Union Pacific UNP · USD

Commitments and ContingenciesSee Note 20 for a discussion on the pending acquisition of 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 $413 million to $530 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.

DebtTotal debt as of December 31, 2025 and 2024, is summarized below:Millions20252024Notes and debentures, 2.3% to 7.2% due through February 14, 2072$32,694 $32,044 Equipment obligations, 2.6% to 6.2% due through January 2, 2031 [a]693 732 Finance leases, 3.1% to 6.8% due through August 21, 2029105 109 Unamortized discount and deferred issuance costs(1,678)(1,693)Total debt31,814 31,192 Less: current portion(1,520)(1,425)Total long-term debt$30,294 $29,767 [a]Equipment obligations are secured by an interest in certain railroad equipment with a carrying value of approximately $0.8 billion at both December 31, 2025 and 2024.Debt maturities – The following table presents aggregate debt maturities as of December 31, 2025, excluding market value adjustments:Millions2026$1,521 20271,291 20281,239 20291,276 2030753 Thereafter27,412 Total principal33,492 Unamortized discount and deferred issuance costs(1,678)Total debt$31,814 Credit facilities – At December 31, 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. During 2025, we issued $0 and repaid $0 through the Facility. As of both December 31, 2025 and 2024, we had $0 outstanding with the Facility. 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 Employee Retirement Income Security Act of 1974 (ERISA), and unamortized debt discount and deferred debt issuance costs. At December 31, 2025, the Company was in compliance with the adjusted debt-to-EBITDA coverage ratio, which allows us to carry up to $47.7 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.

Income TaxesComponents of income tax expense were as follows for the years ended December 31:Millions202520242023Current tax expense:Federal1,460 1,649 1,417 State321 359 314 Foreign6 11 6 Total current tax expense1,787 2,019 1,737 Deferred and other tax expense/(benefit):Federal351 47 219 State [a](114)(24)(104)Foreign4 5 2 Total deferred and other tax expense241 28 117 Total income tax expense$2,028 $2,047 $1,854 [a]In 2025, Kansas enacted corporate income tax legislation that resulted in a $115 million reduction of our deferred tax expense. In 2024, Louisiana and Arkansas enacted corporate income tax legislation that resulted in a $34 million reduction of our deferred tax expense. In 2023, Nebraska, Iowa, Kansas, and Arkansas enacted corporate income tax legislation that resulted in a $114 million reduction of our deferred tax expense.For the years ended December 31, reconciliations between statutory and effective tax rates are as follows:Millions, except percentages202520242023Federal Taxes$1,925 21.0%$1,847 21.0%$1,729 21.0%State and local income tax, net of federal benefit163 1.8264 3.0166 2.0Foreign tax effects10 0.1 16 0.2 8 0.1 Effect of cross-border tax laws(2)- 1 - (2)- Tax credits(50)(0.6)(45)(0.5)(21)(0.3)Nontaxable or nondeductible items(16)(0.2)(36)(0.4)(37)(0.4)Changes in unrecognized tax benefits(2)- - - (1)- Other adjustments- -- -12 0.1Effective tax rate$2,028 22.1 %$2,047 23.3 %$1,854 22.5 %The state statutory rate, net of federal benefits, was 3.1%, 3.2%, and 3.4% for years ended December 31, 2025, 2024, and 2023, respectively.UPRR operates in the western two-thirds of the country. The majority of our state taxes are paid in the states where we actively operate.

LeasesWe lease certain locomotives, freight cars, and other property for use in our rail operations.The following are details related to our lease portfolio as of December 31:MillionsClassification20252024AssetsOperating leasesOperating lease assets$1,036 $1,297 Finance leasesProperties, net [a]185 172 Total leased assets$1,221 $1,469 LiabilitiesCurrentOperatingAccounts payable and other current liabilities$270 $346 FinanceDebt due within one year39 37 NoncurrentOperatingOperating lease liabilities738 925 FinanceDebt due after one year66 72 Total lease liabilities$1,113 $1,380 [a]Finance lease assets are recorded net of accumulated amortization of $456 million and $472 million as of December 31, 2025 and 2024, respectively.The following table presents the classification of lease cost components for the year-ended December 31:Millions20252024Operating lease cost [a]$305 $340 Short-term lease cost23 24 Variable lease cost39 37 Finance lease costAmortization of leased assets [b]28 31 Interest on lease liabilities [c]5 5 Net lease cost$400 $437 [a]Operating lease cost is primarily reported in equipment and other rents in our Consolidated Statements of Income.[b]Amortization of leased assets is reported in depreciation in our Consolidated Statements of Income.[c]Interest on lease liabilities is reported in interest expense in our Consolidated Statements of Income.The following table presents aggregate lease maturities as of December 31, 2025:MillionsOperating leasesFinance leasesTotal2026$276 $42 $318 2027238 37 275 2028191 14 205 2029123 21 144 2030121 - 121 After 2030176 - 176 Total lease payments$1,125 $114 $1,239 Less: Interest117 9 126 Present value of lease liabilities$1,008 $105 $1,113 The following table presents the weighted average remaining lease term and discount rate as of December 31:2025Weighted-average remaining lease term (years)Operating leases5.4Finance leases2.6Weighted-average discount rate (%)Operating leases4.0 Finance leases4.

Pending AcquisitionNorfolk Southern Corporation (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.

The Company is subject to cybersecurity threats that could have a material adverse impact on our results of operations, financial condition, and liquidity. See also our discussion in the Risk Factors in Item 1A of this report. As a component of our Company-wide enterprise risk management framework, we implemented a cybersecurity program whose objective is to assess, identify, and manage risks from cybersecurity threats that may result in adverse effects on the confidentiality, integrity, and availability of the electronic information systems that we own. We regularly perform internal security assessments, engage third-party consultants to conduct external security assessments, and participate in, conduct, and/or administer exercises, drills, and recovery tests as part of this program. We also maintain training programs and policies and procedures designed to safeguard employee handling and use of data, internet usage, controlled access measures, and physical protections. We consult with industry groups, monitor threat intelligence reports, and communicate with various government agencies in an effort to stay up-to-date on changes in the cybersecurity threat landscape. This program, in addition to addressing our own information systems, is also designed to oversee, identify, and reduce the potential impact of a security incident at a third-party service provider or that otherwise impacts third-party technology and systems we use.Internal cybersecurity teamThe Company’s internal information security organization (Internal Cybersecurity Team), led by our Executive Vice President and Chief Information Officer (CIO) as well as the Assistant Vice President and Chief Information Security Officer (CISO), is responsible for coordinating all aspects of the Company’s electronic information security systems, including prevention, detection, mitigation, and remediation of cybersecurity incidents, as well as implementing, monitoring, and maintaining our enterprise-wide security strategy, standards, architecture, policies, and processes. Our CIO reports directly to our Chief Executive Officer, our CISO reports to our CIO, and reporting to our CISO are our Deputy Chief Information Security Officer (Deputy CISO) and other experienced information security personnel responsible for various parts of our business.

Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 14, 2026, are incorporated by reference into Part III of this report. The registrant’s Proxy Statement will be filed with the Securities and Exchange Commission (SEC) within 120 days after the end of the fiscal year that this report relates pursuant to Regulation 14A.

PropertiesThe 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 lifeCostAccumulateddepreciationNet bookvalueEstimateduseful lifeAs of December 31, 2025Land$5,471 N/A $5,471 N/ARoad:Rail and other track material19,747 $7,936 11,811 45Ties12,779 4,305 8,474 34Ballast6,646 2,309 4,337 34Other roadway [a]24,610 6,080 18,530 47Total road63,782 20,630 43,152 N/AEquipment:Locomotives9,926 3,813 6,113 18Freight cars3,080 1,107 1,973 23Work equipment and other1,318 540 778 17Total equipment14,324 5,460 8,864 N/ATechnology and other1,414 669 745 12Construction in progress1,413 - 1,413 N/ATotal$86,404 $26,759 $59,645 N/A[a]Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.Millions, except estimated useful lifeCostAccumulateddepreciationNet bookvalueEstimateduseful lifeAs of December 31, 2024Land$5,441 N/A $5,441 N/ARoad:Rail and other track material19,283 $7,642 11,641 46Ties12,358 4,109 8,249 34Ballast6,495 2,182 4,313 34Other roadway [a]23,913 5,681 18,232 47Total road62,049 19,614 42,435 N/AEquipment:Locomotives9,517 3,724 5,793 18Freight cars3,011 1,037 1,974 22Work equipment and other [b]1,222 482 740 17Total equipment13,750 5,243 8,507 N/ATechnology and other1,431 640 791 12Construction in progress1,169 - 1,169 N/ATotal$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 to the asset class, 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 Consolidated Statements of Income.Property and depreciation – Our railroad operations are highly capital-intensive, and our large base of homogeneous, network-type assets turns over on a continuous basis. Each year we develop a capital program for the replacement of assets and for the acquisition or construction of assets that enable us to enhance our operations or provide new service offerings to customers.