Union Pacific 2007 Annual Report Download - page 34

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through 2002, among other things, resulted in the $118 million reduction in 2005. Our effective tax rate was
36.4% and 28.6% in 2006 and 2005, respectively.
OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS
We report key Railroad performance measures weekly to the Association of American Railroads (AAR),
including carloads, average daily inventory of rail cars on our system, average train speed, and average
terminal dwell time. We provide this data on our website at www.up.com/investors/reports/index.shtml.
Operating/Performance Statistics
Railroad performance measures reported to the AAR, as well as other performance measures, are included in
the table below:
2007 2006 2005
% Change
2007 v 2006
% Change
2006 v 2005
Avg. train speed (miles per hour)......... 21.8 21.4 21.1 2 % 1%
Avg. terminal dwell time (hours) ......... 25.1 27.2 28.7 (8) % (5)%
Gross ton-miles (billions) ..................... 1,052.3 1,072.5 1,043.9 (2) % 3 %
Revenue ton-miles (billions) ................ 561.8 565.2 548.8 (1) % 3 %
Operating ratio ...................................... 79.3 81.5 86.8 2.2 pt 5.3 pt
Avg. full-time-equivalent employees.... 50,089 50,739 49,747 (1) % 2 %
Customer satisfaction index.................. 79 72 64 7 pt 8 pt
Average Train Speed – Average train speed is calculated by dividing train miles by hours operated on our main
lines between terminals. Ongoing network management initiatives and capacity expansion contributed to 2%
and 1% improvements of average train speed during 2007 and 2006, respectively.
Average Terminal Dwell Time – Average terminal dwell time is the average time that a rail car spends at our
terminals. Lower average terminal dwell time is favorable. Average terminal dwell improved 8% and 5% in
2007 and 2006, respectively, as a result of ongoing management initiatives and directed efforts to more timely
deliver rail cars to our interchange partners and customers. Average terminal dwell time was also impacted by
1% lower volume levels in 2007 and a 3% increase in volume levels during 2006.
Gross and Revenue Ton-Miles – Gross ton-miles are calculated by multiplying the weight of loaded or empty
freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of
freight by the number of tariff miles. Revenue ton-miles declined 1% in relation to the 1% reduction in
carloadings in 2007 compared to 2006. Gross ton-miles decreased 2% in 2007 driven by a mix shift in freight
shipments. In 2006, gross and revenue-ton miles grew 3% in relation to the 3% increase in carloadings as
volume was balanced between the higher and lower density commodities.
Operating Ratio – Operating ratio is defined as our operating expenses as a percentage of revenue. Our
operating ratio improved 2.2 points to 79.3% in 2007 as a result of yield increases, network management
initiatives, and improved productivity. In 2006, our operating ratio improved 5.3 points to 81.5% as a result of
solid demand, yield increases, and improved operational efficiency.
Average Full-Time-Equivalent Employees – Lower employee levels in 2007 versus 2006 resulted from fewer train
and engine personnel due to improved network productivity and 1% lower volume levels, partially offset by
more employees maintaining our larger locomotive fleet. The larger full-time-equivalent number in 2006,
included more people to maintain our larger locomotive and freight car fleet, more employees needed for
increased track repair and maintenance programs, more operations management personnel (including an
expanded management training program), and more train and engine personnel to meet demand levels.