Union Pacific 2010 Annual Report Download - page 34

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34
support organizations reduced their full-time-equivalent force levels, benefiting from continued
productivity initiatives. Productivity initiatives and lower volumes reduced employee levels 10%
throughout the Company in 2009 versus 2008.
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 2010 and 2009 generally reflects
customer recognition of our service quality.
Return on Average Common Shareholders’ Equity
Millions, Except Percentages 2010 2009 2008
Net income $ 2,780 $ 1,890 $ 2,335
Average equity $ 17,282 $ 16,058 $ 15,386
Return on average common shareholders' equity 16.1% 11.8% 15.2%
Return on Invested Capital as Adjusted (ROIC)
Millions, Except Percentages 2010 2009 2008
Net income $ 2,780 $ 1,890 $ 2,335
Add: Interest expense 602 600 511
Add: Interest on present value of operating leases 222 232 299
Add: Receivable securitization fees - 9 23
Less: Taxes on interest and fees (307) (306) (300)
Net operating profit after taxes as adjusted (a) $ 3,297 $ 2,425 $ 2,868
Average equity $ 17,282 $ 16,058 $ 15,386
Add: Average debt 9,545 9,388 8,305
Add: Average value of sold receivables 200 492 592
Add: Average present value of operating leases 3,574 3,681 3,737
Average invested capital as adjusted (b) $ 30,601 $ 29,619 $ 28,020
Return on invested capital as adjusted (a/b) 10.8% 8.2% 10.2%
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. In addition, 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
reconciliations from return on average common shareholders’ equity to ROIC. Our 2010 ROIC improved
2.6 points compared to 2009, primarily as a result of higher earnings.