Form 10-K - Union Pacific

2011, effectively handling the 3% increase in carloads. Maintenance activities and weather disruptions,
combined with higher volume levels, led to a 4% decrease in average train speed in 2010 compared to a
record set in 2009.
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 improves asset utilization and service. Average terminal
dwell time increased 3% in 2011 compared to 2010. Additional volume, weather challenges, track
replacement programs, and a shift of traffic mix to more manifest shipments, which require additional
terminal processing, all contributed to the increase. Average terminal dwell time increased 2% in 2010
compared to 2009, driven in part by our network plan to increase the length of numerous trains to improve
overall efficiency, which resulted in higher terminal dwell time for some cars.
Average Rail Car Inventory – Average rail car inventory is the daily average number of rail cars on our
lines, including rail cars in storage. Lower average rail car inventory reduces congestion in our yards and
sidings, which increases train speed, reduces average terminal dwell time, and improves rail car
utilization. Average rail car inventory decreased slightly in 2011 compared to 2010, as we continued to
adjust the size of our freight car fleet. Average rail car inventory decreased 3% in 2010 compared to
2009, while we handled a 13% increase in carloads during the period compared to 2009. We maintained
more freight cars off-line and retired a number of old freight cars, which drove the decrease.
Gross and Revenue Ton-Miles – Gross ton-miles are calculated by multiplying the weight of loaded and
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. Gross and revenue-ton-miles increased 5% in 2011
compared to 2010, driven by a 3% increase in carloads and mix changes to heavier commodity groups,
notably a 5% increase in energy shipments. Gross and revenue-ton-miles increased 10% and 9%,
respectively, in 2010 compared to 2009 due to a 13% increase in carloads. Commodity mix changes
(notably automotive shipments) drove the variance in year-over-year growth between gross ton-miles,
revenue ton-miles and carloads.
Operating Ratio – Operating ratio is our operating expenses reflected as a percentage of operating
revenue. Our operating ratio increased 0.1 points to 70.7% in 2011 versus 2010. Higher fuel prices,
inflation and weather related costs, partially offset by core pricing gains and productivity initiatives, drove
the increase. Our operating ratio improved 5.5 points to 70.6% in 2010 and 1.3 points to 76.1% in 2009.
Efficiently leveraging volume increases, core pricing gains, and productivity initiatives drove the
improvement in 2010 and more than offset the impact of higher fuel prices during the year.
Employees – Employee levels were up 5% in 2011 versus 2010, driven by a 3% increase in volume
levels, a higher number of trainmen, engineers, and yard employees receiving training during the year,
and increased work on capital projects. Employee levels were down 1% in 2010 compared to 2009
despite a 13% increase in volume levels. We leveraged the additional volumes through network
efficiencies and other productivity initiatives. In addition, we successfully managed the growth of our fulltime-equivalent
train and engine force levels at a rate less than half of our carload growth in 2010. All
other operating functions and support organizations reduced their full-time-equivalent force levels,
benefiting from continued productivity initiatives.
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. We believe that improvement in survey results in 2011 generally reflects
customer recognition of our service quality supported by our capital investment program.
Return on Average Common Shareholders’ Equity
Millions, Except Percentages 2011 2010 2009
Net income $ 3,292 $ 2,780 $ 1,890
Average equity $ 18,171 $ 17,282 $ 16,058
Return on average common shareholders' equity 18.1% 16.1% 11.8%
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