Item 1. . Financial Statements

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Item 1. . Financial Statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

Second QuarterFirst Six Months
2026202520262025
($ in millions, except per share amounts)
Railway operating revenues$3,465$3,110$6,463$6,103
Railway operating expenses
Compensation and benefits7446921,4841,431
Purchased services and rents5505201,0721,018
Fuel405219661463
Depreciation358346710692
Materials and other212195401400
Merger-related expenses51—103—
Restructuring and other charges610610
Eastern Ohio incident15(47)25(232)
Total railway operating expenses2,3411,9354,4623,782
Income from railway operations1,1241,1752,0012,321
Other income – net32246755
Interest expense on debt197201394400
Income before income taxes9599981,6741,976
Income taxes225230393458
Net income$734$768$1,281$1,518
Earnings per share
Basic$3.26$3.41$5.70$6.72
Diluted3.263.415.696.72

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Second QuarterFirst Six Months
2026202520262025
($ in millions)
Net income$734$768$1,281$1,518
Other comprehensive income (loss), before tax:
Pension and other postretirement expense——(2)—
Other comprehensive income (loss) of equity investees(1)—(1)1
Other comprehensive income (loss), before tax(1)—(3)1
Income tax benefit related to items of other
comprehensive income (loss)——1—
Other comprehensive income (loss), net of tax(1)—(2)1
Total comprehensive income$733$768$1,279$1,519

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

June 30, 2026December 31, 2025
($ in millions)
Assets
Current assets:
Cash and cash equivalents$1,069$1,530
Accounts receivable – net1,177988
Materials and supplies327271
Other current assets228409
Total current assets2,8013,198
Investments4,1554,089
Properties less accumulated depreciation of $15,031
and $14,617, respectively36,62636,479
Other assets1,5401,470
Total assets$45,122$45,236
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$1,783$1,863
Income and other taxes218340
Other current liabilities720965
Current maturities of long-term debt649607
Total current liabilities3,3703,775
Long-term debt15,96716,480
Other liabilities1,7141,723
Deferred income taxes7,8187,711
Total liabilities28,86929,689
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 224,608,373 and 224,420,699 shares,
respectively, net of treasury shares226226
Additional paid-in capital2,3322,296
Accumulated other comprehensive loss(212)(210)
Retained income13,90713,235
Total stockholders’ equity16,25315,547
Total liabilities and stockholders’ equity$45,122$45,236

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

First Six Months
20262025
($ in millions)
Cash flows from operating activities
Net income$1,281$1,518
Reconciliation of net income to net cash provided by operating activities:
Depreciation710692
Deferred income taxes108109
Gains and losses on properties(18)(57)
Changes in assets and liabilities affecting operations:
Accounts receivable(190)(57)
Materials and supplies(56)(36)
Other current assets6254
Current liabilities other than debt(386)(106)
Other – net(113)(90)
Net cash provided by operating activities1,3982,027
Cash flows from investing activities
Property additions(821)(924)
Property sales and other transactions17766
Investment purchases(5)(613)
Investment sales and other transactions2036
Net cash used in investing activities(629)(1,435)
Cash flows from financing activities
Dividends(606)(609)
Common stock transactions(12)(8)
Purchase and retirement of common stock(5)(456)
Proceeds from borrowings—396
Debt repayments(607)(253)
Net cash used in financing activities(1,230)(930)
Net decrease in cash and cash equivalents(461)(338)
Cash and cash equivalents
At beginning of year1,5301,641
At end of period$1,069$1,303
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)$377$378
Income taxes (net of refunds)386414

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

Common StockAdditional Paid-in CapitalAccum. Other Comprehensive LossRetained IncomeTotal
($ in millions, except per share amounts)
Balance at December 31, 2025$226$2,296$(210)$13,235$15,547
Comprehensive income:
Net income547547
Other comprehensive loss(1)(1)
Total comprehensive income546
Dividends on common stock,
$1.35 per share(303)(303)
Stock-based compensation16(2)14
Balance at March 31, 20262262,312(211)13,47715,804
Comprehensive income:
Net income734734
Other comprehensive loss(1)(1)
Total comprehensive income733
Dividends on common stock,
$1.35 per share(303)(303)
Stock-based compensation20(1)19
Balance at June 30, 2026$226$2,332$(212)$13,907$16,253

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

Common StockAdditional Paid-in CapitalAccum. Other Comprehensive LossRetained IncomeTotal
($ in millions, except per share amounts)
Balance at December 31, 2024$228$2,247$(262)$12,093$14,306
Comprehensive income:
Net income750750
Other comprehensive income11
Total comprehensive income751
Dividends on common stock,
$1.35 per share(306)(306)
Share repurchases(1)(9)(240)(250)
Stock-based compensation11(1)10
Balance at March 31, 20252272,249(261)12,29614,511
Comprehensive income:
Net income768768
Other comprehensive income——
Total comprehensive income768
Dividends on common stock,
$1.35 per share(303)(303)
Share repurchases(1)(8)(196)(205)
Stock-based compensation18(2)16
Balance at June 30, 2025$226$2,259$(261)$12,563$14,787

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial position at June 30, 2026 and December 31, 2025, our results of operations, comprehensive income and changes in stockholders’ equity for the second quarters and first six months of 2026 and 2025, and our cash flows for the first six months of 2026 and 2025 in conformity with U.S. Generally Accepted Accounting Principles (GAAP).

These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our latest Annual Report on Form 10-K.

1. Merger Agreement

On July 28, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Union Pacific Corporation, a Utah corporation (“Union Pacific”), pursuant to which Union Pacific will acquire the Company in a stock-and-cash transaction more fully described therein.

The consummation of this transaction is subject to certain conditions, including approval by the U.S. Surface Transportation Board (STB). 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 U.S. Securities and Exchange Commission (SEC) on July 29, 2025.

We incurred $51 million and $103 million in expenses during the second quarter and first six months of 2026, respectively, 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.

2. Segment Reporting

We manage our company as one reportable operating segment, railway operations, providing rail transportation to customers. Although we provide and analyze revenues by commodity group, the overall financial and operational performance of the railroad is analyzed as one operating segment due to the nature of our integrated rail network.

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. The measure of segment assets is reported on the Consolidated Balance Sheets as “Total assets.” Total expenditures for long-lived assets are disclosed as “Property additions” on the Consolidated Statements of Cash Flows.

Railway operations segment revenues, expenses, and profit are disclosed below as reviewed and used by the chief operating decision maker. There are no other significant segment items or reconciling items to segment profit.

Second QuarterFirst Six Months
2026202520262025
($ in millions)
Railway operating revenues (Note 3)$3,465$3,110$6,463$6,103
Railway operating expenses
Compensation and benefits7446921,4841,431
Purchased services435409853810
Equipment rents115111219208
Fuel405219661463
Depreciation358346710692
Materials11398207198
Claims6959122125
Other30387277
Merger-related expenses51—103—
Restructuring and other charges610610
Eastern Ohio incident15(47)25(232)
Total railway operating expenses2,3411,9354,4623,782
Income from railway operations1,1241,1752,0012,321
Other income – net32246755
Interest expense on debt197201394400
Income before income taxes9599981,6741,976
Income taxes225230393458
Net income$734$768$1,281$1,518

3. Railway Operating Revenues

The following table disaggregates our revenues by major commodity group:

Second QuarterFirst Six Months
2026202520262025
($ in millions)
Merchandise:
Agriculture, forest and consumer products$673$645$1,298$1,281
Chemicals6465461,2131,081
Metals and construction480458893872
Automotive334323614601
Merchandise2,1331,9724,0183,835
Intermodal9087431,6571,503
Coal424395788765
Total$3,465$3,110$6,463$6,103

We recognize the amount of revenues to which we expect to be entitled for the transfer of promised goods or services to customers. A performance obligation is created when a customer under a transportation contract or public tariff submits a bill of lading to us for the transport of goods. These performance obligations are satisfied as the shipments move from origin to destination. As such, transportation revenues are recognized proportionally as a shipment moves, and related expenses are recognized as incurred. These performance obligations are generally short-term in nature with transit days averaging approximately one week or less for each commodity group. The customer has an unconditional obligation to pay for the service once the service has been completed. Estimated revenues associated with in-process shipments at period-end are recorded based on the estimated percentage of service completed. We had no material remaining performance obligations at June 30, 2026 and December 31, 2025.

We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts. The revenues associated with these distinct performance obligations are recognized when the services are performed or as contractual obligations are met. These revenues are included within each of the commodity groups and represent approximately 5% of total “Railway operating revenues” on the Consolidated Statements of Income for the second quarters and first six months of 2026 and 2025.

Revenues related to interline transportation services that involve another railroad are reported on a net basis. Therefore, the portion of the total amount that relates to another party is not reflected in revenues.

Under the typical terms of our freight contracts, payment for services is due within fifteen days of billing the customer, thus there are no significant financing components. “Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows:

June 30, 2026December 31, 2025
($ in millions)
Customer$886$715
Non-customer291273
Accounts receivable – net$1,177$988

Non-customer receivables include non-revenue-related amounts due from other railroads, governmental entities, and others. We do not have any material contract assets or liabilities at June 30, 2026 and December 31, 2025.

4. Stock-Based Compensation

Second QuarterFirst Six Months
2026202520262025
($ in millions)
Stock-based compensation expense$24$17$49$35
Total tax benefit33108

During the second quarter and first six months of 2026, no stock options were granted. We granted restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows:

Second QuarterFirst Six Months
GrantedWeighted-Average Grant-Date Fair ValueGrantedWeighted-Average Grant-Date Fair Value
RSUs1,132$315.93198,891$288.07
PSUs——78,986273.82

Stock Options

Second QuarterFirst Six Months
2026202520262025
($ in millions)
Options exercised8,10926,35247,80268,904
Cash received upon exercise$1$2$5$6
Related tax benefits realized1122

Restricted Stock Units

RSUs granted primarily have three- and four-year ratable restriction periods and will be settled through the issuance of shares of Norfolk Southern common stock (Common Stock). Certain RSU grants include cash dividend equivalent payments during the restriction period in an amount equal to the regular quarterly dividends paid on Common Stock.

Second QuarterFirst Six Months
2026202520262025
($ in millions)
RSUs vested9,97010,454188,553163,218
Common Stock issued net of tax withholding6,2636,225131,463113,482
Related tax benefits realized$—$—$2$1

Performance Share Units

PSUs provide for awards based on the achievement of certain predetermined corporate performance goals at the end of a three-year cycle and are settled through the issuance of shares of Common Stock. All PSUs will earn out based on the achievement of performance conditions and some will also earn out based on a market condition. The market condition fair value was measured on the date of grant using a Monte Carlo simulation model. No PSUs were earned or paid out during the second quarter and first six months of 2026.

First Six Months
2025
($ in millions)
PSUs earned8,540
Common Stock issued net of tax withholding5,633
Related tax benefits realized$—

5. Restructuring and Other Charges

During the second quarter of 2026, we recorded $6 million in expenses related to severance costs associated with organizational changes. During the second quarter of 2025, we recorded $10 million in expenses primarily related to the restructuring of certain technology functions, which includes severance costs for impacted employees.

6. Earnings Per Share

The following table sets forth the calculation of basic and diluted earnings per share:

BasicDiluted
Second Quarter
2026202520262025
($ in millions, except per share amounts, shares in millions)
Net income$734$768$734$768
Dividend equivalent payments(1)(1)(1)—
Income available to common stockholders$733$767$733$768
Weighted-average shares outstanding224.6225.0224.6225.0
Dilutive effect of outstanding options and share-settled awards0.40.2
Adjusted weighted-average shares outstanding225.0225.2
Earnings per share$3.26$3.41$3.26$3.41
BasicDiluted
First Six Months
2026202520262025
($ in millions, except per share amounts, shares in millions)
Net income$1,281$1,518$1,281$1,518
Dividend equivalent payments(2)(2)(1)(1)
Income available to common stockholders$1,279$1,516$1,280$1,517
Weighted-average shares outstanding224.5225.5224.5225.5
Dilutive effect of outstanding options and share-settled awards0.50.3
Adjusted weighted-average shares outstanding225.0225.8
Earnings per share$5.70$6.72$5.69$6.72

During the second quarters and first six months of 2026 and 2025, dividend equivalent payments were made to certain holders of stock options and RSUs. For purposes of computing basic earnings per share, dividend equivalent payments made to holders of stock options and RSUs were deducted from net income to determine income available to common stockholders. For purposes of computing diluted earnings per share, we evaluate on a grant-by-grant basis those stock options and RSUs receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is more dilutive for each grant. For those grants for which the two-class method was more dilutive, net income was reduced by dividend equivalent payments to determine income available to common stockholders. The dilution calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: none in the second quarter and first six months ended June 30, 2026 and 0.1 million in the second quarter and first six months ended June 30, 2025.

7. Accumulated Other Comprehensive Loss

The changes in the cumulative balances of “Accumulated other comprehensive loss” reported on the Consolidated Balance Sheets consisted of the following:

Balance at Beginning of YearNet IncomeReclassification AdjustmentsBalance at End of Period
($ in millions)
Six months ended June 30, 2026
Pensions and other postretirement liabilities$(192)$—$(1)$(193)
Other comprehensive loss of equity investees(18)(1)—(19)
Accumulated other comprehensive loss$(210)$(1)$(1)$(212)
Six months ended June 30, 2025
Pensions and other postretirement liabilities$(240)$—$—$(240)
Other comprehensive income (loss) of equity investees(22)1—(21)
Accumulated other comprehensive loss$(262)$1$—$(261)

8. Stock Repurchase Program

We did not repurchase shares of Common Stock under our stock repurchase program in the first six months of 2026, while we repurchased and retired 1.9 million shares of Common Stock at a cost of $455 million in the first six months of 2025, inclusive of accrued excise taxes. “Purchase and retirement of common stock” in 2026 as presented on the Consolidated Statements of Cash Flows reflects the payment of excise taxes on shares repurchased in 2025.

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.

9. Investments

Investment in Conrail

Through a limited liability company, we and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). We have a 58% economic and 50% voting interest in the jointly-owned entity, and CSX has the remainder of the economic and voting interests. Our investment in Conrail was $1.9 billion and $1.8 billion at June 30, 2026 and December 31, 2025, respectively.

CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. “Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $51 million and $44 million for the second quarters of 2026 and 2025, respectively, and $103 million and $93 million for the first six months of 2026 and 2025, respectively. Our equity in Conrail’s earnings, net of amortization, was $20 million and $23 million for the second quarters of 2026 and 2025, respectively, and $39 million in both the first six months of 2026 and 2025. These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.”

“Other liabilities” includes $534 million at both June 30, 2026 and December 31, 2025 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31%.

Investment in TTX

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.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $85 million and $81 million for the second quarters of 2026 and 2025, respectively, and $161 million and $155 million for the first six months of 2026 and 2025, respectively. Our equity in TTX’s earnings partially offsets these costs and totaled $8 million and $9 million for the second quarters of 2026 and 2025, respectively, and $16 million and $20 million for the first six months of 2026 and 2025, respectively.

10. Debt

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

In April 2026, we entered into a non-cancellable finance lease of an office building in replacement of a previous operating lease. The lease term is for five years and includes options to renew, purchase, or sell the building at the end of the lease. We recorded a right-of-use asset of $117 million and a finance lease liability of $115 million, based on the initial five-year term. The lease contains a residual value guarantee of approximately $499 million for the total construction cost of the building. We determined no amounts are probable of being owed under the guarantee and, as such, were not included in the measurement of the finance lease liability. Right-of-use assets related to finance leases are included in “Properties less accumulated depreciation,” and finance lease liabilities are included in “Current maturities of long-term debt” and “Long-term debt” in the Consolidated Balance Sheet. In connection with the transaction, a third-party bank paid $272 million directly to other bank counterparties related to the restructuring of our prior operating lease.

In May 2026, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2027. Amounts received under this facility are accounted for as borrowings. We had no amounts outstanding under this program and our available borrowing capacity was approximately $400 million and $397 million at June 30, 2026 and December 31, 2025, respectively. Our accounts receivable securitization program was supported by $901 million and $735 million in receivables at June 30, 2026 and December 31, 2025, respectively, which are included in “Accounts receivable – net.”

We have in place an $800 million credit agreement. The agreement expires in January 2029, and provides for borrowings at prevailing rates and includes covenants. We had no amounts outstanding under this facility at either June 30, 2026 or December 31, 2025, and we are in compliance with all of its covenants.

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

11. Pensions and Other Postretirement Benefits

We have both funded and unfunded defined benefit pension plans covering eligible employees. We also provide specified health care benefits to eligible retired employees; these plans can be amended or terminated at our option. Under our self-insured retiree health care plan, for those participants who are not Medicare-eligible, certain health care expenses are covered for retired employees and their dependents, reduced by any deductibles, coinsurance, and, in some cases, coverage provided under other group insurance policies. Eligible retired participants and their spouses who are Medicare-eligible are not covered under the self-insured retiree health care plan, but instead are provided with an employer-funded health reimbursement account which can be used for reimbursement of health insurance premiums or eligible out-of-pocket medical expenses.

Pension and postretirement benefit cost components were as follows:

Pension BenefitsOther Postretirement Benefits
Second Quarter
2026202520262025
($ in millions)
Service cost$6$6$—$—
Interest cost252734
Expected return on plan assets(52)(49)(3)(3)
Amortization of net losses55——
Amortization of prior service benefit——(5)(5)
Net benefit$(16)$(11)$(5)$(4)
Pension BenefitsOther Postretirement Benefits
First Six Months
2026202520262025
($ in millions)
Service cost$13$12$1$1
Interest cost505367
Expected return on plan assets(104)(98)(5)(5)
Amortization of net losses911——
Amortization of prior service benefit——(11)(11)
Net benefit$(32)$(22)$(9)$(8)

The service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Compensation and benefits” and all other components are presented in “Other income – net” on the Consolidated Statements of Income.

12. Fair Values of Financial Instruments

The fair values of “Cash and cash equivalents,” “Accounts receivable – net,” and “Accounts payable,” approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance (COLI) is recorded at cash surrender value and, accordingly, approximates fair value. There are no other assets or liabilities measured at fair value on a recurring basis at June 30, 2026 or December 31, 2025. The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following:

June 30, 2026December 31, 2025
Carrying AmountFair ValueCarrying AmountFair Value
($ in millions)
Long-term debt, including current maturities$(16,616)$(15,221)$(17,087)$(15,865)

13. Commitments and Contingencies

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 Financial Accounting Standards Board (FASB) Accounting Standards Codification (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. 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 our 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. 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.

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; (3) damages sought in these legal and regulatory proceedings can be unsubstantiated or indeterminate; (4) there are often significant facts in dispute; and/or (5) there is a wide range of possible outcomes. Accordingly, our estimated range of loss with respect to these matters may change from time to time, and actual losses may exceed current estimates.

Litigation Related to our Pending Merger with Union Pacific

Shareholders have and may continue to file lawsuits challenging our pending merger with Union Pacific, which may name us, Union Pacific, members of our Board of Directors, 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 merger on the agreed-upon terms, such an injunction may delay the completion of the merger or may prevent the merger 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 merger. 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 merger. 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 merger. 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:

  • We were named in a consolidated putative class action in the Northern District of Ohio (Eastern Division) (the Ohio Class Action) in which plaintiffs alleged various claims, including negligence, gross negligence, strict liability, and nuisance, and sought 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. On March 2, 2026, the U.S. Supreme Court denied objectors’ petition for a writ of certiorari. Accordingly, pursuant to the class action settlement terms, we made the final settlement payment in March 2026 in the amount of $285 million.

  • 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 closed the case, which plaintiffs appealed on March 28, 2025 to the U.S. Court of Appeals for the Second Circuit. On February 27, 2026, the U.S. Court of Appeals for the Second Circuit affirmed the district court’s judgment. The case is now closed.

◦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 the safety of the Company’s operations, among other claims (collectively, the Shareholder Derivative Matters). The lead plaintiffs filed an amended complaint on April 7, 2026, and the defendants filed a motion to dismiss on June 8, 2026. We received an additional shareholder litigation demand letter dated June 4, 2026, asserting substantially the same claims as in the Shareholder Derivative Matters.

Incident accruals principally related to ongoing legal proceedings totaled $186 million and $474 million at June 30, 2026 and December 31, 2025, respectively.

In regards to the Incident, the U.S. Department of Justice (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 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 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. 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 and twenty years. The Ohio AG did not join this settlement, and the litigation remains ongoing in the Ohio AG case. Both Norfolk Southern and the Ohio AG filed summary judgment motions, and Norfolk Southern filed six Daubert motions. On March 9, 2026, the Court granted a motion to intervene filed by two individuals who live and/or work near the derailment site. In granting the motion to intervene, the Court stayed the pending summary judgment and Daubert motions until it determines whether additional discovery is necessary. Total Incident-related environmental liabilities related to ongoing environmental monitoring activities and regulatory oversight are $185 million and $191 million at June 30, 2026 and December 31, 2025, respectively.

With respect to the Incident, we have recognized approximately $1.1 billion in insurance recoveries (including $3 million and $74 million during the second quarters of 2026 and 2025, respectively, and $4 million and $298 million during the first six months of 2026 and 2025, respectively), principally from excess liability (re)insurers. By June 30, 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 Federal Railroad Administration (FRA), the Occupational Safety and Health Administration, the Ohio 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).

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 National Transportation Safety Board. The FRA Incident Investigation is substantially complete and did not result in a specific findings report. We do not expect any civil penalties imposed in connection with such investigation to be significant.

Lawsuits

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 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. The decision was upheld by the Court of Appeals on August 16, 2019. Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia. 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. Circuit. 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.

Casualty Claims

Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs. 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 Federal Employers’ Liability Act (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 – 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. The actuarial firm provides the results of these analyses to aid in our estimate of the ultimate amount of liability. We adjust the liability quarterly based upon our assessment and the results of the study. The accuracy of our estimate of the liability is subject to inherent limitations given the difficulty of predicting future events such as jury decisions, court interpretations, or legislative changes. As a result, actual claim settlements may vary from the estimated liability recorded.

Occupational claims – Occupational claims include injuries and illnesses alleged to be caused by exposures which occur over time as opposed to injuries or illnesses caused by a specific accident or event. Types of occupational claims commonly seen allege exposure to asbestos and other claimed toxic substances resulting in respiratory diseases or cancer. Many such claims are being asserted by former or retired employees, some of whom have not been employed in the rail industry for decades. The independent actuarial firm provides an estimate of the occupational claims liability based upon our history of claim filings, severity, payments, and other pertinent facts. The liability is dependent upon judgments we make as to the specific case reserves as well as judgments of the actuarial firm in the quarterly studies. Our estimate of ultimate loss includes a provision for those claims that have been incurred but not reported. This provision is derived by analyzing industry data and projecting our experience. We adjust the liability quarterly based upon our assessment and the results of the study. However, it is possible that the recorded liability may not be adequate to cover the future payment of claims. Adjustments to the recorded liability are reflected in operating expenses in the periods in which such adjustments become known.

Third-party claims – We record a liability for third-party claims including those for highway crossing accidents, trespasser and other injuries, property damage, and lading damage. The actuarial firm assists us with the calculation of potential liability for third-party claims, except lading damage, based upon our experience including the number

and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses. 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.

Environmental Matters

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

In addition to environmental claims associated with the Incident, our Consolidated Balance Sheets include liabilities for other environmental exposures of $60 million at June 30, 2026 and $63 million at December 31, 2025, of which $15 million is classified as a current liability at the end of both periods. At June 30, 2026, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 70 known locations and projects compared with 69 locations and projects at December 31, 2025. At June 30, 2026, eighteen sites accounted for $53 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. 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.

As set forth above, with respect to known environmental sites (whether identified by us or by the U.S. EPA or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability.

The risk of incurring environmental liability for acts and omissions, past, present, and future, is inherent in the railroad business. Some of the commodities we transport, particularly those classified as hazardous materials, pose special risks that we work diligently to reduce. In addition, several of our subsidiaries own, or have owned, land used as operating property, or which is leased and operated by others, or held for sale. Because environmental problems that are latent or undisclosed may exist on these properties, there can be no assurance that we will not incur environmental liabilities or costs with respect to one or more of them, the amount and materiality of which cannot be estimated reliably at this time. Moreover, lawsuits and claims involving these and potentially other unidentified environmental sites and matters are likely to arise from time to time. The resulting liabilities could have a significant effect on financial position, results of operations, or liquidity in a particular year or quarter.

Based on our assessment of the facts and circumstances now known, we believe we have recorded the probable and reasonably estimable costs to address those environmental matters of which we are aware. Further, we believe that it is unlikely that any known matters, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, or liquidity.

Labor Agreements

Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act (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. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee (NCCC).

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.

Insurance

We purchase insurance covering legal liabilities for bodily injury and property damage to third parties. Our liability insurance provides limits for approximately 83% of covered losses above $75 million and below $734 million per occurrence and/or policy year. Above $800 million per occurrence and/or policy year, we maintain approximately $57 million of additional liability insurance limits for certain types of pollution releases. We also purchase insurance for property damage to property owned by us or in our care, custody, or control. Our property insurance provides limits for approximately 81% of covered losses above $75 million and below $275 million per occurrence and/or policy year.

Purchase Commitments

During the first quarter of 2026, we entered into additional unconditional purchase obligations of approximately $300 million through 2030 for track and locomotive materials.

14. New Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update (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. 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 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.

In December 2025, the FASB issued ASU 2025-10, “Accounting for Government Grants Received by Business Entities.” This update establishes guidance for the recognition, measurement, and presentation of government grants, including specific criteria for grants related to assets and grants related to income. The ASU is effective for interim periods and fiscal years beginning after December 15, 2028. We will not early adopt the standard and are currently evaluating the impact.

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