurity Team has robust processes and redundancies in place designed with the objective of deterring, detecting, mitigating, and responding to potential cybersecurity threats, which includes a vulnerability assessment, prioritization, and remediation program. The Internal Cybersecurity Team also performs regular system penetration testing to validate our security controls and assess our infrastructure and applications.
Biggest changeAdditionally, in 2025, certain management employees participated in a tabletop exercise to simulate a response to a cybersecurity incident, and the teams incorporated the findings of this exercise into our Business Sustainment Plans The Internal Cybersecurity Team has robust processes and redundancies in place designed with the objective of deterring, detecting, mitigating, and responding to potential cybersecurity threats, which includes a vulnerability assessment, prioritization, and remediation program.
Our CISO and Deputy CISO receive reports on cybersecurity threats from a number of experienced information security professionals for various parts of our business on an ongoing 16 Table of Contents basis and, in conjunction with other management personnel, regularly consult on risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
Our CISO and Deputy CISO receive reports on cybersecurity threats from a number of experienced information security professionals for various parts of our business on an ongoing basis and, in conjunction with other management personnel, regularly consult on risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
At the management level, our CIO, CISO, and Deputy CISO, each of whom has extensive cybersecurity knowledge and skills gained from over 28 years, 29 years, and 20 years of relevant work experience, respectively, head the Internal Cybersecurity Team that is responsible for implementing and maintaining cybersecurity and data protection practices across our business, with our CIO reporting directly to our Chief Executive Officer.
At the management level, our CIO, CISO, and Deputy CISO, each of whom has extensive cybersecurity knowledge and skills gained from over 29 years, 30 years, and 21 years of relevant work experience, respectively, head the Internal Cybersecurity Team that is responsible for implementing and maintaining cybersecurity and data protection practices across our business, with our CIO reporting directly to our Chief Executive Officer.
Governance The Board of Directors has delegated primary oversight of the Company’s cybersecurity risk to the Audit Committee, which receives updates on cybersecurity risks, risk mitigation initiatives, and incidents at each regularly scheduled Audit Committee meeting from the CIO, CISO, and other members of management, as needed.
Governance The Board of Directors has delegated primary oversight of the Company’s cybersecurity risk to the Audit Committee, which receives updates on cybersecurity risks, risk mitigation initiatives, and incidents at Audit Committee meetings from the CIO, CISO, and other members of management, as needed.
In addition, our Risk and Compliance Committee (RCC) is responsible for oversight and support of the Company’s Enterprise Risk Management and Compliance and Ethics programs and is comprised of the Executive Leadership Team and the Senior Vice President and Chief Accounting, Risk, and Compliance Officer (Compliance Officer).
In addition, our Risk and Compliance Committee (RCC) is responsible for oversight and support of the Company’s Enterprise Risk Management and Compliance and Ethics programs and is comprised of the Executive Leadership Team, the Vice President Law and Chief Compliance Officer (Compliance Officer), and the Assistant Vice President - Accounting who has responsibilities for Enterprise Risk Management.
Our information security program is designed to align our defenses and resources to identify, assess, and address more likely and more damaging cyber events, to provide support for our organizational mission and operational objectives, and to position us to deter, detect, mitigate, and respond to a wide variety of potential attacks in a timely fashion.
All management employees take mandatory security awareness training on the Company’s data security policies and procedures, which is supplemented by Company-wide testing initiatives, including periodic phishing tests. 20 Table of Contents Our information security program is designed to align our defenses and resources to identify, assess, and address more likely and more damaging cyber events, to provide support for our organizational mission and operational objectives, and to position us to deter, detect, mitigate, and respond to a wide variety of potential attacks in a timely fashion.
When the Company learns of a cybersecurity incident at a third-party service provider, the Company’s respective department contacts maintain communication with the third-party service provider and communicate any cybersecurity incidents to the CISO.
In addition to our internal cybersecurity capabilities, we also periodically engage assessors, consultants, auditors, and other third parties to assist with assessing, identifying, and managing cybersecurity risks. When the Company learns of a cybersecurity incident at a third-party service provider, the Company’s respective department contacts maintain communication with the third-party service provider and communicate any cybersecurity incidents to the CISO.
The RCC also created a subcommittee, the Enterprise Risk Management Committee (ERMC), who is charged with continually monitoring, evaluating, and managing enterprise risks.
The RCC also created a subcommittee, the Enterprise Risk Management Committee (ERMC), who is charged with continually monitoring, evaluating, and managing enterprise risks. The ERMC includes the Compliance Officer, General Auditor, Vice President and Chief Safety Officer, CISO, Vice President - Strategy and Corporate Development, Assistant Vice President - Accounting, and Assistant Vice President - HDC and Network Operations.
The ERMC includes the Compliance Officer, General Auditor, Vice President Law - Finance, Compliance and Commercial Litigation, Vice President and Chief Safety Officer, CISO, Vice President - Strategy and Corporate Development, and Assistant Vice President - Executive Services. The RCC and ERMC both meet throughout the year and receive periodic updates on cybersecurity from the CISO.
The RCC and ERMC both meet throughout the year and receive periodic updates on cybersecurity from the CISO. 21 Table of Contents
Removed
In addition to our internal cybersecurity capabilities, we also periodically engage assessors, consultants, auditors, and other third parties 15 Table of Contents to assist with assessing, identifying, and managing cybersecurity risks.
Added
The Internal Cybersecurity Team also performs regular system penetration testing to validate our security controls and assess our infrastructure and applications.
Removed
All management employees take mandatory security awareness training on the Company’s data security policies and procedures, which is supplemented by Company-wide testing initiatives, including periodic phishing tests.

Item 2. Properties

Properties — owned and leased real estate

10 edited+1 added−0 removed6 unchanged
Biggest changeThe following table includes the major yards and terminals on our system: Major Classification Yards Major Intermodal Terminals Houston, Texas Joliet (Global 4), Illinois North Platte, Nebraska Global II (Chicago), Illinois North Little Rock, Arkansas East Los Angeles, California Livonia, Louisiana ICTF (Long Beach), California Fort Worth, Texas Mesquite, Texas West Colton, California Marion, Arkansas Roseville, California Lathrop, California 18 Table of Contents RAIL EQUIPMENT Our equipment includes owned and leased locomotives and rail cars; heavy maintenance equipment and machinery; other equipment and tools in our shops, offices, and facilities; and vehicles for maintenance, transportation of crews, and other activities.
Biggest changeLouis), Illinois East Los Angeles, California Livonia, Louisiana Mesquite (Dallas), Texas Fort Worth, Texas ICTF (Los Angeles), California North Platte East, Nebraska Lathrop, California North Platte West, Nebraska Marion (Memphis), Arkansas Roseville, California Port Laredo, Texas Settegast (Houston), Texas Settegast (Houston), Texas RAIL EQUIPMENT Our equipment includes owned and leased locomotives and rail cars; heavy maintenance equipment and machinery; other equipment and tools in our shops, offices, and facilities; and vehicles for maintenance, transportation of crews, and other activities.
The facility has 1.2 million square feet of space that can accommodate approximately 4,000 employees. HARRIMAN DISPATCHING CENTER The Harriman Dispatching Center (HDC), located in Omaha, Nebraska, is our primary dispatching facility. It is linked to regional dispatching and locomotive management facilities at various locations along our network.
The facility has 1.2 million square feet of space that can accommodate approximately 4,000 employees. 22 Table of Contents HARRIMAN DISPATCHING CENTER The Harriman Dispatching Center (HDC), located in Omaha, Nebraska, is our primary dispatching facility. It is linked to regional dispatching and locomotive management facilities at various locations along our network.
These investments enhance safety, support the transportation needs of our customers, improve our operational efficiency, and support emission reduction initiatives. Additionally, we add new equipment to our fleet to replace older equipment and to support growth and customer demand. 2024 Capital Program – During 2024, our capital program totaled approximately $3.4 billion.
These investments enhance safety, support the transportation needs of our customers, improve our operational efficiency, and support emission reduction initiatives. Additionally, we add new equipment to our fleet to replace older equipment and to support growth and customer demand. 2025 Capital program – During 2025, our capital program totaled approximately $3.5 billion.
These fleets serve as the most reliable and efficient equipment to facilitate growth without additional acquisitions. Locomotive and freight car in service utilization percentages for the year ended December 31, 2024, were 65% and 75%, respectively. CAPITAL EXPENDITURES Our rail network requires significant annual capital investments for replacement, improvement, and expansion.
These fleets serve as the most reliable and efficient equipment to facilitate growth without additional acquisitions. Locomotive and freight car in service utilization percentages for the year ended December 31, 2025, were 68% and 76%, respectively. CAPITAL EXPENDITURES Our rail network requires significant annual capital investments for replacement, improvement, and expansion.
(See further discussion of our 2025 capital plan in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, Item 7, of this report.) 19 Table of Contents OTHER Equipment Encumbrances – See Note 14 and 16 to the Financial Statements and Supplementary Data, Item 8.
(See further discussion of our 2026 capital plan in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, Item 7, of this report.) OTHER Equipment encumbrances – See Note 14 and 16 to the Financial Statements and Supplementary Data, Item 8.
Item 2. Properties We employ a variety of assets in the management and operation of our rail business. Our rail network covers 23 states in the western two-thirds of the U.S. 17 Table of Contents TRACK Our rail network includes 32,880 route miles. We own 26,291 miles and operate on the remainder pursuant to trackage rights or leases.
Item 2. Properties We employ a variety of assets in the management and operation of our rail business. Our rail network covers 23 states in the western two-thirds of the U.S. TRACK Our rail network includes 32,889 route miles. We own 26,294 miles and operate on the remainder pursuant to trackage rights or leases.
(See the cash capital investments table in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, Item 7, of this report.) 2025 Capital Plan – In 2025, we expect our capital plan to be approximately $3.4 billion, consistent with 2024.
(See the cash capital investments table in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, Item 7, of this report.) 2026 Capital plan – In 2026, we expect our capital plan to be approximately $3.3 billion .
The following table describes track miles: As of December 31, 2024 2023 Route 32,880 32,693 Other main line 7,116 7,117 Passing lines and turnouts 3,526 3,466 Switching and classification yard lines 8,850 8,852 Total miles 52,372 52,128 HEADQUARTERS BUILDING We own our headquarters building in Omaha, Nebraska.
The following table describes track miles: As of December 31, 2025 2024 Route 32,889 32,880 Other main line 7,148 7,116 Passing lines and turnouts 3,526 3,526 Switching and classification yard lines 8,851 8,850 Total miles 52,414 52,372 HEADQUARTERS BUILDING We own our headquarters building in Omaha, Nebraska.
HDC employees coordinate moves of locomotives and trains, manage traffic and train crews on our network, and coordinate interchanges with other railroads. Generally, around 600 employees work on-site in the facility.
HDC employees coordinate movement of locomotives and trains; manage traffic, train crews, as well as engineering and signal requirements for safe repair and maintenance, on our network; and coordinate interchanges with other railroads. Generally, around 600 employees work on-site in the facility.
As of December 31, 2024, we owned or leased the following units of equipment: Locomotives Owned Leased Total Average Age (yrs.) Multiple purpose 5,973 920 6,893 25.2 Switching 122 - 122 44.6 Other 11 - 11 54 Total locomotives 6,106 920 7,026 N/A Freight cars Owned Leased Total Average Age (yrs.) Covered hoppers 14,642 8,897 23,539 21.1 Open hoppers 4,658 579 5,237 37.8 Gondolas 6,293 4,251 10,544 23.4 Boxcars 3,741 5,526 9,267 27.2 Refrigerated cars 2,404 945 3,349 20.1 Flat cars 1,966 1,952 3,918 33.4 Other - 322 322 36.1 Total freight cars 33,704 22,472 56,176 N/A Highway revenue equipment Owned Leased Total Average Age (yrs.) Containers 46,375 288 46,663 13.1 Chassis 4,356 1,197 5,553 11.6 Total highway revenue equipment 50,731 1,485 52,216 N/A We continuously assess our need for equipment to run an efficient and reliable network.
As of December 31, 2025, we owned or leased the following units of equipment: Locomotives Owned Leased Total Average age (yrs.) Multiple purpose 6,228 605 6,833 26.1 Switching 120 - 120 45.6 Other 11 - 11 50.8 Total locomotives 6,359 605 6,964 N/A Freight cars Owned Leased Total Average age (yrs.) Covered hoppers 16,205 7,129 23,334 20.8 Open hoppers 4,254 519 4,773 38.2 Gondolas 6,130 3,666 9,796 23.3 Boxcars 3,534 4,772 8,306 26.3 Refrigerated cars 2,270 791 3,061 18.6 Flat cars 1,594 2,629 4,223 32.0 Other - 297 297 36.9 Total freight cars 33,987 19,803 53,790 N/A 23 Table of Contents Highway revenue equipment Owned Leased Total Average age (yrs.) Containers 45,678 128 45,806 14.0 Chassis 4,297 613 4,910 11.6 Total highway revenue equipment 49,975 741 50,716 N/A We continuously assess our need for equipment to run an efficient and reliable network.
Added
The following table includes the major yards and terminals on our system: Major classification yards Major intermodal terminals North Little Rock, Arkansas Global 4 (Chicago), Illinois Englewood (Houston), Texas Global 2 (Chicago), Illinois Gateway Yard (St.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+2 added−1 removed8 unchanged
Biggest changeOTHER MATTERS Antitrust Litigation – As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, 20 rail shippers (many of whom were represented by the same law firms) filed virtually identical antitrust lawsuits in various federal district courts against us and four other Class I railroads in the U.S.
Biggest changeInformation concerning environmental claims and contingencies and estimated remediation costs is set forth in this report in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Environmental, Item 7, and Note 17 to the Financial Statements and Supplementary Data, Item 8. 24 Table of Contents OTHER MATTERS Antitrust litigation – As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, 20 rail shippers (many of whom were represented by the same law firms) filed virtually identical antitrust lawsuits in various federal district courts against us and four other Class I railroads in the U.S.
See also Note 17 to the Financial Statements and Supplementary Date, Item 8. ENVIRONMENTAL MATTERS We receive notices from the EPA and state environmental agencies alleging that we are or may be liable under federal or state environmental laws for remediation costs at various sites throughout the U.S., including sites on the Superfund National Priorities List or state superfund lists.
See also Note 17 to the Financial Statements and Supplementary Data, Item 8. ENVIRONMENTAL MATTERS We receive notices from the EPA and state environmental agencies alleging that we are or may be liable under federal or state environmental laws for remediation costs at various sites throughout the U.S., including sites on the Superfund National Priorities List or state superfund lists.
We believe that these lawsuits are without merit, and we will vigorously defend our actions. Therefore, we currently believe that these matters will not have a material adverse effect on any of our results of operations, financial condition, and liquidity. 20 Table of Contents
Therefore, we currently believe that these matters will not have a material adverse effect on any of our results of operations, financial condition, and liquidity.
Oxbow's claims previously were proceeding in the U.S. District of Columbia District Court before the Honorable Pail L. Friedman. In 2024, Oxbow's case was transferred to the Honorable Beryl A. Howell. We continue to deny the allegations that our fuel surcharge programs violate the antitrust laws or any other laws.
Oxbow's claims previously were proceeding in the U.S. District of Columbia District Court before the Honorable Pail L. Friedman. In 2024, Oxbow's case was transferred to the Honorable Beryl A.
Removed
Information concerning environmental claims and contingencies and estimated remediation costs is set forth in this report in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Environmental, Item 7, and Note 17 to the Financial Statements and Supplementary Data, Item 8.
Added
Howell As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, on June 24, 2025, Judge Howell granted all defendant railroads summary judgment and directed the closure of the cases. Plaintiffs have appealed Judge Howell's decision to the U.S. Court of Appeals for the District of Columbia Circuit.
Added
We continue to deny the allegations that our fuel surcharge programs violate the antitrust laws or any other laws. We believe that these lawsuits are without merit, and we will vigorously defend our actions, including on appeal.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

5 edited+2 added−4 removed1 unchanged
Biggest changeHe previously served as a Senior Advisor to the Chairman (January 2021 - June 2021) and Chief Operating Officer (January 2019 - December 2020). [2] Ms. Whited was elected President effective August 14, 2023. Ms. Whited most recently served as Executive Vice President - Sustainability and Strategy (February 2022 - August 2023).
Biggest changeRocker Executive Vice President - Marketing and Sales 54 Current Position [1] Mr. Vena was elected Chief Executive Officer effective August 14, 2023. He previously served as a Senior Advisor to the Chairman (January 2021 - June 2021) and Chief Operating Officer (January 2019 - December 2020). [2] Ms.
Item 4. Mine Safety Disclosures Not applicable. Information About Our Executive Officers and Principal Executive Officers of Our Subsidiaries The Board of Directors typically elects and designates our executive officers on an annual basis at the board meeting held in conjunction with the Annual Meeting of Shareholders, and they hold office until their successors are elected.
Item 4. Mine Safety Disclosures Not applicable. 25 Table of Contents Information About Our Executive Officers and Principal Executive Officers of Our Subsidiaries The Board of Directors typically elects and designates our executive officers on an annual basis at the board meeting held in conjunction with the Annual Meeting of Shareholders, and they hold office until their successors are elected.
The following table sets forth certain information current as of February 7, 2025, relating to the executive officers of UPC and the Railroad. Name Position Age Business Experience During Past Five Years V. James Vena Chief Executive Officer 66 [1] Elizabeth F. Whited President 59 [2] Jennifer L.
The following table sets forth certain information current as of February 6, 2026, relating to the executive officers of UPC and the Railroad. Name Position Age Business experience during past five years V. James Vena Chief Executive Officer 67 [1] Jennifer L. Hamann Executive Vice President and Chief Financial Officer 58 Current Position Christina B.
Hamann Executive Vice President and Chief Financial Officer 57 Current Position Eric J. Gehringer Executive Vice President - Operations 45 [3] Rahul Jalali Executive Vice President and Chief Information Officer 51 [4] Craig V. Richardson Executive Vice President, Chief Legal Officer, and Corporate Secretary 63 [5] Kenny G.
Conlin Executive Vice President, Chief Legal Officer, and Corporate Secretary 53 [2] Eric J. Gehringer Executive Vice President - Operations 46 Current Position Rahul Jalali Executive Vice President and Chief Information Officer 52 [3] Carrie J. Powers Vice President, Controller, and Chief Accounting Officer 55 [4] Kenny G.
Jalali was elected Executive Vice President and Chief Information Officer effective June 1, 2023. Mr. Jalali most recently served as Senior Vice President and Chief Information Officer (November 2020 - May 2023). [5] Mr. Richardson was elected Executive Vice President, Chief Legal Officer, and Corporate Secretary effective December 8, 2020.
Conlin was elected Executive Vice President, Chief Legal Officer, and Corporate Secretary effective July 16, 2025. She most recently served as Senior Vice President, Chief Legal Officer, and Corporate Secretary (April 2025 – July 2025), Senior Vice President and Deputy General Counsel (December 2024 – April 2025).
Removed
Rocker Executive Vice President - Marketing and Sales 53 Current Position Todd M. Rynaski Senior Vice President and Chief Accounting, Risk, and Compliance Officer 54 [6] [1] Mr. Vena was elected Chief Executive Officer effective August 14, 2023.
Added
She was previously Chief Risk Officer and Regulatory Affairs Assistant General Counsel of Good Year Tire & Rubber Company (July 2022 – December 2024), and a Partner at Baker McKenzie (October 2016 – July 2022). [3] Mr. Jalali was elected Executive Vice President and Chief Information Officer effective June 1, 2023. Mr.
Removed
She previously served as Executive Vice President and Chief Human Resources Officer (August 2018 - February 2022). [3] Mr. Gehringer was elected Executive Vice President - Operations effective January 1, 2021. Mr. Gehringer previously served as Senior Vice President - Transportation (July 2020 - December 2020) and Vice President - Mechanical and Engineering (January 2020 - July 2020). [4] Mr.
Added
Jalali most recently served as Senior Vice President and Chief Information Officer (November 2020 - May 2023). [4] Ms. Powers was elected Vice President, Controller, and Chief Accounting Officer effective May 8, 2025. Ms. Powers previously served as Assistant Vice President - Financial Reporting (March 2019 - May 2025). 26 Table of Contents PART II
Removed
He most recently served as Interim Executive Vice President, Chief Legal Officer, and Corporate Secretary (September 2020 - November 2020) and Vice President - Commercial and Regulatory Law (July 2018 - August 2020). [6] Mr. Rynaski was elected Senior Vice President and Chief Accounting, Risk, and Compliance Officer effective July 1, 2022. Mr.
Removed
Rynaski previously served as Vice President and Controller (September 2015 - June 2022). 21 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed2 unchanged
Biggest changeThe following table presents common stock repurchases during each month for the fourth quarter of 2024: Period Total Number of Shares Purchased [a] Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program Maximum Number of Shares Remaining Under the Plan or Program [b] Oct. 1 through Oct. 31 2,503,616 $ 237.58 2,503,002 74,390,644 Nov. 1 through Nov. 30 303,827 235.43 301,783 74,088,861 Dec. 1 through Dec. 31 274 244.72 - 74,088,861 Total 2,807,717 $ 237.35 2,804,785 N/A [a] Total number of shares purchased during the quarter includes approximately 2,932 shares delivered or attested to UPC by employees to pay stock option exercise prices, satisfy excess tax withholding obligations for stock option exercises or vesting of retention units, and pay withholding obligations for vesting of retention shares. [b] Effective April 1, 2022, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock by March 31, 2025.
Biggest changeThe following table presents common stock repurchases during each month for the fourth quarter of 2025: Period Total number of shares purchased [a] Average price paid per share Total number of shares purchased as part of a publicly announced plan or program [b] Maximum number of shares remaining under the plan or program [c] Oct. 1 through Oct. 31 330 $ 229.80 - 93,888,442 Nov. 1 through Nov. 30 401 224.63 - 93,888,442 Dec. 1 through Dec. 31 - - - 93,888,442 Total 731 $ 226.96 - N/A [a] Total number of shares purchased during the quarter includes approximately 731 shares delivered or attested to UPC by employees to pay stock option exercise prices and satisfy tax withholding obligations for stock option exercises or vesting of retention awards. [b] As part of the pending acquisition of Norfolk Southern described in Note 20 to the Financial Statements and Supplementary Data, Item 8, we paused our share repurchase program. [c] Effective April 1, 2025, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock by March 31, 2028.
The graph assumes that $100 was invested in the common stock of Union Pacific Corporation and each index on December 31, 2019, and that all dividends were reinvested.
The graph assumes that $100 was invested in the common stock of Union Pacific Corporation and each index on December 31, 2020, and that all dividends were reinvested.
On that date, the closing price of the common stock on the NYSE was $247.79. We paid dividends to our common shareholders during each of the past 125 years.
On that date, the closing price of the common stock on the NYSE was $235.10. We paid dividends to our common shareholders during each of the past 126 years.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock is traded on the NYSE under the symbol “UNP”. At January 31, 2025, there were 604,286,378 shares of common stock outstanding and 26,755 common shareholders of record.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock is traded on the NYSE under the symbol “UNP”. At January 30, 2026, there were 593,391,460 shares of common stock outstanding and 25,761 common shareholders of record.
The information below is historical in nature and is not necessarily indicative of future performance. 22 Table of Contents Purchases of Equity Securities – During 2024, we repurchased 6,467,619 shares of our common stock at an average price of $240.51.
The information below is historical in nature and is not necessarily indicative of future performance. 27 Table of Contents Purchases of equity securities – During 2025, we repurchased 11,951,818 shares of our common stock at an average price of $234.15.
Period UNP Peer Group DJ Trans S&P 500 1 Year (2024) (5.1 %) (2.4 %) 1.5 % 25.0 % 3 Year (2022 - 2024) (3.1 %) (13.0 %) 0.6 % 29.2 % Five-Year Performance Comparison – The following graph provides an indicator of cumulative total shareholder returns for the Corporation as compared to the peer group index (described above), the DJ Trans, and the S&P 500.
Period UNP Peer Group DJ Trans S&P 500 1 Year (2025) 3.8 % 19.8 % 10.9 % 17.9 % 3 Year (2023 - 2025) 19.7 % 23.7 % 35.6 % 86.0 % Five-year performance comparison – The following graph provides an indicator of cumulative total shareholder returns for the Corporation as compared to the peer group index (described above), the DJ Trans, and the S&P 500.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−1 removed0 unchanged
Biggest changeItem 6. [Reserved] 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Critical Accounting Estimates 34 Cautionary Information 36 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 37 Item 8. Financial Statements and Supplementary Data 38 Report of Independent Registered Public Accounting Firm 39 Item 9.
Biggest changeItem 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Critical Accounting Estimates 40 Cautionary Information 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8. Financial Statements and Supplementary Data 43 Report of Independent Registered Public Accounting Firm 44
Removed
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 68 Item 9A. Controls and Procedures 69 Management’s Annual Report on Internal Control Over Financial Reporting 69 Report of Independent Registered Public Accounting Firm 70

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+18 added−25 removed43 unchanged
Biggest changeAccessorial revenues decreased in 2024 compared to 2023 driven by lower intermodal accessorial revenues because of our intermodal equipment sale, partially offset by a one-time contract settlement. 25 Table of Contents The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type: Freight Revenues Millions 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Grain & grain products $ 3,828 $ 3,644 $ 3,598 5 % 1 % Fertilizer 811 757 712 7 6 Food & refrigerated 1,085 1,041 1,093 4 (5) Coal & renewables 1,483 1,916 2,134 (23) (10) Bulk 7,207 7,358 7,537 (2) (2) Industrial chemicals & plastics 2,345 2,176 2,158 8 1 Metals & minerals 2,081 2,194 2,196 (5) - Forest products 1,326 1,347 1,465 (2) (8) Energy & specialized markets 2,688 2,521 2,386 7 6 Industrial 8,440 8,238 8,205 2 - Automotive 2,452 2,421 2,257 1 7 Intermodal 4,712 4,554 5,160 3 (12) Premium 7,164 6,975 7,417 3 (6) Total $ 22,811 $ 22,571 $ 23,159 1 % (3) % Revenue Carloads Thousands 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Grain & grain products 850 798 798 7 % - % Fertilizer 213 191 190 12 1 Food & refrigerated 177 175 187 1 (6) Coal & renewables 702 867 885 (19) (2) Bulk 1,942 2,031 2,060 (4) (1) Industrial chemicals & plastics 672 645 637 4 1 Metals & minerals 719 793 785 (9) 1 Forest products 213 213 241 - (12) Energy & specialized markets 607 582 552 4 5 Industrial 2,211 2,233 2,215 (1) 1 Automotive 824 820 778 - 5 Intermodal [a] 3,357 3,028 3,116 11 (3) Premium 4,181 3,848 3,894 9 (1) Total 8,334 8,112 8,169 3 % (1) % Average Revenue per Car 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Grain & grain products $ 4,505 $ 4,567 $ 4,509 (1) % 1 % Fertilizer 3,809 3,962 3,749 (4) 6 Food & refrigerated 6,104 5,929 5,844 3 1 Coal & renewables 2,113 2,211 2,410 (4) (8) Bulk 3,710 3,623 3,658 2 (1) Industrial chemicals & plastics 3,493 3,374 3,388 4 - Metals & minerals 2,893 2,765 2,797 5 (1) Forest products 6,229 6,310 6,092 (1) 4 Energy & specialized markets 4,426 4,335 4,320 2 - Industrial 3,818 3,689 3,704 3 - Automotive 2,976 2,955 2,902 1 2 Intermodal [a] 1,404 1,504 1,656 (7) (9) Premium 1,714 1,813 1,905 (5) (5) Average $ 2,737 $ 2,782 $ 2,835 (2) % (2) % [a] For intermodal shipments, each container or trailer equals one carload. 26 Table of Contents Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables.
Biggest changeAccessorial revenues decreased in 2025 compared to 2024 as a result of lower intermodal container revenues due to an intermodal equipment sale and a one-time contract settlement, both of which occurred in 2024, partially offset by higher intermodal accessorial revenues. 30 Table of Contents The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type: Freight revenues Millions 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Grain & grain products $ 3,926 $ 3,828 $ 3,644 3 % 5 % Fertilizer 856 811 757 6 7 Food & refrigerated 1,018 1,085 1,041 (6) 4 Coal & renewables 1,786 1,483 1,916 20 (23) Bulk 7,586 7,207 7,358 5 (2) Industrial chemicals & plastics 2,512 2,345 2,176 7 8 Metals & minerals 2,193 2,081 2,194 5 (5) Forest products 1,290 1,326 1,347 (3) (2) Energy & specialized markets 2,609 2,688 2,521 (3) 7 Industrial 8,604 8,440 8,238 2 2 Automotive 2,398 2,452 2,421 (2) 1 Intermodal 4,632 4,712 4,554 (2) 3 Premium 7,030 7,164 6,975 (2) 3 Total $ 23,220 $ 22,811 $ 22,571 2 % 1 % Revenue carloads Thousands 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Grain & grain products 880 850 798 4 % 7 % Fertilizer 216 213 191 1 12 Food & refrigerated 163 177 175 (8) 1 Coal & renewables 797 702 867 14 (19) Bulk 2,056 1,942 2,031 6 (4) Industrial chemicals & plastics 704 672 645 5 4 Metals & minerals 747 719 793 4 (9) Forest products 203 213 213 (5) - Energy & specialized markets 587 607 582 (3) 4 Industrial 2,241 2,211 2,233 1 (1) Automotive 793 824 820 (4) - Intermodal [a] 3,357 3,357 3,028 - 11 Premium 4,150 4,181 3,848 (1) 9 Total 8,447 8,334 8,112 1 % 3 % Average revenue per car 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Grain & grain products $ 4,461 $ 4,505 $ 4,567 (1) % (1) % Fertilizer 3,970 3,809 3,962 4 (4) Food & refrigerated 6,233 6,104 5,929 2 3 Coal & renewables 2,241 2,113 2,211 6 (4) Bulk 3,690 3,710 3,623 (1) 2 Industrial chemicals & plastics 3,568 3,493 3,374 2 4 Metals & minerals 2,935 2,893 2,765 1 5 Forest products 6,369 6,229 6,310 2 (1) Energy & specialized markets 4,446 4,426 4,335 - 2 Industrial 3,840 3,818 3,689 1 3 Automotive 3,024 2,976 2,955 2 1 Intermodal [a] 1,380 1,404 1,504 (2) (7) Premium 1,694 1,714 1,813 (1) (5) Average $ 2,749 $ 2,737 $ 2,782 - % (2) % [a] For intermodal shipments, each container or trailer equals one carload. 31 Table of Contents Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables.
We expect that we will continue to have access to liquidity through any or all the following sources or activities: (a) increasing the utilization of our Receivables Facility, (b) issuing commercial paper, (c) entering into bank loans, outside of our revolving credit facility, or (iv) issuing bonds or other debt securities to public or private investors based on our assessment of the current condition of the credit markets.
We expect that we will continue to have access to liquidity through any or all of the following sources or activities: (a) increasing the utilization of our Receivables Facility, (b) issuing commercial paper, (c) entering into bank loans, outside of our revolving credit facility, or (iv) issuing bonds or other debt securities to public or private investors based on our assessment of the current condition of the credit markets.
These forward-looking statements and information include, without limitation, statements in the CEO’s letter preceding Part I; statements regarding planned capital expenditures under the caption “2025 Capital Plan” in Item 2 of Part I; and statements and information set forth under the captions “2025 Outlook”; “Liquidity and Capital Resources” in Item 7 of Part II regarding our capital plan, share repurchase programs, contractual obligations, "Pension Benefits", and "Other Matters" in this Item 7 of Part II.
These forward-looking statements and information include, without limitation, statements in the CEO’s letter preceding Part I; statements regarding planned capital expenditures under the caption “2026 Capital Plan” in Item 2 of Part I; and statements and information set forth under the captions “2026 Outlook”; “Liquidity and Capital Resources” in Item 7 of Part II regarding our capital plan, share repurchase programs, contractual obligations, "Pension Benefits", and "Other Matters" in this Item 7 of Part II.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Changes in estimated useful lives of our assets due to the results of our depreciation studies could significantly impact future periods’ depreciation expense and have a material impact on our Consolidated Financial Statements. If the estimated useful lives of all depreciable assets were increased by one year, annual depreciation expense would decrease by approximately $73 million.
Changes in estimated useful lives of our assets due to the results of our depreciation studies could significantly impact future periods’ depreciation expense and have a material impact on our Consolidated Financial Statements. If the estimated useful lives of all depreciable assets were increased by one year, annual depreciation expense would decrease by approximately $81 million.
However, such information and assumptions (and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown or 36 Table of Contents unforeseeable events or circumstances over which management has little or no influence or control, and many of these risks and uncertainties are currently amplified by and may continue to be amplified by, or in the future may be amplified by, among other things, macroeconomic and geopolitical conditions.
However, such information and assumptions (and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown or unforeseeable events or circumstances over which management has little or no influence or control, and many of these risks and uncertainties are currently amplified by and may continue to be amplified by, or in the future may be amplified by, among other things, macroeconomic and geopolitical conditions.
At both December 31, 2024 and 2023, we had a working capital deficit due to upcoming debt maturities. It is not unusual for us to have a working capital deficit, and we believe it is not an indication of a lack of liquidity.
At both December 31, 2025 and 2024, we had a working capital deficit due to upcoming debt maturities. It is not unusual for us to have a working capital deficit, and we believe it is not an indication of a lack of liquidity.
Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects” and similar words, phrases, or expressions.
Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects,” and similar words, phrases, or expressions.
These initiatives are aligned with our strategy of Safety, Service, and Operational Excellence leading to Growth. (See further discussion in "Sustainable Future" in the Operations section in Item 1 of this report.) CRITICAL ACCOUNTING ESTIMATES Our Consolidated Financial Statements have been prepared in accordance with GAAP.
These initiatives are aligned with our strategy of Safety, Service, and Operational Excellence leading to Growth. (See further discussion in "Sustainable Future" in the Operations section in Item 1 of this report.) 39 Table of Contents CRITICAL ACCOUNTING ESTIMATES Our Consolidated Financial Statements have been prepared in accordance with GAAP.
Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a hypothetical 1% decrease in interest rates as of December 31, 2024, and totals an increase of approximately $3.0 billion to the fair value of our debt at December 31, 2024.
Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a hypothetical 1% decrease in interest rates as of December 31, 2025, and 2024, and totals an increase of approximately $3.2 billion and $3.0 billion to the fair value of our debt at December 31, 2025, and 2024, respectively.
We have been, and we expect to continue to be, in compliance with our debt covenants. Our principal sources of liquidity include cash and cash equivalents, our Receivables Facility, our revolving credit facility, as well as the availability of commercial paper and other sources of financing through the capital markets.
We have been, and we expect to continue to be, in compliance with our debt covenants. 36 Table of Contents Our principal sources of liquidity include cash and cash equivalents, our Receivables Facility, our revolving credit facility, as well as, the availability of commercial paper and other sources of financing through the capital markets.
As of December 31, 2024, none of the revolving credit 31 Table of Contents facility was drawn, and we did not draw on our revolving credit facility at any time during 2024. Our access to the Receivables Facility may be reduced or restricted if our bond ratings fall to certain levels below investment grade.
As of December 31, 2025, none of the revolving credit facility was drawn, and we did not draw on our revolving credit facility at any time during 2025. Our access to the Receivables Facility may be reduced or restricted if our bond ratings fall to certain levels below investment grade.
We believe cash 32 Table of Contents flow conversion rate is important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing. Cash flow conversion rate should be considered in addition to, rather than as a substitute for, cash provided by operating activities.
We believe cash flow conversion rate is important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing. Cash flow conversion rate should be considered in addition to, rather than as a substitute for, cash provided by operating activities.
We generate strong cash from operations and also maintain adequate resources, including our credit facility and, when necessary, access the capital markets to meet foreseeable cash requirements. During 2024, we generated $9.3 billion of cash provided by operating activities, paid down $1.3 billion of long-term debt, paid $3.2 billion in dividends, and repurchased shares totaling $1.5 billion.
We generate strong cash from operations and also maintain adequate resources, including our credit facility and, when necessary, access the capital markets to meet foreseeable cash requirements. During 2025, we generated $9.3 billion of cash provided by operating activities, paid down $1.4 billion of long-term debt, paid $3.2 billion in dividends, and repurchased shares totaling $2.7 billion.
We will engage with customers by being the first to act on new opportunities, investing to grow, and finding innovative solutions to win together. • Operational Excellence – To provide our customers with the service we sold, we must run a fluid network.
We will engage with customers by being the first to act on new opportunities, investing to grow, and finding innovative solutions to win together. 29 Table of Contents • Operational Excellence – To provide our customers with the service we sold, we must run a fluid network.
The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At December 31, 2024, 2023, and 2022, the incremental borrowing rate on operating leases was 3.8%, 3.6%, and 3.3%, respectively. Pension and OPEB were funded at December 31, 2024, 2023, and 2022.
The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At December 31, 2025, 2024, and 2023, the incremental borrowing rate on operating leases was 4.0%, 3.8%, and 3.6%, respectively. Pension and OPEB were funded at December 31, 2025, 2024, and 2023.
Includes an interest component of $25,130 million. [b] Purchase obligations include locomotive maintenance contracts; purchase commitments for ties, ballast, and rail; and agreements to purchase other goods and services. [c] Includes leases for locomotives, freight cars, other equipment, and real estate.
Includes an interest component of $26,037 million. [b] Purchase obligations include locomotive maintenance contracts; purchase commitments for ties, ballast, and rail; and agreements to purchase other goods and services. [c] Includes leases for locomotives, freight cars, other equipment, and real estate.
Includes an interest component of $130 million. [d] Includes estimated other post-retirement, medical, and life insurance payments, and payments made under the unfunded pension plan for the next ten years. [e] Represents total obligations, including interest component of $9 million.
Includes an interest component of $117 million. [d] Includes estimated other post-retirement medical payments and payments made under the unfunded pension plan for the next ten years. [e] Represents total obligations, including an interest component of $9 million.
Future tax legislation, such as a change in the federal corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity. For example, a future, permanent 1% increase in our federal income tax rate would increase our deferred tax liability by approximately $525 million.
Future tax legislation, such as a change in the federal corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity. For example, as of December 31, 2025, a future, permanent 1% increase in our federal income tax rate would increase our deferred tax liability by approximately $550 million.
The following section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The following section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
The Company’s $2.0 billion revolving credit facility is intended to support the issuance of commercial paper by UPC and also serves as an additional source of liquidity to fund short-term needs. The Company currently does not intend to make any borrowings under this facility.
The Company’s $2.0 billion revolving credit facility is intended to support the issuance of commercial paper by UPC and also serves as an additional source of liquidity to fund short-term needs. The Company currently does not intend to borrow from this facility.
Forward-looking statements and information also include any other statements or information in this report (including information incorporated herein by reference) regarding: potential impacts of public health crises, including pandemics, epidemics, and the outbreak of other contagious disease, such as COVID; the Russia-Ukraine and Israel-Hamas wars and other geopolitical tensions in the Middle East, and any impacts on our business operations, financial results, liquidity, and financial position, and on the world economy (including customers, employees, and supply chains), including as a result of fluctuations in volumes and carloadings; closing of customer manufacturing, distribution or production facilities; expectations as to operational or service improvements; expectations as to hiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service, infrastructure improvements, and transportation plan modifications (including those discussed in response to increased traffic); expectations as to cost savings, revenue growth, and earnings; the time by which goals, targets, aspirations, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to our business, financial, and operational results, future economic performance, and general economic conditions; proposed new products and services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; estimates and expectations regarding potential tariffs; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyber-attacks, or other matters will not have a material adverse effect on our consolidated results of operations, financial condition, or liquidity and any other similar expressions concerning matters that are not historical facts.
Forward-looking statements and information also include any other statements or information in this report (including information incorporated herein by reference) regarding: the merger agreement and the transactions contemplated therein (described in Note 20 to the Financial Statements and Supplementary Data, Item 8), potential impacts of public health crises, including pandemics, epidemics, and the outbreak of other contagious disease, such as such as the coronavirus and its variant strains (COVID); the Russia-Ukraine and Israel-Hamas wars and other geopolitical tensions in the Middle East and elsewhere, and any impacts on our business operations, financial results, liquidity, and financial position, and on the world economy (including customers, employees, and supply chains), including as a result of fluctuations in volume and carloadings; closing of customer manufacturing, distribution, or production facilities; expectations as to operational or service improvements; expectations as to hiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service, infrastructure improvements, and transportation plan modifications (including those discussed in response to increased traffic); expectations as to cost savings, revenue growth, and earnings; the time by which goals, targets, aspirations, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to our business, financial, and operational results, future economic performance, and general economic conditions; proposed new products and services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; estimates and expectations regarding potential tariffs; potential impacts of H.R. 1, which was enacted on July 4, 2025; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyber-attacks, or other matters will not have a material adverse effect on our consolidated results of operations, financial condition, or liquidity and any other similar expressions concerning matters that are not historical facts.
Our environmental liability balance and site activity was as follows: 2024 2023 2022 Ending liability balance at December 31 (millions) $ 268 $ 245 $ 253 Open sites, beginning balance 333 353 376 New sites 84 74 69 Closed sites (65) (94) (92) Open sites, ending balance at December 31 352 333 353 Property and Depreciation – See Note 11 to the Financial Statements and Supplementary Data, Item 8.
Our environmental liability balance and site activity was as follows: 2025 2024 2023 Ending liability balance at December 31 (millions) $ 259 $ 268 $ 245 Open sites, beginning balance 352 333 353 New sites 73 84 74 Closed sites (82) (65) (94) Open sites, ending balance at December 31 343 352 333 Property and depreciation – See Note 11 to the Financial Statements and Supplementary Data, Item 8.
In addition, other factors, such as imposition of higher tariffs and changes in domestic and foreign monetary policy may affect economic activity and demand for rail transportation; natural gas prices, weather conditions, and demand for other energy sources may impact the coal market; crude oil prices and spreads may drive demand for petroleum products and drilling materials; available truck capacity could impact our intermodal business; and international trade agreements could promote or hinder trade.
In addition, other factors, such as geopolitical instability or changes in trade policies that may affect economic activity and demand for rail transportation; natural gas prices, weather conditions, and demand for other energy sources may impact the coal market; crude oil prices and spreads may drive demand for petroleum products and drilling materials; available truck capacity could impact our intermodal business; and international trade agreements could promote or hinder trade.
In addition, operating ratio year-over-year comparison was positively impacted by 2024 contract settlements, a 2024 gain on the sale of intermodal equipment, and lower labor agreement ratification charges than in 2023.
In addition, operating ratio year-over-year comparison was negatively impacted by 2024 contract settlements, a 2024 gain on the sale of intermodal equipment, and higher labor agreement ratification charges in 2025.
Return on Average Common Shareholders’ Equity Millions, Except Percentages 2024 2023 2022 Net income $ 6,747 $ 6,379 $ 6,998 Average equity $ 15,839 $ 13,476 $ 13,162 Return on average common shareholders' equity 42.6 % 47.3 % 53.2 % Return on Invested Capital as Adjusted (ROIC) Millions, Except Percentages 2024 2023 2022 Net income $ 6,747 $ 6,379 $ 6,998 Interest expense 1,269 1,340 1,271 Interest on average operating lease liabilities 55 58 56 Taxes on interest (308) (315) (304) Net operating profit after taxes as adjusted $ 7,763 $ 7,462 $ 8,021 Average equity $ 15,839 $ 13,476 $ 13,162 Average debt 31,886 32,953 31,528 Average operating lease liabilities 1,436 1,616 1,695 Average invested capital as adjusted $ 49,161 $ 48,045 $ 46,385 Return on invested capital as adjusted 15.8 % 15.5 % 17.3 % ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner.
Return on average common shareholders’ equity Millions, except percentages 2025 2024 2023 Net income $ 7,138 $ 6,747 $ 6,379 Average equity $ 17,679 $ 15,839 $ 13,476 Return on average common shareholders' equity 40.4 % 42.6 % 47.3 % Return on invested capital as adjusted (ROIC) Millions, except percentages 2025 2024 2023 Net income $ 7,138 $ 6,747 $ 6,379 Interest expense 1,309 1,269 1,340 Interest on average operating lease liabilities 46 55 58 Taxes on interest (299) (308) (315) Net operating profit after taxes as adjusted $ 8,194 $ 7,763 $ 7,462 Average equity $ 17,679 $ 15,839 $ 13,476 Average debt 31,503 31,886 32,953 Average operating lease liabilities 1,140 1,436 1,616 Average invested capital as adjusted $ 50,322 $ 49,161 $ 48,045 Return on invested capital as adjusted 16.3 % 15.8 % 15.5 % ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner.
In 2024, the states of Louisiana and Arkansas enacted legislation to reduce their corporate income tax rates for future years resulting in a $34 million reduction of our deferred tax expense.
In 2024, the states of Louisiana and Arkansas enacted legislation to reduce their corporate income tax rates for future years resulting in a $34 million reduction of our deferred tax expense. Our effective tax rates for 2025 and 2024 were 22.1% and 23.3%, respectively.
Free cash flow is not considered a financial measure under GAAP by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner.
Free cash flow is defined as cash provided by operating activities less cash used in investing activities and dividends paid. Free cash flow is not considered a financial measure under GAAP by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner.
Railroad performance measures are included in the table below: 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Gross ton-miles (GTMs) (billions) 847.4 837.5 843.4 1 % (1) % Revenue ton-miles (billions) 409.7 413.3 420.8 (1) (2) Freight car velocity (daily miles per car) [a] 208 204 191 2 7 Average train speed (miles per hour) [a] 23.6 24.2 23.8 (2) 2 Average terminal dwell time (hours) [a] 22.6 23.4 24.4 (3) (4) Locomotive productivity (GTMs per horsepower day) 135 129 125 5 3 Train length (feet) 9,469 9,356 9,329 1 - Intermodal service performance index (%) 90 88 76 2 pts 12 pts Manifest service performance index (%) 89 85 77 4 pts 8 pts Workforce productivity (car miles per employee) 1,062 1,000 1,036 6 (3) Total employees (average) 30,336 31,490 30,717 (4) 3 Operating ratio (%) 59.9 62.3 60.1 (2.4) pts 2.2 pts [a] As reported to the STB.
Railroad performance measures are included in the table below: 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Gross ton-miles (GTMs) (billions) 873.6 847.4 837.5 3 % 1 % Revenue ton-miles (billions) 426.9 409.7 413.3 4 (1) Freight car velocity (daily miles per car) 225 208 204 8 2 Average train speed (miles per hour) [a] 24.3 23.6 24.2 3 (2) Average terminal dwell time (hours) [a] 20.9 22.6 23.4 (8) (3) Locomotive productivity (GTMs per horsepower day) 139 135 129 3 5 Train length (feet) 9,678 9,469 9,356 2 1 Intermodal service performance index (%) 99 90 88 9 pts 2 pts Manifest service performance index (%) 100 89 85 11 pts 4 pts Workforce productivity (car miles per employee) 1,132 1,062 1,000 7 6 Total employees (average) 29,287 30,336 31,490 (3) (4) Operating ratio (%) 59.8 59.9 62.3 (0.1) pts (2.4) pts [a] As reported to the STB.
Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments increased in 2024 versus 2023 due to core pricing gains and positive mix of traffic from decreased short haul rock shipments and increased petroleum shipments, partially offset by lower fuel surcharge revenues and lower volumes.
Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments increased in 2025 versus 2024 due to core pricing gains and higher volumes, partially offset by a negative mix of traffic, from increased rock and lower lumber shipments, and lower fuel surcharge revenues.
The following table detail cash capital investments for the years ended December 31: Millions 2024 2023 2022 Ties $ 503 $ 565 $ 544 Rail and other track material 493 454 437 Ballast 197 194 216 Other [a] 740 691 693 Total road infrastructure replacements 1,933 1,904 1,890 Line expansion and other capacity projects 183 239 276 Commercial facilities 317 425 308 Total capacity and commercial facilities 500 664 584 Locomotives and freight cars [b] 788 728 800 Technology and other 231 310 346 Total cash capital investments [c] $ 3,452 $ 3,606 $ 3,620 [a] Other includes bridges and tunnels, signals, other road assets, and road work equipment. [b] Locomotives and freight cars include lease buyouts of $143 million, $57 million, and $70 million in 2024, 2023, and 2022, respectively. [c] Weather-related damages for 2024, 2023, and 2022 are immaterial.
The following table details cash capital investments for the years ended December 31: Millions 2025 2024 2023 Ties $ 523 $ 503 $ 565 Rail and other track material 562 493 454 Ballast 197 197 194 Other [a] 705 740 691 Total road infrastructure replacements 1,987 1,933 1,904 Line expansion and other capacity projects 258 183 239 Commercial facilities 359 317 425 Total capacity and commercial facilities 617 500 664 Locomotives and freight cars [b] 810 788 728 Technology and other 377 231 310 Total cash capital investments [c] $ 3,791 $ 3,452 $ 3,606 [a] Other includes bridges and tunnels, signals, other road assets, and road work equipment. [b] Locomotives and freight cars include lease buyouts of $311 million, $143 million, and $57 million in 2025, 2024, and 2023, respectively. [c] Weather-related damages for 2025, 2024, and 2023 are immaterial.
Changes in commodity mix drove the year-over-year variances between gross ton-miles, revenue ton-miles, and carloads due to lower coal shipments, which are heavier, and increased international intermodal shipments that are lighter. Freight Car Velocity – Freight car velocity measures the average daily miles per car on our network.
Changes in commodity mix drove the year-over-year variances between gross ton-miles, revenue ton-miles, and carloads due to higher coal shipments, which are heavier. 34 Table of Contents Freight car velocity – Freight car velocity measures the average daily miles per car on our network.
Gross and Revenue Ton-Miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of tariff miles. In 2024, gross ton-miles increased 1% and revenue ton-miles decreased 1%, while carloadings were up 3% year-over-year.
Gross and revenue ton-miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of tariff miles. In 2025, gross ton-miles increased 3% and revenue ton-miles increased 4% on 1% higher carloadings year-over-year.
On December 31, 2024, we had $1.0 billion of cash and cash equivalents, $2.0 billion of committed credit available under our revolving credit facility, and up to $800 million undrawn on the Receivables Facility.
On December 31, 2025, we had $1.3 billion of cash and cash equivalents, $250 million of short-term investments, $2.0 billion of committed credit available under our revolving credit facility, and up to $600 million undrawn on the Receivables Facility.
Freight revenues from bulk shipments decreased in 2024 compared to 2023 due to lower volumes and lower fuel surcharge revenues, partially offset by positive mix, from decreased coal shipments, and core pricing gains.
Freight revenues from bulk shipments increased in 2025 compared to 2024 due to 6% higher volumes and core pricing gains, partially offset by negative mix, from increased coal shipments, and lower fuel surcharge revenues.
Fuel surcharge revenues in 2024 decreased $0.4 billion due to a 15% decrease in fuel prices and the lag impact of fluctuating fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volumes.
Fuel surcharge revenues in 2025 decreased $218 million due to lower fuel prices and the lag impact of fluctuating fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volumes.
There were no material changes to the assumptions used in the latest actuarial analysis. 34 Table of Contents Our personal injury liability balance and claims activity was as follows: 2024 2023 2022 Ending liability balance at December 31 (millions) $ 379 $ 383 $ 361 Open claims, beginning balance 1,871 2,036 2,027 New claims 2,842 3,008 2,747 Settled or dismissed claims (3,146) (3,173) (2,738) Open claims, ending balance at December 31 1,567 1,871 2,036 Environmental Costs – See Note 17 to the Financial Statements and Supplementary Data, Item 8; " We Are Subject to Significant Environmental Laws and Regulations " in the Risk Factors, Item 1A; and Environmental Matters in the Legal Proceedings, Item 3.
Our personal injury liability balance and claims activity was as follows: 2025 2024 2023 Ending liability balance at December 31 (millions) $ 413 $ 379 $ 383 Open claims, beginning balance 1,567 1,871 2,036 New claims 2,602 2,842 3,008 Settled or dismissed claims (2,829) (3,146) (3,173) Open claims, ending balance at December 31 1,340 1,567 1,871 Environmental costs – See Note 17 to the Financial Statements and Supplementary Data, Item 8; " We are subject to significant environmental laws and regulations " in the Risk Factors, Item 1A; and Environmental Matters in the Legal Proceedings, Item 3.
In addition, the plan includes investments in growth-related projects to drive more carloads to the network and enhance productivity. This includes siding construction and extension projects, terminal investments supporting our manifest network, and invest in certain ramps to efficiently handle volumes from new and existing intermodal customers.
In addition, the plan includes investments in growth-related projects to drive more carloads to the network and enhance productivity. This includes terminal investments supporting our manifest network and intermodal ramps to efficiently handle new and existing customers, along with siding investments (extensions and new), and second mainline track projects.
If the estimated useful lives of all depreciable assets were decreased by one year, annual depreciation expense would increase by approximately $78 million. We are projecting an increase in our depreciation expense of approximately 3% to 4% in 2025 versus 2024. This is driven by an increase in our projected depreciable asset base.
If the estimated useful lives of all depreciable assets were decreased by one year, annual depreciation expense would increase by approximately $76 million. We are projecting an increase in our depreciation expense of approximately 4% in 2026 versus 2025.
RESULTS OF OPERATIONS Operating Revenues Millions 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Freight revenues $ 22,811 $ 22,571 $ 23,159 1 % (3) % Other subsidiary revenues 788 872 884 (10) (1) Accessorial revenues 554 584 779 (5) (25) Other 97 92 53 5 74 Total $ 24,250 $ 24,119 $ 24,875 1 % (3) % We generate freight revenues by transporting products from our three commodity groups.
RESULTS OF OPERATIONS Operating revenues Millions 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Freight revenues $ 23,220 $ 22,811 $ 22,571 2 % 1 % Other subsidiary revenues 718 788 872 (9) (10) Accessorial revenues 475 554 584 (14) (5) Other 97 97 92 - 5 Total $ 24,510 $ 24,250 $ 24,119 1 % 1 % We generate freight revenues by transporting products from our three commodity groups.
The two key drivers of this metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals (average terminal dwell time). Freight car velocity increased 2% driven by record terminal dwell levels.
The two key drivers of this metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals (average terminal dwell time). Compared to 2024, freight car velocity increased 8% driven by record terminal dwell, which also improved 8%, and 3% higher average train speeds.
Fuel expense decreased compared to 2023 due to a decrease in locomotive diesel fuel prices, which averaged $2.64 per gallon (including taxes and transportation costs) in 2024 compared to $3.09 per gallon in 2023, resulting in a $0.4 billion decrease in expense (excluding any impact from decreased volumes year-over-year), and a 1% improvement to the fuel consumption rate in 2024 (computed as gallons of fuel consumed divided by gross ton-miles), partially offset by a 1% increase in gross ton-miles.
Fuel expense decreased compared to 2024 due to a 6% decrease in locomotive diesel fuel prices, declining from an average of $2.64 per gallon (including taxes and transportation costs) in 2024 to $2.49 per gallon in 2025, resulting in a $138 million decrease in expense (excluding any impact from increased volumes year-over-year) and a 1% improvement to the fuel consumption rate in 2024 (computed as gallons of fuel consumed divided by gross ton-miles).
Volume increases were primarily driven by international intermodal and grain and grain product shipments, partially offset by weaker demand for coal and rock shipments. Our fuel surcharge programs generated freight revenues of $2.6 billion and $3.0 billion in 2024 and 2023, respectively.
Volume increases were primarily driven by coal, grain and grain products, industrial chemicals and plastics, and rock shipments, partially offset by weaker demand for automotive and energy and specialized markets shipments. Our fuel surcharge programs generated freight revenues of $2.3 billion and $2.6 billion in 2025 and 2024, respectively.
Discount rates are based on a Mercer yield curve of high-quality corporate bonds (rated AA by a recognized rating agency). • Expected return on plan assets is based on our asset allocation mix and our historical return, taking into consideration current and expected market conditions. 35 Table of Contents The following tables present the key assumptions used to measure net periodic pension benefit/cost for 2025 and the estimated impact on 2025 net periodic pension benefit/cost relative to a change in those assumptions: Assumptions Discount rate for benefit obligations 5.61 % Discount rate for interest on benefit obligations 5.32 % Discount rate for service cost 5.75 % Discount rate for interest on service cost 5.68 % Expected return on plan assets 5.25 % Sensitivities Millions Increase in Expense Pension 0.25% decrease in discount rates $ - 0.25% decrease in expected return on plan assets $ 12 The following table presents the net periodic pension benefit/cost for the years ended December 31: Millions Est. 2025 2024 2023 2022 Net periodic pension (benefit)/cost $ (10) $ (3) $ - $ 9 CAUTIONARY INFORMATION Certain statements in this report, and statements in other reports or information filed or to be filed with the SEC (as well as information included in oral statements or other written statements made or to be made by us), are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.
The following tables present the key assumptions used to measure net periodic pension benefit/cost for 2026 and the estimated impact on 2026 net periodic pension benefit/cost relative to a change in those assumptions: Assumptions Discount rate for interest on benefit obligations 4.94 % Discount rate for service cost 5.88 % Discount rate for interest on service cost 5.64 % Expected return on plan assets 5.25 % Sensitivities Millions Increase in pension cost 0.25% decrease in discount rates $ - 0.25% decrease in expected return on plan assets $ 12 The following table presents the net periodic pension benefit/cost for the years ended December 31: Millions Est. 2026 2025 2024 2023 Net periodic pension (benefit)/cost $ (23) $ (14) $ (3) $ - 41 Table of Contents CAUTIONARY INFORMATION Certain statements in this report, and statements in other reports or information filed or to be filed with the SEC (as well as information included in oral statements or other written statements made or to be made by us), are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.
These critical tasks are those where any form of non-compliance can result in a serious injury. Training is key to helping our employees understand how to execute those tasks safely. We are Leveraging Technology to eliminate or automate activities with the most risk.
Injury Prevention efforts focus on specific, critical tasks where any form of non-compliance can result in a serious injury. Training is vital to teach our employees how to safely execute those critical tasks in order to reduce the risk of injury or derailment. By Leveraging Technology, we seek to eliminate or automate activities with the most risk.
The following table reconciles cash provided by operating activities (GAAP measure) to cash flow conversion rate (non-GAAP measure): Millions, Except Percentages 2024 2023 2022 Cash provided by operating activities $ 9,346 $ 8,379 $ 9,362 Cash used in capital investments (3,452) (3,606) (3,620) Total (a) 5,894 4,773 5,742 Net income (b) $ 6,747 $ 6,379 $ 6,998 Cash flow conversion rate (a/b) 87 % 75 % 82 % Investing Activities Cash used in investing activities in 2024 decreased compared to 2023 primarily driven by less capital investments and higher proceeds from asset sales, including a sale of intermodal equipment.
The following table reconciles cash provided by operating activities (GAAP measure) to cash flow conversion rate (non-GAAP measure): Millions, except percentages 2025 2024 2023 Cash provided by operating activities $ 9,290 $ 9,346 $ 8,379 Cash used in capital investments (3,791) (3,452) (3,606) Total (a) 5,499 5,894 4,773 Net income (b) $ 7,138 $ 6,747 $ 6,379 Cash flow conversion rate (a/b) 77 % 87 % 75 % Investing activities Cash used in investing activities in 2025 increased compared to 2024 primarily driven by higher capital investments and the purchase of short term investments, partially offset by higher proceeds from real estate sales.
Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. Depreciation expense was up 3% in 2024 compared to 2023 due to a higher depreciable asset base.
Gross-ton miles increased 3% in 2025 and partially offset the impact of lower fuel prices and improved fuel consumption rate. Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. Depreciation expense was up 3% in 2025 compared to 2024 due to a higher depreciable asset base.
Pension Plans – See Note 5 to the Financial Statements and Supplementary Data, Item 8. The critical assumptions used to measure pension obligations and expenses are the discount rates and expected rate of return on pension assets.
This is driven by an increase in our projected depreciable asset base. 40 Table of Contents Pension plans – See Note 5 to the Financial Statements and Supplementary Data, Item 8. The critical assumptions used to measure pension obligations and expenses are the discount rates and expected rate of return on pension assets.
The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow (non-GAAP measure): Millions 2024 2023 2022 Cash provided by operating activities $ 9,346 $ 8,379 $ 9,362 Cash used in investing activities (3,325) (3,667) (3,471) Dividends paid (3,213) (3,173) (3,159) Free cash flow $ 2,808 $ 1,539 $ 2,732 2025 Outlook • Safety – Our goal is to be an industry leader in safety, and we are committed to continuously finding new ways to enhance safety.
The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow (non-GAAP measure): Millions 2025 2024 2023 Cash provided by operating activities $ 9,290 $ 9,346 $ 8,379 Cash used in investing activities (3,762) (3,325) (3,667) Dividends paid (3,236) (3,213) (3,173) Free cash flow $ 2,292 $ 2,808 $ 1,539 2026 Outlook • Safety – We are committed to our goal of world-class safety and are continuously identifying areas in which we can enhance safety.
Operating Expenses Millions 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Compensation and benefits $ 4,899 $ 4,818 $ 4,645 2 % 4 % Purchased services and materials 2,520 2,616 2,442 (4) 7 Fuel 2,474 2,891 3,439 (14) (16) Depreciation 2,398 2,318 2,246 3 3 Equipment and other rents 920 947 898 (3) 5 Other 1,326 1,447 1,288 (8) 12 Total $ 14,537 $ 15,037 $ 14,958 (3) % 1 % 27 Table of Contents Operating expenses decreased $500 million, or 3%, in 2024 compared to 2023 driven by lower fuel prices, productivity, a gain on the sale of intermodal equipment in 2024, partially offset by inflation, volume-related costs, and higher depreciation.
Operating expenses Millions 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Compensation and benefits $ 4,897 $ 4,899 $ 4,818 - % 2 % Purchased services and materials 2,626 2,520 2,616 4 (4) Depreciation 2,465 2,398 2,318 3 3 Fuel 2,390 2,474 2,891 (3) (14) Equipment and other rents 912 920 947 (1) (3) Other 1,374 1,326 1,447 4 (8) Total $ 14,664 $ 14,537 $ 15,037 1 % (3) % 32 Table of Contents Operating expenses increased $127 million, or 1%, in 2025 compared to 2024 driven by inflation, volume-related costs, acquisition-related expenses, and higher depreciation, partially offset by productivity and lower fuel prices.
Other – Other expenses include state and local taxes; freight, equipment, and property damage; utilities; insurance; personal injury; environmental; employee travel; telephone and cellular; computer software; bad debt; and other general expenses.
Higher other rental expense and lower equity income partially offset the favorable expense drivers. Other – Other expenses include property taxes; freight, equipment, and property damage; utilities; insurance; personal injury; environmental; employee travel; telephone and cellular; computer software; bad debt; and other general expenses.
Our personal injury liability is subject to uncertainty due to unasserted claims, timing and outcome of claims, and evolving trends in litigation.
Our personal injury liability is subject to uncertainty due to unasserted claims, timing and outcome of claims, and evolving trends in litigation. There were no material changes to the assumptions used in the latest actuarial analysis.
We generated $9.3 billion of cash provided by operating activities, yielded free cash flow of $2.8 billion after reductions of $3.3 billion for cash used in investing activities and $3.2 billion in dividends paid.
We generated $9.3 billion of cash provided by operating activities, yielded free cash flow of $2.3 billion after reductions of $3.8 billion for cash used in investing activities and $3.2 billion in dividends paid. Cash provided by operating activities was positively impacted by $0.3 billion due to the enactment of H.R.1 and the reinstatement of 100% bonus depreciation.
Freight revenues increased 1% year-over-year to $22.8 billion driven by a 3% increase in volumes and core pricing gains, partially offset by lower fuel surcharge revenues and negative mix of traffic (for example, a relative increase in international intermodal shipments, which have a lower ARC).
Freight revenues of $23.2 billion increased 2% from 2024 driven by core pricing gains and a 1% increase in volumes, partially offset by traffic mix (for example, a relative increase in coal and rock shipments, which have a lower ARC, combined with a decline in lumber shipments, which have a higher ARC) and lower fuel surcharge revenues.
These hypothetical changes do not consider other factors that could impact actual results. Interest Rates – At December 31, 2024, we did not have variable-rate debt.
Sensitivity analyses – The sensitivity analyses that follow illustrate the economic effect that hypothetical changes in interest and tax rates could have on our results of operations and financial condition. These hypothetical changes do not consider other factors that could impact actual results. Interest rates – At both December 31, 2025, and 2024, we did not have variable-rate debt.
Equipment and other rents expense decreased 3% compared to 2023 due to lower lease expense and improved cycle times, partially offset by increased demand in commodities utilizing freight cars owned by others and inflation.
Equipment and other rents expense decreased 1% compared to 2024 due to lower operating equipment lease expense, which included favorable contract settlements in 2025, and reduced car hire expense as favorable haul length and improved cycle times partially offset inflation and costs associated with increased demand in commodities utilizing freight cars owned by others.
However, we are unable to predict the likelihood, manner, severity, or ultimate financial impact of actual future incidents as climate scenario analysis considers a range of potential outcomes.
We continue to refine our approach to understand climate-related risks and are taking an iterative approach in our business planning processes as risk factors, solutions, and technology develop. However, we are unable to predict the likelihood, manner, severity, or ultimate financial impact of actual future incidents as climate scenario analysis considers a range of potential outcomes.
We will continue to transform our railroad using technology and automation to further improve our service product, improve resource utilization, and lower our overall cost structure. 24 Table of Contents • Business Volumes – Macroeconomic uncertainties remain in 2025 that could have a material impact on our 2025 financial and operating results.
We will continue to transform our railroad using technology and automation to further improve our service product, improve resource utilization, and lower our overall cost structure. • Business volumes – We expect macroeconomic uncertainties to persist in 2026, and those uncertainties could have a material impact on our 2026 financial and operating results. 2026 industrial production is forecasted to be essentially flat with 2025, coupled with reduced expectations for housing starts and light vehicle sales.
See Note 14 to the Financial Statements and Supplementary Data, Item 8, for a description of all our outstanding financing arrangements and significant new borrowings, and Note 18 to the Financial Statements and Supplementary Data, Item 8, for a description of our share repurchase programs. 33 Table of Contents OTHER MATTERS Inflation – For capital-intensive companies, inflation significantly increases asset replacement costs for long-lived assets.
See Note 14 to the Financial Statements and Supplementary Data, Item 8, for a description of all our outstanding financing arrangements and significant new borrowings, Note 18 to the Financial Statements and Supplementary Data, Item 8, for a description of our share repurchase programs, and Note 20 to the Financial Statements and Supplementary Data, Item 8, for the pending acquisition of Norfolk Southern.
Service Performance Index (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance over the last three years.
Our train length increased 2% compared to 2024 due to train length improvement initiatives and increases in coal train length, coinciding with increased shipments. Service performance index (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance over the last three years.
In addition, positively impacting the year-over-year comparison are lower labor agreement ratification charges as we reached agreements impacting crew staffing in both years, and lower weather-related costs from less impactful winter weather in the first quarter of 2024 compared to 2023. 2024 Operating Expenses Compensation and Benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs.
In addition, the year-over-year comparison was negatively impacted by a gain on the sale of intermodal equipment in 2024 and higher crew staffing agreement ratification charges in 2025 as we reached agreements in both years. 2025 Operating Expenses Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs.
Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Freight revenues from premium shipments increased driven by higher volumes and core pricing gains, partially offset by lower fuel surcharge revenues and negative mix. Starting in the third quarter of 2024, international intermodal experienced heavy demand due to increased U.S.
Freight revenues from premium shipments decreased in 2025 driven by lower fuel surcharge revenues, negative business mix from reduced automotive shipments, and lower volumes, partially offset by core pricing gains. The heavy demand from increased U.S.
SPI is calculated for intermodal and manifest products. Intermodal SPI improved 2 points, at the same time international volume surged. Manifest SPI improved 4 points in 2024 compared to 2023. Workforce Productivity – Workforce productivity is average daily car miles per employee.
SPI is calculated for intermodal and manifest products. Intermodal SPI improved 9 points as we adjusted to shifting international intermodal customer demand during 2025. Manifest SPI improved 11 points in 2025 compared to 2024 while handling more volume. Workforce productivity – Workforce productivity is average daily car miles per employee.
Operating income of $9.7 billion increased 7% from 2023, and our operating ratio was 59.9%, improving 2.4 points from 2023. Net income of $6.7 billion translated into earnings of $11.09 per diluted share, up 6% from 2023.
Operating income of $9.8 billion increased 1% from 2024, and our operating ratio improved 10 basis points to 59.8% in 2025. Net income of $7.1 billion translated into earnings of $11.98 per diluted share, improving 8% from the prior year.
We will continue using a comprehensive safety management approach utilizing technology, hazard identification and risk assessments, employee engagement, training, quality control, and targeted capital investments.
In 2026, our focus remains on our four pillars of safety. Critical safety tasks will be reinforced. Training to engage both new and experienced employees is fundamental to our success. We will continue using a comprehensive safety management approach utilizing technology, hazard identification and risk assessments, employee engagement, training, quality control, and targeted capital investments.
Safety is paramount to the success of the railroad and deeply ingrained in our culture, and this will not change in 2025. • Service – We are committed to delivering the service we sold to our customers.
Our culture is ingrained with a safety-first mindset, critical to our success, both operationally and financially, and our focus will not deviate in 2026. • Service – We are committed to delivering the service we sold to our customers.
We utilize climate scenario analyses to better understand climate-related risks and opportunities the Company may face in the future under a range of potential scenarios. We continue to refine our approach to understand climate-related risks and are taking an iterative approach in our business planning processes as risk factors, solutions, and technology develop.
Climate change – Climate change could have an adverse impact on our operations and financial performance (see Risk Factors under Item 1A of this report). We utilize climate scenario analyses to better understand climate-related risks and opportunities the Company may face in the future under a range of potential scenarios.
Automotive shipments were flat year-over-year as business development wins were offset by market weakness and unplanned production decreases. 2024 Bulk Carloads 2024 Industrial Carloads 2024 Premium Carloads Mexico Business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which amounted to $3.0 billion in 2024, up 8% compared to 2023, driven by a 3% volumes increase and a 4% increase in ARC.
Automotive shipments were down 4% year-over-year due to tariff uncertainties in the first half of 2025 and reduced manufacturer production from softer consumer demand. 2025 Bulk Carloads 2025 Industrial Carloads 2025 Premium Carloads Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which equated to $2.9 billion in 2025, down 1% compared to 2024, driven by a 2% reduction in ARC partially offset by 2% higher volumes.
We are building safer trains with our proprietary Physics Train Builder technology, which allows us to evaluate train and route characteristics to enable proactive intervention by our Operating Practices Command Center to prevent derailments. We utilize our autonomous geometry car fleet to inspect 500,000 miles of track annually.
Over 7,000 wayside detectors monitor freight cars and locomotives in real time, generating 72 million data points daily to proactively identify and mitigate risks. We are building safer trains with our proprietary Physics Train Builder technology, which allows us to evaluate train and route characteristics to enable proactive intervention by our Operating Practices Command Center to prevent derailments.
This technology and the data it provides enable us to direct investments and resources in the right place, helping to significantly reduce track-caused derailments over the last 10 years. Situational Awareness Testing (a program we call COMMIT) is our program that observes, tests, and coaches our employees to promote understanding and compliance with our work rules.
We utilize our autonomous geometry car fleet to inspect 500,000 miles of track annually. This technology and the data it provides enable us to direct investments and resources in the right place, helping to significantly reduce track-caused derailments over the last 10 years.
Similarly, a future, permanent 1% decrease in our federal income tax rate would decrease our deferred tax liability by approximately $525 million. Accounting Pronouncements – See Note 3 to the Financial Statements and Supplementary Data, Item 8. Asserted and Unasserted Claims – See Note 17 to the Financial Statements and Supplementary Data, Item 8.
Accounting pronouncements – See Note 3 to the Financial Statements and Supplementary Data, Item 8. Asserted and unasserted claims – See Note 17 to the Financial Statements and Supplementary Data, Item 8. Indemnities – See Note 17 to the Financial Statements and Supplementary Data, Item 8.
At December 31, 2024, 2023, and 2022, the incremental borrowing rate on operating leases was 3.8%, 3.6%, and 3.3%, respectively. 30 Table of Contents Debt / Net Income Millions, Except Ratios 2024 2023 2022 Debt $ 31,192 $ 32,579 $ 33,326 Net income $ 6,747 $ 6,379 $ 6,998 Debt / net income 4.6 5.1 4.8 Adjusted Debt / Adjusted EBITDA Millions, Except Ratios 2024 2023 2022 Net income $ 6,747 $ 6,379 $ 6,998 Add: Income tax expense 2,047 1,854 2,074 Depreciation 2,398 2,318 2,246 Interest expense 1,269 1,340 1,271 EBITDA $ 12,461 $ 11,891 $ 12,589 Adjustments: Other income, net (350) (491) (426) Interest on operating lease liabilities 48 58 54 Adjusted EBITDA (a) $ 12,159 $ 11,458 $ 12,217 Debt $ 31,192 $ 32,579 $ 33,326 Operating lease liabilities 1,271 1,600 1,631 Adjusted debt (b) $ 32,463 $ 34,179 $ 34,957 Adjusted debt / adjusted EBITDA (b/a) 2.7 3.0 2.9 Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post-retirement benefit) obligations) to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on present value of operating leases) is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner.
At December 31, 2025, 2024, and 2023, the incremental borrowing rate on operating leases was 4.0%, 3.8%, and 3.6%, respectively. 35 Table of Contents Debt / net income Millions, except ratios 2025 2024 2023 Debt $ 31,814 $ 31,192 $ 32,579 Net income $ 7,138 $ 6,747 $ 6,379 Debt / net income 4.5 4.6 5.1 Adjusted debt / adjusted EBITDA Millions, except ratios 2025 2024 2023 Net income $ 7,138 $ 6,747 $ 6,379 Add: Income tax expense 2,028 2,047 1,854 Depreciation 2,465 2,398 2,318 Interest expense 1,309 1,269 1,340 EBITDA $ 12,940 $ 12,461 $ 11,891 Adjustments: Other income, net (629) (350) (491) Interest on operating lease liabilities [1] 40 48 58 Adjusted EBITDA (a) $ 12,351 $ 12,159 $ 11,458 Debt $ 31,814 $ 31,192 $ 32,579 Operating lease liabilities 1,008 1,271 1,600 Adjusted debt (b) $ 32,822 $ 32,463 $ 34,179 Adjusted debt / adjusted EBITDA (b/a) 2.7 2.7 3.0 [1] Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.
The capital plan may be revised if business conditions warrant or if laws or regulations affect our ability to generate sufficient returns on these investments.
The capital plan may be revised if business conditions warrant or if laws or regulations affect our ability to generate sufficient returns on these investments. 38 Table of Contents Financing activities Cash used in financing activities decreased in 2025 compared to 2024 driven by an increase of debt issued and a decrease in debt repaid, partially offset by an increase in share repurchases.
As a result, assuming that we replace all operating assets at current price levels, depreciation charges (on an inflation-adjusted basis) would be substantially greater than historically reported amounts. Sensitivity Analyses – The sensitivity analyses that follow illustrate the economic effect that hypothetical changes in interest and tax rates could have on our results of operations and financial condition.
OTHER MATTERS Inflation – For capital-intensive companies, inflation significantly increases asset replacement costs for long-lived assets. As a result, assuming that we replace all operating assets at current price levels, depreciation charges (on an inflation-adjusted basis) would be substantially greater than historically reported amounts.
Regardless of external factors, we will focus on operating a safe railroad and delivering the service we sold to our customers as well as effective asset utilization, cost control, and seeking new business opportunities.
Regardless of macroeconomic or other external factors, we remain focused on operating a safe, fluid, and efficient rail network while delivering the service we sold our customers and capitalizing on new business opportunities.
In 2024, expenses increased 2% compared to 2023 due to wage inflation, which includes the impact of labor agreements to modernize work rules and improve availability, higher incentive compensation, and increased crew needs associated with labor agreements and increased volumes, partially offset by 4% lower employee levels.
In 2025, expenses were essentially flat compared to 2024 due to wage inflation, increased volumes, higher incentive compensation, and increased crew needs associated with labor agreements, partially offset by 3% lower employee levels. Active train, engine, and yard (TE&Y) force levels decreased 3% in 2025 on 1% increased carloads due to improved network fluidity.
Purchased services and materials decreased 4% in 2024 compared to 2023 driven by declines in locomotive maintenance expense due to a smaller active fleet as productivity improved year-over-year, decreased volume-related drayage cost incurred at one of our subsidiaries, and a favorable contract settlement, partially offset by inflation and volume-related costs.
Purchased services and materials increased 4% in 2025 compared to 2024 driven by inflation (including tariff-related material expenses), acquisition-related expenses, and higher locomotive maintenance expense was partially offset by productivity and lower expenses incurred by our subsidiaries. The comparison was also negatively impacted by a favorable contract settlement in 2024.
Our operating ratio of 59.9% improved 2.4 points compared to 2023 driven by productivity initiatives, core pricing gains, and the year-over-year impact from lower fuel prices, partially offset by inflation and other costs.
Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. Our operating ratio of 59.8% improved 0.1 points compared to 2024 driven by core pricing gains and productivity initiatives, partially offset by the impact of negative business mix, inflation, and acquisition-related expenses.
Non-Operating Items Millions 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 Other income, net $ 350 $ 491 $ 426 (29) % 15 % Interest expense (1,269) (1,340) (1,271) (5) 5 Income tax expense $ (2,047) $ (1,854) $ (2,074) 10 % (11) % Other Income, net – Other income decreased in 2024 compared to 2023 driven by a $107 million real estate transaction in 2023 and lower income from other real estate transactions, partially offset by interest received in 2024 from the IRS on refund claims.
Other expenses increased 4% in 2025 compared to 2024 driven by the negative comparison from a 2024 gain on the sale of intermodal equipment, in addition to, higher personal injury costs, and property taxes, partially offset by lower environmental and freight loss and damage casualty costs. 33 Table of Contents Non-operating items Millions 2025 2024 2023 % Change 2025 v 2024 % Change 2024 v 2023 Other income, net $ 629 $ 350 $ 491 80 % (29) % Interest expense (1,309) (1,269) (1,340) 3 (5) Income tax expense $ (2,028) $ (2,047) $ (1,854) (1) % 10 % Other income, net – Other income increased $279 million in 2025 compared to 2024 driven by $295 million in higher real estate income, including $250 million in industrial park land sales.
Locomotive productivity improved 5% in 2024 compared to 2023 driven by improved network fluidity and asset utilization despite maintaining a buffer in 2024 to flex the fleet size as we experienced and subsequently recovered from certain weather events and reacted to higher volume levels. 29 Table of Contents Train Length – Train length is the average maximum train length on a route measured in feet.
Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower. Locomotive productivity improved 3% in 2025 compared to 2024 driven by improved network fluidity and asset utilization. Train length – Train length is the average maximum train length on a route measured in feet.

… 51 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk Information concerning market risk sensitive instruments is set forth under Management’s Discussion and Analysis of Financial Condition and Results of Operations - Other Matters, Item 7. **************************************** 37 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk Information concerning market risk sensitive instruments is set forth under Management’s Discussion and Analysis of Financial Condition and Results of Operations - Other Matters, Item 7. **************************************** 42 Table of Contents

Other UNP 10-K year-over-year comparisons