What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-09 compared with 2025-02-10 · 182 added, 243 removed, 1047 unchanged (29% of the section changed)

91 unchanged sentences

Materials and other 634 333 832

Merger-related expenses 80 — —

Restructuring and other charges 22 183 —

129 unchanged sentences

( 1,221 ) ( 1,221 )

Share repurchases ( 3 ) ( 24 ) ( 600 ) ( 627 )

Stock-based compensation 1 68 ( 3 ) 66

7 unchanged sentences

( 1,215 ) ( 1,215 )

Share repurchases ( 2 ) ( 20 ) ( 511 ) ( 533 )

Stock-based compensation 69 ( 5 ) 64

4 unchanged sentences

The following Notes are an integral part of the Consolidated Financial Statements.

Certain prior year information has been reclassified to conform to current year presentation.

Summary of Significant Accounting Policies

4 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

On July 28, 2025, we entered into a Merger Agreement with Union Pacific, discussed further in Note 2.

NSR and its railroad subsidiaries transport raw materials, intermediate products, and finished goods classified in the following commodity groups (percent of total railway operating revenues in 2025):

12 unchanged sentences

The accounting policies of our railway operations segment are the same as those described in the summary of significant accounting policies herein.

The chief operating decision maker assesses performance for the railway operations segment and decides how to allocate resources based on “Net income” that is reported on the Consolidated Statements of Income.

The chief operating decision maker assesses the performance of the railway operations segment and decides how to allocate resources based on “Net income” that is reported on the Consolidated Statements of Income.

Net income is used to monitor budget versus actual results of the organization.

15 unchanged sentences

Claims 281 237 242

Other (Note 8) ( 273 ) 226 160

Restructuring and other charges (Note 3) 183 — —

Eastern Ohio incident (Note 18) 325 1,116 —

Other ( 58 ) ( 273 ) 226

Merger-related expenses 80 — —

Restructuring and other charges 22 183 —

Eastern Ohio incident ( 254 ) 325 1,116

Total railway operating expenses 7,824 8,052 9,305

Income from railway operations 4,356 4,071 2,851

Other income – net (Note 4) 65 191 13

Other income – net 101 65 191

Interest expense on debt 792 807 722

Income before income taxes 3,665 3,329 2,320

Income taxes (Note 5) 707 493 860

Income taxes 792 707 493

Net income $ 2,873 $ 2,622 $ 1,827

58 unchanged sentences

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

” This update requires additional reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses and information used to assess performance.

The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We adopted the ASU on January 1, 2024 and updated our segment disclosures in Note 1.

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

1 unchanged sentence

The ASU is effective for fiscal years beginning after December 15, 2024.

We did not adopt the standard early and are currently evaluating the effect on our financial statements.

We adopted the ASU on January 1, 2025 and incorporated the required disclosures in Note 6.

In November 2024, the FASB issued ASU 2024-03, “ Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

” This update requires an entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods.

” This update requires an entity to disclose specific

information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods.

Entities are required to provide disaggregated information about expenses to help investors better understand performance, better assess prospects for future cash flows, and compare performance over time and with that of other entities.

The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

We will not early adopt the standard and are currently evaluating the effect on our financial statements.

We will not early adopt the standard and are currently evaluating the impact of this amendment on our disclosures.

In September 2025, the FASB issued ASU 2025-06, “ Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software .” This update revises the recognition guidance for internal-use software by eliminating the previous model based on software development stages and introducing a principles-based approach.

Under the new guidance, capitalization begins when management has authorized and committed to funding the project, and it is probable that the software will be completed and used for its intended purpose.

The ASU is effective for interim periods and fiscal years beginning after December 15, 2027.

We will not early adopt the standard and are currently evaluating the impact.

Merger Agreement

On July 28, 2025, we entered into a Merger Agreement with Union Pacific Corporation, Merger Sub 1, and Merger Sub 2.

The Merger Agreement provides that Union Pacific will acquire the Company in a stock-and-cash transaction whereby (a) Merger Sub 1 will be merged with and into the Company (the “First Merger”), with the Company surviving the First Merger as a direct wholly owned subsidiary of Union Pacific, and (b) immediately following the First Merger, the Company will be merged with and into Merger Sub 2 (the “Second Merger” and together with the First Merger, the “Mergers”), with Merger Sub 2 surviving the Second Merger as a direct, wholly owned subsidiary of Union Pacific.

At the effective time of the First Merger, each share of Common Stock, par value $ 1.00 per share, of the Company, issued and outstanding immediately prior to the effective time of the First Merger, subject to certain exclusions set forth in the Merger Agreement, will be converted into the right to receive one share of common stock, par value $ 2.50 per share, of Union Pacific, and $ 88.82 in cash without interest.

The consummation of the Mergers is subject to certain conditions, including approval by the STB.

Approval from the shareholders of each company was obtained on November 14, 2025.

Additionally, if the Merger Agreement is terminated under specific circumstances, either we or Union Pacific are required to pay a termination fee of $ 2.5 billion.

The full text of the Merger Agreement can be found as Exhibit 2.1 in our Current Report on Form 8-K filed with the SEC on July 29, 2025.

During 2025, we incurred $ 80 million in expenses related to or resulting from the proposed transaction.

These costs, which include costs associated with employee retention agreements, fees to third-party advisors, and expenses for legal services, are recorded in “Merger-related expenses” on the Consolidated Statements of Income.

Railway Operating Revenues

32 unchanged sentences

Restructuring and Other Charges

In 2024, we initiated voluntary and involuntary separation programs to reduce our management workforce.

Through these programs, approximately 350 management employees were separated from service by May 2024.

“Restructuring and other charges” reflects separation payments and other benefits to the impacted management employees and amounted to $ 69 million.

Additionally, we evaluated the impact of these separation programs on our pension and other postretirement benefit plans, as further discussed in Note 13.

During 2024, we made strategic decisions to cease development of certain technology projects that had not been placed into service and which resulted in a write-down of these assets.

Additionally, we discontinued the use of our Triple Crown Road Railer assets, and, with a planned disposition of the entire asset class, we incurred expenses to reflect these assets at their net realizable value.

As a result, “Restructuring and other charges” includes an additional $ 79 million of expenses related to these efforts.

In March 2024, we appointed John Orr as Executive Vice President and Chief Operating Officer of the Company.

“Restructuring and other charges” in 2024 also includes $ 35 million of costs related to this appointment, including an agreement with his previous employer, CPKC, that resulted in a $ 25 million payment and certain commercial considerations to CPKC in exchange for a waiver of his non-compete provisions.

Restructuring and other charges in 2025 includes expenses associated with the restructuring of certain technology functions, including severance costs for impacted employees, and the rationalization of certain software development projects that had not been placed into service.

Restructuring and other charges in 2024 includes expenses associated with our voluntary and involuntary separation programs that reduced our management workforce, expenses associated with the rationalization of certain software development projects that had not been placed into service, costs associated with the appointment of our new chief operating officer, and the disposition of an asset class.

We incurred expenses of $ 22 million and $ 183 million in 2025 and 2024, respectively.

Other Income – Net

15 unchanged sentences

Income taxes $ 792 $ 707 $ 493

During 2024, we recorded a $ 27 million deferred income tax benefit as a result of a subsidiary restructuring.

We recorded a $ 50 million discrete benefit in 2025 resulting from the resolution of a state tax matter and recorded a $ 27 million deferred income tax benefit in 2024 as a result of a subsidiary restructuring.

Both amounts are presented net of federal effects.

On July 4, 2025, the OBBBA was signed into law.

The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of business interest expense, and expensing of domestic research costs.

FASB ASC 740 “ Income Taxes ” requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted.

The impact of this change is primarily a reclassification from current to deferred taxes.

Reconciliation of Statutory Rate to Effective Rate

“Income taxes” on the Consolidated Statements of Income differs from the amounts computed by applying the statutory federal corporate tax rate as follows:

2024 2023 2022

Amount % Amount % Amount %

($ in millions)

US federal statutory tax rate $ 770 21.0

State and local income taxes, net of federal income tax effect * 101 2.8

Nontaxable or nondeductible items ( 9 ) ( 0.2 )

Tax credits ( 25 ) ( 0.7 )

Changes in unrecognized tax benefits ( 45 ) ( 1.3 )

Income taxes $ 792 21.6

*State taxes in Pennsylvania, Virginia, and Indiana made up the majority (greater than 50%) of the tax effect in this category.

Amount % Amount %

($ in millions)

Federal income tax at statutory rate $ 699 21.0 $ 487 21.0

1 unchanged sentence

Tax credits ( 14 ) ( 0.4 ) ( 27 ) ( 1.2 )

State law changes ( 15 ) ( 0.4 ) — — ( 136 ) ( 3.3 )

Other, net ( 29 ) ( 1.0 ) ( 32 ) ( 1.4 )

Income taxes $ 707 21.2 $ 493 21.3

On July 8, 2022, House Bill 1342 was signed into law in the Commonwealth of Pennsylvania, which reduced its corporate income tax rate from 9.99% to 4.99%, through a series of phased reductions beginning each tax year from January 1, 2023 through January 1, 2031.

GAAP requires companies to recognize the effect of tax law changes in the period of enactment.

As a result, in 2022, we recognized a $ 136 million benefit in “Income taxes” with a corresponding reduction in “Deferred income taxes.”

Income Taxes Paid

($ in millions)

Federal $ 389

Total income taxes paid, net of refunds $ 491

Income taxes paid, net of refunds, for 2024 and 2023 were $ 305 million and $ 681 million, respectively.

Deferred Tax Assets and Liabilities

17 unchanged sentences

The valuation allowance at the end of each year primarily relates to subsidiary state income tax net operating losses and state investment tax credits that may not be utilized prior to their expiration.

The total valuation allowance increased by $ 11 million in 2024, decreased by $ 10 million in 2023, and decreased by $ 19 million in 2022.

The total valuation allowance increased by $ 3 million in 2025, increased by $ 11 million in 2024, and decreased by $ 10 million in 2023.

Uncertain Tax Positions

9 unchanged sentences

Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.

The statute of limitations on Internal Revenue Service examinations has expired for all years prior to 2019.

Our consolidated federal income tax returns for 2019 through 2021 are currently being audited by the IRS.

We anticipate that the IRS will complete its examination in 2025.

The statute of limitations on Internal Revenue Service (IRS) examinations has expired for all years prior to 2020.

The IRS audits of our consolidated federal income tax returns for 2019 through 2021 are being finalized.

State income tax returns are generally subject to examination for a period of three to four years after the return.

2 unchanged sentences

Fair Value Measurements

FASB Accounting Standards Codification (ASC) 820-10, “ Fair Value Measurements, ” established a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

FASB ASC 820-10, “ Fair Value Measurements, ” established a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.

26 unchanged sentences

Total long-term investments $ 4,089 $ 3,370

We had $ 605 million of borrowings against our COLI policies outstanding at December 31, 2024, with no amounts outstanding at December 31, 2023, which are included in the “Investment sales and other transactions” line item within investing activities in the Consolidated Statements of Cash Flows.

In January 2025, we repaid all amounts that were borrowed against these policies at December 31, 2024.

We had no borrowings against our COLI policies at December 31, 2025, while we had $ 605 million of borrowings outstanding at December 31, 2024.

Repayments of borrowings in 2025 are included in “Investment purchases,” and borrowings in 2024 are included in “Investment sales and other transactions” within investing activities in the Consolidated Statements of Cash Flows.

Investment in Conrail

8 unchanged sentences

Future payments for access fees due to CRC under the Shared Assets Areas agreements are as follows:

$ 47 million in each of 2025 through 2028 and $ 21 million thereafter.

$ 54 million in each of 2026 through 2028 and $ 23 million in 2029.

We provide certain general and administrative support functions to Conrail, the fees for which are billed in accordance with several service-provider arrangements and approximate $ 7 million annually.

2 unchanged sentences

Our equity in Conrail’s earnings, net of amortization, was $ 75 million for 2025, $ 89 million for 2024, and $ 70 million for 2023.

These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.” Equity in Conrail’s earnings is included in the “Other – net” line item within operating activities in the Consolidated Statements of Cash Flows.

These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.” Equity in Conrail’s earnings is included in “Other – net” within operating activities in the Consolidated Statements of Cash Flows.

Investment in TTX

We and six other North American railroads collectively own TTX, a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates.

We and six other North American railroads collectively own TTX Company (TTX), a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates.

We have a 19.78 % ownership interest in TTX.

1 unchanged sentence

Our equity in TTX’s earnings partially offsets these costs and totaled $ 43 million for 2025, $ 48 million for 2024, and $ 47 million for 2023.

Equity in TTX’s earnings is included in the “Other – net” line item within operating activities in the Consolidated Statements of Cash Flows.

Equity in TTX’s earnings is included in “Other – net” within operating activities in the Consolidated Statements of Cash Flows.

Accumulated Net Book Depreciation

35 unchanged sentences

(1) Composite annual depreciation rate for the underlying assets, excluding the effects of the amortization of any deficiency (or excess) that resulted from our depreciation studies.

Gains from operating property sales, inclusive of the railway line sales, amounted to $ 253 million, $ 490 million, and $ 43 million in 2025, 2024, and 2023, respectively.

“Other current assets” includes $ 185 million pertaining to sales of property in 2025 in which the cash proceeds will be received in 2026.

Acquisition of Assets of Cincinnati Southern Railway

1 unchanged sentence

We previously operated this line subject to an operating lease agreement, which was terminated upon the close of the transaction.

Lease expense associated with the prior operating lease agreement totaled $ 5 million, $ 26 million, and $ 25 million in 2024, 2023, and 2022, respectively.

Lease expense associated with the prior operating lease agreement totaled $ 5 million and $ 26 million in 2024 and 2023, respectively.

The purchase price was allocated to the assets acquired in the transaction.

5 unchanged sentences

The total gain recognized as a result of the transaction was $ 323 million.

Additionally, the VPRA also agreed to exchange a railway line (“V-Line”) in consideration for the land and above ground assets described as the “Seminary Passage.” This transaction closed in November 2024 and

the gain recognized as a result of the transaction was $ 53 million.

Additionally, the VPRA also agreed to exchange a railway line (“V-Line”) in consideration for the

land and above ground assets described as the “Seminary Passage.” This transaction closed in November 2024 and the gain recognized as a result of the transaction was $ 53 million.

On September 6, 2024, we consummated an agreement with the City of Charlotte to sell a railway line between Charlotte and Mecklenburg County, NC in exchange for $ 74 million.

30 unchanged sentences

Total debt 17,087 17,206

Less current maturities and short-term debt ( 555 ) ( 4 )

Long-term debt excluding current maturities and short-term debt $ 16,651 $ 17,175

Less current maturities ( 607 ) ( 555 )

Long-term debt excluding current maturities $ 16,480 $ 16,651

Long-term debt maturities subsequent to 2026 are as follows:

1 unchanged sentence

Total $ 16,480

In June 2024, we entered into an agreement that provides us the ability to issue up to $ 800 million of unsecured commercial paper and is backed by our credit agreement.

The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants.

At December 31, 2024, we had no outstanding commercial paper.

Under the terms of the Merger Agreement, we are subject to certain restrictions on incurring additional indebtedness.

In May 2025, we issued $ 400 million of 5.10 % senior notes due 2035.

In May 2025, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $ 400 million.

2 unchanged sentences

Amounts received under this facility are accounted for as borrowings.

We had no amounts outstanding under this program and our available borrowing capacity was $ 400 million at both December 31, 2024, and December 31, 2023.

We had no amounts outstanding under this program and our available borrowing capacity was approximately $ 397 million and $ 400 million at December 31, 2025 and December 31, 2024, respectively.

Our accounts receivable securitization program was supported by $ 735 million and $ 790 million in receivables at December 31, 2025 and December 31, 2024, respectively, which are included in “Accounts receivable – net.”

In June 2024, we entered into an agreement that provides us the ability to issue up to $ 800 million of unsecured commercial paper and is backed by our credit agreement.

The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants.

At December 31, 2025 and December 31, 2024, we had no outstanding commercial paper.

Credit Agreement and Debt Covenants

2 unchanged sentences

We had no amounts outstanding under this facility at either December 31, 2025 or December 31, 2024, and we are in compliance with all of its covenants.

In January 2024, we entered into a term loan credit agreement that established a 364-day , $ 1.0 billion, unsecured delayed draw term loan facility under which we could borrow for general corporate purposes.

The term loan credit agreement provided for borrowing at prevailing rates and included covenants that align with the $ 800 million credit agreement.

The term loan expired undrawn in October 2024.

We are committed under long-term lease agreements for equipment, lines of road, and other property.

1 unchanged sentence

Some of these agreements are variable lease agreements that include usage-based payments.

These agreements contain payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date, and are therefore not included in our future minimum lease payments.

These agreements contain payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date.

Our long-term lease agreements do not contain any material restrictive covenants.

1 unchanged sentence

Some of these leases include options to extend the leases for up to 99 years and some include options to terminate the leases within 30 days.

Because we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and associated payments are excluded from future minimum lease payments.

In instances when we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and associated payments are excluded from future minimum lease payments.

Leases with an initial term of twelve months or less are not recorded on the balance sheet.

43 unchanged sentences

Net other postretirement benefit obligations (Note 14) 125 133

Non-current Eastern Ohio incident liability (Note 18) 103 118

Deferred compensation 78 90

Non-current Eastern Ohio incident liability (Note 19) 56 103

Other 286 228

15 unchanged sentences

Actuarial (gains) losses 80 ( 91 ) 17 ( 21 )

Plan amendments — — — ( 5 )

Benefits paid ( 155 ) ( 155 ) ( 31 ) ( 32 )

17 unchanged sentences

Prior service benefit ( 4 ) ( 4 ) ( 91 ) ( 113 )

Our accumulated benefit obligation for our defined benefit pension plans is $ 1.9 billion and $ 2.0 billion at December 31, 2024 and 2023, respectively.

Our accumulated benefit obligation for our defined benefit pension plans is $ 1.9 billion at both December 31, 2025 and 2024.

Our unfunded pension plans, included above, which in all cases have no assets, had projected benefit obligations of $ 277 million and $ 273 million at December 31, 2025 and 2024, respectively, and had accumulated benefit obligations of $ 265 million and $ 256 million at December 31, 2025 and 2024, respectively.

27 unchanged sentences

($ in millions)

Net gains arising during the year $ ( 69 ) $ ( 31 )

Net (gains) losses arising during the year $ ( 71 ) $ 7

Amortization of net gains (losses) ( 22 ) 2

Amortization of prior service benefit — 22

Prior service benefit due to curtailment — 20

Effect of curtailment — 2

Total recognized in other comprehensive income $ ( 93 ) $ 31

Total recognized in net periodic cost and other comprehensive income $ ( 136 ) $ 15

Net gains arising during the year for both pension benefits and other postretirement benefits were due primarily to an increase in discount rates, in addition to higher actual returns on plan assets for our other postretirement benefit plan assets.

Net gains arising during the year for pension benefits were due primarily to higher actual returns on plan assets offset partially by a decrease in discount rates.

Net losses arising during the year for other postretirement benefits were due primarily to a decrease in discount rates.

The estimated net losses and prior service credits for the pension plans that will be amortized from accumulated other comprehensive loss into net periodic cost over the next year are $ 17 million.

28 unchanged sentences

Asset Management

Twelve investment firms manage our defined benefit pension plan’s assets under investment guidelines approved by our Benefits Investment Committee that is composed of members of our management.

Eight investment firms manage our defined benefit pension plan’s assets under investment guidelines approved by our Benefits Investment Committee that is composed of members of our management.

Investments are restricted to domestic and international equity securities, domestic and international fixed income securities, and unleveraged exchange-traded options and financial futures.

12 unchanged sentences

Total 100 % 100 %

The other postretirement benefit plan assets consist primarily of trust-owned variable life insurance policies with an asset allocation at December 31, 2024 of 65 % in equity securities and 35 % in debt securities compared with 66 % in equity securities and 34 % in debt securities at December 31, 2023.

The other postretirement benefit plan assets consist primarily of trust-owned variable life insurance policies with an asset allocation at December 31, 2025 and at December 31, 2024 of 65 % in equity securities and 35 % in debt securities.

The target asset allocation for equity is between 50 % and 65 % of the plan’s assets.

23 unchanged sentences

Common collective trusts:

International equity securities — 362 362

Debt securities — 675 675

Domestic equity securities — 380 380

International equity securities — 294 294

Commingled funds — 280 280

Fixed income securities:

Government and agencies securities — 4 4

Commingled funds — 123 123

Cash and cash equivalents 26 — 26

5 unchanged sentences

Common collective trusts:

International equity securities — 371 371

Debt securities — 637 637

International equity securities — 362 362

Domestic equity securities — 346 346

Commingled funds — 123 123

Fixed income securities:

Government and agencies securities — 4 4

Corporate bonds — 93 93

Mortgage and other asset-backed securities — 32 32

Commingled funds — 122 122

Cash and cash equivalents 25 — 25

25 unchanged sentences

Under the plans, we match a portion of employee contributions, subject to applicable limitations.

Our matching contributions, recorded as an expense, totaled $ 25 million in both 2024 and 2023, and $ 22 million in 2022.

Our matching contributions, recorded as an expense, totaled $ 26 million in 2025, and $ 25 million in both 2024 and 2023.

Stock-Based Compensation

4 unchanged sentences

The LTIP also permits the payment, on a current or a deferred basis and in cash or in stock, of dividend equivalents on shares of Common Stock covered by stock options, RSUs, or PSUs in an amount commensurate with regular quarterly dividends paid on Common Stock.

With respect to stock options, if employment of the participant is terminated for any reason, including retirement, disability, or death, we have no further obligation to make any

dividend equivalent payments.

With respect to stock options, if employment of the participant is terminated for any reason, including retirement, disability, or death, we have no further obligation to make any dividend equivalent payments.

Regarding RSUs, we have no further obligation to make any dividend equivalent payments unless employment of the participant is terminated as a result of qualifying retirement or disability.

20 unchanged sentences

All options are subject to a vesting period of at least one year , and the term of the option will not exceed ten years .

Holders of the options granted under the LTIP who remain actively employed receive cash dividend equivalent payments for four years in an amount equal to the regular quarterly dividends paid on Common Stock.

Holders of the options granted under the LTIP who remain actively employed receive cash dividend equivalent payments for three or four years in an amount equal to the regular quarterly dividends paid on Common Stock.

For all years prior to 2024, options granted under the LTIP and the TSOP may not be exercised prior to the fourth and third anniversaries of the date of grant, respectively, or if the optionee retires or dies before that anniversary date, may not be exercised before the later of one year after the grant date or the date of the optionee’s retirement or death.

6 unchanged sentences

Treasury yield curve in effect at the time of grant.

A dividend yield of zero was used for the LTIP

options during the vesting period.

A dividend yield of zero was used for the LTIP options during the vesting period.

For 2025, 2024, and 2023, a dividend yield of 2.10 %, 2.25 %, and 2.24 %, respectively, was used for the vested period during the remaining expected option term for LTIP options.

23 unchanged sentences

Restricted Stock Units

RSUs granted primarily have a four-year ratable restriction period and will be settled through the issuance of shares of Common Stock.

RSUs granted primarily have three - and four-year ratable restriction periods and will be settled through the issuance of shares of Common Stock.

Certain RSU grants include cash dividend equivalent payments during the restriction period in an amount equal to regular quarterly dividends paid on Common Stock.

27 unchanged sentences

Earned ( 8,540 ) 274.26

Forfeited ( 85,095 ) 251.40

Unearned ( 14,232 ) 274.26

Balance at December 31, 2025 118,888 275.32

6 unchanged sentences

TSOP 437,746 437,746 436,571

Shares issued during the year:

LTIP 236,986 444,189 315,700

42 unchanged sentences

Stock Repurchase Programs

We did not repurchase any shares of Common Stock under our stock repurchase program in 2024, while we repurchased and retired 2.8 million and 12.6 million shares of Common Stock under our stock repurchase programs in 2023 and 2022, respectively, at a cost of $ 627 million and $ 3.1 billion, respectively, inclusive of excise taxes.

We repurchased and retired 2.2 million shares and 2.8 million shares of Common Stock under our stock repurchase programs in 2025 and 2023, respectively, at a cost of $ 533 million and $ 627 million, respectively, inclusive of accrued excise taxes.

We did not repurchase any shares of Common Stock under our stock repurchase programs in 2024.

On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $ 10.0 billion of

1 unchanged sentence

As of December 31, 2025, $ 6.3 billion remains authorized for repurchase.

Our previous share repurchase program terminated on March 31, 2022.

With limited exceptions, the Merger Agreement prohibits repurchases of our Common Stock without Union Pacific’s consent.

As a result, we suspended share repurchases upon entering into the Merger Agreement.

Earnings Per Share

18 unchanged sentences

Commitments and Contingencies

Eastern Ohio Incident

On February 3, 2023, a train operated by us derailed in East Palestine, Ohio.

The derailed equipment included 38 railcars, 11 of which were non-Company-owned tank cars containing hazardous materials.

Fires associated with the derailment threatened certain tank cars.

There was concern that the pressure inside of the tank cars carrying vinyl chloride was rising and that the pressure relief devices were no longer functioning properly, which would have

posed the risk of a catastrophic explosion.

As a consequence, on February 6, 2023, the local incident commander (the East Palestine Fire Chief)—in consultation with the incident command that included, among others, federal, state and local officials and Norfolk Southern—opted to conduct a controlled vent and burn of five derailed tank cars, all of which contained vinyl chloride.

This procedure involved creating holes in the five tank cars to drain the vinyl chloride into adjacent trenches that had been dug into the ground where the vinyl chloride was ignited and burned.

Any remaining materials released from the derailment or during the vent and burn have been or are being remediated.

The February 3rd derailment, the associated fire, and the resulting vent and burn of the tank cars containing vinyl chloride on February 6th is hereinafter referred to as the “Incident.”

In response to the Incident, we have been working to clean the site safely and thoroughly, including those activities described in the Environmental Matters section below with respect to potentially impacted air, soil, and water and to monitor for any impact on public health and the environment.

We are working with federal, state, and local officials to mitigate impacts from the Incident, including, among other efforts, conducting environmental monitoring and clean-up activities (as more fully described below), and operating a field office to provide support to members of East Palestine and the surrounding communities .

Financial Impact

Although we cannot predict the final outcome or estimate the reasonably possible range of loss related to the Incident with certainty, we have accrued amounts for probable and reasonably estimable liabilities for those environmental and non-environmental matters described below.

Certain costs incurred thus far and related to the Incident may be recoverable under our insurance policies in effect at the date of the Incident or from third parties.

For additional information about our insurance coverage, see “Insurance” below.

Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods when recovery is considered probable.

Amounts recorded related to the Incident, including outstanding liabilities at the end of each year, are summarized in the table below.

Our current estimates of probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings are discussed in further detail below.

Environmental Matters Legal Contingencies and Other Total Insurance Recoveries Total - Net of Recoveries

($ in millions)

At December 31, 2022 $ — $ — $ — $ — $ —

Expense/(Recoveries) 836 381 1,217 ( 101 ) 1,116

(Payments)/Receipts ( 517 ) ( 236 ) ( 753 ) 101 ( 652 )

At December 31, 2023 $ 319 $ 145 $ 464 $ — $ 464

Expense/(Recoveries) 190 785 975 ( 650 ) 325

(Payments)/Receipts ( 265 ) ( 486 ) ( 751 ) 632 ( 119 )

At December 31, 2024 $ 244 $ 444 $ 688 $ ( 18 ) $ 670

At December 31, 2024 and December 31, 2023, we have also recorded a deferred tax asset (Note 5) of $ 211 million and $ 249 million, respectively, related to the Incident expecting that certain expenses will be deductible for tax purposes in future periods or offset with insurance recoveries.

Environmental Matters – In response to the Incident, we have been working with federal, state, and local officials such as the U.S.

Environmental Protection Agency (EPA), the Ohio EPA, the Pennsylvania Department of Environmental Protection (DEP), and the Columbiana County Health District to conduct environmental response and remediation activities, some of which have concluded and some which are continuing, including but not limited to, excavating and disposing of potentially affected soil (based on

sampling results), air monitoring, indoor air quality screenings, municipal water and private water well testing, residential, commercial, and agricultural soil sampling, surface water and groundwater sampling, re-routing a local waterway around the affected site, and capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities.

The EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various requirements, including the submission of numerous work plans to assess and remediate various environmental media and performance of certain removal actions at the affected site.

On February 24, 2023, we submitted to the EPA our Notice of Intent to Comply with the UAO.

We continue to conduct environmental assessment and remediation activities pursuant to the UAO and the directives issued thereunder, including sampling and excavating soil (if needed based on sampling results) at the affected site, including areas beneath our tracks.

On October 18, 2023, the U.S.

EPA issued a second unilateral order under Section 311(c) of the Clean Water Act (CWA Order), requiring preparation of additional environmental work plans to address local waterways.

We timely submitted our Notice of Intent to Comply with the CWA Order and continue to complete environmental assessment and remediation as required by the EPA, as well as state agencies, in compliance with the CWA Order.

Once approved by the court, the proposed Consent Decree (discussed below) will supersede the UAO and CWA Order.

We are also subject to the following legal proceedings that principally relate to the environmental impact of the Incident:

DOJ filed a civil complaint on behalf of the U.S.

EPA (the DOJ Complaint) in the Northern District of Ohio (Eastern Division) seeking injunctive relief and civil penalties for alleged violations of the CWA and cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The Ohio Attorney General (AG) also filed a lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) seeking damages for a variety of common law and environmental statutory claims under CERCLA and various state laws.

The DOJ and Ohio AG cases have been consolidated for discovery purposes.

We have filed an answer, and discovery is ongoing in the Ohio AG case.

On June 30, 2023, we filed third-party claims against certain railcar defendants and shippers involved in the Incident.

The Court dismissed the third party claims on March 6, 2024, and on March 26, 2024, we filed a motion requesting the Court to enter partial final judgment as to the third party claims.

On May 23, 2024, DOJ and the Company reached a settlement to resolve all of the government’s civil claims against the Company related to the Incident, and jointly lodged a proposed Consent Decree with the court.

As proposed, the Consent Decree will require the Company to pay for the federal government’s oversight costs of $ 57 million through November 30, 2023 as well as additional oversight costs from December 1, 2023 until the remediation is complete.

The proposed Consent Decree also requires the Company to pay a civil penalty of $ 15 million for alleged violations of the CWA.

Other provisions of the proposed Consent Decree relate to injunctive relief for safety, community support including medical and mental health programs, and environmental support, which provisions, if approved by the court, will be in effect between five years to twenty years .

The proposed Consent Decree was subject to a mandatory public comment period, which ended on August 2, 2024, and DOJ filed a motion on October 10, 2024 seeking entry of the Consent Decree.

The Ohio AG did not join this settlement and its claims remain outstanding and are proceeding.

In accordance with FASB ASC 410-30 “ Environmental Liabilities, ” we have recognized probable and reasonably estimable liabilities in connection with the foregoing environmental matters.

Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the EPA and the Ohio EPA), and other related costs, including those in connection with the proposed DOJ Consent Decree (including civil penalties related to alleged violations of the CWA).

Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, the nature and extent of required future cleanup and removal activities (including those resulting from soil, water, and sediment remediation activities that are currently being, and will continue to be, conducted at the site), and the extent and duration of governmental oversight, amongst other factors.

clean-up efforts progress and more information is available, we will review these estimates and revise as appropriate.

Legal Proceedings and Claims (Non-Environmental) – To date, numerous non-environmental legal actions have commenced with respect to the Incident, including those more specifically set forth below.

• There is a consolidated putative class action pending in the Northern District of Ohio (Eastern Division) (the Ohio Class Action) in which plaintiffs allege various claims, including negligence, gross negligence, strict liability, and nuisance, and seeking as relief compensatory and punitive damages, medical monitoring and business losses.

On July 12, 2023, we filed a third-party complaint bringing in multiple parties involved in the Incident.

Fact discovery ended on February 5, 2024.

The Court denied in part and granted in part all motions to dismiss, as to the plaintiffs’ case and as to our third-party complaint, on March 13, 2024.

On April 26, 2024, we entered into a class action settlement with the plaintiffs to resolve the Ohio Class Action for $ 600 million.

The settlement agreement resolves all class action claims within a 20 -mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10 -mile radius from the derailment.

The settlement agreement does not resolve, and expressly preserves, our third-party claims in the third-party complaint.

The district court granted final approval of the settlement on September 27, 2024, which was subsequently appealed.

We made a partial payment of the settlement in 2024, in the amount of $ 315 million.

Payment of the remaining balance, including timing, is dependent upon resolution of any appeals to the settlement.

Another putative class action is pending in the Western District of Pennsylvania, brought by Pennsylvania school districts and students.

On August 22, 2023, six Pennsylvania school districts and students filed a putative class action lawsuit alleging negligence, strict liability, nuisance, and trespass, and seeking damages and health monitoring.

On December 8, 2023, the school districts amended their complaint to add additional companies as defendants in the action.

On February 23, 2024, we and the other defendants filed motions to dismiss and those motions are fully briefed and currently pending before the court.

Combined with the Ohio Class Action, these lawsuits are collectively referred to herein as the Incident Lawsuits.

In accordance with FASB ASC 450, “ Contingencies, ” as of December 31, 2024 and December 31, 2023, we had accruals for probable and reasonably estimable liabilities principally associated with the Incident Lawsuits and related contingencies of $ 369 million and $ 82 million, respectively.

For the reasons set forth below, our estimated loss or range of loss with respect to the Incident Lawsuits may change from time to time, and it is reasonably possible that we will incur actual losses in excess of the amounts currently accrued and such additional amounts may be material.

While we continue to work with parties with respect to potential resolution, no assurance can be given that we will be successful in doing so and we cannot predict the outcome of these matters.

• We have received securities and derivative litigation and multiple shareholder document and litigation demand letters, including a securities class action lawsuit under the Securities Exchange Act of 1934 (Exchange Act) initially filed in the Southern District of Ohio alleging multiple securities law violations but since transferred to the Northern District of Georgia, a securities class action lawsuit under the Securities Act of 1933 (Securities Act) filed in the Southern District of New York alleging misstatements in association with our debt offerings, and six shareholder derivative complaints filed in Virginia state court asserting claims for breach of fiduciary duties, waste of corporate assets, and unjust enrichment in connection with safety of the Company’s operations, among other claims (collectively, the Shareholder Matters).

On February 2, 2024, defendants filed a motion to dismiss the complaint in the Securities Act lawsuit, and on July 26, 2024, the magistrate judge issued a Report and Recommendation to the district judge, recommending that the defendants’ motion to dismiss be granted in part and denied in part.

Defendants’ objections to the Report and Recommendation were filed on August 9, 2024, and

plaintiffs’ response to defendants’ objections were filed on August 23, 2024.

A decision on the motion to dismiss remains pending.

The plaintiffs filed an amended complaint in the Exchange Act lawsuit on April 25, 2024, and the defendants filed a motion to dismiss on June 24, 2024.

A decision on the motion to dismiss remains pending.

No responsive pleadings have been filed yet with respect to the other Shareholder Matters.

• We are also named as a defendant in various other Incident-related lawsuits involving other potentially affected third parties, some of which were filed on or around February 3, 2025.

We are continuing to assess the claims and any potential impact on the Company.

With respect to the Incident-related litigation and regulatory matters, we record a liability for loss contingencies through a charge to earnings when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated and disclose such liability if we conclude it to be material.

We and/or certain subsidiaries are subject to numerous lawsuits, inquiries, investigations and other claims and proceedings relating principally to railroad operations.

In accordance with FASB ASC 450, “ Contingencies ,” when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below.

While the ultimate amount of liability incurred in any of these matters is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liabilities and claims.

However, the final outcome of any of these matters cannot be predicted with certainty, and developments related to the progress of such matters or other unfavorable or unexpected developments or outcomes could result in additional costs or new or additionally accrued amounts that could be significant to financial position, results of operations, or liquidity in a particular year or quarter.

Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known.

Because the final outcome of any of these legal proceedings cannot be predicted with certainty, developments related to the progress of such legal proceedings or other unfavorable or unexpected developments or outcomes could result in additional costs or new or additionally accrued amounts that could be material to our results of operations in a particular year or quarter.

In addition, if it is reasonably possible that we will incur Incident-related losses in excess of the amounts currently recorded as a loss contingency, we disclose the potential range of loss, if reasonably estimable, or we disclose that we cannot reasonably estimate such an amount at this time.

For Incident-related litigation and regulatory matters where a loss may be reasonably possible, but not probable, or probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed.

Our estimates of probable losses and reasonably possible losses are based upon currently available information and involve significant judgement and a variety of assumptions, given that (1) certain legal and regulatory proceedings are in early stages;

If it is reasonably possible that we will incur losses in excess of the amounts currently recorded as a loss contingency, we disclose the potential range of loss, if reasonably estimable, or we disclose that we cannot reasonably estimate such an amount at this time.

For loss contingency matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed below.

We routinely review relevant information with respect to our lawsuits, inquiries, investigations and other claims and proceedings and update our accruals, disclosures and estimates of reasonably possible loss based on such reviews.

Our estimates of probable losses and reasonably possible losses are based upon currently available information and involve significant judgment and a variety of assumptions, given that (1) certain legal and regulatory proceedings are in early stages;

(2) discovery may not be completed;

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Accordingly, our estimated range of loss with respect to these matters may change from time to time, and actual losses may exceed current estimates.

At this time, we are unable to estimate the possible loss or range of loss in excess of the amounts accrued with respect to the matters described above.

The amounts recorded do not include any estimate of loss for which we believe a loss is either not probable or not reasonably estimable for any fines or penalties (in excess of the liabilities established for CWA-related civil penalties) that may be imposed as a result of the Incident Inquiries and Investigations, as more specifically set forth and defined below (the outcome of which are uncertain at this time).

Inquiries and Investigations

As set forth above, we are subject to inquiries and investigations by numerous federal, state, and local government authorities and regulatory agencies regarding the Incident, including but not limited to, the NTSB, the FRA, the Occupational Safety and Health Administration, the Ohio AG, and the Pennsylvania AG.

Further details regarding the NTSB and FRA investigations are set forth below.

Litigation Related to the Mergers

Shareholders have and may continue to file lawsuits challenging the Mergers, which may name us, Union Pacific, members of our Board, members of the Union Pacific board, or others as defendants.

No assurance can be made as to the outcome of such lawsuits, including the amount of costs associated with defending claims or any other liabilities that may be incurred in connection with the litigation of any claims.

If plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Mergers on the agreed-upon terms, such an injunction may delay the completion of the Mergers or may prevent the Mergers from being completed altogether.

We and Union Pacific have each received demand letters from certain purported shareholders of Norfolk Southern and Union Pacific, as applicable, that allege deficiencies and/or omissions in the registration statement on Form S-4 filed by Union Pacific with the SEC relating to the Mergers.

In response to shareholder demand letters alleging deficiencies in the registration statement on Form S-4, we provided additional disclosure via Form 8-K filed on November 6, 2025, which clarified financial projections, board deliberations, and risk factors related to the Mergers.

We believe that the allegations in these letters are without merit.

There can be no assurances that complaints or additional demands will not be filed or made with respect to the Mergers.

If additional similar demands are made, absent new or different allegations that are material, neither we nor Union Pacific will necessarily announce them.

Eastern Ohio Incident

Numerous legal actions have commenced with respect to the February 3, 2023 derailment of a train operated by us in East Palestine, Ohio, the associated fire, and the resulting vent and burn of the tank cars containing vinyl chloride on February 6, 2023 (the Incident), including those more specifically set forth below:

• A consolidated putative class action is pending in the Northern District of Ohio (Eastern Division) (the Ohio Class Action) in which plaintiffs allege various claims, including negligence, gross negligence, strict

liability, and nuisance, and seeking as relief compensatory and punitive damages, medical monitoring and business losses.

On April 26, 2024, we entered into a class action settlement with the plaintiffs to resolve the Ohio Class Action for $ 600 million, and we made a partial payment of the settlement in 2024, in the amount of $ 315 million.

On November 5, 2025, the U.S.

Court of Appeals for the Sixth Circuit dismissed objectors’ appeals of the class action settlement.

Under the class action settlement terms, payment of the remaining balance, including timing, is dependent upon resolution of any further appeals to the settlement.

• On August 22, 2023, six Pennsylvania school districts and students filed a putative class action lawsuit in the Western District of Pennsylvania (the Pennsylvania Class Action) alleging negligence, strict liability, nuisance, and trespass, and seeking damages and health monitoring.

On December 8, 2023, the school districts amended their complaint to add additional companies as defendants.

On February 23, 2024, we and the other defendants filed motions to dismiss and those motions are fully briefed and currently pending before the court.

• We are also named as a defendant in various other Incident-related lawsuits involving other potentially affected third parties, a number of which were filed in early 2025.

We are continuing to assess the claims and their potential impact on the Company.

• We have received securities and derivative lawsuits and multiple shareholder document and litigation demand letters:

◦ A securities class action lawsuit under the Securities Exchange Act of 1934 (Exchange Act) was initially filed in the Southern District of Ohio alleging multiple securities law violations, but has since been transferred to the Northern District of Georgia.

The plaintiffs filed an amended complaint on April 25, 2024 and the defendants filed a motion to dismiss on June 24, 2024.

On March 24, 2025, the district court presiding over the Exchange Act lawsuit denied defendants' motion to dismiss and the Exchange Act lawsuit is now in discovery.

◦ A securities class action lawsuit under the Securities Act of 1933 (Securities Act) was filed in the Southern District of New York alleging misstatements in association with our debt offerings.

On February 27, 2025, the district judge granted defendants' motion to dismiss the Securities Act lawsuit in its entirety, and close the case, which plaintiffs appealed on March 28, 2025 to the U.S.

Court of Appeals for the Second Circuit.

The appeal was fully briefed as of October 31, 2025 and oral argument is scheduled for February 12, 2026.

◦ Six shareholder derivative complaints were filed in Virginia state court asserting claims for breach of fiduciary duties, waste of corporate assets, and unjust enrichment in connection with safety of the Company’s operations, among other claims (collectively, the Shareholder Derivative Matters).

The Shareholder Derivative Matters were consolidated on July 10, 2025, by agreement of the parties.

No responsive pleadings have been filed yet in the Shareholder Derivative Matters.

Incident accruals principally related to ongoing legal proceedings totaled $ 474 million and $ 444 million at December 31, 2025 and 2024, respectively, which includes the remaining payment of $ 285 million related to the Ohio Class Action.

In regards to the Incident, the DOJ filed a civil complaint on behalf of the U.S.

EPA (the DOJ Complaint) in the Northern District of Ohio (Eastern Division) seeking injunctive relief and civil penalties for alleged violations of the Clean Water Act (CWA) and cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The Ohio AG also filed a lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) seeking damages for a variety of common law and environmental statutory claims under CERCLA and various state laws.

The DOJ and Ohio AG cases were consolidated for discovery purposes.

On May 23, 2024, the DOJ and the Company reached a settlement to resolve all of the government’s civil claims against the Company.

The DOJ filed a motion on October 10, 2024 seeking entry of the Consent Decree, which motion remains pending before the Court.

If approved, the Consent Decree will require the Company to pay a civil penalty

of $ 15 million for alleged violations of the CWA, plus $ 57 million for the federal government’s oversight costs through November 30, 2023 as well as additional oversight costs from December 1, 2023 until the remediation is complete.

The Ohio AG did not join this settlement;

we have filed an answer, and the litigation remains ongoing, in the Ohio AG case.

Total Incident-related environmental liabilities related to ongoing environmental monitoring activities and regulatory oversight are $ 191 million and $ 244 million at December 31, 2025 and 2024, respectively.

With respect to the Incident, we have recognized approximately $ 1.1 billion in insurance recoveries (including $ 338 million, $ 650 million, and $ 101 million in 2025, 2024, and 2023, respectively), principally from excess liability (re)insurers.

At December 31, 2025, no amounts were outstanding, while $ 18 million was outstanding at December 31, 2024 and is included in “Accounts receivable – net” on the Consolidated Balance Sheets.

In 2025, we exhausted coverage under our liability insurance policies with respect to the Incident.

With the exception of amounts that have been recognized, potential future recoveries under our property and other insurance coverage have not yet been recorded (given the insurers ongoing evaluation of our claims).

We are also subject to inquiries and investigations by numerous federal, state, and local government authorities and regulatory agencies regarding the Incident, including but not limited to, the FRA, the Occupational Safety and Health Administration, the Ohio Attorney General (AG), and the Pennsylvania AG.

We are cooperating with all pending inquiries and investigations, including responding to civil and criminal subpoenas and other requests for information (the aforementioned inquiries and investigations, as well as the civil and criminal subpoenas are collectively referred to herein as the Incident Inquiries and Investigations).

Aside from the FRA Safety Assessment (defined and described below), the outcome of any current or future Incident Inquiries and Investigations is uncertain at this time, including any related fines, penalties or settlements.

Therefore, our accruals for probable and reasonably estimable liabilities related to the Incident do not include estimates of the total amount that we may incur for any such fines, penalties or settlements.

Subsequent to the Incident, investigators from the NTSB examined railroad equipment and track conditions;

reviewed data from the signal system, wayside defect detectors, local surveillance cameras, and the lead locomotive’s event recorder and forward-facing and inward-facing image recorders;

and completed certain interviews (the NTSB Investigation).

The NTSB concluded its investigation and adopted a final investigative report on June 25, 2024, then issued the final public report on July 12, 2024.

The NTSB found that the probable cause of the derailment was the failure of a bearing which overheated and caused the axle to separate, derailing the train and leading to a post-derailment fire.

The NTSB issued over 30 recommendations, of which four were issued to Norfolk Southern.

The NTSB continues to work on a safety culture investigation, and a report on this part of the investigation is expected to be issued in the spring of 2025.

Concurrent with the NTSB Investigation, the FRA also investigated the Incident.

Similar in scope to the NTSB Investigation, the FRA examined railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation).

The FRA examined railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation), similar in scope to an investigation by the NTSB.

The FRA Incident Investigation will likely result in the assessment of civil penalties, though the amount and materiality of these penalties cannot be reasonably estimated at this time.

In addition to the FRA Incident Investigation, the FRA completed a 60-day supplemental safety assessment (the FRA Safety Assessment).

The FRA Safety Assessment included a review of findings from a previously completed 2022 system audit and an assessment of operational elements including, but not limited to:

track, signal, and rolling stock maintenance, inspection and repair practices;

protection of employees;

communications between transportation departments and mechanical and engineering staff;

operation control center procedures and dispatcher training.

The overall scope of the FRA Safety Assessment was to examine our safety culture.

The FRA issued a public report in early August 2023 which included its findings and related corrective actions.

We have launched initiatives to implement all of these items, and will monitor progress on these initiatives going forward.

Other Commitments and Contingencies

We and/or certain subsidiaries are defendants in numerous lawsuits and other claims relating principally to railroad operations.

When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below.

While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liability and claims.

However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter.

Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known.

For lawsuits and other claims where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed below.

We routinely review relevant information with respect to our lawsuits and other claims and update our accruals, disclosures and estimates of reasonably possible loss based on such reviews.

In 2007, various antitrust class actions filed against us and other Class I railroads in various federal district courts regarding fuel surcharges were consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation.

In 2012, the court certified the case as a class action.

The defendant railroads appealed this certification, and the Court of Appeals for the District of Columbia vacated the District Court’s decision and remanded the case for further consideration.

The defendant railroads appealed this certification, and the Court of Appeals for the D.C.

Circuit vacated the District Court’s decision and remanded the case for further consideration.

On October 10, 2017, the District Court denied class certification.

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Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia.

We intend to vigorously defend the cases and we believe that we will prevail.

On June 24, 2025, the District Court granted summary judgment dismissing the consolidated cases in full.

On July 24, 2025, a majority of plaintiffs appealed this ruling to the Court of Appeals for the D.C.

We intend to vigorously defend the cases through appeal and believe that we will prevail.

However, given that litigation is inherently unpredictable and subject to uncertainties, there can be no assurances that the final resolution of the litigation will not be material.

At this time, we cannot reasonably estimate the potential loss or range of loss associated with this matter.

In 2018, a lawsuit was filed against one of our subsidiaries by the minority owner in a jointly-owned terminal railroad company in which our subsidiary has the majority ownership.

The lawsuit alleged violations of various state laws and federal antitrust laws.

On January 3, 2023, the court granted summary judgment to us on all of the compensatory claims but denied summary judgment for all equitable relief claims.

On January 18, 2023, the court dismissed the federal equitable relief claims, leaving the state equitable relief claims as the sole remaining issue under consideration.

On April 19, 2023, the court disposed of all remaining state equitable relief claims.

On August 29, 2024, the United States Court of Appeals for the Fourth Circuit affirmed the opinion of the lower court.

We will continue to vigorously defend the lawsuit and, although it is reasonably possible we could incur a loss in the case, we believe that we will prevail.

However, given that litigation is inherently unpredictable and subject to uncertainties, there can be no assurances that the final outcome of the litigation (including the related appeal) will not be material.

Until such appeal is final, we cannot reasonably estimate the potential loss or range of loss associated with this matter.

Casualty Claims

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To aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year, we utilize studies prepared by an independent consulting actuarial firm.

Job-related personal injury and occupational claims are subject to the FELA, which is applicable only to railroads.

Job-related personal injury and occupational claims are subject to FELA, which is applicable only to railroads.

The variability inherent in FELA’s fault-based tort system could result in actual costs being different from the liability recorded.

While the ultimate amount of claims incurred is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payments of claims and is supported by the most recent actuarial study.

In all cases, we record a liability when the expected loss for the claim is both probable and reasonably estimable.

Employee personal injury claims – Other than Incident-related matters noted above, the largest component of claims expense is employee personal injury costs.

The independent actuarial firm we engage provides quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense.

Employee personal injury claims – The largest component of casualty claims expense not pertaining to the Incident is employee personal injury costs.

We engage an independent actuarial firm to provide quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense.

The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences.

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We adjust the liability quarterly based upon our assessment and the results of the study.

Given the inherent uncertainty

in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded.

Given the inherent uncertainty in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded.

Environmental Matters

We are subject to various jurisdictions’ environmental laws and regulations.

We record a liability where such liability or loss is probable and reasonably estimable.

In accordance with FASB ASC 410-30 “ Environmental Liabilities ,” we record a liability for environmental matters where such liability or loss is probable and reasonably estimable.

Environmental specialists regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates.

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At December 31, 2025, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 69 known locations and projects compared with 74 locations and projects at December 31, 2024.

At December 31, 2024, twenty sites accounted for $ 56 million of the liability, and no individual site was considered to be material.

At December 31, 2025, eighteen sites accounted for $ 55 million of the liability, and no individual site was considered to be material.

We anticipate that most of this liability will be paid out over five years ;

however, some costs will be paid out over a longer period.

At eight locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under CERCLA or comparable state statutes that impose joint and several liability for cleanup costs.

several liability for cleanup costs.

We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability.

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Pursuant to the RLA, these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the RLA are completed.

Moratorium provisions in the labor agreements govern

when the railroads and unions may propose changes to the agreements.

Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements.

We largely bargain nationally in concert with other major railroads, represented by the NCCC.

Under current moratorium provisions, neither party was permitted to serve notice to compel a new round of mandatory collective bargaining until November 1, 2024.

In the months prior to the opening of the current national bargaining round, we engaged in voluntary local discussions with our labor unions and, as a result, reached local tentative agreements with ten of our thirteen unions.

A majority of those tentative agreements were subsequently ratified by union membership and became effective January 1, 2025, foreclosing the parties from serving new notices to compel mandatory bargaining until November 1, 2029.

For those unions with whom we have not yet reached a ratified agreement, the NCCC, on behalf of Norfolk Southern, sent bargaining notices on November 1, 2024, to commence mandatory direct negotiations as prescribed under the RLA.

Even if the parties are unable to reach voluntary agreement during this first phase of RLA bargaining, self-help (e.g., a strike or other work stoppage) related to this collective-bargaining process remains prohibited by law until a lengthy series of additional procedures mandated by the RLA, including federal mediation, are exhausted.

Under moratorium provisions from the last round of negotiations, neither party was permitted to serve notice to compel a new round of mandatory collective bargaining until November 1, 2024.

Since that date, Norfolk Southern, or the NCCC acting on behalf of Norfolk Southern, has engaged in discussions and reached ratified agreements with all of our labor unions.

Moratorium clauses in these new ratified agreements foreclose the parties from serving further notices to compel mandatory bargaining until November 1, 2029.

During this period, self-help against Norfolk Southern (e.g., a strike or other work stoppage) related to the mandatory collective-bargaining process is prohibited by law.

We purchase insurance covering legal liabilities for bodily injury and property damage to third parties.

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We also purchase insurance for property damage to property owned by us or in our care, custody, or control.

Our current property insurance provides limits for approximately 82 % of covered losses above $ 75 million and below $ 275 million per occurrence and/or policy year.

With respect to the Incident, our insurance in effect at such time provided coverage above $ 75 million and below $ 800 million (or up to $ 1.1 billion for specified types of pollution releases) per occurrence and/or policy year, and with respect to property owned by us or in our care, custody, or control, our insurance covered approximately 82 % of potential losses above $ 75 million and below $ 275 million per occurrence and/or policy year.

Insurance coverage with respect to the Incident is subject to certain conditions, including but not limited to our insurers’ reservation of rights to further investigate and contest coverage, the express restrictions and sub-limits of coverage, and various policy exclusions, including those for some governmental fines or penalties.

Some (re)insurers have questioned certain payments we have made, for example, as part of our effort to respond to mitigate and compensate for the impact to the community and affected residents and businesses.

We are pursuing coverage with respect to the Incident, and we have recognized $ 650 million and $ 101 million in insurance recoveries in 2024 and 2023, respectively, principally from excess liability (re)insurers.

At December 31, 2024, $ 18 million was outstanding and is included in “Accounts receivable – net” on the Consolidated Balance Sheets while no amounts were outstanding at December 31, 2023.

With the exception of amounts that have been recognized, potential recoveries under our insurance coverage have not yet been recorded (given the insurers ongoing evaluation of our claims).

In addition, no amounts have been recorded related to potential recoveries from other third parties, which may reduce amounts payable by our insurers under our applicable insurance coverage.

Our property insurance provides limits for approximately 77 % of covered losses above $ 75 million and below $ 275 million per occurrence and/or policy year.

Purchase Commitments

At December 31, 2025, we had outstanding purchase commitments totaling $ 2.0 billion through 2053 for locomotive modernizations, long-term technology support and development contracts, track material, and vehicles.

Change-In-Control Arrangements

Change-In-Control and Retention Arrangements

We have compensation agreements with certain officers and key employees that become operative only upon a change in control of Norfolk Southern, as defined in those agreements.

The agreements provide generally for payments based on compensation at the time of a covered individual’s involuntary or other specified termination and for certain other benefits.

We have also entered into retention agreements with certain key employees to promote stability, maintain continuity of leadership and incentivize individuals to remain focused on our business and the successful completion of the Merger with Union Pacific.

Indemnifications

6 unchanged sentences

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What changed 10-K

Item 8. Financial Statements and Supplementary Data