Union Pacific 2011 Annual Report Download - page 32

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32
the lower personal injury costs. As a result of our 2009 annual review of asbestos-related costs, we
reduced expenses by $25 million, thus driving the unfavorable variance in 2010.
Non-Operating Items
Millions 2011 2010 2009
% Change
2011 v 2010
% Change
2010 v 2009
Other income $ 112 $ 54 $ 195 107% (72)%
Interest expense (572) (602) (600) (5) -
Income taxes (1,972) (1,653) (1,084) 19% 52 %
Other Income – Other income increased in 2011 versus 2010 due to higher gains from real estate sales,
lower environmental costs associated with non-operating properties and the comparative impact of
premiums paid for early redemption of long-term debt in the first quarter of 2010.
Other income decreased in 2010 versus 2009 due to lower gains from real estate sales (the second
quarter of 2009 included a $116 million pre-tax gain from a land sale to the Regional Transportation
District in Colorado) and premiums paid for early debt redemption.
Interest Expense – Interest expense decreased in 2011 versus 2010 due to a lower weighted-average
debt level of $9.2 billion versus $9.7 billion. The effective interest rate was 6.2% in both 2011 and 2010.
Interest expense was flat in 2010 compared to 2009 due to a modestly higher weighted-average debt
level of $9.7 billion, compared to $9.6 billion in 2009, offset by a lower effective interest rate of 6.2% in
2010, compared to 6.3% in 2009.
Income Taxes – Higher pre-tax income increased income taxes in 2011 compared to 2010. Our effective
tax rate remained relatively flat at 37.5% in 2011 compared to 37.3% in 2010.
Income taxes were higher in 2010 compared to 2009, primarily driven by higher pre-tax income. Our
effective tax rate for the year was 37.3% compared to 36.4% in 2009.
OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS
We report key performance measures weekly to the Association of American Railroads (AAR), including
carloads, average daily inventory of freight 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:
2011 2010 2009
% Change
2011 v 201
0
% Change
2010 v 2009
Average train speed (miles per hour) 25.6 26.2 27.3 (2)% (4)%
Average terminal dwell time (hours) 26.2 25.4 24.8 3 % 2 %
Average rail car inventory (thousands) 272.9 274.4 283.1 (1)% (3)%
Gross ton-miles (billions) 978.2 931.4 846.5 5 % 10 %
Revenue ton-miles (billions) 544.4 520.4 479.2 5 % 9 %
Operating ratio 70.7 70.6 76.1 0.1 pt (5.5) pt
Employees (average) 44,861 42,884 43,531 5 % (1)%
Customer satisfaction index 92 89 88 3 pt 1 pt
Average Train Speed – Average train speed is calculated by dividing train miles by hours operated on our
main lines between terminals. The severe heat and drought in the South, combined with extreme winter
weather in February and severe Midwest flooding, had a greater impact than weather events in 2010.
These weather challenges, in addition to increased carloadings and traffic mix changes, drove the 2%
decline in 2011 compared to 2010. Overall, we continued operating a fluid and efficient network during