filings.toolsItem 1. Condensed Consolidated Financial Statements
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Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Income (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions, except per share amounts, for the three months ended September 30, | 2025 | 2024 | ||||||
| Operating revenues: | ||||||||
| Freight revenues | $ | 5,927 | $ | 5,768 | ||||
| Other revenues | 317 | 323 | ||||||
| Total operating revenues | 6,244 | 6,091 | ||||||
| Operating expenses: | ||||||||
| Compensation and benefits | 1,214 | 1,228 | ||||||
| Purchased services and materials | 683 | 644 | ||||||
| Depreciation | 618 | 602 | ||||||
| Fuel | 616 | 610 | ||||||
| Equipment and other rents | 212 | 237 | ||||||
| Other | 352 | 354 | ||||||
| Total operating expenses | 3,695 | 3,675 | ||||||
| Operating income | 2,549 | 2,416 | ||||||
| Other income, net (Note 6) | 96 | 87 | ||||||
| Interest expense | (327) | (314) | ||||||
| Income before income taxes | 2,318 | 2,189 | ||||||
| Income tax expense (Note 7) | (530) | (518) | ||||||
| Net income | $ | 1,788 | $ | 1,671 | ||||
| Share and per share (Note 8): | ||||||||
| Earnings per share - basic | $ | 3.02 | $ | 2.75 | ||||
| Earnings per share - diluted | $ | 3.01 | $ | 2.75 | ||||
| Weighted average number of shares - basic | 592.4 | 607.6 | ||||||
| Weighted average number of shares - diluted | 593.2 | 608.6 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions, for the three months ended September 30, | 2025 | 2024 | ||||||
| Net income | $ | 1,788 | $ | 1,671 | ||||
| Other comprehensive income/(loss): | ||||||||
| Defined benefit plans | (1) | - | ||||||
| Foreign currency translation | 21 | (86) | ||||||
| Total other comprehensive income/(loss) [a] | 20 | (86) | ||||||
| Comprehensive income | $ | 1,808 | $ | 1,585 |
*[a]*Net of deferred taxes of $0.1 million and $0.8 million during the three months ended September 30, 2025 and 2024, respectively.
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Income (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions, except per share amounts, for the nine months ended September 30, | 2025 | 2024 | ||||||
| Operating revenues: | ||||||||
| Freight revenues | $ | 17,461 | $ | 17,022 | ||||
| Other revenues | 964 | 1,107 | ||||||
| Total operating revenues | 18,425 | 18,129 | ||||||
| Operating expenses: | ||||||||
| Compensation and benefits | 3,675 | 3,638 | ||||||
| Purchased services and materials | 1,956 | 1,901 | ||||||
| Depreciation | 1,841 | 1,792 | ||||||
| Fuel | 1,795 | 1,893 | ||||||
| Equipment and other rents | 683 | 672 | ||||||
| Other | 1,030 | 1,045 | ||||||
| Total operating expenses | 10,980 | 10,941 | ||||||
| Operating income | 7,445 | 7,188 | ||||||
| Other income, net (Note 6) | 297 | 282 | ||||||
| Interest expense | (984) | (957) | ||||||
| Income before income taxes | 6,758 | 6,513 | ||||||
| Income tax expense (Note 7) | (1,468) | (1,528) | ||||||
| Net income | $ | 5,290 | $ | 4,985 | ||||
| Share and per share (Note 8): | ||||||||
| Earnings per share - basic | $ | 8.88 | $ | 8.19 | ||||
| Earnings per share - diluted | $ | 8.87 | $ | 8.18 | ||||
| Weighted average number of shares - basic | 595.8 | 608.7 | ||||||
| Weighted average number of shares - diluted | 596.7 | 609.7 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions, for the nine months ended September 30, | 2025 | 2024 | ||||||
| Net income | $ | 5,290 | $ | 4,985 | ||||
| Other comprehensive income/(loss): | ||||||||
| Defined benefit plans | - | 1 | ||||||
| Foreign currency translation | 51 | (79) | ||||||
| Total other comprehensive income/(loss) [a] | 51 | (78) | ||||||
| Comprehensive income | $ | 5,341 | $ | 4,907 |
*[a]*Net of deferred taxes of ($1.8) million and $0.7 million during the nine months ended September 30, 2025 and 2024, respectively.
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Financial Position (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions, except share and per share amounts | Sep. 30, 2025 | Dec. 31, 2024 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 808 | $ | 1,016 | ||||
| Accounts receivable, net (Note 10) | 1,921 | 1,894 | ||||||
| Materials and supplies | 782 | 769 | ||||||
| Other current assets | 393 | 342 | ||||||
| Total current assets | 3,904 | 4,021 | ||||||
| Investments | 2,841 | 2,664 | ||||||
| Properties, net (Note 11) | 59,392 | 58,343 | ||||||
| Operating lease assets | 1,090 | 1,297 | ||||||
| Other assets | 1,420 | 1,390 | ||||||
| Total assets | $ | 68,647 | $ | 67,715 | ||||
| Liabilities and common shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and other current liabilities (Note 12) | $ | 3,699 | $ | 3,829 | ||||
| Debt due within one year (Note 14) | 1,521 | 1,425 | ||||||
| Total current liabilities | 5,220 | 5,254 | ||||||
| Debt due after one year (Note 14) | 30,286 | 29,767 | ||||||
| Operating lease liabilities | 764 | 925 | ||||||
| Deferred income taxes | 13,329 | 13,151 | ||||||
| Other long-term liabilities | 1,744 | 1,728 | ||||||
| Commitments and contingencies (Note 15) | ||||||||
| Total liabilities | 51,343 | 50,825 | ||||||
| Common shareholders' equity: | ||||||||
| Common shares, $2.50 par value, 1,400,000,000 authorized; 1,113,163,706 and | ||||||||
| 1,113,018,733 issued; 593,127,096 and 604,241,260 outstanding, respectively | 2,783 | 2,783 | ||||||
| Paid-in-surplus | 5,548 | 5,334 | ||||||
| Retained earnings | 68,501 | 65,628 | ||||||
| Treasury stock | (58,856) | (56,132) | ||||||
| Accumulated other comprehensive loss (Note 9) | (672) | (723) | ||||||
| Total common shareholders' equity | 17,304 | 16,890 | ||||||
| Total liabilities and common shareholders' equity | $ | 68,647 | $ | 67,715 |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions, for the nine months ended September 30, | 2025 | 2024 | ||||||
| Operating activities | ||||||||
| Net income | $ | 5,290 | $ | 4,985 | ||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
| Depreciation | 1,841 | 1,792 | ||||||
| Deferred and other income taxes | 172 | 77 | ||||||
| Other operating activities, net | 6 | (52) | ||||||
| Changes in current assets and liabilities: | ||||||||
| Accounts receivable, net | (27) | 37 | ||||||
| Materials and supplies | (13) | (32) | ||||||
| Other current assets | 1 | (92) | ||||||
| Accounts payable and other current liabilities | (324) | (82) | ||||||
| Income and other taxes | 119 | 51 | ||||||
| Cash provided by operating activities | 7,065 | 6,684 | ||||||
| Investing activities | ||||||||
| Capital investments | (2,792) | (2,530) | ||||||
| Other investing activities, net | 1 | 104 | ||||||
| Cash used in investing activities | (2,791) | (2,426) | ||||||
| Financing activities | ||||||||
| Share repurchase programs (Note 16) | (2,679) | (831) | ||||||
| Dividends paid | (2,418) | (2,403) | ||||||
| Debt issued (Note 14) | 1,995 | 800 | ||||||
| Debt repaid | (1,424) | (2,220) | ||||||
| Other financing activities, net | 54 | 279 | ||||||
| Cash used in financing activities | (4,472) | (4,375) | ||||||
| Net change in cash, cash equivalents, and restricted cash | (198) | (117) | ||||||
| Cash, cash equivalents, and restricted cash at beginning of year | 1,028 | 1,074 | ||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 830 | $ | 957 | ||||
| Supplemental cash flow information | ||||||||
| Non-cash investing and financing activities: | ||||||||
| Capital investments accrued but not yet paid | $ | 190 | $ | 153 | ||||
| Cash paid during the period for: | ||||||||
| Income taxes, net of refunds | $ | (841) | $ | (1,219) | ||||
| Interest, net of amounts capitalized | (1,083) | (1,074) | ||||||
| Reconciliation of cash, cash equivalents, and restricted cash | ||||||||
| to the Condensed Consolidated Statement of Financial Position: | ||||||||
| Cash and cash equivalents | $ | 808 | $ | 947 | ||||
| Restricted cash equivalents in other current assets | 17 | 2 | ||||||
| Restricted cash equivalents in other assets | 5 | 8 | ||||||
| Total cash, cash equivalents, and restricted cash equivalents per above | $ | 830 | $ | 957 |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Changes in Common Shareholders’ Equity (Unaudited)
Union Pacific Corporation and Subsidiary Companies
| Millions | Common shares | Treasury shares | Common shares | Paid-in-surplus | Retained earnings | Treasury stock | AOCI [a] | Total | ||||||||||||||||||
| Balance at July 1, 2024 | 1,113.0 | (503.3) | $ | 2,783 | $ | 5,249 | $ | 63,820 | $ | (54,757) | $ | (606) | $ | 16,489 | ||||||||||||
| Net income | - | - | 1,671 | - | - | 1,671 | ||||||||||||||||||||
| Other comprehensive income/(loss) | - | - | - | - | (86) | (86) | ||||||||||||||||||||
| Conversion, stock option exercises, forfeitures, ESPP, and other [b] | - | 0.2 | - | 48 | - | 14 | - | 62 | ||||||||||||||||||
| Share repurchase programs (Note 16) | - | (3.0) | - | - | - | (738) | - | (738) | ||||||||||||||||||
| Dividends declared ($1.34 per share) | - | - | - | - | (814) | - | - | (814) | ||||||||||||||||||
| Balance at September 30, 2024 | 1,113.0 | (506.1) | $ | 2,783 | $ | 5,297 | $ | 64,677 | $ | (55,481) | $ | (692) | $ | 16,584 | ||||||||||||
| Balance at July 1, 2025 | 1,113.2 | (520.2) | $ | 2,783 | $ | 5,505 | $ | 67,532 | $ | (58,870) | $ | (692) | $ | 16,258 | ||||||||||||
| Net income | - | - | 1,788 | - | - | 1,788 | ||||||||||||||||||||
| Other comprehensive income/(loss) | - | - | - | - | 20 | 20 | ||||||||||||||||||||
| Conversion, stock option exercises, forfeitures, ESPP, and other [b] | - | 0.2 | - | 43 | - | 14 | - | 57 | ||||||||||||||||||
| Share repurchase programs (Note 16) | - | - | - | - | - | - | - | - | ||||||||||||||||||
| Dividends declared ($1.38 per share) | - | - | - | - | (819) | - | - | (819) | ||||||||||||||||||
| Balance at September 30, 2025 | 1,113.2 | (520.0) | $ | 2,783 | $ | 5,548 | $ | 68,501 | $ | (58,856) | $ | (672) | $ | 17,304 |
| Millions | Common shares | Treasury shares | Common shares | Paid-in-surplus | Retained earnings | Treasury stock | AOCI [a] | Total | ||||||||||||||||||
| Balance at January 1, 2024 | 1,112.9 | (503.2) | $ | 2,782 | $ | 5,193 | $ | 62,093 | $ | (54,666) | $ | (614) | $ | 14,788 | ||||||||||||
| Net income | - | - | 4,985 | - | - | 4,985 | ||||||||||||||||||||
| Other comprehensive income/(loss) | - | - | - | - | (78) | (78) | ||||||||||||||||||||
| Conversion, stock option exercises, forfeitures, ESPP, and other [b] | 0.1 | 0.6 | 1 | 104 | - | 34 | - | 139 | ||||||||||||||||||
| Share repurchase programs (Note 16) | - | (3.5) | - | - | - | (849) | - | (849) | ||||||||||||||||||
| Dividends declared ($3.94 per share) | - | - | - | - | (2,401) | - | - | (2,401) | ||||||||||||||||||
| Balance at September 30, 2024 | 1,113.0 | (506.1) | $ | 2,783 | $ | 5,297 | $ | 64,677 | $ | (55,481) | $ | (692) | $ | 16,584 | ||||||||||||
| Balance at January 1, 2025 | 1,113.0 | (508.8) | $ | 2,783 | $ | 5,334 | $ | 65,628 | $ | (56,132) | $ | (723) | $ | 16,890 | ||||||||||||
| Net income | - | - | 5,290 | - | - | 5,290 | ||||||||||||||||||||
| Other comprehensive income/(loss) | - | - | - | - | 51 | 51 | ||||||||||||||||||||
| Conversion, stock option exercises, forfeitures, ESPP, and other [b] | 0.2 | 0.7 | - | 131 | - | 53 | - | 184 | ||||||||||||||||||
| Share repurchase programs (Note 16) | - | (11.9) | - | 83 | - | (2,777) | - | (2,694) | ||||||||||||||||||
| Dividends declared ($4.06 per share) | - | - | - | - | (2,417) | - | - | (2,417) | ||||||||||||||||||
| Balance at September 30, 2025 | 1,113.2 | (520.0) | $ | 2,783 | $ | 5,548 | $ | 68,501 | $ | (58,856) | $ | (672) | $ | 17,304 |
*[a]*AOCI = accumulated other comprehensive income/loss (Note 9)
*[b]*ESPP = employee stock purchase plan
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For purposes of this report, unless the context otherwise requires, all references herein to "Union Pacific", “Corporation”, “Company”, “UPC”, “we”, “us”, and “our” mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which will be separately referred to herein as “UPRR” or the “Railroad”.
1. Basis of Presentation
Our Condensed Consolidated Financial Statements are unaudited and reflect all adjustments (consisting 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). Pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and notes thereto contained in our 2024 Annual Report on Form 10-K. Our Consolidated Statement of Financial Position at December 31, 2024, is derived from audited financial statements. The results of operations for the nine months ended September 30, 2025, are not necessarily indicative of the results for the entire year ending December 31, 2025.
The Condensed Consolidated Financial Statements are presented in accordance with GAAP as codified in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Certain prior period amounts have been reclassified to conform to the current period financial statement presentation.
2. Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update No. (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires business entities to expand their annual disclosures of the effective rate reconciliation and income taxes paid. The ASU is effective for fiscal years beginning after December 15, 2024, may be adopted on a prospective or retrospective basis, and early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on our related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories in the notes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, may be adopted on a prospective or retrospective basis, with early adoption permitted. The Company is currently evaluating the effect that the new guidance will have on our related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows a practical expedient that assumes current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years, must be adopted on a prospective basis, and early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on our consolidated financial statements and related 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, which details the criteria for capitalization of internal-use software costs. The ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, may be adopted on a prospective, modified, or retrospective transition approach, and early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on our consolidated financial statements and related disclosures.
3. Operations and Segmentation
The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze revenues by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network.
The Company’s Chief Operating Decision Maker (CODM) is our Chief Executive Officer. The CODM assesses performance for our rail network and decides how to allocate resources based on net income as reported on our Consolidated Statements of Income. The measure of segment assets is reported on our Consolidated Statements of Financial Position as total assets.
Our operating revenues are primarily derived from contracts with customers for the transportation of freight from origin to destination.
Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of origination or destination for some products we transport are outside the U.S. Freight revenues from each of our commodity groups, as described in the table below, includes revenues from shipments to and from Mexico, which amounted to $752 million and $724 million for the three months ended September 30, 2025 and 2024, respectively, and $2.2 billion and $2.3 billion for the nine months ended September 30, 2025 and 2024, respectively.
Our significant segment expenses as monitored by the CODM are shown in the table below. This breakout of revenues and expenses is used by the CODM to monitor and assess the financial performance of our rail network by comparing actual results to prior years and plans.
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| Millions | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Bulk | $ | 1,930 | $ | 1,805 | $ | 5,667 | $ | 5,343 | |||||||||
| Industrial | 2,194 | 2,121 | 6,488 | 6,348 | |||||||||||||
| Premium | 1,803 | 1,842 | 5,306 | 5,331 | |||||||||||||
| Total freight revenues | $ | 5,927 | $ | 5,768 | $ | 17,461 | $ | 17,022 | |||||||||
| Other subsidiary revenues | 172 | 179 | 547 | 608 | |||||||||||||
| Accessorial revenues | 124 | 122 | 349 | 427 | |||||||||||||
| Other | 21 | 22 | 68 | 72 | |||||||||||||
| Total operating revenues | $ | 6,244 | $ | 6,091 | $ | 18,425 | $ | 18,129 | |||||||||
| Operating [a] | 1,711 | 1,727 | 5,080 | 5,066 | |||||||||||||
| Administrative [a] | 176 | 184 | 557 | 564 | |||||||||||||
| Locomotive fuel | 600 | 595 | 1,754 | 1,850 | |||||||||||||
| Acquisition-related (Note 18) | 41 | - | 42 | - | |||||||||||||
| Other segment items [b] | 549 | 567 | 1,706 | 1,669 | |||||||||||||
| Depreciation | 618 | 602 | 1,841 | 1,792 | |||||||||||||
| Other income, net | (96) | (87) | (297) | (282) | |||||||||||||
| Interest expense | 327 | 314 | 984 | 957 | |||||||||||||
| Income tax expense | 530 | 518 | 1,468 | 1,528 | |||||||||||||
| Net income | $ | 1,788 | $ | 1,671 | $ | 5,290 | $ | 4,985 |
*[a]*Operating and administrative includes compensation and benefits, purchased services and materials, equipment and other rents, non-locomotive fuel, and other expenses.
*[b]*Other segment items includes car hire and leases, casualty costs, state and local taxes, subsidiary expense, and other overhead expense.
4. Stock-Based Compensation
We have several stock-based compensation plans where employees receive nonvested stock options, nonvested retention shares, and nonvested stock units. We refer to the nonvested shares and stock units collectively as “retention awards”. Employees may also participate in our employee stock purchase plan (ESPP).
Information regarding stock-based compensation expense appears in the table below:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| Millions | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Stock-based compensation, before tax: | |||||||||||||||||
| Stock options | $ | 6 | $ | 4 | $ | 19 | $ | 13 | |||||||||
| Retention awards | 30 | 23 | 78 | 58 | |||||||||||||
| ESPP [a] | 3 | 6 | 13 | 16 | |||||||||||||
| Total stock-based compensation, before tax | $ | 39 | $ | 33 | $ | 110 | $ | 87 | |||||||||
| Excess income tax benefits from equity compensation plans | $ | 3 | $ | 3 | $ | 11 | $ | 13 |
*[a]*Effective with the June 10, 2025, purchase (for employee services rendered in May 2025), the Company match was changed from 40% to 20% of amounts contributed by the employee up to a maximum employee contribution of 5% of monthly salary (limited to $15,000 annually).
Stock options – Stock options are granted at the closing price on the date of grant, have 10-year contractual terms, and vest no later than 3 years from the date of grant. At September 30, 2025, outstanding stock options are not subject to performance or market-based vesting conditions.
The table below shows the annual weighted-average assumptions used for Black-Scholes valuation purposes:
| Weighted-average assumptions | 2025 | 2024 | ||||||||||||
| Risk-free interest rate | 4.3% | 4.2% | ||||||||||||
| Dividend yield | 2.2% | 2.1% | ||||||||||||
| Expected life (years) | 4.3 | 4.4 | ||||||||||||
| Volatility | 22.4% | 28.7% | ||||||||||||
| Weighted-average grant-date fair value of options granted | $ | 48.70 | $ | 61.75 |
The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the expected dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected exercise behavior; and expected volatility is based on the historical volatility of our stock price over the expected life of the stock option.
A summary of stock option activity during the nine months ended September 30, 2025, is presented below:
| Options (thous.) | Weighted-average exercise price | Weighted-average remaining contractual term (in yrs.) | Aggregate intrinsic value (millions) | |||||||||||
| Outstanding at January 1, 2025 | 1,981 | $ | 195.81 | 5.8 | $ | 74 | ||||||||
| Granted | 423 | 243.51 | N/A | N/A | ||||||||||
| Exercised | (261) | 162.09 | N/A | N/A | ||||||||||
| Forfeited or expired | (21) | 238.93 | N/A | N/A | ||||||||||
| Outstanding at September 30, 2025 | 2,122 | $ | 209.04 | 5.8 | $ | 67 | ||||||||
| Vested or expected to vest at September 30, 2025 | 2,102 | $ | 208.75 | 5.8 | $ | 67 | ||||||||
| Options exercisable at September 30, 2025 | 1,428 | $ | 194.51 | 4.5 | $ | 63 |
At September 30, 2025, there was $16 million of unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.0 year. Additional information regarding stock option exercises appears in the following table:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| Millions | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Intrinsic value of stock options exercised | $ | 2 | $ | 15 | $ | 23 | $ | 31 | |||||||||
| Cash received from option exercises | 1 | 16 | 47 | 40 | |||||||||||||
| Treasury shares repurchased for employee payroll taxes | - | (2) | (7) | (7) | |||||||||||||
| Income tax benefit realized from option exercises | - | 2 | 3 | 6 | |||||||||||||
| Aggregate grant-date fair value of stock options vested | - | - | 16 | 15 |
Retention awards – Retention awards are granted at no cost to the employee, vest over periods lasting up to 4 years, and have dividends and dividend equivalents paid to participants during the vesting periods.
Changes in our retention awards during the nine months ended September 30, 2025, were as follows:
| Shares (thous.) | Weighted-average grant-date fair value | ||||||||||
| Nonvested at January 1, 2025 | 915 | $ | 222.50 | ||||||||
| Granted | 229 | 243.48 | |||||||||
| Vested | (230) | 205.15 | |||||||||
| Forfeited | (32) | 230.39 | |||||||||
| Nonvested at September 30, 2025 | 882 | $ | 232.19 |
At September 30, 2025, there was $68 million of total unrecognized compensation expense related to nonvested retention awards, which is expected to be recognized over a weighted-average period of 1.0 year.
Performance stock unit awards – In February 2025, our Board of Directors approved performance stock unit grants. This plan is based on performance targets for annual return on invested capital (ROIC) and operating income growth (OIG) compared to companies in the S&P 100 Industrials Index plus the Class I railroads. We define ROIC as net operating profit adjusted for interest expense (including interest on average operating lease liabilities) and taxes on interest divided by average invested capital adjusted for average operating lease liabilities.
The February 2025 stock units awarded to executives are subject to continued employment for 37 months, the attainment of certain levels of ROIC, and the relative three-year OIG. We expense two-thirds of the fair value of the units that are probable of being earned based on our forecasted ROIC over the three-year performance period, and with respect to the third year of the plan, we expense the remaining one-third of the fair value subject to the relative three-year OIG. We measure the fair value of performance stock units based upon the closing price of the underlying common stock as of the date of grant. Dividend equivalents are accumulated during the service period and paid to participants only after the units are earned.
Changes in our performance stock unit awards during the nine months ended September 30, 2025, were as follows:
| Shares (thous.) | Weighted-average grant-date fair value | ||||||||||
| Nonvested at January 1, 2025 | 607 | $ | 219.08 | ||||||||
| Granted | 254 | 243.51 | |||||||||
| Vested | (72) | 244.95 | |||||||||
| Unearned | (83) | 244.35 | |||||||||
| Forfeited | (85) | 218.45 | |||||||||
| Nonvested at September 30, 2025 | 621 | $ | 222.78 |
At September 30, 2025, there was $18 million of total unrecognized compensation expense related to nonvested performance stock unit awards, which is expected to be recognized over a weighted-average period of 1.5 years. This expense is subject to achievement of the performance measures established for the performance stock unit grants.
5. Retirement Plans
We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements. Non-union employees hired on or after January 1, 2018, are no longer eligible for pension benefits, but are eligible for an enhanced 401(k) plan.
Expense
Pension expense is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a 5-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately but are deferred in accumulated other comprehensive income/loss and, if necessary, amortized as pension expense.
The components of our net periodic pension benefit/cost were as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| Millions | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Service cost | $ | 9 | $ | 12 | $ | 31 | $ | 39 | |||||||||
| Interest cost | 45 | 47 | 135 | 139 | |||||||||||||
| Expected return on plan assets | (60) | (63) | (181) | (189) | |||||||||||||
| Amortization of actuarial loss | 2 | 4 | 6 | 8 | |||||||||||||
| Net periodic pension (benefit)/cost | $ | (4) | $ | - | $ | (9) | $ | (3) |
Cash contributions
For the nine months ended September 30, 2025, cash contributions totaled $0 to the qualified pension plans. Any contributions made during 2025 will be based on cash generated from operations and financial market considerations. Our policy with respect to funding the qualified pension plans is to fund at least the minimum required by law and not more than the maximum amount deductible for tax purposes. At September 30, 2025, we do not have minimum cash funding requirements for 2025.
6. Other Income
Other income included the following:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| Millions | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Real estate income | $ | 74 | $ | 70 | $ | 240 | $ | 192 | |||||||||
| Interest income | 12 | 15 | 42 | 39 | |||||||||||||
| Net periodic pension benefit/(costs) | 13 | 12 | 40 | 42 | |||||||||||||
| Non-operating property environmental remediation and restoration | (6) | (7) | (18) | (21) | |||||||||||||
| Interest from IRS refund claims | - | - | - | 24 | |||||||||||||
| Other | 3 | (3) | (7) | 6 | |||||||||||||
| Total | $ | 96 | $ | 87 | $ | 297 | $ | 282 |
7. Income Taxes
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.
8. Earnings Per Share
The following table provides a reconciliation between basic and diluted earnings per share:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| Millions, except per share amounts | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income | $ | 1,788 | $ | 1,671 | $ | 5,290 | $ | 4,985 | |||||||||
| Weighted-average number of shares outstanding: | |||||||||||||||||
| Basic | 592.4 | 607.6 | 595.8 | 608.7 | |||||||||||||
| Dilutive effect of stock options | 0.2 | 0.4 | 0.3 | 0.4 | |||||||||||||
| Dilutive effect of retention shares and units | 0.6 | 0.6 | 0.6 | 0.6 | |||||||||||||
| Diluted | 593.2 | 608.6 | 596.7 | 609.7 | |||||||||||||
| Earnings per share - basic | $ | 3.02 | $ | 2.75 | $ | 8.88 | $ | 8.19 | |||||||||
| Earnings per share - diluted | $ | 3.01 | $ | 2.75 | $ | 8.87 | $ | 8.18 | |||||||||
| Stock options excluded as their inclusion would be anti-dilutive | 1.0 | 0.6 | 0.9 | 0.6 |
9. Accumulated Other Comprehensive Income/Loss
Reclassifications out of accumulated other comprehensive income/loss were as follows (net of tax):
| Millions | Defined benefit plans | Foreign currency translation | Unrealized gain on derivative instruments [a] | Total | ||||||||||
| Balance at July 1, 2025 | $ | (497) | $ | (211) | $ | 16 | $ | (692) | ||||||
| Other comprehensive income/(loss) before reclassifications | 1 | 21 | - | 22 | ||||||||||
| Amounts reclassified from accumulated other comprehensive income/(loss) [b] | (2) | - | - | (2) | ||||||||||
| Net quarter-to-date other comprehensive income/(loss), net of taxes of $0.1 million | (1) | 21 | - | 20 | ||||||||||
| Balance at September 30, 2025 | $ | (498) | $ | (190) | $ | 16 | $ | (672) | ||||||
| Balance at July 1, 2024 | $ | (483) | $ | (139) | $ | 16 | $ | (606) | ||||||
| Other comprehensive income/(loss) before reclassifications | - | (86) | - | (86) | ||||||||||
| Amounts reclassified from accumulated other comprehensive income/(loss) [b] | - | - | - | - | ||||||||||
| Net quarter-to-date other comprehensive income/(loss), net of taxes of $0.8 million | - | (86) | - | (86) | ||||||||||
| Balance at September 30, 2024 | $ | (483) | $ | (225) | $ | 16 | $ | (692) |
*[a]*Related to interest rate swaps from equity method investments.
*[b]*The accumulated other comprehensive income/loss reclassification components are 1) prior service cost/credit and 2) net actuarial loss, which are both included in the computation of net periodic pension benefit/cost. See Note 5 Retirement Plans for additional details.
Reclassifications out of accumulated other comprehensive income/loss were as follows (net of tax):
| Millions | Defined benefit plans | Foreign currency translation | Unrealized gain on derivative instruments [a] | Total | ||||||||||
| Balance at January 1, 2025 | $ | (498) | $ | (241) | $ | 16 | $ | (723) | ||||||
| Other comprehensive income/(loss) before reclassifications | 2 | 51 | - | 53 | ||||||||||
| Amounts reclassified from accumulated other comprehensive income/(loss) [b] | (2) | - | - | (2) | ||||||||||
| Net year-to-date other comprehensive income/(loss), net of taxes of ($1.8) million | - | 51 | - | 51 | ||||||||||
| Balance at September 30, 2025 | $ | (498) | $ | (190) | $ | 16 | $ | (672) | ||||||
| Balance at January 1, 2024 | $ | (484) | $ | (146) | $ | 16 | $ | (614) | ||||||
| Other comprehensive income/(loss) before reclassifications | 2 | (79) | - | (77) | ||||||||||
| Amounts reclassified from accumulated other comprehensive income/(loss) [b] | (1) | - | - | (1) | ||||||||||
| Net year-to-date other comprehensive income/(loss), net of taxes of $0.7 million | 1 | (79) | - | (78) | ||||||||||
| Balance at September 30, 2024 | $ | (483) | $ | (225) | $ | 16 | $ | (692) |
*[a]*Related to interest rate swaps from equity method investments.
*[b]*The accumulated other comprehensive income/loss reclassification components are 1) prior service cost/credit and 2) net actuarial loss, which are both included in the computation of net periodic pension benefit/cost. See Note 5 Retirement Plans for additional details.
10. Accounts Receivable
Accounts receivable include freight and other receivables reduced by an allowance for doubtful accounts. At September 30, 2025, and December 31, 2024, our accounts receivable were reduced by $5 million and $6 million, respectively. Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Condensed Consolidated Statements of Financial Position. At September 30, 2025, and December 31, 2024, receivables classified as other assets were reduced by allowances of $71 million and $69 million, respectively.
Receivables securitization facility – On July 28, 2025, the Railroad completed the renewal of the receivables securitization facility (the Receivables Facility). The new $600 million, 3-year facility replaces the prior $800 million facility and will mature in July 2028. Under the Receivables Facility, the Railroad sells most of its eligible third-party receivables to Union Pacific Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in accounts receivable to investors. The investors have no recourse to the Railroad’s other assets except for customary warranty and indemnity claims. Creditors of the Railroad do not have recourse to the assets of UPRI.
The amount recorded under the Receivables Facility was $0 at both September 30, 2025, and December 31, 2024. During the nine months ended September 30, 2025, we issued $0 and repaid $0 under the Receivables Facility. The Receivables Facility was supported by $1.6 billion of accounts receivable as collateral at both September 30, 2025, and December 31, 2024, which, as a retained interest, is included in accounts receivable, net in our Condensed Consolidated Statements of Financial Position.
The outstanding amount the Railroad maintains under the Receivables Facility may fluctuate based on current cash needs. The maximum allowed under the Receivables Facility is $600 million with availability directly impacted by eligible receivables, business volume, and credit risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the Receivables Facility would not materially change.
The costs of the Receivables Facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unused commitment availability. The costs of the Receivables Facility are included in interest expense and were $1 million and $2 million for the three months ended September 30, 2025 and 2024, respectively, and $3 million and $7 million for the nine months ended September 30, 2025 and 2024, respectively.
11. Properties
The following tables list the major categories of property and equipment, as well as the weighted-average estimated useful life for each category (in years):
| Millions, except estimated useful life As of September 30, 2025 | Cost | Accumulated depreciation | Net book value | Estimated useful life | ||||||||||
| Land | $ | 5,455 | N/A | $ | 5,455 | N/A | ||||||||
| Road: | ||||||||||||||
| Rail and other track material | 19,646 | 7,858 | 11,788 | 45 | ||||||||||
| Ties | 12,699 | 4,251 | 8,448 | 34 | ||||||||||
| Ballast | 6,618 | 2,274 | 4,344 | 34 | ||||||||||
| Other roadway [a] | 24,385 | 6,005 | 18,380 | 47 | ||||||||||
| Total road | 63,348 | 20,388 | 42,960 | N/A | ||||||||||
| Equipment: | ||||||||||||||
| Locomotives | 9,899 | 3,819 | 6,080 | 18 | ||||||||||
| Freight cars | 3,063 | 1,088 | 1,975 | 23 | ||||||||||
| Work equipment and other | 1,287 | 524 | 763 | 17 | ||||||||||
| Total equipment | 14,249 | 5,431 | 8,818 | N/A | ||||||||||
| Technology and other | 1,386 | 637 | 749 | 12 | ||||||||||
| Construction in progress | 1,410 | N/A | 1,410 | N/A | ||||||||||
| Total | $ | 85,848 | $ | 26,456 | $ | 59,392 | N/A |
| Millions, except estimated useful life As of December 31, 2024 | Cost | Accumulated depreciation | Net book value | Estimated useful life | ||||||||||
| Land | $ | 5,441 | N/A | $ | 5,441 | N/A | ||||||||
| Road: | ||||||||||||||
| Rail and other track material | 19,283 | 7,642 | 11,641 | 46 | ||||||||||
| Ties | 12,358 | 4,109 | 8,249 | 34 | ||||||||||
| Ballast | 6,495 | 2,182 | 4,313 | 34 | ||||||||||
| Other roadway [a] | 23,913 | 5,681 | 18,232 | 47 | ||||||||||
| Total road | 62,049 | 19,614 | 42,435 | N/A | ||||||||||
| Equipment: | ||||||||||||||
| Locomotives | 9,517 | 3,724 | 5,793 | 18 | ||||||||||
| Freight cars | 3,011 | 1,037 | 1,974 | 22 | ||||||||||
| Work equipment and other [b] | 1,222 | 482 | 740 | 17 | ||||||||||
| Total equipment | 13,750 | 5,243 | 8,507 | N/A | ||||||||||
| Technology and other | 1,431 | 640 | 791 | 12 | ||||||||||
| Construction in progress | 1,169 | N/A | 1,169 | N/A | ||||||||||
| Total | $ | 83,840 | $ | 25,497 | $ | 58,343 | N/A |
*[a]*Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.
*[b]*For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized if the retirement meets each of the following three conditions: (a) is unusual, (b) is material in amount, and (c) varies significantly from the retirement profile identified through our depreciation studies. In the second quarter of 2024, we sold a large portion of an intermodal equipment asset class resulting in a $46 million gain recognized in other expense in our Condensed Consolidated Statements of Income.
12. Accounts Payable and Other Current Liabilities
| Millions | Sep. 30, 2025 | Dec. 31, 2024 | |||||||||
| Accounts payable | $ | 853 | $ | 847 | |||||||
| Income and other taxes payable | 767 | 605 | |||||||||
| Compensation-related accruals | 612 | 618 | |||||||||
| Accrued casualty costs | 307 | 319 | |||||||||
| Current operating lease liabilities | 277 | 346 | |||||||||
| Interest payable | 269 | 372 | |||||||||
| Equipment rents payable | 105 | 109 | |||||||||
| Other | 509 | 613 | |||||||||
| Total accounts payable and other current liabilities | $ | 3,699 | $ | 3,829 |
13. Financial Instruments
Short-term investments – All of the Company's short-term investments consist of time deposits and government agency securities. These investments are considered Level 2 investments and are valued at amortized cost, which approximates fair value. As of both September 30, 2025, and December 31, 2024, the Company had $20 million of short-term investments, which is included in other current assets in our Condensed Consolidated Statements of Financial Position. All short-term investments have a maturity of less than one year and are classified as held-to-maturity.
Fair value of financial instruments – The fair value of our short- and long-term debt was estimated using a market value price model, which utilizes applicable U.S. Treasury rates along with current market quotes on comparable debt securities. All of the inputs used to determine the fair market value of the Corporation’s long-term debt are Level 2 inputs and obtained from an independent source. At September 30, 2025, the fair value of total debt was $26.8 billion, approximately $5.0 billion less than the carrying value. At December 31, 2024, the fair value of total debt was $25.3 billion, approximately $5.9 billion less than the carrying value. The fair value of the Corporation’s debt is a measure of its current value under present market conditions. The fair value of our cash equivalents approximates their carrying value due to the short-term maturities of these instruments.
14. Debt
Credit facilities – At September 30, 2025, we had $2.0 billion of credit available under our revolving credit facility (the Facility), which is designated for general corporate purposes and supports the issuance of commercial paper. Credit facility withdrawals totaled $0 during the nine months ended September 30, 2025. Commitment fees and interest rates payable under the Facility are similar to fees and rates available to comparably rated, investment-grade borrowers. The Facility allows for borrowings at floating rates based on Term Secured Overnight Financing Rate (SOFR), plus a spread, depending upon credit ratings for our senior unsecured debt. The Facility, set to expire May 20, 2027, requires UPC to maintain an adjusted debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) coverage ratio.
The definition of debt used for purposes of calculating the adjusted debt-to-EBITDA coverage ratio includes, among other things, certain credit arrangements, finance leases, guarantees, unfunded and vested pension benefits under Title IV of the Employee Retirement Income Security Act of 1974 (ERISA), and unamortized debt discount and deferred debt issuance costs. At September 30, 2025, the Company was in compliance with the adjusted debt-to-EBITDA coverage ratio, which allows us to carry up to $47.8 billion of debt (as defined in the Facility), and we had $33.5 billion of debt (as defined in the Facility) outstanding at that date. The Facility does not include any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post collateral. The Facility also includes a $150 million cross-default provision and a change-of-control provision.
During the nine months ended September 30, 2025, we issued $0 and repaid $0 of commercial paper. At September 30, 2025, we had $0 of commercial paper outstanding. Our revolving credit facility supports our outstanding commercial paper balances, and, unless we change the terms of our commercial paper program, our aggregate issuance of commercial paper will not exceed the amount of borrowings available under the Facility.
Shelf registration statement and significant new borrowings – We filed an automatic shelf registration statement with the SEC that became effective on February 13, 2024. On July 28, 2025, the Board of Directors authorized the issuance of up to $20.0 billion of debt securities, replacing the prior authorization from 2024, which had $7.0 billion of authority remaining. Under our shelf registration, we may issue, from time to time, any combination of debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one or more offerings.
During the nine months ended September 30, 2025, we issued the following unsecured, fixed-rate debt securities under our shelf registration:
| Date | Description of securities | |||||||
| February 13, 2025 | $1.00 billion of 5.100% Notes due February 20, 2035 | |||||||
| $1.00 billion of 5.600% Notes due December 1, 2054 |
We used the net proceeds from the offering for general corporate purposes, including the repurchase of common stock pursuant to our share repurchase programs. These debt securities include change-of-control provisions. At September 30, 2025, we had remaining authority from the Board of Directors to issue up to $20.0 billion of debt securities under our shelf registration.
Receivables securitization facility – As of both September 30, 2025, and December 31, 2024, we recorded $0 of borrowings under our Receivables Facility as secured debt. (See further discussion in the "Receivables Securitization Facility" section of Note 10).
15. Commitments and Contingencies
See Note 18 for a discussion on the pending acquisition of Norfolk Southern Corporation (Norfolk Southern).
Asserted and unasserted claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. We cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations, financial condition, or liquidity. We have recorded a liability where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated. We currently do not expect that any known lawsuits, claims, environmental costs, commitments, contingent liabilities, or guarantees will have a material adverse effect on our consolidated results of operations, financial condition, or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters.
In December 2019, we received a putative class action complaint under the Illinois Biometric Information Privacy Act, alleging violation due to the use of a finger scan system developed and managed by third parties. While we believe that we have strong defenses to the claims made in the complaint and will vigorously defend ourselves, there is no assurance regarding the ultimate outcome. The outcome of this litigation is inherently uncertain, and we cannot reasonably estimate any loss or range of loss that may arise from this matter.
Personal injury – The Federal Employers’ Liability Act (FELA) governs compensation for work-related accidents. Under FELA, damages are assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work.
Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle these claims may range from approximately $389 million to $508 million. We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other. Estimates can vary over time due to evolving trends in litigation.
Our personal injury liability activity was as follows:
| Millions, for the nine months ended September 30, | 2025 | 2024 | ||||||
| Beginning balance | $ | 379 | $ | 383 | ||||
| Current year accruals | 82 | 87 | ||||||
| Changes in estimates for prior years | 9 | (2) | ||||||
| Payments | (81) | (75) | ||||||
| Ending balance at September 30, | $ | 389 | $ | 393 | ||||
| Current portion, ending balance at September 30, | $ | 105 | $ | 114 |
Environmental costs – We are subject to federal, state, and local environmental laws and regulations. We have identified 361 sites where we are or may be liable for remediation costs associated with alleged contamination or for violations of environmental requirements. This includes 29 sites that are the subject of actions taken by the U.S. government, including 17 that are currently on the Superfund National Priorities List. Certain federal legislation imposes joint and several liability for the remediation of identified sites; consequently, our ultimate environmental liability may include costs relating to activities of other parties, in addition to costs relating to our own activities at each site.
Our environmental liability activity was as follows:
| Millions, for the nine months ended September 30, | 2025 | 2024 | ||||||
| Beginning balance | $ | 268 | $ | 245 | ||||
| Accruals | 44 | 100 | ||||||
| Payments | (55) | (76) | ||||||
| Ending balance at September 30, | $ | 257 | $ | 269 | ||||
| Current portion, ending balance at September 30, | $ | 66 | $ | 119 |
The environmental liability includes future costs for remediation and restoration of sites, as well as ongoing monitoring costs, but excludes any anticipated recoveries from third parties. Cost estimates are based on information available for each site, financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharing arrangements with other potentially responsible parties, the degree of contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the speculative nature of remediation costs. Estimates of liability may vary over time due to changes in federal, state, and local laws governing environmental remediation. Current obligations are not expected to have a material adverse effect on our consolidated results of operations, financial condition, or liquidity.
Indemnities – Our maximum potential exposure under indemnification arrangements, including certain tax indemnifications, can range from a specified dollar amount to an unlimited amount, depending on the nature of the transactions and the agreements. Due to uncertainty as to whether claims will be made or how they will be resolved, we cannot reasonably determine the probability of an adverse claim or reasonably estimate any adverse liability or the total maximum exposure under these indemnification arrangements. We do not have any reason to believe that we will be required to make any material payments under these indemnity provisions.
16. Share Repurchase Programs
Effective April 1, 2025, our Board of Directors authorized the repurchase of up to 100 million shares of our common stock by March 31, 2028. As of September 30, 2025, we repurchased a total of 6.1 million shares of our common stock under the 2025 authorization. As part of the pending acquisition of Norfolk Southern described in Note 18, we paused our share repurchase program.
Our previous authorization, which was effective April 1, 2022, through March 31, 2025, was approved by our Board of Directors for up to 100 million shares of common stock. We repurchased a total of 31.7 million shares of our common stock under the 2022 authorization.
The table below represents shares repurchased under repurchase programs in the nine months ended September 30, 2025 and 2024:
| Number of shares purchased | Average price paid [a] | ||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| First quarter [b] | 5,745,601 | - | $ | 250.74 | $ | - | |||||||||||
| Second quarter [c] | 6,111,558 | 492,320 | 205.06 | 225.96 | |||||||||||||
| Third quarter | - | 3,006,061 | - | 245.44 | |||||||||||||
| Total | 11,857,159 | 3,498,381 | $ | 227.20 | $ | 242.70 | |||||||||||
| Remaining number of shares that may be repurchased under current authority | 93,888,442 |
*[a]*In the period of the final settlement, the average price under the accelerated share repurchase programs (ASRs) is calculated based on the total program value less the value assigned to the initial delivery of shares. The average price of the completed 2025 ASRs was $229.32.
*[b]*Includes 4,815,022 shares repurchased in 2025 under the ASRs at an average price $251.73.
*[c]*Includes an incremental 1,795,904 shares received upon final settlement in 2025 under the ASRs at an average price of $169.22.
Accelerated share repurchase programs – The Company has established ASRs with financial institutions to repurchase shares of our common stock. These ASRs have been structured so that at the time of commencement, we pay a specified amount to the financial institutions and receive an initial delivery of shares. Additional shares may be received at the time of settlement. The final number of shares to be received is based on the volume weighted average price of the Company's common stock during the ASR term, less a discount and subject to potential adjustments pursuant to the terms of such ASR.
On February 18, 2025, the Company received 4,815,022 shares of its common stock repurchased under ASRs for an aggregate of $1.5 billion. Upon settlement of these ASRs in the second quarter of 2025, we received 1,795,904 additional shares.
ASRs are accounted for as equity transactions, and at the time of receipt, shares are included in treasury stock at fair market value as of the corresponding initiation or settlement date. The Company reflects shares received as a repurchase of common stock in the weighted average common shares outstanding calculation for basic and diluted earnings per share.
17. Related Parties
UPRR and other North American railroad companies jointly own TTX Company (TTX). UPRR has a 37.03% economic interest in TTX while the other North American railroads own the remaining interest. In accordance with ASC 323 Investments - Equity Method and Joint Venture, UPRR applies the equity method of accounting to our investment in TTX.
TTX is a rail car pooling company that owns rail cars and intermodal wells to serve North America’s railroads. TTX assists railroads in meeting the needs of their customers by providing rail cars in an efficient, pooled environment. All railroads may utilize TTX rail cars through car hire (i.e., renting rail cars at stated rates).
UPRR had $2.0 billion and $1.9 billion recognized as investments related to TTX in our Condensed Consolidated Statements of Financial Position as of September 30, 2025, and December 31, 2024, respectively. TTX car hire expense of $115 million and $112 million for the three months ended September 30, 2025 and 2024, respectively, and $336 million and $321 million for the nine months ended September 30, 2025 and 2024, respectively, are included in equipment and other rents in our Condensed Consolidated Statements of Income. In addition, UPRR had accounts payable to TTX of $75 million and $70 million at September 30, 2025, and December 31, 2024, respectively.
18. Pending Acquisition
Norfolk Southern, a Virginia corporation, is one of the nation’s premier transportation companies, moving goods and materials that help drive the U.S. economy. Norfolk Southern connects customers to markets and communities to economic opportunity with safe, reliable, and cost-effective shipping solutions. Its Norfolk Southern Railway Company subsidiary operates in 22 states and the District of Columbia. Norfolk Southern is a major transporter of industrial products, including agriculture, forest, and consumer products, chemicals, and metals and construction materials. In addition, in the East, it serves every major container port and operates the most extensive intermodal network. Norfolk Southern is also a principal carrier of coal, automobiles, and automotive parts. Norfolk Southern’s stock is publicly traded on the NYSE under the ticker symbol NSC.
On July 28, 2025, Union Pacific, Norfolk Southern, Ruby Merger Sub 1 Corporation, and Ruby Merger Sub 2 LLC, entered into an agreement and plan of merger (the merger agreement). The merger agreement provides, among other things, for the acquisition of Norfolk Southern by Union Pacific, subject to the satisfaction or waiver of the conditions specified therein, through two mergers: (i) first, Ruby Merger Sub 1 Corporation will merge with and into Norfolk Southern with Norfolk Southern surviving as a direct, wholly owned subsidiary of Union Pacific (the first merger); and (ii) second, immediately after the first merger, Norfolk Southern will merge with and into Ruby Merger Sub 2 LLC with Ruby Merger Sub 2 LLC surviving as a direct, wholly owned subsidiary of Union Pacific (second merger). The first merger and the second merger are collectively referred to as the mergers.
At the effective time of the first merger (first effective time), each share of Norfolk Southern common stock issued and outstanding immediately prior to the first effective time, except for shares held by Union Pacific or Norfolk Southern, or their direct or indirect subsidiaries (other than, with respect to shares held by Union Pacific, Norfolk Southern, Ruby Merger Sub 1 Corporation, or Ruby Merger Sub 2 LLC, shares held on behalf of third parties), will be converted automatically into the right to receive one validly issued, fully paid, and nonassessable share of Union Pacific common stock and $88.82 in cash, without interest. Assuming completion of the mergers, we expect approximately 224.8 million shares of common stock to be issued and approximately $20 billion of cash consideration to be paid. The cash consideration is expected to be funded through a combination of new debt and cash accumulated through cash provided by operating activities. The actual value of the transaction may fluctuate based upon changes in the price of Union Pacific common stock and the number of Norfolk Southern common stock outstanding at the first effective time.
The combination of Norfolk Southern and Union Pacific would create America’s first transcontinental railroad that spans over 50,000 miles across 43 states with access to 10 international interchanges and approximately 100 ports.
Union Pacific filed a registration statement on Form S-4 (File No. 333-290282), which the SEC declared effective on September 30, 2025. Union Pacific and Norfolk Southern each also filed definitive proxy statements on October 1, 2025. Both Union Pacific's and Norfolk Southern's special meetings of shareholders will be held on November 14, 2025 (unless one or both are adjourned or postponed to a later date).
Completion of the mergers is conditioned on Union Pacific shareholders approving the share issuance proposal, Norfolk Southern shareholders approving the merger agreement proposal (each as described in the companies' definitive proxy statements), as well as the receipt of approval of the Surface Transportation Board (STB) and a number of other conditions before the mergers can be consummated, as described in the merger agreement. Norfolk Southern's management and Board of Directors will continue to manage Norfolk Southern until the first effective time, pursuing its independent business plans and growth strategies. Subject to completion of the mergers, the acquisition is expected to be accounted for as a business combination using the acquisition method of accounting and currently expected to be completed in early 2027.
Union Pacific incurred the following acquisition-related expense associated with the merger agreement:
| Millions | Three months ended September 30, 2025 | Nine months ended September 30, 2025 | |||||||||||||||
| Acquisition-related expense | |||||||||||||||||
| Purchased services and materials | $ | 40 | $ | 41 | |||||||||||||
| Other | 1 | 1 | |||||||||||||||
| Total acquisition-related expense [a] | $ | 41 | $ | 42 | |||||||||||||
*[a]*Certain acquisition-related costs are non-deductible for income tax purposes.
As of September 30, 2025, we incurred deferred share issuance costs of $8 million that will be recognized in paid-in-surplus upon completion of the mergers.
Both Union Pacific and Norfolk Southern may be required to pay the other a termination fee of $2.5 billion if the merger agreement is terminated under certain circumstances described in the merger agreement.
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