Union Pacific Corp.

Strategic execution · Merger acquisition and divestiture risks

On July 28, 2025, the Company, Norfolk Southern, Ruby Merger Sub 1 Corporation, and Ruby Merger Sub 2 LLC, entered into an agreement and plan of merger. The completion of the mergers is subject to a number of conditions, including, among others, the receipt of the requisite regulatory approvals, which make the completion of the mergers and timing thereof uncertain.

Strategic execution · Strategic transformation and turnaround risks

The success of the mergers will depend, in part, on the combined company's ability to successfully combine the businesses of the Company and Norfolk Southern, which currently operate as independent public companies, and realize the anticipated benefits, including synergies, cost savings, innovation, and operational efficiencies, from the combination.

Market position and competition · Market cyclicality and demand volatility

Significant reductions in demand for rail services with respect to one or more commodities or changes in consumer preferences that affect the businesses of our customers can lead to increased costs associated with resizing our operations, including higher unit operating costs and costs for the storage of locomotives, rail cars, and other equipment.

Market position and competition · Pricing pressure and margin compression

In addition to price competition, we face competition with respect to transit times, quality, and reliability of service from motor carriers and other railroads. Many movements face product or geographic competition where our customers can use different products or commodities from different locations, which allows shippers to substitute different carriers, and such competition may reduce our volumes or constrain prices.

Market position and competition · Competitive pressure and market share loss

We face competition from other railroads, motor carriers, ships, barges, and pipelines. Our main railroad competitor is Burlington Northern Santa Fe LLC. Motor carrier competition exists in all three of our commodity groups. Because of the proximity of our routes to major inland and Gulf Coast waterways, barges can be particularly competitive, especially for grain and bulk commodities in certain areas where we operate.

Natural and catastrophic events · Terrorism and security threats

Our rail lines, facilities, and equipment, including rail cars carrying hazardous materials, could be direct targets or indirect casualties of terrorist attacks. Terrorist attacks, or other similar events, any government response thereto, and war or risk of war may adversely affect our results of operations, financial condition, and liquidity.

Natural and catastrophic events · Pandemic and public health crises

Pandemics, epidemics, and other outbreaks of disease can have significant and widespread impacts. As we saw during the peaks of the COVID pandemic, outbreaks of disease can cause a global slowdown of economic activity (including the decrease in demand for a broad variety of goods), disruptions in global supply chains, and significant volatility and disruption of financial markets.

Natural and catastrophic events · Climate change and environmental impact

Climate change, including the impact of global warming and transition risks involving policy, legal risks, and market risks, could have a material adverse effect on our results of operations, financial condition, and liquidity on both a long-term and near-term basis. Restrictions, caps, taxes, or other controls on emissions of greenhouse gases (GHGs), including diesel exhaust, could significantly increase our operating costs.

Geopolitical and trade · Regulatory and policy uncertainty

Before the mergers may be completed, the requisite regulatory approvals must have been obtained, including the approval, authorization, or exemption by the U.S. Surface Transportation Board (STB) of the mergers and other transactions contemplated by the merger agreement. The terms and conditions of the approvals that are granted may impose requirements, concessions, limitations, or costs or place restrictions on the conduct of the combined company's business.

Economic and market conditions · Economic recession and downturns

Prolonged, severe adverse domestic and global macroeconomic conditions or disruptions of financial and credit markets, including, for example, the cycles of recessionary fears, inflationary pressures, changes in interest rates, and/or related monetary policy actions by governments in response to inflation, may affect the producers and consumers of the commodities we carry.

Geopolitical and trade · International conflicts and tensions

Significant and sustained interruptions of trade with Mexico, Canada, or countries in Southeast Asia, including China, could adversely affect customers and other entities that, directly or indirectly, purchase or rely on rail transportation services in the U.S. as part of their operations, and any such interruptions, including international armed conflicts, such as the Russia-Ukraine and Israel-Hamas wars, could have a material adverse effect on our results of operations.

Natural and catastrophic events · Natural disasters and extreme weather

As a railroad with a vast network, we are exposed to severe weather conditions and other natural phenomena, including earthquakes, hurricanes, fires, floods, mudslides or landslides, extreme temperatures, avalanches, and significant precipitation, and climate change may cause or contribute to the severity or frequency of such weather conditions.

Legal and litigation · Product liability and warranty claims

We transport certain hazardous materials and other materials, including crude oil, ethanol, and toxic inhalation hazard (TIH) materials, such as chlorine, that pose certain risks in the event of a release or combustion. An accident or other incident on our network, at our facilities, or at the facilities of our customers involving the release or combustion of hazardous materials can involve significant costs and claims for personal injury, property damage, and environmental penalties and remediation in excess of our insurance coverage.

Legal and litigation · Litigation and legal proceedings

As a railroad with operations in densely populated urban areas and a vast rail network, we are exposed to the potential for various claims and litigation related to labor and employment, personal injury, property damage, environmental liability, and other matters. Any material changes to litigation trends or a catastrophic rail accident or series of accidents involving any or all of property damage, personal injury, and environmental liability that exceed our insurance coverage could have a material adverse effect.

Credit and liquidity · Debt service and covenant compliance

The combined company will likely be required to comply with a leverage covenant as set forth in these agreements. The combined company's ability to comply with the leverage covenant in future periods will depend on its ongoing financial and operating performance. Failure to comply with any of the covenants in its existing or future financing agreements could result in a default under those agreements.

Capital structure and performance · Debt management and refinancing

The combined company's consolidated indebtedness may have the effect of, among other things, increasing borrowing costs. In addition, the amount of cash required to service the indebtedness levels will be greater than the amount of cash flows required to service the indebtedness of the Company or Norfolk Southern individually prior to completion of the mergers.

Credit and liquidity · Access to capital and financing

Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad, we rely on the capital markets to provide some of our capital requirements. Significant instability or disruptions of the capital markets, including, among other things, elevated interest rates in the credit markets and/or changes in interest rates, could restrict or prohibit our access to, and significantly increase the cost of, commercial paper and other financing sources.

Supply chain and procurement · Supplier operation and dependance

Due to the capital-intensive nature and sophistication of locomotive equipment, parts, and maintenance, potential new suppliers face high barriers to entry. Therefore, if any of our two domestic suppliers of locomotives discontinues manufacturing locomotives, supplying parts, or providing maintenance for any reason, including bankruptcy or insolvency, we could experience significant cost increases and reduced availability of the locomotives that are necessary for our operations.

Core operations · Operational disruption and business continuity

If there is significant demand for our services that exceeds the designed capacity of our network or shifts in traffic flow that are contrary to the designed capacity of our network, we can experience challenges, including congestion and reduced velocity, that could compromise the level of service we provide to our customers.

Corporate governance · Shareholder rights and activism

We may and have been a target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the mergers from being completed. Even if the lawsuits are without merit, defending against or otherwise resolving these claims can result in substantial costs and divert management time and resources.