Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

RESULTS OF OPERATIONS

Three and six months ended June 30, 2025, compared to

three and six months ended June 30, 2024

For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “UPC”, “Corporation”, “Company”, “we”, “us”, and “our” shall mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which we separately refer to as “UPRR” or the “Railroad”.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and applicable notes to the Condensed Consolidated Financial Statements, Item 1, and other information included in this report. Our Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (GAAP).

The Railroad, along with its subsidiaries and rail affiliates, is our one reportable business segment. Although revenues are analyzed by commodity, we analyze the net financial results of the Railroad as one segment due to the integrated nature of the rail network.

Critical accounting estimates

The preparation of these financial statements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ materially from actual results, the impact on the Condensed Consolidated Financial Statements may be material. Our critical accounting estimates are available in Item 7 of our 2024 Annual Report on Form 10-K. During the first six months of 2025, there have not been any significant changes with respect to our critical accounting estimates.

RESULTS OF OPERATIONS

Quarterly summary

The Company reported earnings of $3.15 per diluted share on net income of $1.9 billion and an operating ratio of 59.0% in the second quarter of 2025 compared to earnings of $2.74 per diluted share on net income of $1.7 billion and an operating ratio of 60.0% for the second quarter of 2024. Freight revenues increased 4% in the second quarter of 2025 compared to the same period in 2024 driven by 4% volume increases and core pricing gains, partially offset by lower fuel surcharge revenues and unfavorable business mix (for example, relative increases in shipments with a lower average revenue per car (ARC), such as coal and intermodal). Volume increases were primarily driven by coal, intermodal, grain and grain products, and industrial chemicals, partially offset by weaker demand for automotive and fertilizer.

The second quarter of 2025 continued the trajectory of improved operational performance as reflected in the key service metric results compared to 2024. Freight car velocity increased 10% and terminal dwell improved 7%, while we handled 4% more volume than last year, including an increase of 31% in coal business. We continue to utilize our resources effectively as workforce productivity improved 9% and locomotive productivity improved 5% year-over-year. Both manifest and intermodal service performance index measures improved, while train length increased 2%.

Operating expenses increased slightly compared to the second quarter of 2024 due to volume-related costs, inflation, a $55 million crew staffing agreement ratification charge, and higher depreciation. These increases were partially offset by productivity, lower fuel prices, and lower casualty costs. Compared to second quarter of last year, operating income increased 5% to $2.5 billion and operating ratio of 59.0% improved 1.0 point, reflecting top-line growth, solid operational performance, and productivity gains.

Operating revenues
			Three months ended June 30,												Six months ended June 30,
Millions			2025			2024			Change						2025			2024			Change
Freight revenues			$	5,843		$	5,638		4%						$	11,534		$	11,254		2%
Other subsidiary revenues			181			212			(15)						375			429			(13)
Accessorial revenues			107			131			(18)						225			305			(26)
Other			23			26			(12)						47			50			(6)
Total			$	6,154		$	6,007		2%						$	12,181		$	12,038		1%

We generate freight revenues by transporting products from our three commodity groups. Freight revenues vary with volume (carloads) and ARC. Changes in price, traffic mix, and fuel surcharges drive ARC. Customer incentives, which are primarily provided for shipping to/from specific locations or based on cumulative volume, are recorded as a reduction to operating revenues. Customer incentives that include variable consideration based on cumulative volume are estimated using the expected value method, which is based on available historical, current, and forecasted volume, and recognized as the related performance obligation is satisfied. We recognize freight revenues over time as shipments move from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred.

Other subsidiary revenues (primarily logistics and commuter rail operations) are generally recognized over time as shipments move from origin to destination. The allocation of revenues between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Accessorial revenues are recognized at a point in time as performance obligations are satisfied.

Freight revenues increased 4% in the second quarter of 2025 compared to the same period in 2024 driven by 4% volume increases and core pricing gains, partially offset by lower fuel surcharge revenues and unfavorable business mix (for example, relative increases in shipments with a lower ARC, such as coal and intermodal). Volume increases were primarily driven by coal, intermodal, grain and grain products, and industrial chemicals, partially offset by weaker demand for automotive and fertilizer.

Each of our commodity groups includes revenues from fuel surcharges. Freight revenues from fuel surcharge programs decreased $100 million to $569 million in the second quarter of 2025 compared to $669 million in the same period of 2024 due to lower fuel prices and the lag impact on fuel prices (it can generally take up to two months for changing fuel prices to affect fuel surcharge recoveries), partially offset by higher volume.

Other subsidiary revenues decreased in the second quarter and six month periods of 2025 compared to 2024 primarily driven by the transfer of commuter operations to Metra and a weaker demand for auto parts shipments at our subsidiary that brokers intermodal and transload logistics services. Accessorial revenues decreased in the second quarter and six month periods of 2025 compared to 2024 driven by lower intermodal accessorial revenues as a result of our intermodal equipment sale. Additionally, the year-to-date comparison was negatively impacted by a one-time contract settlement recognized in the first quarter of 2024.

The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type:

Freight revenues			Three months ended June 30,												Six months ended June 30,
Millions			2025			2024			Change						2025			2024			Change
Grain & grain products			$	964		$	901		7%						$	1,914		$	1,844		4%
Fertilizer			201			203			(1)						411			404			2
Food & refrigerated			267			278			(4)						527			563			(6)
Coal & renewables			469			339			38						885			727			22
Bulk			1,901			1,721			10						3,737			3,538			6
Industrial chemicals & plastics			646			593			9						1,253			1,165			8
Metals & minerals			561			530			6						1,082			1,045			4
Forest products			340			342			(1)						661			680			(3)
Energy & specialized markets			665			658			1						1,298			1,337			(3)
Industrial			2,212			2,123			4						4,294			4,227			2
Automotive			632			659			(4)						1,213			1,270			(4)
Intermodal			1,098			1,135			(3)						2,290			2,219			3
Premium			1,730			1,794			(4)						3,503			3,489			-
Total			$	5,843		$	5,638		4%						$	11,534		$	11,254		2%

Revenue carloads			Three months ended June 30,												Six months ended June 30,
Thousands			2025			2024			Change						2025			2024			Change
Grain & grain products			216			200			8%						430			410			5%
Fertilizer			55			62			(11)						104			109			(5)
Food & refrigerated			43			46			(7)						86			92			(7)
Coal & renewables			205			158			30						390			335			16
Bulk			519			466			11						1,010			946			7
Industrial chemicals & plastics			177			169			5						346			333			4
Metals & minerals			191			184			4						365			354			3
Forest products			52			55			(5)						103			108			(5)
Energy & specialized markets			149			147			1						292			301			(3)
Industrial			569			555			3						1,106			1,096			1
Automotive			209			218			(4)						404			425			(5)
Intermodal [a]			817			798			2						1,691			1,537			10
Premium			1,026			1,016			1						2,095			1,962			7
Total			2,114			2,037			4%						4,211			4,004			5%

			Three months ended June 30,												Six months ended June 30,
Average revenue per car			2025			2024			Change						2025			2024			Change
Grain & grain products			$	4,467		$	4,493		(1)%						$	4,451		$	4,493		(1)%
Fertilizer			3,627			3,311			10						3,959			3,727			6
Food & refrigerated			6,237			5,943			5						6,147			6,086			1
Coal & renewables			2,283			2,156			6						2,267			2,173			4
Bulk			3,659			3,692			(1)						3,700			3,740			(1)
Industrial chemicals & plastics			3,647			3,507			4						3,625			3,497			4
Metals & minerals			2,950			2,885			2						2,967			2,955			-
Forest products			6,508			6,249			4						6,387			6,272			2
Energy & specialized markets			4,439			4,462			(1)						4,436			4,439			-
Industrial			3,885			3,825			2						3,881			3,855			1
Automotive			3,034			3,033			-						3,004			2,991			-
Intermodal [a]			1,345			1,421			(5)						1,355			1,444			(6)
Premium			1,688			1,766			(4)						1,673			1,779			(6)
Average			$	2,764		$	2,768		-%						$	2,739		$	2,811		(3)%

*[a]*For intermodal shipments each container or trailer equals one carload.

Bulk – Bulk includes shipments of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. Freight revenues from bulk shipments increased in the second quarter and year-to-date periods of 2025 compared to 2024 due to volume growth of 11% and 7%, respectively, and core pricing gains, partially offset by business mix (from increased coal shipments) and lower fuel surcharge revenues. The volume increases for both periods of 2025 were driven by higher demand for coal used in electricity generation due to higher natural gas prices and business wins, strength in grain and grain products from increased exports, soybean crush production, and ethanol demand. Lower food and refrigerated and fertilizer volume partially offset the volume growth.

Industrial – Industrial includes shipments of industrial chemicals and plastics, metals and minerals, forest products, and energy and specialized markets. Freight revenues from industrial shipments increased in the second quarter of 2025 compared to 2024 due to core pricing gains and 3% volume increases, partially offset by lower fuel surcharge revenues and business mix from increased rock shipments. Volume increases in the second quarter of 2025 compared to 2024 were driven by strength in industrial chemicals, rock, and soda ash shipments. The volume gains were partially offset by lower iron ore shipments impacted by ongoing tariff uncertainties, and softness in the paper market. For the year-to-date period, industrial revenues increased 2% driven by core pricing gains and volume growth, partially offset by business mix and lower fuel surcharge revenues. Volume growth from industrial chemicals and rock was partially offset by lower shipments of forest and petroleum products in the first six months of 2025 compared to 2024.

Premium – Premium includes shipments of finished automobiles, automotive parts, and merchandise in intermodal containers, both domestic and international. Premium freight revenues decreased in the second quarter of 2025 compared to 2024 driven by lower fuel surcharge revenues and business mix, partially offset by a 1% increase in volume and core pricing gains. For the year-to-date period of 2025 compared to 2024, premium freight revenues were flat as 7% volume increases and core pricing gains were offset by business mix and lower fuel surcharge revenues. The volume increases in the second quarter and year-to-date periods of 2025 were primarily due to continued elevated U.S. West Coast imports in addition to domestic intermodal business development conversions. Automotive shipments decreased in the second quarter and year-to-date periods of 2025 compared to 2024 due to reduced production and tariff uncertainties.

Mexico business – Freight revenues from each of our commodity groups includes revenues from shipments to and from Mexico, which increased 1% to $751 million in the second quarter of 2025 compared to 2024 driven by volume growth in grain, petroleum products, and intermodal shipments, partially offset by lower automotive related shipments. For the first six months of 2025, Mexico related freight revenues declined 4% on 2% volume decreases driven by lower auto parts and finished vehicles, which more than offset growth in grain, intermodal, and petroleum product shipments.

Operating expenses
			Three months ended June 30,												Six months ended June 30,
Millions			2025			2024			Change						2025			2024			Change
Compensation and benefits			1,249			1,187			5%						$	2,461		$	2,410		2%
Purchased services and materials			642			644			-						1,273			1,257			1
Depreciation			613			596			3						1,223			1,190			3
Fuel			576			625			(8)						1,179			1,283			(8)
Equipment and other rents			230			219			5						471			435			8
Other			319			336			(5)						678			691			(2)
Total			$	3,629		$	3,607		1%						$	7,285		$	7,266		-%

Operating expenses increased slightly in the second quarter and year-to-date periods of 2025 compared to 2024 due to volume-related costs, inflation, a $55 million crew staffing agreement ratification charge, and higher depreciation. These increases were partially offset by productivity, lower fuel prices, and lower casualty costs.

Compensation and benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, and incentive costs. For the second quarter and six month periods of 2025, compensation and benefits expense increased 5% and 2%, respectively, compared to 2024 due to volume-related costs, a $55 million crew staffing agreement ratification charge, wage inflation, and higher incentive compensation, partially offset by lower employee levels.

Purchased services and materials – Expense for purchased services and materials includes the costs of services purchased from outside contractors and other service providers (including equipment maintenance and contract expense incurred by our subsidiaries for external transportation services); materials used to maintain the Railroad’s lines, structures, and equipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers; leased automobile maintenance expense; and tools and supplies. Purchased services and materials was flat in the second quarter of 2025 compared to 2024 driven by decreased volume-related drayage costs incurred at one of our subsidiaries, offset by inflation and volume-related costs (including an increase in our active locomotive fleet). For the year-to-date period, purchased services and materials increased 1% driven by inflation, volume-related costs, and a 2024 favorable contract settlement, partially offset by decreased volume-related drayage costs incurred at one of our subsidiaries.

Depreciation – The majority of depreciation relates to road property, including rail, ties, ballast, and other track material. Depreciation expense increased 3% for both the second quarter and year-to-date periods of 2025 compared to 2024 driven by a higher depreciable asset base.

Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Fuel expense decreased in both the second quarter and year-to-date periods of 2025 compared to the same period in 2024 driven by a decrease in locomotive diesel fuel prices and an improvement in the fuel consumption rate (computed as gallons of fuel consumed divided by gross ton-miles in thousands), partially offset by an increase in gross ton-miles. Locomotive diesel fuel prices averaged $2.42 and $2.73 per gallon (including taxes and transportation costs) in the second quarter of 2025 and 2024, respectively. For the year-to-date period, locomotive diesel fuel prices averaged $2.46 per gallon in 2025 compared to $2.77 per gallon in 2024.

Equipment and other rents – Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expense, offset by equity income from certain equity method investments. Equipment and other rents expense increased 5% and 8%, respectively, in the second quarter and year-to-date periods of 2025 compared to 2024 driven by lower equity income, increased car hire for auto racks, increased demand in business (mainly intermodal) utilizing freight cars owned by others, and inflation, partially offset by lower operating equipment lease expense.

Other – Other expense includes state and local taxes; freight, equipment, and property damage; utilities; insurance; personal injury; environmental remediation; employee travel; telephone and cellular; computer software; bad debt; and other general expenses. Other expense decreased 5% and 2%, respectively, in the second quarter and year-to-date periods of 2025 compared to 2024 driven by lower environmental remediation and freight loss and damage costs, partially offset by a 2024 gain on the sale of intermodal equipment.

Non operating items
			Three months ended June 30,												Six months ended June 30,
Millions			2025			2024			Change						2025			2024			Change
Other income, net			$	123		$	103		19%						$	201		$	195		3%
Interest expense			(335)			(319)			5						(657)			(643)			2
Income tax expense			(437)			(511)			(14)						(938)			(1,010)			(7)

Other income, net – Other income increased in the second quarter and year-to-date periods of 2025 compared to 2024 driven by higher real estate income, partially offset by interest received in 2024 from the IRS on refund claims. See Note 6 to the Condensed Consolidated Financial Statements, Item 1, for additional detail.

Interest expense – Interest expense increased in the second quarter and year-to-date periods of 2025 compared to 2024 due to a higher weighted-average debt level combined with a slightly higher effective interest rate of 4.1% in 2025 compared to 4.0% in 2024 for both periods. The weighted-average debt levels were $32.8 billion and $31.7 billion for second quarter of 2025 and 2024, respectively, and $32.3 billion and $32.0 billion for the six month period of 2025 and 2024, respectively.

Income tax expense – Income tax expense decreased 14% and 7% in the second quarter and year-to-date periods of 2025, respectively, compared to 2024. In the second quarter of 2025, the state of Kansas enacted legislation modifying the corporate income tax apportionment formula for future years resulting in a $115 million reduction of our deferred tax expense. In the second quarter of 2024, the state of Arkansas enacted legislation to reduce its corporate income tax rate for future years resulting in an $8 million reduction of our deferred tax expense. Our effective tax rates were 18.9% and 23.4% for the second quarter of 2025 and 2024, respectively, and 21.1% and 23.4% for the six month period of 2025 and 2024, respectively.

OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS

We report a number of key performance measures weekly to the Surface Transportation Board (STB). We provide these on our website at https://investor.unionpacific.com/key-performance-metrics.

Operating/performance statistics

Management continuously monitors these key operating metrics to evaluate our operational efficiency in striving to deliver the service product we sold to our customers.

Railroad performance measures are included in the table below:

			Three months ended June 30,												Six months ended June 30,
			2025			2024			Change						2025			2024			Change
Gross ton-miles (GTMs) (billions)			220.3			206.8			7%						433.1			412.8			5%
Revenue ton-miles (billions)			107.6			100.0			8						211.6			201.3			5
Freight car velocity (daily miles per car)			221			201			10						218			202			8
Average train speed (miles per hour) [a]			23.9			23.3			3						23.8			23.7			-
Average terminal dwell time (hours) [a]			21.2			22.7			(7)						21.7			23.1			(6)
Locomotive productivity (GTMs per horsepower day)			141			134			5						138			134			3
Train length (feet)			9,689			9,544			2						9,590			9,415			2
Intermodal service performance index (%)			99			93			6 pts						96			93			3 pts
Manifest service performance index (%)			97			84			13 pts						95			85			10 pts
Workforce productivity (car miles per employee)			1,124			1,031			9						1,108			1,015			9
Total employees (average)			29,711			30,556			(3)						29,929			30,804			(3)
Operating ratio (%)			59.0			60.0			(1.0) pts						59.8			60.4			(0.6) pts

*[a]*As reported to the STB.

Gross and revenue ton-miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of rate miles. Gross ton-miles and revenue ton-miles increased by 7% and 8%, respectively, in the second quarter of 2025, compared to 2024 driven by a 4% increase in carloadings over the same time period. Changes in business mix drove the variances between gross ton-miles, revenue ton-miles, and carloads due to increased coal shipments that are generally heavier. Year-to-date, gross ton-miles, revenue ton-miles, and carloadings all increased 5% compared to the same period of 2024.

Freight car velocity – Freight car velocity measures the average daily miles per car on our network. The two key drivers of this metric are the speed of the train between terminals (average train speed) and the time a rail car spends at the terminals (average terminal dwell time). Freight car velocity increased 10% and 8%, respectively, in the second quarter and six month period of 2025 compared to 2024 driven by improvements in terminal dwell in both periods.

Locomotive productivity – Locomotive productivity is gross ton-miles per average daily locomotive horsepower available. Locomotive productivity increased 5% and 3% in the second quarter and year-to-date periods of 2025, respectively, driven by improved network fluidity and asset utilization even while the active locomotive fleet increased to handle the additional volume.

Train length – Train length is the average maximum train length on a route measured in feet. Our train length increased 2% in both the second quarter and six month periods of 2025 compared to 2024 due to train length improvement initiatives, specifically driven by increased coal and grain train volume moving on longer trains.

Service performance index (SPI) – SPI is a ratio of the service customers are currently receiving relative to the best monthly performance over the last three years. Measuring our performance relative to a historical benchmark demonstrates our focus on continuously improving service for our customers. Our SPI is calculated for intermodal and manifest products. Intermodal SPI improved 6 and 3 points, respectively, in the second quarter and year-to-date periods of 2025 compared to 2024, while we handled 2% and 10% more volume, respectively. Manifest SPI improved 13 and 10 points, respectively, in the second quarter and six month periods of 2025 compared to 2024 driven by improved network fluidity, while we handled higher volume.

Workforce productivity – Workforce productivity is average daily car miles per employee. Workforce productivity improved 9% in both the second quarter and year-to-date periods of 2025 compared to 2024 as average daily car miles increased 6% and employees decreased 3% compared to 2024 for both periods. In the second quarter of 2025, we continued to align our active train, engine, and yard (TE&Y) workforce to meet customer needs in a dynamic demand environment, while maintaining operational fluidity. As a result, we were able to handle 4% and 5% more volume in the second quarter and six month period of 2025, respectively, compared to 2024 with 1% fewer active TE&Y employees in both periods.

Operating ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenues. For the second quarter and year-to-date periods of 2025, our operating ratio of 59.0% and 59.8%, respectively, improved 1.0 and 0.6 points, respectively, driven by core pricing gains, productivity initiatives, and volume growth, partially offset by the year-over-year impact of changes in business mix, inflation, a $55 million crew staffing agreement ratification charge, and a 2024 gain on the sale of intermodal equipment. In addition, the year-to-date period was negatively impacted by contract settlements in the first quarter of 2024.

Debt / net income
Millions, except ratios for the trailing twelve months ended [1]			Jun. 30, 2025			Dec. 31, 2024
Debt			$	32,813		$	31,192
Net income			6,935			6,747
Debt / net income			4.7			4.6

Adjusted debt / adjusted EBITDA
Millions, except ratios for the trailing twelve months ended [1]			Jun. 30, 2025			Dec. 31, 2024
Net income			$	6,935		$	6,747
Add:
Income tax expense			1,975			2,047
Depreciation			2,431			2,398
Interest expense			1,283			1,269
EBITDA			$	12,624		$	12,461
Adjustments:
Other income, net			(356)			(350)
Interest on operating lease liabilities [2]			46			48
Adjusted EBITDA (a)			$	12,314		$	12,159
Debt			$	32,813		$	31,192
Operating lease liabilities			1,143			1,271
Adjusted debt (b)			$	33,956		$	32,463
Adjusted debt / adjusted EBITDA (b/a)			2.8			2.7

*[1]*The trailing twelve months income statement information ended June 30, 2025, is recalculated by taking the twelve months ended December 31, 2024, subtracting the six months ended June 30, 2024, and adding the six months ended June 30, 2025.

*[2]*Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.

Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post-retirement benefit) obligations) to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on present value of operating leases) is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the Company’s ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At June 30, 2025, and December 31, 2024, the incremental borrowing rate on operating leases was 4.0% and 3.8%, respectively. Pension and OPEB were funded at June 30, 2025, and December 31, 2024.

LIQUIDITY AND CAPITAL RESOURCES

Financial condition

Cash flows
Millions, for the six months ended June 30,			2025			2024
Cash provided by operating activities			$	4,543		$	4,033
Cash used in investing activities			(1,839)			(1,592)
Cash used in financing activities			(2,649)			(2,368)
Net change in cash, cash equivalents, and restricted cash			$	55		$	73

Operating activities

Cash provided by operating activities increased in the first six months of 2025 compared to the same period of 2024 driven by higher net income and lower income taxes paid.

On July 4, 2025, H.R.1 was enacted that makes key elements of the 2017 Tax Cuts and Jobs Act permanent, including provisions for 100% bonus depreciation on qualified property and fully expensing internally developed software, which will have a favorable impact to our future cash provided by operating activities.

Investing activities

Cash used in investing activities increased in the first six months of 2025 compared to the same period of 2024 driven by the timing of capital investments.

The table below details cash capital investments:

Millions, for the six months ended June 30,			2025			2024
Rail and other track material			$	245		$	249
Ties			306			230
Ballast			101			90
Other [a]			294			296
Total road infrastructure replacements			946			865
Line expansion and other capacity projects			118			92
Commercial facilities			174			111
Total capacity and commercial facilities			292			203
Locomotives and freight cars [b]			465			535
Technology and other			139			96
Total cash capital investments [c]			$	1,842		$	1,699

*[a]*Other includes bridges and tunnels, signals, other road assets, and road work equipment.

*[b]*Locomotives and freight cars include early lease buyouts of $178 million in 2025 and $96 million in 2024.

*[c]*Weather-related damages for the six months ended June 30, 2025 and 2024, are immaterial.

Capital plan

In 2025, we expect our capital plan to be approximately $3.4 billion, consistent with 2024. We plan to continue to make investments to support our growth strategy, improve the safety, resiliency, and operational efficiency of the network, harden our infrastructure, and replace older assets, including modernization of our locomotive fleet and acquiring freight cars to support replacement and growth opportunities. In addition, the plan includes investments in growth-related projects to drive more carloads to the network and enhance productivity. This includes siding construction and extension projects, terminal investments supporting our manifest network, and investments in certain ramps to efficiently handle volume from new and existing intermodal customers. The capital plan may be revised if business conditions warrant or if laws or regulations affect our ability to generate sufficient returns on these investments.

Financing activities

Cash used in financing activities increased in the first six months of 2025 compared to the same period of 2024 driven by more share repurchases, including the 2025 accelerated share repurchase programs, partially offset by an increase of debt issued and less debt repaid.

See Note 14 of the Condensed Consolidated Financial Statements, Item 1, for a description of all our outstanding financing arrangements and significant new borrowings and Note 16 of the Condensed Consolidated Financial Statements, Item 1, for a description of our share repurchase programs.

Free cash flow – Free cash flow is defined as cash provided by operating activities less cash used in investing activities and dividends paid. Cash flow conversion rate is defined as cash provided by operating activities less cash used for capital investments as a ratio of net income.

Free cash flow and cash flow conversion rate are considered non-GAAP financial measures by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe free cash flow and cash flow conversion rate are important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing. Free cash flow and cash flow conversion rate should be considered in addition to, rather than as a substitute for, cash provided by operating activities.

The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow (non-GAAP measure):

Millions, for the six months ended June 30,			2025						2024
Cash provided by operating activities			$	4,543					$	4,033
Cash used in investing activities			(1,839)						(1,592)
Dividends paid			(1,599)						(1,588)
Free cash flow			$	1,105					$	853

The following table reconciles cash provided by operating activities (GAAP measure) to cash flow conversion rate (non-GAAP measure):

Millions, except percentages, for the six months ended June 30,			2025						2024
Cash provided by operating activities			$	4,543					$	4,033
Cash used in capital investments			(1,842)						(1,699)
Total (a)			$	2,701					$	2,334
Net income (b)			$	3,502					$	3,314
Cash flow conversion rate (a/b)			77%						70%

Current liquidity status

We are continually evaluating our financial condition and liquidity. We analyze a wide range of economic scenarios and the impact on our ability to generate cash. These analyses inform our liquidity plans and activities outlined below and indicate we have sufficient borrowing capacity to sustain an extended period of lower volume.

During the second quarter of 2025, we generated $2.3 billion of cash provided by operating activities, repurchased $1.3 billion worth of shares under our share repurchase programs, including amounts assigned to the final delivery of shares under our accelerated share repurchase programs, and paid our quarterly dividend. On June 30, 2025, we had $1.1 billion of cash and cash equivalents, $2.0 billion of credit available under our revolving credit facility, and up to $800 million undrawn on the Receivables Facility. We have been, and we expect to continue to be, in compliance with our debt covenants.

As described in the notes to the Condensed Consolidated Financial Statements and as referenced in the table below, we have contractual obligations that may affect our financial condition. Based on our assessment of the underlying provisions and circumstances of our contractual obligations, other than the risks that we and other similarly situated companies face with respect to the condition of the capital markets, as of the date of this filing, there is no known trend, demand, commitment, event, or uncertainty that is reasonably likely to occur that would have a material adverse effect on our consolidated results of operations, financial condition, or liquidity. In addition, our commercial obligations, financings, and commitments are customary transactions that are like those of other comparable corporations, particularly within the transportation industry.

The following table identifies material contractual obligations as of June 30, 2025:

						Jul. 1, through Dec. 31, 2025			Payments Due by Dec. 31,
Millions			Total			2026			2027			2028			2029			After 2029
Debt [a]			$	61,094		$	1,670		$	2,724		$	2,455		$	2,402		$	2,360		$	49,483
Purchase obligations [b]			1,693			444			645			267			195			134			8
Operating leases [c]			1,280			142			284			235			187			137			295
Other post-retirement benefits [d]			358			19			39			38			38			38			186
Finance lease obligations [e]			132			19			42			36			14			21			-
Total contractual obligations			$	64,557		$	2,294		$	3,734		$	3,031		$	2,836		$	2,690		$	49,972

*[a]*Excludes finance lease obligations of $122 million as well as unamortized discount and deferred issuance costs of ($1,697) million. Includes an interest component of $26,706 million.

*[b]*Purchase obligations include locomotive maintenance contracts; purchase commitments for ties, ballast, and rail; and agreements to purchase other goods and services.

*[c]*Includes leases for locomotives, freight cars, other equipment, and real estate. Includes an interest component of $137 million.

*[d]*Includes estimated other post-retirement, medical, and life insurance payments and payments made under the unfunded pension plan for the next ten years.

*[e]*Represents total obligations, including interest component of $10 million.

OTHER MATTERS

Asserted and unasserted claims – See Note 15 to the Condensed Consolidated Financial Statements, Item 1.

Indemnities – See Note 15 to the Condensed Consolidated Financial Statements, Item 1.

CAUTIONARY INFORMATION

Certain statements in this report, and statements in other reports or information filed or to be filed with the SEC (as well as information included in oral statements or other written statements made or to be made by us), are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements and information include, without limitation, statements and information set forth under the captions “Liquidity and Capital Resources” regarding our capital plan, share repurchase programs, contractual obligations, and "Other Matters" in this Item 2 of Part I. Forward-looking statements and information also include any other statements or information in this report (including information incorporated herein by reference) regarding: potential impacts of public health crises, including pandemics, epidemics, and the outbreak of other contagious disease, such as the coronavirus and its variant strains (COVID); the Russia-Ukraine and Israel-Hamas wars and other geopolitical tensions in the Middle East, and any impacts on our business operations, financial results, liquidity, and financial position, and on the world economy (including customers, employees, and supply chains), including as a result of fluctuations in volume and carloadings; closing of customer manufacturing, distribution or production facilities; expectations as to operational or service improvements; expectations as to hiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service, infrastructure improvements, and transportation plan modifications (including those discussed in response to increased traffic); expectations as to cost savings, revenue growth, and earnings; the time by which goals, targets, aspirations, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to our business, financial, and operational results, future economic performance, and general economic conditions; proposed new products and services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; estimates and expectations regarding current or potential tariffs; potential impacts of H.R.1, which was enacted on July 4, 2025; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyber-attacks, or other matters will not have a material adverse effect on our consolidated results of operations, financial condition, or liquidity and any other similar expressions concerning matters that are not historical facts. Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects,” and similar words, phrases, or expressions.

Forward-looking statements should not be read as a guarantee of future performance, results, or outcomes, and will not necessarily be accurate indications of the times that, or by which, such performance, results, or outcomes will be achieved, if ever. Forward-looking statements and information are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements and information. Forward-looking statements and information reflect the good faith consideration by management of currently available information, and may be based on underlying assumptions believed to be reasonable under the circumstances. However, such information and assumptions (and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown or unforeseeable events or circumstances over which management has little or no influence or control, and many of these risks and uncertainties are currently amplified by and may continue to be amplified by, or in the future may be amplified by, among other things, macroeconomic and geopolitical conditions.

The Risk Factors in Item 1A of our 2024 Annual Report on Form 10-K, filed February 7, 2025, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in any forward-looking statements or information. To the extent circumstances require or we deem it otherwise necessary, we will update or amend these risk factors in a Form 10-Q, Form 8-K, or subsequent Form 10-K. All forward-looking statements are qualified by, and should be read in conjunction with, these Risk Factors.

Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward looking information to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

AVAILABLE INFORMATION

Our Internet website is www.up.com. We make available free of charge on our website (under the “Investors” caption link) our Annual Reports on Form 10-K; our Quarterly Reports on Form 10-Q; our current reports on Form 8-K; our proxy statements; Forms 3, 4, and 5, filed on behalf of directors and certain executive officers; and amendments to such reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act). We provide these reports and statements as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We also make available on our website previously filed SEC reports and exhibits via a link to EDGAR on the SEC’s Internet site at www.sec.gov. We provide these previously filed reports as a convenience and their contents reflect only information that was true and correct as of the date of the report. We assume no obligation to update this historical information. Additionally, our corporate governance materials, including By-Laws, Board Committee charters, governance guidelines and policies, and codes of conduct and ethics for directors, officers, and employees are available on our website. From time to time, the corporate governance materials on our website may be updated as necessary to comply with rules issued by the SEC and the New York Stock Exchange or as desirable to promote the effective and efficient governance of our Company. Any security holder wishing to receive, without charge, a copy of any of our SEC filings or corporate governance materials should send a written request to: Secretary, Union Pacific Corporation, 1400 Douglas Street, Omaha, NE 68179.

References to our website address in this report, including references in Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 2, are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website. Therefore, such information should not be considered part of this report.