Union Pacific 2009 Annual Report Download - page 36

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36
to lower volumes and network initiatives, combined with improved productivity within the support
organizations, contributed to the lower full-time equivalent force levels.
Customer Satisfaction Index – Our customer satisfaction survey asks customers to rate how satisfied they
are with our performance over the last 12 months on a variety of attributes. A higher score indicates
higher customer satisfaction. The improvement in survey results in 2009 and 2008 generally reflects
customer recognition of our improving service.
Return on Average Common Shareholders’ Equity
Millions of Dollars, Except Percentages 2009 2008 2007
Net income $ 1,898 $ 2,338 $ 1,855
Average equity $ 16,194 $ 15,516 $ 15,448
Return on average common shareholders' equity 11.7% 15.1
%
12.0%
Return on Invested Capital as Adjusted (ROIC)
Millions of Dollars, Except Percentages 2009 2008 2007
Net income $ 1,898 $ 2,338 $ 1,855
Add: Interest expense 600 511 482
Add: Sale of receivables fees 9 23 35
Add: Interest on present value of operating leases 232 299 292
Less: Taxes on interest and fees (307) (301
)
(310
)
Net operating profit after taxes as adjusted (a) $ 2,432 $ 2,870 $ 2,354
Average equity $ 16,194 $ 15,516 $ 15,448
Add: Average debt 9,388 8,305 7,232
Add: Average value of sold receivables 492 592 600
Add: Average present value of operating leases 3,681 3,737 3,648
Average invested capital as adjusted (b) $ 29,755 $ 28,150 $ 26,928
Return on invested capital as adjusted (a/b) 8.2% 10.2
%
8.7
%
ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation
S-K, and may not be defined and calculated by other companies in the same manner. We believe this
measure is important in evaluating the efficiency and effectiveness of the Corporation’s long-term capital
investments, and we currently use ROIC as a performance criteria in determining certain elements of
equity compensation for our executives. ROIC should be considered in addition to, rather than as a
substitute for, other information provided in accordance with GAAP. The most comparable GAAP
measure is Return on Average Common Shareholders’ Equity. The tables above provide a reconciliation
from return on average common shareholders’ equity to ROIC. Our 2009 ROIC decreased 2.0 points
compared to 2008 primarily as a result of lower earnings and higher average debt and equity levels.