notes to consolidated financial statements level 3 rollforward if a derivative was transferred to level 3 during a reporting period , its entire gain or loss for the period is included in level 3 .
transfers between levels are reported at the beginning of the reporting period in which they occur .
in the tables below , negative amounts for transfers into level 3 and positive amounts for transfers out of level 3 represent net transfers of derivative liabilities .
gains and losses on level 3 derivatives should be considered in the context of the following : 2030 a derivative with level 1 and/or level 2 inputs is classified in level 3 in its entirety if it has at least one significant level 3 input .
2030 if there is one significant level 3 input , the entire gain or loss from adjusting only observable inputs ( i.e. , level 1 and level 2 inputs ) is classified as level 3 .
2030 gains or losses that have been reported in level 3 resulting from changes in level 1 or level 2 inputs are frequently offset by gains or losses attributable to level 1 or level 2 derivatives and/or level 1 , level 2 and level 3 cash instruments .
as a result , gains/ ( losses ) included in the level 3 rollforward below do not necessarily represent the overall impact on the firm 2019s results of operations , liquidity or capital resources .
the tables below present changes in fair value for all derivatives categorized as level 3 as of the end of the year. .

in millions                | level 3 derivative assets and liabilities at fair value for the year ended december 2013 asset/ ( liability ) balance beginning of year | level 3 derivative assets and liabilities at fair value for the year ended december 2013 net realized gains/ ( losses ) | level 3 derivative assets and liabilities at fair value for the year ended december 2013 net unrealized gains/ ( losses ) relating to instruments still held at year-end | level 3 derivative assets and liabilities at fair value for the year ended december 2013 purchases | level 3 derivative assets and liabilities at fair value for the year ended december 2013 sales | level 3 derivative assets and liabilities at fair value for the year ended december 2013 settlements | level 3 derivative assets and liabilities at fair value for the year ended december 2013 transfers into level 3 | level 3 derivative assets and liabilities at fair value for the year ended december 2013 transfers out of level 3 | level 3 derivative assets and liabilities at fair value for the year ended december 2013 asset/ ( liability ) balance endof year
-------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------
interest rates 2014 net    | $ -355 ( 355 )                                                                                | $ -78 ( 78 )                                                                                | $ 168                                                                                | $ 1                                                                                | $ -8 ( 8 )                                                                                | $ 196                                                                                | $ -9 ( 9 )                                                                                | $ -1 ( 1 )                                                                                | $ -86 ( 86 )
credit 2014 net            | 6228                                                                                | -1 ( 1 )                                                                                | -977 ( 977 )                                                                                | 201                                                                                | -315 ( 315 )                                                                                | -1508 ( 1508 )                                                                                | 695                                                                                | -147 ( 147 )                                                                                | 4176
currencies 2014 net        | 35                                                                                | -93 ( 93 )                                                                                | -419 ( 419 )                                                                                | 22                                                                                | -6 ( 6 )                                                                                | 169                                                                                | 139                                                                                | -47 ( 47 )                                                                                | -200 ( 200 )
commodities 2014 net       | -304 ( 304 )                                                                                | -6 ( 6 )                                                                                | 58                                                                                | 21                                                                                | -48 ( 48 )                                                                                | 281                                                                                | 50                                                                                | 8                                                                                | 60
equities 2014 net          | -1248 ( 1248 )                                                                                | -67 ( 67 )                                                                                | -202 ( 202 )                                                                                | 77                                                                                | -472 ( 472 )                                                                                | 1020                                                                                | -15 ( 15 )                                                                                | -52 ( 52 )                                                                                | -959 ( 959 )
total derivatives 2014 net | $ 4356                                                                                | $ ( 245 ) 1                                                                                | $ ( 1372 ) 1                                                                                | $ 322                                                                                | $ -849 ( 849 )                                                                                | $ 158                                                                                | $ 860                                                                                | $ -239 ( 239 )                                                                                | $ 2991

1 .
the aggregate amounts include losses of approximately $ 1.29 billion and $ 324 million reported in 201cmarket making 201d and 201cother principal transactions , 201d respectively .
the net unrealized loss on level 3 derivatives of $ 1.37 billion for 2013 principally resulted from changes in level 2 inputs and was primarily attributable to losses on certain credit derivatives , principally due to the impact of tighter credit spreads , and losses on certain currency derivatives , primarily due to changes in foreign exchange rates .
transfers into level 3 derivatives during 2013 primarily reflected transfers of credit derivative assets from level 2 , principally due to reduced transparency of upfront credit points and correlation inputs used to value these derivatives .
transfers out of level 3 derivatives during 2013 primarily reflected transfers of certain credit derivatives to level 2 , principally due to unobservable credit spread and correlation inputs no longer being significant to the valuation of these derivatives and unobservable inputs not being significant to the net risk of certain portfolios .
goldman sachs 2013 annual report 143


american tower corporation and subsidiaries notes to consolidated financial statements 2014 ( continued ) pro forma disclosure 2014the company has adopted the disclosure-only provisions of sfas no .
123 , as amended by sfas no .
148 , and has presented such disclosure in note 1 .
the 201cfair value 201d of each option grant is estimated on the date of grant using the black-scholes option pricing model .
the weighted average fair values of the company 2019s options granted during 2004 , 2003 and 2002 were $ 7.05 , $ 6.32 , and $ 2.23 per share , respectively .
key assumptions used to apply this pricing model are as follows: .

                                                                                | 2004             | 2003             | 2002
---------------------------------------------------------------------------------- | ---------------- | ---------------- | ----------------
approximate risk-free interest rate                                                | 4.23% ( 4.23 % ) | 4.00% ( 4.00 % ) | 4.53% ( 4.53 % )
expected life of option grants                                                     | 4 years          | 4 years          | 5 years
expected volatility of underlying stock ( the company plan )                       | 80.6% ( 80.6 % ) | 86.6% ( 86.6 % ) | 92.3% ( 92.3 % )
expected volatility of underlying stock ( atc mexico and atc south america plans ) | n/a              | n/a              | n/a
expected dividends                                                                 | n/a              | n/a              | n/a

voluntary option exchanges 2014in february 2004 , the company issued to eligible employees 1032717 options with an exercise price of $ 11.19 per share , the fair market value of the class a common stock on the date of grant .
these options were issued in connection with a voluntary option exchange program entered into by the company in august 2003 , where the company accepted for surrender and cancelled options ( having an exercise price of $ 10.25 or greater ) to purchase 1831981 shares of its class a common stock .
the program , which was offered to both full and part-time employees , excluding the company 2019s executive officers and its directors , called for the grant ( at least six months and one day from the surrender date to employees still employed on that date ) of new options exercisable for two shares of class a common stock for every three shares of class a common stock issuable upon exercise of a surrendered option .
no options were granted to any employees who participated in the exchange offer between the cancellation date and the new grant date .
in may 2002 , the company issued to eligible employees 2027612 options with an exercise price of $ 3.84 per share , the fair market value of the class a common stock on the date of grant .
these options were issued in connection with a voluntary option exchange program entered into by the company in october 2001 , where the company accepted for surrender and cancelled options to purchase 3471211 shares of its class a common stock .
the program , which was offered to both full and part-time employees , excluding most of the company 2019s executive officers , called for the grant ( at least six months and one day from the surrender date to employees still employed on that date ) of new options exercisable for two shares of class a common stock for every three shares of class a common stock issuable upon exercise of a surrendered option .
no options were granted to any employees who participated in the exchange offer between the cancellation date and the new grant date .
atc mexico holding stock option plan 2014the company maintains a stock option plan in its atc mexico subsidiary ( atc mexico plan ) .
the atc mexico plan provides for the issuance of options to officers , employees , directors and consultants of atc mexico .
the atc mexico plan limits the number of shares of common stock which may be granted to an aggregate of 360 shares , subject to adjustment based on changes in atc mexico 2019s capital structure .
during 2002 , atc mexico granted options to purchase 318 shares of atc mexico common stock to officers and employees .
such options were issued at one time with an exercise price of $ 10000 per share .
the exercise price per share was at fair market value as determined by the board of directors with the assistance of an independent appraisal performed at the company 2019s request .
the fair value of atc mexico plan options granted during 2002 were $ 3611 per share as determined by using the black-scholes option pricing model .
as described in note 10 , all outstanding options were exercised in march 2004 .
no options under the atc mexico plan were granted in 2004 or 2003 , or exercised or cancelled in 2003 or 2002 , and no options were exercisable as of december 31 , 2003 or 2002 .
( see note 10. )


2022 fuel prices 2013 crude oil prices increased at a steady rate in 2007 , rising from a low of $ 56.58 per barrel in january to close at nearly $ 96.00 per barrel at the end of december .
our 2007 average fuel price increased by 9% ( 9 % ) and added $ 242 million of operating expenses compared to 2006 .
our fuel surcharge programs are designed to help offset the impact of higher fuel prices .
in addition , our fuel conservation efforts allowed us to improve our consumption rate by 2% ( 2 % ) .
locomotive simulator training , operating practices , and technology all contributed to this improvement , saving approximately 21 million gallons of fuel in 2007 .
2022 free cash flow 2013 cash generated by operating activities totaled a record $ 3.3 billion , yielding free cash flow of $ 487 million in 2007 .
free cash flow is defined as cash provided by operating activities , less cash used in investing activities and dividends paid .
free cash flow is not considered a financial measure under accounting principles generally accepted in the united states ( gaap ) by sec regulation g and item 10 of sec regulation s-k .
we believe free cash flow is important in evaluating our financial performance and measures our ability to generate cash without additional external financings .
free cash flow should be considered in addition to , rather than as a substitute for , cash provided by operating activities .
the following table reconciles cash provided by operating activities ( gaap measure ) to free cash flow ( non-gaap measure ) : millions of dollars 2007 2006 2005 .

millions of dollars                   | 2007           | 2006           | 2005
------------------------------------- | -------------- | -------------- | --------------
cash provided by operating activities | $ 3277         | $ 2880         | $ 2595
cash used in investing activities     | -2426 ( 2426 ) | -2042 ( 2042 ) | -2047 ( 2047 )
dividends paid                        | -364 ( 364 )   | -322 ( 322 )   | -314 ( 314 )
free cash flow                        | $ 487          | $ 516          | $ 234

2008 outlook 2022 safety 2013 operating a safe railroad benefits our employees , our customers , our shareholders , and the public .
we will continue using a multi-faceted approach to safety , utilizing technology , risk assessment , quality control , and training for , and engaging with our employees .
we plan to implement total safety culture ( tsc ) throughout our operations .
tsc , an employee-focused initiative that has helped improve safety , is a process designed to establish , maintain , and promote safety among co-workers .
with respect to public safety , we will continue our efforts to maintain , upgrade , and close crossings , install video cameras on locomotives , and educate the public about crossing safety through various internal and industry programs , along with other activities .
2022 commodity revenue 2013 despite uncertainty regarding the u.s .
economy , we expect record revenue in 2008 based on current economic indicators , forecasted demand , improved customer service , and additional opportunities to reprice certain of our business .
yield increases and fuel surcharges will be the primary drivers of commodity revenue growth in 2008 .
we expect that overall volume will fall within a range of 1% ( 1 % ) higher to 1% ( 1 % ) lower than 2007 , with continued softness in some market sectors .
2022 transportation plan 2013 in 2008 , we will continue to evaluate traffic flows and network logistic patterns to identify additional opportunities to simplify operations and improve network efficiency and asset utilization .
we plan to maintain adequate manpower and locomotives , improve productivity using industrial engineering techniques , and improve our operating margins .
2022 fuel prices 2013 fuel prices should remain volatile , with crude oil prices and conversion and regional spreads fluctuating throughout the year .
on average , we expect fuel prices to increase 15% ( 15 % ) to 20% ( 20 % ) above the average price in 2007 .
to reduce the impact of fuel price on earnings , we will continue to seek recovery from our customers through our fuel surcharge programs and expand our fuel conservation efforts.


continue to be deployed as wireless service providers are beginning their investments in 3g data networks .
similarly , in ghana and uganda , wireless service providers continue to build out their voice and data networks in order to satisfy increasing demand for wireless services .
in south africa , where voice networks are in a more advanced stage of development , carriers are beginning to deploy 3g data networks across spectrum acquired in recent spectrum auctions .
in mexico and brazil , where nationwide voice networks have also been deployed , some incumbent wireless service providers continue to invest in their 3g data networks , and recent spectrum auctions have enabled other incumbent wireless service providers to begin their initial investments in 3g data networks .
in markets such as chile , peru and colombia , recent or anticipated spectrum auctions are expected to drive investment in nationwide voice and 3g data networks .
in germany , our most mature international wireless market , demand is currently being driven by a government-mandated rural fourth generation network build-out , as well as other tenant initiatives to deploy next generation wireless services .
we believe incremental demand for our tower sites will continue in our international markets as wireless service providers seek to remain competitive by increasing the coverage of their networks while also investing in next generation data networks .
rental and management operations new site revenue growth .
during the year ended december 31 , 2012 , we grew our portfolio of communications real estate through acquisitions and construction activities , including the acquisition and construction of approximately 8810 sites .
in a majority of our international markets , the acquisition or construction of new sites results in increased pass-through revenues and expenses .
we continue to evaluate opportunities to acquire larger communications real estate portfolios , both domestically and internationally , to determine whether they meet our risk adjusted hurdle rates and whether we believe we can effectively integrate them into our existing portfolio. .

new sites ( acquired or constructed ) | 2012 | 2011  | 2010
------------------------------------- | ---- | ----- | ----
domestic                              | 960  | 470   | 950
international ( 1 )                   | 7850 | 10000 | 6870

( 1 ) the majority of sites acquired or constructed in 2012 were in brazil , germany , india and uganda ; in 2011 were in brazil , colombia , ghana , india , mexico and south africa ; and in 2010 were in chile , colombia , india and peru .
network development services segment revenue growth .
as we continue to focus on growing our rental and management operations , we anticipate that our network development services revenue will continue to represent a relatively small percentage of our total revenues .
through our network development services segment , we offer tower-related services , including site acquisition , zoning and permitting services and structural analysis services , which primarily support our site leasing business and the addition of new tenants and equipment on our sites , including in connection with provider network upgrades .
rental and management operations expenses .
direct operating expenses incurred by our domestic and international rental and management segments include direct site level expenses and consist primarily of ground rent , property taxes , repairs and maintenance , security and power and fuel costs , some of which may be passed through to our tenants .
these segment direct operating expenses exclude all segment and corporate selling , general , administrative and development expenses , which are aggregated into one line item entitled selling , general , administrative and development expense in our consolidated statements of operations .
in general , our domestic and international rental and management segments selling , general , administrative and development expenses do not significantly increase as a result of adding incremental tenants to our legacy sites and typically increase only modestly year-over-year .
as a result , leasing additional space to new tenants on our legacy sites provides significant incremental cash flow .
we may incur additional segment selling , general , administrative and development expenses as we increase our presence in geographic areas where we have recently launched operations or are focused on expanding our portfolio .
our profit margin growth is therefore positively impacted by the addition of new tenants to our legacy sites and can be temporarily diluted by our development activities.


note 17 .
debt our debt as of december 2 , 2011 and december 3 , 2010 consisted of the following ( in thousands ) : capital lease obligations total debt and capital lease obligations less : current portion debt and capital lease obligations $ 1494627 19681 1514308 $ 1505096 $ 1493969 28492 1522461 $ 1513662 in february 2010 , we issued $ 600.0 million of 3.25% ( 3.25 % ) senior notes due february 1 , 2015 ( the 201c2015 notes 201d ) and $ 900.0 million of 4.75% ( 4.75 % ) senior notes due february 1 , 2020 ( the 201c2020 notes 201d and , together with the 2015 notes , the 201cnotes 201d ) .
our proceeds were approximately $ 1.5 billion and were net of an issuance discount of $ 6.6 million .
the notes rank equally with our other unsecured and unsubordinated indebtedness .
in addition , we incurred issuance costs of approximately $ 10.7 million .
both the discount and issuance costs are being amortized to interest expense over the respective terms of the notes using the effective interest method .
the effective interest rate including the discount and issuance costs is 3.45% ( 3.45 % ) for the 2015 notes and 4.92% ( 4.92 % ) for the 2020 notes .
interest is payable semi-annually , in arrears , on february 1 and august 1 , commencing on august 1 , 2010 .
during fiscal 2011 interest payments totaled $ 62.3 million .
the proceeds from the notes are available for general corporate purposes , including repayment of any balance outstanding on our credit facility .
based on quoted market prices , the fair value of the notes was approximately $ 1.6 billion as of december 2 , 2011 .
we may redeem the notes at any time , subject to a make whole premium .
in addition , upon the occurrence of certain change of control triggering events , we may be required to repurchase the notes , at a price equal to 101% ( 101 % ) of their principal amount , plus accrued and unpaid interest to the date of repurchase .
the notes also include covenants that limit our ability to grant liens on assets and to enter into sale and leaseback transactions , subject to significant allowances .
as of december 2 , 2011 , we were in compliance with all of the covenants .
credit agreement in august 2007 , we entered into an amendment to our credit agreement dated february 2007 ( the 201camendment 201d ) , which increased the total senior unsecured revolving facility from $ 500.0 million to $ 1.0 billion .
the amendment also permits us to request one-year extensions effective on each anniversary of the closing date of the original agreement , subject to the majority consent of the lenders .
we also retain an option to request an additional $ 500.0 million in commitments , for a maximum aggregate facility of $ 1.5 billion .
in february 2008 , we entered into a second amendment to the credit agreement dated february 26 , 2008 , which extended the maturity date of the facility by one year to february 16 , 2013 .
the facility would terminate at this date if no additional extensions have been requested and granted .
all other terms and conditions remain the same .
the facility contains a financial covenant requiring us not to exceed a certain maximum leverage ratio .
at our option , borrowings under the facility accrue interest based on either the london interbank offered rate ( 201clibor 201d ) for one , two , three or six months , or longer periods with bank consent , plus a margin according to a pricing grid tied to this financial covenant , or a base rate .
the margin is set at rates between 0.20% ( 0.20 % ) and 0.475% ( 0.475 % ) .
commitment fees are payable on the facility at rates between 0.05% ( 0.05 % ) and 0.15% ( 0.15 % ) per year based on the same pricing grid .
the facility is available to provide loans to us and certain of our subsidiaries for general corporate purposes .
on february 1 , 2010 , we paid the outstanding balance on our credit facility and the entire $ 1.0 billion credit line under this facility remains available for borrowing .
capital lease obligation in june 2010 , we entered into a sale-leaseback agreement to sell equipment totaling $ 32.2 million and leaseback the same equipment over a period of 43 months .
this transaction was classified as a capital lease obligation and recorded at fair value .
as of december 2 , 2011 , our capital lease obligations of $ 19.7 million includes $ 9.2 million of current debt .
table of contents adobe systems incorporated notes to consolidated financial statements ( continued ) .

                                         | 2011      | 2010
---------------------------------------- | --------- | ---------
notes                                    | $ 1494627 | $ 1493969
capital lease obligations                | 19681     | 28492
total debt and capital lease obligations | 1514308   | 1522461
less : current portion                   | 9212      | 8799
debt and capital lease obligations       | $ 1505096 | $ 1513662

note 17 .
debt our debt as of december 2 , 2011 and december 3 , 2010 consisted of the following ( in thousands ) : capital lease obligations total debt and capital lease obligations less : current portion debt and capital lease obligations $ 1494627 19681 1514308 $ 1505096 $ 1493969 28492 1522461 $ 1513662 in february 2010 , we issued $ 600.0 million of 3.25% ( 3.25 % ) senior notes due february 1 , 2015 ( the 201c2015 notes 201d ) and $ 900.0 million of 4.75% ( 4.75 % ) senior notes due february 1 , 2020 ( the 201c2020 notes 201d and , together with the 2015 notes , the 201cnotes 201d ) .
our proceeds were approximately $ 1.5 billion and were net of an issuance discount of $ 6.6 million .
the notes rank equally with our other unsecured and unsubordinated indebtedness .
in addition , we incurred issuance costs of approximately $ 10.7 million .
both the discount and issuance costs are being amortized to interest expense over the respective terms of the notes using the effective interest method .
the effective interest rate including the discount and issuance costs is 3.45% ( 3.45 % ) for the 2015 notes and 4.92% ( 4.92 % ) for the 2020 notes .
interest is payable semi-annually , in arrears , on february 1 and august 1 , commencing on august 1 , 2010 .
during fiscal 2011 interest payments totaled $ 62.3 million .
the proceeds from the notes are available for general corporate purposes , including repayment of any balance outstanding on our credit facility .
based on quoted market prices , the fair value of the notes was approximately $ 1.6 billion as of december 2 , 2011 .
we may redeem the notes at any time , subject to a make whole premium .
in addition , upon the occurrence of certain change of control triggering events , we may be required to repurchase the notes , at a price equal to 101% ( 101 % ) of their principal amount , plus accrued and unpaid interest to the date of repurchase .
the notes also include covenants that limit our ability to grant liens on assets and to enter into sale and leaseback transactions , subject to significant allowances .
as of december 2 , 2011 , we were in compliance with all of the covenants .
credit agreement in august 2007 , we entered into an amendment to our credit agreement dated february 2007 ( the 201camendment 201d ) , which increased the total senior unsecured revolving facility from $ 500.0 million to $ 1.0 billion .
the amendment also permits us to request one-year extensions effective on each anniversary of the closing date of the original agreement , subject to the majority consent of the lenders .
we also retain an option to request an additional $ 500.0 million in commitments , for a maximum aggregate facility of $ 1.5 billion .
in february 2008 , we entered into a second amendment to the credit agreement dated february 26 , 2008 , which extended the maturity date of the facility by one year to february 16 , 2013 .
the facility would terminate at this date if no additional extensions have been requested and granted .
all other terms and conditions remain the same .
the facility contains a financial covenant requiring us not to exceed a certain maximum leverage ratio .
at our option , borrowings under the facility accrue interest based on either the london interbank offered rate ( 201clibor 201d ) for one , two , three or six months , or longer periods with bank consent , plus a margin according to a pricing grid tied to this financial covenant , or a base rate .
the margin is set at rates between 0.20% ( 0.20 % ) and 0.475% ( 0.475 % ) .
commitment fees are payable on the facility at rates between 0.05% ( 0.05 % ) and 0.15% ( 0.15 % ) per year based on the same pricing grid .
the facility is available to provide loans to us and certain of our subsidiaries for general corporate purposes .
on february 1 , 2010 , we paid the outstanding balance on our credit facility and the entire $ 1.0 billion credit line under this facility remains available for borrowing .
capital lease obligation in june 2010 , we entered into a sale-leaseback agreement to sell equipment totaling $ 32.2 million and leaseback the same equipment over a period of 43 months .
this transaction was classified as a capital lease obligation and recorded at fair value .
as of december 2 , 2011 , our capital lease obligations of $ 19.7 million includes $ 9.2 million of current debt .
table of contents adobe systems incorporated notes to consolidated financial statements ( continued )


notes to consolidated financial statements see notes 6 and 7 for further information about fair value measurements of cash instruments and derivatives , respectively , included in 201cfinancial instruments owned , at fair value 201d and 201cfinancial instruments sold , but not yet purchased , at fair value , 201d and note 8 for further information about fair value measurements of other financial assets and financial liabilities accounted for at fair value under the fair value option .
the table below presents financial assets and financial liabilities accounted for at fair value under the fair value option or in accordance with other u.s .
gaap .
in the table below , cash collateral and counterparty netting represents the impact on derivatives of netting across levels of the fair value hierarchy .
netting among positions classified in the same level is included in that level. .

$ in millions                                                                                | as of december 2013 | as of december 2012
----------------------------------------------------------------------------------------------- | ------------------- | -------------------
total level 1 financial assets                                                                  | $ 156030            | $ 190737
total level 2 financial assets                                                                  | 499480              | 502293
total level 3 financial assets                                                                  | 40013               | 47095
cash collateral and counterparty netting                                                        | -95350 ( 95350 )    | -101612 ( 101612 )
total financial assets at fair value                                                            | $ 600173            | $ 638513
total assets1                                                                                | $ 911507            | $ 938555
total level 3 financial assets as a percentage of total assets                                  | 4.4% ( 4.4 % )      | 5.0% ( 5.0 % )
total level 3 financial assets as a percentage of total financial assets at fair value          | 6.7% ( 6.7 % )      | 7.4% ( 7.4 % )
total level 1 financialliabilities                                                              | $ 68412             | $ 65994
total level 2 financial liabilities                                                             | 300583              | 318764
total level 3 financial liabilities                                                             | 12046               | 25679
cash collateral and counterparty netting                                                        | -25868 ( 25868 )    | -32760 ( 32760 )
total financial liabilities at fair value                                                       | $ 355173            | $ 377677
total level 3 financial liabilities as a percentage of total financial liabilities at fairvalue | 3.4% ( 3.4 % )      | 6.8% ( 6.8 % )

1 .
includes approximately $ 890 billion and $ 915 billion as of december 2013 and december 2012 , respectively , that is carried at fair value or at amounts that generally approximate fair value .
level 3 financial assets as of december 2013 decreased compared with december 2012 , primarily reflecting a decrease in derivative assets , bank loans and bridge loans , and loans and securities backed by commercial real estate .
the decrease in derivative assets primarily reflected a decline in credit derivative assets , principally due to settlements and unrealized losses .
the decrease in bank loans and bridge loans , and loans and securities backed by commercial real estate primarily reflected settlements and sales , partially offset by purchases and transfers into level 3 .
level 3 financial liabilities as of december 2013 decreased compared with december 2012 , primarily reflecting a decrease in other liabilities and accrued expenses , principally due to the sale of a majority stake in the firm 2019s european insurance business in december 2013 .
see notes 6 , 7 and 8 for further information about level 3 cash instruments , derivatives and other financial assets and financial liabilities accounted for at fair value under the fair value option , respectively , including information about significant unrealized gains and losses , and transfers in and out of level 3 .
124 goldman sachs 2013 annual report


humana inc .
notes to consolidated financial statements 2014 ( continued ) 15 .
stockholders 2019 equity dividends the following table provides details of dividend payments , excluding dividend equivalent rights , in 2016 , 2017 , and 2018 under our board approved quarterly cash dividend policy : payment amount per share amount ( in millions ) .

paymentdate | amountper share | totalamount ( in millions )
----------- | --------------- | ---------------------------
2016        | $ 1.16          | $ 172
2017        | $ 1.49          | $ 216
2018        | $ 1.90          | $ 262

on november 2 , 2018 , the board declared a cash dividend of $ 0.50 per share that was paid on january 25 , 2019 to stockholders of record on december 31 , 2018 , for an aggregate amount of $ 68 million .
declaration and payment of future quarterly dividends is at the discretion of our board and may be adjusted as business needs or market conditions change .
in february 2019 , the board declared a cash dividend of $ 0.55 per share payable on april 26 , 2019 to stockholders of record on march 29 , 2019 .
stock repurchases our board of directors may authorize the purchase of our common shares .
under our share repurchase authorization , shares may have been purchased from time to time at prevailing prices in the open market , by block purchases , through plans designed to comply with rule 10b5-1 under the securities exchange act of 1934 , as amended , or in privately-negotiated transactions ( including pursuant to accelerated share repurchase agreements with investment banks ) , subject to certain regulatory restrictions on volume , pricing , and timing .
on february 14 , 2017 , our board of directors authorized the repurchase of up to $ 2.25 billion of our common shares expiring on december 31 , 2017 , exclusive of shares repurchased in connection with employee stock plans .
on february 16 , 2017 , we entered into an accelerated share repurchase agreement , the february 2017 asr , with goldman , sachs & co .
llc , or goldman sachs , to repurchase $ 1.5 billion of our common stock as part of the $ 2.25 billion share repurchase authorized on february 14 , 2017 .
on february 22 , 2017 , we made a payment of $ 1.5 billion to goldman sachs from available cash on hand and received an initial delivery of 5.83 million shares of our common stock from goldman sachs based on the then current market price of humana common stock .
the payment to goldman sachs was recorded as a reduction to stockholders 2019 equity , consisting of a $ 1.2 billion increase in treasury stock , which reflected the value of the initial 5.83 million shares received upon initial settlement , and a $ 300 million decrease in capital in excess of par value , which reflected the value of stock held back by goldman sachs pending final settlement of the february 2017 asr .
upon settlement of the february 2017 asr on august 28 , 2017 , we received an additional 0.84 million shares as determined by the average daily volume weighted-average share price of our common stock during the term of the agreement of $ 224.81 , less a discount and subject to adjustments pursuant to the terms and conditions of the february 2017 asr , bringing the total shares received under this program to 6.67 million .
in addition , upon settlement we reclassified the $ 300 million value of stock initially held back by goldman sachs from capital in excess of par value to treasury stock .
subsequent to settlement of the february 2017 asr , we repurchased an additional 3.04 million shares in the open market , utilizing the remaining $ 750 million of the $ 2.25 billion authorization prior to expiration .
on december 14 , 2017 , our board of directors authorized the repurchase of up to $ 3.0 billion of our common shares expiring on december 31 , 2020 , exclusive of shares repurchased in connection with employee stock plans.


a lump sum buyout cost of approximately $ 1.1 million .
total rent expense under these leases , included in the accompanying consolidated statements of operations , was approximately $ 893000 , $ 856000 and $ 823000 for the fiscal years ended march 31 , 2001 , 2002 and 2003 , respectively .
during the fiscal year ended march 31 , 2000 , the company entered into 36-month operating leases totaling approximately $ 644000 for the lease of office furniture .
these leases ended in fiscal year 2003 and at the company 2019s option the furniture was purchased at its fair market value .
rental expense recorded for these leases during the fiscal years ended march 31 , 2001 , 2002 and 2003 was approximately $ 215000 , $ 215000 and $ 127000 respectively .
during fiscal 2000 , the company entered into a 36-month capital lease for computer equipment and software for approximately $ 221000 .
this lease ended in fiscal year 2003 and at the company 2019s option these assets were purchased at the stipulated buyout price .
future minimum lease payments under all non-cancelable operating leases as of march 31 , 2003 are approximately as follows ( in thousands ) : .

year ending march 31,               | operating leases
----------------------------------- | ----------------
2004                                | $ 781
2005                                | 776
2006                                | 776
2007                                | 769
2008                                | 772
thereafter                          | 1480
total future minimum lease payments | $ 5354

from time to time , the company is involved in legal and administrative proceedings and claims of various types .
while any litigation contains an element of uncertainty , management , in consultation with the company 2019s general counsel , presently believes that the outcome of each such other proceedings or claims which are pending or known to be threatened , or all of them combined , will not have a material adverse effect on the company .
7 .
stock option and purchase plans all stock options granted by the company under the below-described plans were granted at the fair value of the underlying common stock at the date of grant .
outstanding stock options , if not exercised , expire 10 years from the date of grant .
the 1992 combination stock option plan ( the combination plan ) , as amended , was adopted in september 1992 as a combination and restatement of the company 2019s then outstanding incentive stock option plan and nonqualified plan .
a total of 2670859 options were awarded from the combination plan during its ten-year restatement term that ended on may 1 , 2002 .
as of march 31 , 2003 , 1286042 of these options remain outstanding and eligible for future exercise .
these options are held by company employees and generally become exercisable ratably over five years .
the 1998 equity incentive plan , ( the equity incentive plan ) , was adopted by the company in august 1998 .
the equity incentive plan provides for grants of options to key employees , directors , advisors and consultants as either incentive stock options or nonqualified stock options as determined by the company 2019s board of directors .
a maximum of 1000000 shares of common stock may be awarded under this plan .
options granted under the equity incentive plan are exercisable at such times and subject to such terms as the board of directors may specify at the time of each stock option grant .
options outstanding under the equity incentive plan have vesting periods of 3 to 5 years from the date of grant .
the 2000 stock incentive plan , ( the 2000 plan ) , was adopted by the company in august 2000 .
the 2000 plan provides for grants of options to key employees , directors , advisors and consultants to the company or its subsidiaries as either incentive or nonqualified stock options as determined by the company 2019s board of directors .
up to 1400000 shares of common stock may be awarded under the 2000 plan and are exercisable at such times and subject to such terms as the board of directors may specify at the time of each stock option grant .
options outstanding under the 2000 plan generally vested 4 years from the date of grant .
the company has a nonqualified stock option plan for non-employee directors ( the directors 2019 plan ) .
the directors 2019 plan , as amended , was adopted in july 1989 and provides for grants of options to purchase shares of the company 2019s common stock to non-employee directors of the company .
up to 400000 shares of common stock may be awarded under the directors 2019 plan .
options outstanding under the directors 2019 plan have vesting periods of 1 to 5 years from the date of grant .
notes to consolidated financial statements ( continued ) march 31 , 2003 page 25


all highly liquid securities with a maturity of three months or less at the date of purchase are considered to be cash equivalents .
securities with maturities greater than three months are classified as available-for-sale and are considered to be short-term investments .
the carrying value of our interest-bearing instruments approximated fair value as of december 29 , 2012 .
interest rates under our revolving credit facility are variable , so interest expense for periods when the credit facility is utilized could be adversely affected by changes in interest rates .
interest rates under our revolving credit facility can fluctuate based on changes in market interest rates and in an interest rate margin that varies based on our consolidated leverage ratio .
as of december 29 , 2012 , we had no outstanding balance on the credit facility .
see note 3 in the notes to consolidated financial statements for an additional description of our credit facility .
equity price risk convertible notes our 2015 notes and 2013 notes include conversion and settlement provisions that are based on the price of our common stock at conversion or at maturity of the notes .
in addition , the hedges and warrants associated with these convertible notes also include settlement provisions that are based on the price of our common stock .
the amount of cash we may be required to pay , or the number of shares we may be required to provide to note holders at conversion or maturity of these notes , is determined by the price of our common stock .
the amount of cash or number of shares that we may receive from hedge counterparties in connection with the related hedges and the number of shares that we may be required to provide warrant counterparties in connection with the related warrants are also determined by the price of our common stock .
upon the expiration of our 2015 warrants , cadence will issue shares of common stock to the purchasers of the warrants to the extent our stock price exceeds the warrant strike price of $ 10.78 at that time .
the following table shows the number of shares that cadence would issue to 2015 warrant counterparties at expiration of the warrants , assuming various cadence closing stock prices on the dates of warrant expiration : shares ( in millions ) .

        | shares ( in millions )
------- | ----------------------
$ 11.00 | 0.9
$ 12.00 | 4.7
$ 13.00 | 7.9
$ 14.00 | 10.7
$ 15.00 | 13.0
$ 16.00 | 15.1
$ 17.00 | 17.0
$ 18.00 | 18.6
$ 19.00 | 20.1
$ 20.00 | 21.4

prior to the expiration of the 2015 warrants , for purposes of calculating diluted earnings per share , our diluted weighted-average shares outstanding will increase when our average closing stock price for a quarter exceeds $ 10.78 .
for an additional description of our 2015 notes and 2013 notes , see note 3 in the notes to consolidated financial statements and 201cliquidity and capital resources 2014 other factors affecting liquidity and capital resources , 201d under item 7 , 201cmanagement 2019s discussion and analysis of financial condition and results of operations . 201d


4 .
acquisitions and dispositions acquisitions the company makes acquisitions that align with its strategic business objectives .
the assets and liabilities of the acquired entities have been recorded as of the acquisition date , at their respective fair values , and are included in the consolidated balance sheet .
the purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed .
the aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition .
acquisitions during 2017 , 2016 and 2015 were not significant to the company 2019s consolidated financial statements ; therefore , pro forma financial information is not presented .
anios acquisition on february 1 , 2017 , the company acquired anios for total consideration of $ 798.3 million , including satisfaction of outstanding debt .
anios had annualized pre-acquisition sales of approximately $ 245 million and is a leading european manufacturer and marketer of hygiene and disinfection products for the healthcare , food service , and food and beverage processing industries .
anios provides an innovative product line that expands the solutions the company is able to offer , while also providing a complementary geographic footprint within the healthcare market .
during 2016 , the company deposited 20ac50 million in an escrow account that was released back to the company upon closing of the transaction in february 2017 .
as shown within note 5 , this was recorded as restricted cash within other assets on the consolidated balance sheet as of december 31 , 2016 .
the company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected in the consolidated statement of income .
see note 3 for additional information related to the company 2019s special ( gains ) and charges related to such activities .
the components of the cash paid for anios are shown in the following table. .

( millions )                             | 2017
---------------------------------------- | -------
tangible assets                          | $ 139.8
identifiable intangible assets           |
customer relationships                   | 252.0
trademarks                               | 65.7
other technology                         | 16.1
total assets acquired                    | 473.6
goodwill                                 | 511.7
total liabilities                        | 187.0
total consideration transferred          | 798.3
long-term debt repaid upon close         | 192.8
net consideration transferred to sellers | $ 605.5

tangible assets are primarily comprised of accounts receivable of $ 64.8 million , property , plant and equipment of $ 24.7 million and inventory of $ 29.1 million .
liabilities primarily consist of deferred tax liabilities of $ 102.3 million and current liabilities of $ 62.5 million .
customer relationships , trademarks and other technology are being amortized over weighted average lives of 20 , 17 , and 11 years , respectively .
goodwill of $ 511.7 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding complementary geographies and innovative products to the company 2019s healthcare portfolio .
the goodwill was allocated to the institutional , healthcare , and specialty operating segments within the global institutional reportable segment and the food & beverage and life sciences operating segments within the global industrial reportable segment .
none of the goodwill recognized is expected to be deductible for income tax purposes.


the weighted average grant date fair value of performance-based restricted stock units granted during the years 2008 and 2007 was $ 84.33 and $ 71.72 , respectively .
the total fair value of performance-based restricted stock units vested during 2009 , 2008 and 2007 was $ 33712 , $ 49387 and $ 9181 , respectively .
at september 30 , 2009 , the weighted average remaining vesting term of performance-based restricted stock units is 1.28 years .
time-vested restricted stock units time-vested restricted stock units generally cliff vest three years after the date of grant , except for certain key executives of the company , including the executive officers , for which such units generally vest one year following the employee 2019s retirement .
the related share-based compensation expense is recorded over the requisite service period , which is the vesting period or in the case of certain key executives is based on retirement eligibility .
the fair value of all time-vested restricted stock units is based on the market value of the company 2019s stock on the date of grant .
a summary of time-vested restricted stock units outstanding as of september 30 , 2009 , and changes during the year then ended is as follows : weighted average grant date fair value .

                                 | stock units        | weighted average grant date fair value
-------------------------------- | ------------------ | --------------------------------------
balance at october 1             | 1570329            | $ 69.35
granted                          | 618679             | 62.96
distributed                      | -316839 ( 316839 ) | 60.32
forfeited or canceled            | -165211 ( 165211 ) | 62.58
balance at september 30          | 1706958            | $ 69.36
expected to vest at september 30 | 1536262            | $ 69.36

the weighted average grant date fair value of time-vested restricted stock units granted during the years 2008 and 2007 was $ 84.42 and $ 72.20 , respectively .
the total fair value of time-vested restricted stock units vested during 2009 , 2008 and 2007 was $ 29535 , $ 26674 and $ 3392 , respectively .
at september 30 , 2009 , the weighted average remaining vesting term of the time-vested restricted stock units is 1.71 years .
the amount of unrecognized compensation expense for all non-vested share-based awards as of september 30 , 2009 , is approximately $ 97034 , which is expected to be recognized over a weighted-average remaining life of approximately 2.02 years .
at september 30 , 2009 , 4295402 shares were authorized for future grants under the 2004 plan .
the company has a policy of satisfying share-based payments through either open market purchases or shares held in treasury .
at september 30 , 2009 , the company has sufficient shares held in treasury to satisfy these payments in 2010 .
other stock plans the company has a stock award plan , which allows for grants of common shares to certain key employees .
distribution of 25% ( 25 % ) or more of each award is deferred until after retirement or involuntary termination , upon which the deferred portion of the award is distributable in five equal annual installments .
the balance of the award is distributable over five years from the grant date , subject to certain conditions .
in february 2004 , this plan was terminated with respect to future grants upon the adoption of the 2004 plan .
at september 30 , 2009 and 2008 , awards for 114197 and 161145 shares , respectively , were outstanding .
becton , dickinson and company notes to consolidated financial statements 2014 ( continued )


sources of liquidity primary sources of liquidity for citigroup and its principal subsidiaries include : 2022 deposits ; 2022 collateralized financing transactions ; 2022 senior and subordinated debt ; 2022 commercial paper ; 2022 trust preferred and preferred securities ; and 2022 purchased/wholesale funds .
citigroup 2019s funding sources are diversified across funding types and geography , a benefit of its global franchise .
funding for citigroup and its major operating subsidiaries includes a geographically diverse retail and corporate deposit base of $ 774.2 billion .
these deposits are diversified across products and regions , with approximately two-thirds of them outside of the u.s .
this diversification provides the company with an important , stable and low-cost source of funding .
a significant portion of these deposits has been , and is expected to be , long-term and stable , and are considered to be core .
there are qualitative as well as quantitative assessments that determine the company 2019s calculation of core deposits .
the first step in this process is a qualitative assessment of the deposits .
for example , as a result of the company 2019s qualitative analysis certain deposits with wholesale funding characteristics are excluded from consideration as core .
deposits that qualify under the company 2019s qualitative assessments are then subjected to quantitative analysis .
excluding the impact of changes in foreign exchange rates and the sale of our retail banking operations in germany during the year ending december 31 , 2008 , the company 2019s deposit base remained stable .
on a volume basis , deposit increases were noted in transaction services , u.s .
retail banking and smith barney .
this was partially offset by the company 2019s decision to reduce deposits considered wholesale funding , consistent with the company 2019s de-leveraging efforts , and declines in international consumer banking and the private bank .
citigroup and its subsidiaries have historically had a significant presence in the global capital markets .
the company 2019s capital markets funding activities have been primarily undertaken by two legal entities : ( i ) citigroup inc. , which issues long-term debt , medium-term notes , trust preferred securities , and preferred and common stock ; and ( ii ) citigroup funding inc .
( cfi ) , a first-tier subsidiary of citigroup , which issues commercial paper , medium-term notes and structured equity-linked and credit-linked notes , all of which are guaranteed by citigroup .
other significant elements of long- term debt on the consolidated balance sheet include collateralized advances from the federal home loan bank system , long-term debt related to the consolidation of icg 2019s structured investment vehicles , asset-backed outstandings , and certain borrowings of foreign subsidiaries .
each of citigroup 2019s major operating subsidiaries finances its operations on a basis consistent with its capitalization , regulatory structure and the environment in which it operates .
particular attention is paid to those businesses that for tax , sovereign risk , or regulatory reasons cannot be freely and readily funded in the international markets .
citigroup 2019s borrowings have historically been diversified by geography , investor , instrument and currency .
decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative instruments .
citigroup is a provider of liquidity facilities to the commercial paper programs of the two primary credit card securitization trusts with which it transacts .
citigroup may also provide other types of support to the trusts .
as a result of the recent economic downturn , its impact on the cashflows of the trusts , and in response to credit rating agency reviews of the trusts , the company increased the credit enhancement in the omni trust , and plans to provide additional enhancement to the master trust ( see note 23 to consolidated financial statements on page 175 for a further discussion ) .
this support preserves investor sponsorship of our card securitization franchise , an important source of liquidity .
banking subsidiaries there are various legal limitations on the ability of citigroup 2019s subsidiary depository institutions to extend credit , pay dividends or otherwise supply funds to citigroup and its non-bank subsidiaries .
the approval of the office of the comptroller of the currency , in the case of national banks , or the office of thrift supervision , in the case of federal savings banks , is required if total dividends declared in any calendar year exceed amounts specified by the applicable agency 2019s regulations .
state-chartered depository institutions are subject to dividend limitations imposed by applicable state law .
in determining the declaration of dividends , each depository institution must also consider its effect on applicable risk-based capital and leverage ratio requirements , as well as policy statements of the federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings .
non-banking subsidiaries citigroup also receives dividends from its non-bank subsidiaries .
these non-bank subsidiaries are generally not subject to regulatory restrictions on dividends .
however , as discussed in 201ccapital resources and liquidity 201d on page 94 , the ability of cgmhi to declare dividends can be restricted by capital considerations of its broker-dealer subsidiaries .
cgmhi 2019s consolidated balance sheet is liquid , with the vast majority of its assets consisting of marketable securities and collateralized short-term financing agreements arising from securities transactions .
cgmhi monitors and evaluates the adequacy of its capital and borrowing base on a daily basis to maintain liquidity and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries .
some of citigroup 2019s non-bank subsidiaries , including cgmhi , have credit facilities with citigroup 2019s subsidiary depository institutions , including citibank , n.a .
borrowings under these facilities must be secured in accordance with section 23a of the federal reserve act .
there are various legal restrictions on the extent to which a bank holding company and certain of its non-bank subsidiaries can borrow or obtain credit from citigroup 2019s subsidiary depository institutions or engage in certain other transactions with them .
in general , these restrictions require that transactions be on arm 2019s length terms and be secured by designated amounts of specified collateral .
see note 20 to the consolidated financial statements on page 169 .
at december 31 , 2008 , long-term debt and commercial paper outstanding for citigroup , cgmhi , cfi and citigroup 2019s subsidiaries were as follows : in billions of dollars citigroup parent company cgmhi ( 2 ) citigroup funding inc .
( 2 ) citigroup subsidiaries long-term debt $ 192.3 $ 20.6 $ 37.4 $ 109.3 ( 1 ) .

in billions of dollars | citigroup parent company | cgmhi ( 2 ) | citigroup funding inc. ( 2 ) | other citigroup subsidiaries |
---------------------- | ------------------------ | ----------- | ---------------------------- | ---------------------------- | --------
long-term debt         | $ 192.3                  | $ 20.6      | $ 37.4                       | $ 109.3                      | -1 ( 1 )
commercial paper       | $ 2014                   | $ 2014      | $ 28.6                       | $ 0.5                        |

( 1 ) at december 31 , 2008 , approximately $ 67.4 billion relates to collateralized advances from the federal home loan bank .
( 2 ) citigroup inc .
guarantees all of cfi 2019s debt and cgmhi 2019s publicly issued securities.


( 2 ) our union-represented mainline employees are covered by agreements that are not currently amendable .
joint collective bargaining agreements ( jcbas ) have been reached with post-merger employee groups , except the maintenance , fleet service , stock clerks , maintenance control technicians and maintenance training instructors represented by the twu-iam association who are covered by separate cbas that become amendable in the third quarter of 2018 .
until those agreements become amendable , negotiations for jcbas will be conducted outside the traditional rla bargaining process as described above , and , in the meantime , no self-help will be permissible .
( 3 ) among our wholly-owned regional subsidiaries , the psa mechanics and flight attendants have agreements that are now amendable and are engaged in traditional rla negotiations .
the envoy passenger service employees are engaged in traditional rla negotiations for an initial cba .
the piedmont fleet and passenger service employees have reached a tentative five-year agreement which is subject to membership ratification .
for more discussion , see part i , item 1a .
risk factors 2013 201cunion disputes , employee strikes and other labor-related disruptions may adversely affect our operations . 201d aircraft fuel our operations and financial results are significantly affected by the availability and price of jet fuel , which is our second largest expense .
based on our 2018 forecasted mainline and regional fuel consumption , we estimate that a one cent per gallon increase in aviation fuel price would increase our 2018 annual fuel expense by $ 45 million .
the following table shows annual aircraft fuel consumption and costs , including taxes , for our mainline and regional operations for 2017 , 2016 and 2015 ( gallons and aircraft fuel expense in millions ) .
year gallons average price per gallon aircraft fuel expense percent of total operating expenses .

year | gallons | average priceper gallon | aircraft fuelexpense | percent of totaloperating expenses
---- | ------- | ----------------------- | -------------------- | ----------------------------------
2017 | 4352    | $ 1.73                  | $ 7510               | 19.7% ( 19.7 % )
2016 | 4347    | 1.42                    | 6180                 | 17.7% ( 17.7 % )
2015 | 4323    | 1.72                    | 7456                 | 21.4% ( 21.4 % )

as of december 31 , 2017 , we did not have any fuel hedging contracts outstanding to hedge our fuel consumption .
as such , and assuming we do not enter into any future transactions to hedge our fuel consumption , we will continue to be fully exposed to fluctuations in fuel prices .
our current policy is not to enter into transactions to hedge our fuel consumption , although we review that policy from time to time based on market conditions and other factors .
fuel prices have fluctuated substantially over the past several years .
we cannot predict the future availability , price volatility or cost of aircraft fuel .
natural disasters ( including hurricanes or similar events in the u.s .
southeast and on the gulf coast where a significant portion of domestic refining capacity is located ) , political disruptions or wars involving oil-producing countries , changes in fuel-related governmental policy , the strength of the u.s .
dollar against foreign currencies , changes in access to petroleum product pipelines and terminals , speculation in the energy futures markets , changes in aircraft fuel production capacity , environmental concerns and other unpredictable events may result in fuel supply shortages , distribution challenges , additional fuel price volatility and cost increases in the future .
see part i , item 1a .
risk factors 2013 201cour business is very dependent on the price and availability of aircraft fuel .
continued periods of high volatility in fuel costs , increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity . 201d seasonality and other factors due to the greater demand for air travel during the summer months , revenues in the airline industry in the second and third quarters of the year tend to be greater than revenues in the first and fourth quarters of the year .
general economic conditions , fears of terrorism or war , fare initiatives , fluctuations in fuel prices , labor actions , weather , natural disasters , outbreaks of disease and other factors could impact this seasonal pattern .
therefore , our quarterly results of operations are not necessarily indicative of operating results for the entire year , and historical operating results in a quarterly or annual period are not necessarily indicative of future operating results.


in the fourth quarter of 2002 , aes lost voting control of one of the holding companies in the cemig ownership structure .
this holding company indirectly owns the shares related to the cemig investment and indirectly holds the project financing debt related to cemig .
as a result of the loss of voting control , aes stopped consolidating this holding company at december 31 , 2002 .
other .
during the fourth quarter of 2003 , the company sold its 25% ( 25 % ) ownership interest in medway power limited ( 2018 2018mpl 2019 2019 ) , a 688 mw natural gas-fired combined cycle facility located in the united kingdom , and aes medway operations limited ( 2018 2018aesmo 2019 2019 ) , the operating company for the facility , in an aggregate transaction valued at approximately a347 million ( $ 78 million ) .
the sale resulted in a gain of $ 23 million which was recorded in continuing operations .
mpl and aesmo were previously reported in the contract generation segment .
in the second quarter of 2002 , the company sold its investment in empresa de infovias s.a .
( 2018 2018infovias 2019 2019 ) , a telecommunications company in brazil , for proceeds of $ 31 million to cemig , an affiliated company .
the loss recorded on the sale was approximately $ 14 million and is recorded as a loss on sale of assets and asset impairment expenses in the accompanying consolidated statements of operations .
in the second quarter of 2002 , the company recorded an impairment charge of approximately $ 40 million , after income taxes , on an equity method investment in a telecommunications company in latin america held by edc .
the impairment charge resulted from sustained poor operating performance coupled with recent funding problems at the invested company .
during 2001 , the company lost operational control of central electricity supply corporation ( 2018 2018cesco 2019 2019 ) , a distribution company located in the state of orissa , india .
the state of orissa appointed an administrator to take operational control of cesco .
cesco is accounted for as a cost method investment .
aes 2019s investment in cesco is negative .
in august 2000 , a subsidiary of the company acquired a 49% ( 49 % ) interest in songas for approximately $ 40 million .
the company acquired an additional 16.79% ( 16.79 % ) of songas for approximately $ 12.5 million , and the company began consolidating this entity in 2002 .
songas owns the songo songo gas-to-electricity project in tanzania .
in december 2002 , the company signed a sales purchase agreement to sell 100% ( 100 % ) of our ownership interest in songas .
the sale of songas closed in april 2003 ( see note 4 for further discussion of the transaction ) .
the following tables present summarized comparative financial information ( in millions ) of the entities in which the company has the ability to exercise significant influence but does not control and that are accounted for using the equity method. .

as of and for the years ended december 31, | 2003   | 2002 ( 1 ) | 2001 ( 1 )
------------------------------------------ | ------ | ---------- | ----------
revenues                                   | $ 2758 | $ 2832     | $ 6147
operating income                           | 1039   | 695        | 1717
net income                                 | 407    | 229        | 650
current assets                             | 1347   | 1097       | 3700
noncurrent assets                          | 7479   | 6751       | 14942
current liabilities                        | 1434   | 1418       | 3510
noncurrent liabilities                     | 3795   | 3349       | 8297
stockholder's equity                       | 3597   | 3081       | 6835

( 1 ) includes information pertaining to eletropaulo and light prior to february 2002 .
in 2002 and 2001 , the results of operations and the financial position of cemig were negatively impacted by the devaluation of the brazilian real and the impairment charge recorded in 2002 .
the brazilian real devalued 32% ( 32 % ) and 19% ( 19 % ) for the years ended december 31 , 2002 and 2001 , respectively.


which , $ 44.9 million , or $ 38.2 million , net of taxes , is expected to be reclassified to earnings over the next twelve months .
we also enter into foreign currency forward exchange contracts with terms of one month to manage currency exposures for assets and liabilities denominated in a currency other than an entity 2019s functional currency .
as a result , any foreign currency translation gains/losses recognized in earnings under sfas no .
52 , 201cforeign currency translation 201d are generally offset with gains/losses on the foreign currency forward exchange contracts in the same reporting period .
other comprehensive income 2013 other comprehensive income refers to revenues , expenses , gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net earnings as these amounts are recorded directly as an adjustment to stockholders 2019 equity .
other comprehensive income is comprised of foreign currency translation adjustments , unrealized foreign currency hedge gains and losses , unrealized gains and losses on available-for-sale securities and amortization of prior service costs and unrecognized gains and losses in actuarial assumptions .
the components of accumulated other comprehensive income are as follows ( in millions ) : balance at december 31 , comprehensive income ( loss ) balance at december 31 .

                                                                                | balance at december 31 2006 | other comprehensive income ( loss ) | balance at december 31 2007
----------------------------------------------------------------------------------------- | --------------------------- | ----------------------------------- | ---------------------------
foreign currency translation                                                              | $ 267.7                     | $ 101.1                             | $ 368.8
foreign currency hedges                                                                   | -22.6 ( 22.6 )              | -22.8 ( 22.8 )                      | -45.4 ( 45.4 )
unrealized gains ( losses ) on securities                                                 | -0.5 ( 0.5 )                | -1.4 ( 1.4 )                        | -1.9 ( 1.9 )
unrecognized prior service cost and unrecognized ( gain ) / loss in actuarial assumptions | -35.4 ( 35.4 )              | 4.2                                 | -31.2 ( 31.2 )
accumulated other comprehensive income                                                    | $ 209.2                     | $ 81.1                              | $ 290.3

treasury stock 2013 we account for repurchases of common stock under the cost method and present treasury stock as a reduction of shareholders equity .
we may reissue common stock held in treasury only for limited purposes .
accounting pronouncements 2013 in june 2006 , the fasb issued interpretation no .
48 , 201caccounting for uncertainty in income taxes , an interpretation of fas 109 , accounting for income taxes 201d ( fin 48 ) , to create a single model to address accounting for uncertainty in tax positions .
see our income tax disclosures in note 11 for more information regarding the adoption of fin 48 .
in september 2006 , the fasb issued sfas no .
158 , 201cemployers 2019 accounting for defined benefit pension and other postretirement plans 2013 an amendment of fasb statements no .
87 , 88 , 106 and 132 ( r ) . 201d this statement requires recognition of the funded status of a benefit plan in the statement of financial position .
sfas no .
158 also requires recognition in other comprehensive income of certain gains and losses that arise during the period but are deferred under pension accounting rules , as well as modifies the timing of reporting and adds certain disclosures .
the statement provides recognition and disclosure elements to be effective as of the end of the fiscal year after december 15 , 2006 and measurement elements to be effective for fiscal years ending after december 15 , 2008 .
we adopted sfas no .
158 on december 31 , 2006 .
see our pension and other postretirement disclosures in note 10 .
in december 2004 , the fasb issued sfas no .
123 ( r ) , 201cshare-based payment 201d , which is a revision to sfas no .
123 .
sfas 123 ( r ) requires all share-based payments to employees , including stock options , to be expensed based on their fair values .
we adopted sfas 123 ( r ) on january 1 , 2006 using the modified prospective method and did not restate prior periods .
in september 2006 , the fasb issued sfas no .
157 , 201cfair value measurements 201d , which defines fair value , establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements .
this statement does not require any new fair value measurements , but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information .
sfas no .
157 is effective for financial statements issued for fiscal years beginning after november 15 , 2007 and interim periods within those fiscal years .
in february 2008 , the fasb issued fasb staff position ( fsp ) no .
sfas 157-2 , which delays the effective date of certain provisions of sfas no .
157 relating to non-financial assets and liabilities measured at fair value on a non-recurring basis until fiscal years beginning after november 15 , 2008 .
the adoption of sfas no .
157 is not expected to have a material impact on our consolidated financial statements or results of operations .
in february 2007 , the fasb issued sfas no .
159 , 201cthe fair value option for financial assets and financial liabilities 2013 including an amendment of fasb statement no .
115 201d ( sfas no .
159 ) .
sfas no .
159 creates a 201cfair value option 201d under which an entity may elect to record certain financial assets or liabilities at fair value upon their initial recognition .
subsequent changes in fair value would be recognized in earnings as those changes occur .
the election of the fair value option would be made on a contract-by-contract basis and would need to be supported by concurrent documentation or a preexisting documented policy .
sfas no .
159 requires an entity to separately disclose the fair z i m m e r h o l d i n g s , i n c .
2 0 0 7 f o r m 1 0 - k a n n u a l r e p o r t notes to consolidated financial statements ( continued )


2022 selling costs increased $ 25.0 million to $ 94.6 million in 2010 from $ 69.6 million in 2009 .
this increase was primarily due to higher personnel and other costs incurred for the continued expansion of our direct to consumer distribution channel and higher selling personnel costs , including increased expenses for our performance incentive plan as compared to the prior year .
as a percentage of net revenues , selling costs increased to 8.9% ( 8.9 % ) in 2010 from 8.1% ( 8.1 % ) in 2009 primarily due to higher personnel and other costs incurred for the continued expansion of our factory house stores .
2022 product innovation and supply chain costs increased $ 25.0 million to $ 96.8 million in 2010 from $ 71.8 million in 2009 primarily due to higher personnel costs for the design and sourcing of our expanding apparel , footwear and accessories lines and higher distribution facilities operating and personnel costs as compared to the prior year to support our growth in net revenues .
in addition , we incurred higher expenses for our performance incentive plan as compared to the prior year .
as a percentage of net revenues , product innovation and supply chain costs increased to 9.1% ( 9.1 % ) in 2010 from 8.4% ( 8.4 % ) in 2009 primarily due to the items noted above .
2022 corporate services costs increased $ 24.0 million to $ 98.6 million in 2010 from $ 74.6 million in 2009 .
this increase was attributable primarily to higher corporate facility costs , information technology initiatives and corporate personnel costs , including increased expenses for our performance incentive plan as compared to the prior year .
as a percentage of net revenues , corporate services costs increased to 9.3% ( 9.3 % ) in 2010 from 8.7% ( 8.7 % ) in 2009 primarily due to the items noted above .
income from operations increased $ 27.1 million , or 31.8% ( 31.8 % ) , to $ 112.4 million in 2010 from $ 85.3 million in 2009 .
income from operations as a percentage of net revenues increased to 10.6% ( 10.6 % ) in 2010 from 10.0% ( 10.0 % ) in 2009 .
this increase was a result of the items discussed above .
interest expense , net remained unchanged at $ 2.3 million in 2010 and 2009 .
other expense , net increased $ 0.7 million to $ 1.2 million in 2010 from $ 0.5 million in 2009 .
the increase in 2010 was due to higher net losses on the combined foreign currency exchange rate changes on transactions denominated in the euro and canadian dollar and our derivative financial instruments as compared to 2009 .
provision for income taxes increased $ 4.8 million to $ 40.4 million in 2010 from $ 35.6 million in 2009 .
our effective tax rate was 37.1% ( 37.1 % ) in 2010 compared to 43.2% ( 43.2 % ) in 2009 , primarily due to tax planning strategies and federal and state tax credits reducing the effective tax rate , partially offset by a valuation allowance recorded against our foreign net operating loss carryforward .
segment results of operations year ended december 31 , 2011 compared to year ended december 31 , 2010 net revenues by geographic region are summarized below: .

( in thousands )        | year ended december 31 , 2011 | year ended december 31 , 2010 | year ended december 31 , $ change | year ended december 31 , % (  % ) change
----------------------- | ----------------------------- | ----------------------------- | --------------------------------- | ----------------------------------------
north america           | $ 1383346                     | $ 997816                      | $ 385530                          | 38.6% ( 38.6 % )
other foreign countries | 89338                         | 66111                         | 23227                             | 35.1
total net revenues      | $ 1472684                     | $ 1063927                     | $ 408757                          | 38.4% ( 38.4 % )

net revenues in our north american operating segment increased $ 385.5 million to $ 1383.3 million in 2011 from $ 997.8 million in 2010 primarily due to the items discussed above in the consolidated results of operations .
net revenues in other foreign countries increased by $ 23.2 million to $ 89.3 million in 2011 from $ 66.1 million in 2010 primarily due to footwear shipments to our dome licensee , as well as unit sales growth to our distributors in our latin american operating segment.


contractual obligations in 2011 , we issued $ 1200 million of senior notes and entered into the credit facility with third-party lenders in the amount of $ 1225 million .
as of december 31 , 2011 , total outstanding long-term debt was $ 1859 million , consisting of these senior notes and the credit facility , in addition to $ 105 million of third party debt that remained outstanding subsequent to the spin-off .
in connection with the spin-off , we entered into a transition services agreement with northrop grumman , under which northrop grumman or certain of its subsidiaries provides us with certain services to help ensure an orderly transition following the distribution .
under the transition services agreement , northrop grumman provides , for up to 12 months following the spin-off , certain enterprise shared services ( including information technology , resource planning , financial , procurement and human resource services ) , benefits support services and other specified services .
the original term of the transition services agreement ends on march 31 , 2012 , although we have the right to and have cancelled certain services as we transition to new third-party providers .
the services provided by northrop grumman are charged to us at cost , and a limited number of these services may be extended for a period of approximately six months to allow full information systems transition .
see note 20 : related party transactions and former parent company equity in item 8 .
in connection with the spin-off , we entered into a tax matters agreement with northrop grumman ( the 201ctax matters agreement 201d ) that governs the respective rights , responsibilities and obligations of northrop grumman and us after the spin-off with respect to tax liabilities and benefits , tax attributes , tax contests and other tax sharing regarding u.s .
federal , state , local and foreign income taxes , other taxes and related tax returns .
we have several liabilities with northrop grumman to the irs for the consolidated u.s .
federal income taxes of the northrop grumman consolidated group relating to the taxable periods in which we were part of that group .
however , the tax matters agreement specifies the portion of this tax liability for which we will bear responsibility , and northrop grumman has agreed to indemnify us against any amounts for which we are not responsible .
the tax matters agreement also provides special rules for allocating tax liabilities in the event that the spin-off , together with certain related transactions , is not tax-free .
see note 20 : related party transactions and former parent company equity in item 8 .
we do not expect either the transition services agreement or the tax matters agreement to have a significant impact on our financial condition and results of operations .
the following table presents our contractual obligations as of december 31 , 2011 , and the related estimated timing of future cash payments : ( $ in millions ) total 2012 2013 - 2014 2015 - 2016 2017 and beyond .

( $ in millions )                         | total  | 2012   | 2013 - 2014 | 2015 - 2016 | 2017 and beyond
----------------------------------------- | ------ | ------ | ----------- | ----------- | ---------------
long-term debt                            | $ 1859 | $ 29   | $ 129       | $ 396       | $ 1305
interest payments on long-term debt ( 1 ) | 854    | 112    | 219         | 202         | 321
operating leases                          | 124    | 21     | 32          | 23          | 48
purchase obligations ( 2 )                | 2425   | 1409   | 763         | 209         | 44
other long-term liabilities ( 3 )         | 587    | 66     | 96          | 67          | 358
total contractual obligations             | $ 5849 | $ 1637 | $ 1239      | $ 897       | $ 2076

( 1 ) interest payments include interest on $ 554 million of variable interest rate debt calculated based on interest rates at december 31 , 2011 .
( 2 ) a 201cpurchase obligation 201d is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms , including : fixed or minimum quantities to be purchased ; fixed , minimum , or variable price provisions ; and the approximate timing of the transaction .
these amounts are primarily comprised of open purchase order commitments to vendors and subcontractors pertaining to funded contracts .
( 3 ) other long-term liabilities primarily consist of total accrued workers 2019 compensation reserves , deferred compensation , and other miscellaneous liabilities , of which $ 201 million is the current portion of workers 2019 compensation liabilities .
it excludes obligations for uncertain tax positions of $ 9 million , as the timing of the payments , if any , cannot be reasonably estimated .
the above table excludes retirement related contributions .
in 2012 , we expect to make minimum and discretionary contributions to our qualified pension plans of approximately $ 153 million and $ 65 million , respectively , exclusive of any u.s .
government recoveries .
we will continue to periodically evaluate whether to make additional discretionary contributions .
in 2012 , we expect to make $ 35 million in contributions for our other postretirement plans , exclusive of any


in september 2006 , the fasb issued sfas no .
158 , 201cemployers 2019 accounting for defined benefit pension and other postretirement plans , an amendment of fasb statements no .
87 , 88 , 106 and 132 ( r ) . 201d this standard eliminated the requirement for a 201cminimum pension liability adjustment 201d that was previously required under sfas no .
87 and required employers to recognize the underfunded or overfunded status of a defined benefit plan as an asset or liability in its statement of financial position .
in 2006 , as a result of the implementation of sfas no .
158 , the company recognized an after-tax decrease in accumulated other comprehensive income of $ 1.187 billion and $ 513 million for the u.s .
and international pension benefit plans , respectively , and $ 218 million for the postretirement health care and life insurance benefit plan .
see note 11 for additional detail .
reclassification adjustments are made to avoid double counting in comprehensive income items that are also recorded as part of net income .
in 2007 , as disclosed in the net periodic benefit cost table in note 11 , $ 198 million pre-tax ( $ 123 million after-tax ) were reclassified to earnings from accumulated other comprehensive income to pension and postretirement expense in the income statement .
these pension and postretirement expense amounts are shown in the table in note 11 as amortization of transition ( asset ) obligation , amortization of prior service cost ( benefit ) and amortization of net actuarial ( gain ) loss .
other reclassification adjustments ( except for cash flow hedging instruments adjustments provided in note 12 ) were not material .
no tax provision has been made for the translation of foreign currency financial statements into u.s .
dollars .
note 7 .
supplemental cash flow information .

( millions )             | 2007   | 2006   | 2005
------------------------ | ------ | ------ | ------
cash income tax payments | $ 1999 | $ 1842 | $ 1277
cash interest payments   | 162    | 119    | 79
capitalized interest     | 25     | 16     | 12

individual amounts in the consolidated statement of cash flows exclude the impacts of acquisitions , divestitures and exchange rate impacts , which are presented separately .
201cother 2013 net 201d in the consolidated statement of cash flows within operating activities in 2007 and 2006 includes changes in liabilities related to 3m 2019s restructuring actions ( note 4 ) and in 2005 includes the non-cash impact of adopting fin 47 ( $ 35 million cumulative effect of accounting change ) .
transactions related to investing and financing activities with significant non-cash components are as follows : in 2007 , 3m purchased certain assets of diamond productions , inc .
for approximately 150 thousand shares of 3m common stock , which has a market value of approximately $ 13 million at the acquisition 2019s measurement date .
liabilities assumed from acquisitions are provided in the tables in note 2.


performance graph the performance graph below shows the five-year cumulative total stockholder return on applied common stock during the period from october 28 , 2012 through october 29 , 2017 .
this is compared with the cumulative total return of the standard & poor 2019s 500 stock index and the rdg semiconductor composite index over the same period .
the comparison assumes $ 100 was invested on october 28 , 2012 in applied common stock and in each of the foregoing indices and assumes reinvestment of dividends , if any .
dollar amounts in the graph are rounded to the nearest whole dollar .
the performance shown in the graph represents past performance and should not be considered an indication of future performance .
comparison of 5 year cumulative total return* among applied materials , inc. , the s&p 500 index and the rdg semiconductor composite index *assumes $ 100 invested on 10/28/12 in stock or 10/31/12 in index , including reinvestment of dividends .
indexes calculated on month-end basis .
copyright a9 2017 standard & poor 2019s , a division of s&p global .
all rights reserved. .

                                  | 10/28/2012 | 10/27/2013 | 10/26/2014 | 10/25/2015 | 10/30/2016 | 10/29/2017
--------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
applied materials                 | 100.00     | 171.03     | 207.01     | 165.34     | 293.64     | 586.91
s&p 500 index                     | 100.00     | 127.18     | 149.14     | 156.89     | 163.97     | 202.72
rdg semiconductor composite index | 100.00     | 131.94     | 167.25     | 160.80     | 193.36     | 288.96

dividends during each of fiscal 2017 , 2016 and 2015 , applied 2019s board of directors declared four quarterly cash dividends in the amount of $ 0.10 per share .
applied currently anticipates that cash dividends will continue to be paid on a quarterly basis , although the declaration of any future cash dividend is at the discretion of the board of directors and will depend on applied 2019s financial condition , results of operations , capital requirements , business conditions and other factors , as well as a determination by the board of directors that cash dividends are in the best interests of applied 2019s stockholders .
10/28/12 10/27/13 10/26/14 10/25/15 10/30/16 10/29/17 applied materials , inc .
s&p 500 rdg semiconductor composite


levels during 2008 , an indication that efforts to improve network operations translated into better customer service .
2022 fuel prices 2013 crude oil prices increased at a steady rate through the first seven months of 2008 , closing at a record high of $ 145.29 a barrel in early july .
as the economy worsened during the third and fourth quarters , fuel prices dropped dramatically , hitting $ 33.87 per barrel in december , a near five-year low .
despite these price declines toward the end of the year , our 2008 average fuel price increased by 39% ( 39 % ) and added $ 1.1 billion of operating expenses compared to 2007 .
our fuel surcharge programs helped offset the impact of higher fuel prices .
in addition , we reduced our consumption rate by 4% ( 4 % ) , saving approximately 58 million gallons of fuel during the year .
the use of newer , more fuel efficient locomotives ; our fuel conservation programs ; improved network operations ; and a shift in commodity mix , primarily due to growth in bulk shipments , contributed to the improvement .
2022 free cash flow 2013 cash generated by operating activities totaled a record $ 4.1 billion , yielding free cash flow of $ 825 million in 2008 .
free cash flow is defined as cash provided by operating activities , less cash used in investing activities and dividends paid .
free cash flow is not considered a financial measure under accounting principles generally accepted in the united states ( gaap ) by sec regulation g and item 10 of sec regulation s-k .
we believe free cash flow is important in evaluating our financial performance and measures our ability to generate cash without additional external financings .
free cash flow should be considered in addition to , rather than as a substitute for , cash provided by operating activities .
the following table reconciles cash provided by operating activities ( gaap measure ) to free cash flow ( non-gaap measure ) : millions of dollars 2008 2007 2006 .

millions of dollars                   | 2008           | 2007           | 2006
------------------------------------- | -------------- | -------------- | --------------
cash provided by operating activities | $ 4070         | $ 3277         | $ 2880
cash used in investing activities     | -2764 ( 2764 ) | -2426 ( 2426 ) | -2042 ( 2042 )
dividends paid                        | -481 ( 481 )   | -364 ( 364 )   | -322 ( 322 )
free cash flow                        | $ 825          | $ 487          | $ 516

2009 outlook 2022 safety 2013 operating a safe railroad benefits our employees , our customers , our shareholders , and the public .
we will continue using a multi-faceted approach to safety , utilizing technology , risk assessment , quality control , and training and engaging our employees .
we plan to continue implementation of total safety culture ( tsc ) throughout our operations .
tsc , an employee-focused initiative that has helped improve safety , is a process designed to establish , maintain , and promote safety among co-workers .
with respect to public safety , we will continue our efforts to maintain , upgrade , and close crossings , install video cameras on locomotives , and educate the public about crossing safety through various railroad and industry programs , along with other activities .
2022 transportation plan 2013 in 2009 , we will continue to evaluate traffic flows and network logistic patterns to identify additional opportunities to simplify operations and improve network efficiency and asset utilization .
we plan to maintain adequate manpower and locomotives , and improve productivity using industrial engineering techniques .
2022 fuel prices 2013 on average , we expect fuel prices to decrease substantially from the average price we paid in 2008 .
however , due to economic uncertainty , other global pressures , and weather incidents , fuel prices again could be volatile during the year .
to reduce the impact of fuel price on earnings , we