Norfolk Southern NSC · USD

Railway Operating RevenuesThe following table disaggregates our revenues by major commodity group: 202520242023($ in millions)Merchandise:Agriculture, forest and consumer products$2,538 $2,521 $2,530 Chemicals2,206 2,123 2,054 Metals and construction1,724 1,682 1,634 Automotive1,216 1,144 1,135 Merchandise7,684 7,470 7,353 Intermodal3,009 3,042 3,090 Coal1,487 1,611 1,713 Total$12,180 $12,123 $12,156 We recognize the amount of revenues to which we expect to be entitled for the transfer of promised goods or services to customers. A performance obligation is created when a customer under a transportation contract or public tariff submits a bill of lading to us for the transport of goods. These performance obligations are satisfied as the shipments move from origin to destination. As such, transportation revenues are recognized proportionally as a shipment moves, and related expenses are recognized as incurred. These performance obligations are generally short-term in nature with transit days averaging approximately one week or less for each commodity group. The customer has an unconditional obligation to pay for the service once the service has been completed. Estimated revenues associated with in-process shipments at period-end are recorded based on the estimated percentage of service completed. We had no material remaining performance obligations at December 31, 2025 and 2024. We may provide customers ancillary services, such as switching, demurrage, and other incidental activities, under their transportation contracts. The revenues associated with these distinct performance obligations are recognized when the services are performed or as contractual obligations are met. These revenues are included within each of the commodity groups and represent approximately 5%, 4%, and 5%, respectively, of total “Railway operating revenues” on the Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023. Revenues related to interline transportation services that involve another railroad are reported on a net basis. Therefore, the portion of the amount that relates to another party is not reflected in revenues. Under the typical terms of our freight contracts, payment for services is due within fifteen days of billing the customer, thus there are no significant financing components.

Commitments and ContingenciesWe and/or certain subsidiaries are subject to numerous lawsuits, inquiries, investigations and other claims and proceedings relating principally to railroad operations. In accordance with FASB ASC 450, “Contingencies,” when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below. While the ultimate amount of liability incurred in any of these matters is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liabilities and claims. However, the final outcome of any of these matters cannot be predicted with certainty, and developments related to the progress of such matters or other unfavorable or unexpected developments or outcomes could result in additional costs or new or additionally accrued amounts that could be significant to financial position, results of operations, or liquidity in a particular year or quarter. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. If it is reasonably possible that we will incur losses in excess of the amounts currently recorded as a loss contingency, we disclose the potential range of loss, if reasonably estimable, or we disclose that we cannot reasonably estimate such an amount at this time. For loss contingency matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed below. We routinely review relevant information with respect to our lawsuits, inquiries, investigations and other claims and proceedings and update our accruals, disclosures and estimates of reasonably possible loss based on such reviews. Our estimates of probable losses and reasonably possible losses are based upon currently available information and involve significant judgment and a variety of assumptions, given that (1) certain legal and regulatory proceedings are in early stages; (2) discovery may not be completed; (3) damages sought in these legal and regulatory proceedings can be unsubstantiated or indeterminate; (4) there are often significant facts in dispute; and/or (5) there is a wide range of possible outcomes.

Debt Debt maturities are presented below: December 31, 20252024 ($ in millions)Notes and debentures, with weighted-average interest rates as of December 31, 2025: 4.19% maturing to 2030$3,030 $3,580 4.28% maturing 2031 to 20352,684 2,284 4.28% maturing 2037 to 206410,847 10,847 5.22% maturing 2097 to 21211,384 1,384 Finance leases18 13 Discounts, premiums, and debt issuance costs(876)(902)Total debt17,087 17,206 Less current maturities(607)(555)Long-term debt excluding current maturities$16,480 $16,651 Long-term debt maturities subsequent to 2026 are as follows: 2027$625 2028602 2029611 2030600 2031 and subsequent years14,042 Total$16,480 Under the terms of the Merger Agreement, we are subject to certain restrictions on incurring additional indebtedness.In May 2025, we issued $400 million of 5.10% senior notes due 2035.In May 2025, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2026. Amounts received under this facility are accounted for as borrowings. We had no amounts outstanding under this program and our available borrowing capacity was approximately $397 million and $400 million at December 31, 2025 and December 31, 2024, respectively. Our accounts receivable securitization program was supported by $735 million and $790 million in receivables at December 31, 2025 and December 31, 2024, respectively, which are included in “Accounts receivable – net.”In June 2024, we entered into an agreement that provides us the ability to issue up to $800 million of unsecured commercial paper and is backed by our credit agreement. The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants. At December 31, 2025 and December 31, 2024, we had no outstanding commercial paper. Credit Agreement and Debt CovenantsIn January 2024, we renewed and amended our $800 million credit agreement. The amended agreement expires in January 2029, and provides for borrowings at prevailing rates and includes covenants. We had no amounts outstanding under this facility at either December 31, 2025 or December 31, 2024, and we are in compliance with all of its covenants.

Income Taxes 202520242023 ($ in millions)Current: Federal$410 $445 $437 State105 86 105 Total current taxes515 531 542 Deferred: Federal312 198 (27)State(35)(22)(22)Total deferred taxes277 176 (49)Income taxes$792 $707 $493 We recorded a $50 million discrete benefit in 2025 resulting from the resolution of a state tax matter and recorded a $27 million deferred income tax benefit in 2024 as a result of a subsidiary restructuring. Both amounts are presented net of federal effects.On July 4, 2025, the OBBBA was signed into law. The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of business interest expense, and expensing of domestic research costs. FASB ASC 740 “Income Taxes” requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted. The impact of this change is primarily a reclassification from current to deferred taxes.Reconciliation of Statutory Rate to Effective Rate “Income taxes” on the Consolidated Statements of Income differs from the amounts computed by applying the statutory federal corporate tax rate as follows: 2025Amount%($ in millions)US federal statutory tax rate$770 21.0 State and local income taxes, net of federal income tax effect *101 2.8 Nontaxable or nondeductible items(9)(0.2)Tax credits(25)(0.7)Changes in unrecognized tax benefits(45)(1.3)Income taxes$792 21.6 *State taxes in Pennsylvania, Virginia, and Indiana made up the majority (greater than 50%) of the tax effect in this category. 20242023 Amount%Amount% ($ in millions)Federal income tax at statutory rate$699 21.0 $487 21.0 State income taxes, net of federal tax effect51 1.6 65 2.9 Tax credits(14)(0.4)(27)(1.2)Other, net(29)(1.0)(32)(1.4)Income taxes$707 21.2 $493 21.3 Income Taxes Paid2025($ in millions)Federal$389 State102 Total income taxes paid, net of refunds$491 Income taxes paid, net of refunds, for 2024 and 2023 were $305 million and $681 million, respectively.Deferred Tax Assets and LiabilitiesCertain items are reported in different periods for financial reporting and income tax purposes. Deferred tax assets and liabilities are recorded in recognition of these differences.

Stock-Based Compensation Under the stockholder-approved LTIP, the Human Capital Management and Compensation Committee (Committee), which is made up of nonemployee members of the Board, or the Chief Executive Officer (when delegated authority by such Committee), may grant stock options, stock appreciation rights (SARs), restricted stock units (RSUs), restricted shares, performance share units (PSUs), and performance shares, up to a maximum of 104,125,000 shares of our Common Stock, of which 6,942,153 remain available for future grants as of December 31, 2025. The number of shares remaining for issuance under the LTIP is reduced (i) by 1 for each award granted as a stock option or stock-settled SAR, or (ii) by 1.61 for an award made in the form other than a stock option or stock-settled SAR. Under the Board-approved Thoroughbred Stock Option Plan (TSOP), the Committee may grant stock options up to a maximum of 6,000,000 shares of Common Stock. We use newly issued shares to satisfy any exercises and awards under the LTIP and the TSOP.The LTIP also permits the payment, on a current or a deferred basis and in cash or in stock, of dividend equivalents on shares of Common Stock covered by stock options, RSUs, or PSUs in an amount commensurate with regular quarterly dividends paid on Common Stock. With respect to stock options, if employment of the participant is terminated for any reason, including retirement, disability, or death, we have no further obligation to make any dividend equivalent payments. Regarding RSUs, we have no further obligation to make any dividend equivalent payments unless employment of the participant is terminated as a result of qualifying retirement or disability. Should an employee terminate employment, they are not required to forfeit dividend equivalent payments already received. Outstanding PSUs do not receive dividend equivalent payments. The Committee granted stock options, RSUs, and PSUs pursuant to the LTIP for the last three years as follows:202520242023 GrantedWeighted- Average Grant-Date Fair ValueGrantedWeighted- Average Grant-Date Fair ValueGrantedWeighted- Average Grant-Date Fair ValueStock options80,067$87.33 107,620$77.38 69,580$77.60 RSUs205,871256.22 280,111238.28 214,936230.12 PSUs66,636296.61 64,990258.60 59,200236.16 Recipients of certain RSUs and PSUs pursuant to the LTIP who retire prior to December 31st will forfeit a portion of awards received in the current year.

LeasesWe are committed under long-term lease agreements for equipment, lines of road, and other property. We combine lease and non-lease components for new and reassessed leases. Some of these agreements are variable lease agreements that include usage-based payments. These agreements contain payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date. Our long-term lease agreements do not contain any material restrictive covenants. Our equipment leases have remaining terms of less than 1 year to 7 years and our lines of road and land leases have remaining terms of less than 1 year to 132 years. Some of these leases include options to extend the leases for up to 99 years and some include options to terminate the leases within 30 days. In instances when we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and associated payments are excluded from future minimum lease payments. Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease amounts included on the Consolidated Balance Sheets are as follows:December 31,20252024($ in millions)ClassificationAssetsRight-of-use (ROU) assetsOther assets$218 $271 LiabilitiesCurrent lease liabilitiesOther current liabilities$70 $81 Non-current lease liabilitiesOther liabilities148 191 Total lease liabilities$218 $272 The components of total lease expense, primarily included in “Purchased services and rents,” are as follows:202520242023($ in millions)Operating lease expense$92 $102 $115 Variable lease expense65 84 84 Short-term lease expense8 10 15 Total lease expense$165 $196 $214 In March 2019, we entered into a non-cancellable lease for an office building. In 2021, the construction of the office building was completed, and the lease commenced. The initial lease term is five years with options to renew, purchase, or sell the office building at the end of the lease term. The lease contains a residual value guarantee of up to eighty-three percent of the total construction cost of $499 million.Other information related to operating leases is as follows: December 31,20252024Weighted-average remaining lease term (years) on operating leases6.836.64Weighted-average discount rates on operating leases4.05%3.

ProcessWe use a multi-layered defensive cybersecurity strategy based on the cyber security framework drafted by the U.S. Department of Commerce's National Institute of Standards and Technology (NIST). The NIST Cybersecurity Framework (NIST CSF) is a voluntary framework of best practices to identify, protect, detect, respond to, and recover from cybersecurity matters. Based on the NIST CSF, our processes to identify, assess, manage, and govern material risks from cybersecurity threats includes the following:IdentifyWe identify risks from cybersecurity threats by first developing and maintaining an understanding of those assets essential to our operation and reputation, as well as assets that could provide value to threat actors. Any cyber act is considered a potential risk if a threat actor can use it to reduce the value of an asset, reduce our ability to utilize or otherwise access the value of an asset, or surreptitiously gain or increase their access to an asset or its value.Assess We assess risks from cybersecurity threats by evaluating exposure of our assets to identified cyber risks, as well as potential impacts to our operations or reputation from our inability to access or utilize an asset or realize its value, or a threat actor’s ability to gain access to an asset or its value. We further evaluate the potential materiality of these risks based on the potential impact to our operations or reputation.ManageWe mitigate risks from cybersecurity threats by applying multiple layers of defense to ensure we have the continued ability to access or utilize an asset or its value, and deny threat actors the ability to gain or increase their access to an asset or its value. We prioritize defensive mechanisms, including administrative, procedural, and technical controls, according to their relative cost and reduction in risk based on the NIST CSF.GovernWe govern cybersecurity risk by establishing and maintaining the policies, processes, and oversight mechanisms that define how risk is identified, assessed, and managed across the enterprise. Governance ensures that roles, responsibilities, and decision-making authority are clearly articulated and aligned with organizational objectives, regulatory requirements, and risk appetite. Through governance, we embed accountability and transparency into our cybersecurity program, enabling informed prioritization of resources and consistent execution of risk management practices.

Properties AccumulatedNet BookDepreciationDecember 31, 2025CostDepreciationValueRate (1) ($ in millions)Land$4,172 $— $4,172 —Roadway: Rail and other track material8,702 (2,169)6,533 2.48%Ties6,694 (1,956)4,738 3.33%Ballast3,452 (1,069)2,383 2.70%Construction in process823 — 823 —Other roadway15,526 (4,934)10,592 2.72%Total roadway35,197 (10,128)25,069 Equipment: Locomotives6,408 (2,348)4,060 3.67%Freight cars2,724 (1,018)1,706 2.31%Computers and software1,085 (491)594 9.89%Construction in process158 — 158 —Other equipment1,262 (554)708 4.70%Total equipment11,637 (4,411)7,226 Other property90 (78)12 2.53%Total properties$51,096 $(14,617)$36,479 AccumulatedNet BookDepreciationDecember 31, 2024CostDepreciationValueRate (1) ($ in millions)Land$4,125 $— $4,125 —Roadway: Rail and other track material8,402 (2,098)6,304 2.44%Ties6,450 (1,860)4,590 3.35%Ballast3,339 (1,005)2,334 2.73%Construction in process680 — 680 —Other roadway15,038 (4,589)10,449 2.73%Total roadway33,909 (9,552)24,357 Equipment: Locomotives6,242 (2,180)4,062 3.66%Freight cars2,733 (1,021)1,712 2.45%Computers and software1,149 (570)579 9.88%Construction in process236 — 236 —Other equipment1,304 (558)746 4.60%Total equipment11,664 (4,329)7,335 Other property90 (76)14 2.48%Total properties$49,788 $(13,957)$35,831 (1)Composite annual depreciation rate for the underlying assets, excluding the effects of the amortization of any deficiency (or excess) that resulted from our depreciation studies.Gains from operating property sales, inclusive of the railway line sales, amounted to $253 million, $490 million, and $43 million in 2025, 2024, and 2023, respectively. “Other current assets” includes $185 million pertaining to sales of property in 2025 in which the cash proceeds will be received in 2026.Acquisition of Assets of Cincinnati Southern RailwayOn March 15, 2024, we completed the acquisition of a 337 mile railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee from the CSR for $1.7 billion. We previously operated this line subject to an operating lease agreement, which was terminated upon the close of the transaction. Lease expense associated with the prior operating lease agreement totaled $5 million and $26 million in 2024 and 2023, respectively. The purchase price was allocated to the assets acquired in the transaction.