sources of liquidity primary sources liquidity for citigroup and principal subsidiaries include : 2022 deposits ; 2022 collateralized financing transactions ; 2022 senior and subordinated debt ; 2022 commercial paper ; 2022 trust preferred securities ; 2022 purchased/wholesale funds.
 citigroup 2019s funding sources diversified across funding types and geography benefit of global franchise.
 funding for citigroup major operating subsidiaries includes geographically diverse retail and corporate deposit base of $ 774. 2 billion.
 deposits diversified across products regions approximately two-thirds outside of the u. s.
 this diversification provides company with important , stable low-cost source of funding.
 significant portion of these deposits expected to be long-term and stable considered to be core.
 qualitative quantitative assessments determine company 2019s calculation of core deposits.
 first step in process is qualitative assessment of deposits.
 for company 2019s qualitative analysis certain deposits with wholesale funding characteristics excluded from consideration as core.
 deposits qualify under company 2019s qualitative assessments then subjected to quantitative analysis.
 excluding impact of changes in foreign exchange rates sale of retail banking operations in germany during year ending december 31 , 2008  company 2019s deposit base remained stable.
 on volume basis  deposit increases noted in transaction services , u. s.
 retail banking smith barney.
 partially offset by company 2019s decision to reduce deposits considered wholesale funding  consistent with company 2019s de-leveraging efforts declines in international consumer banking private bank.
 citigroup and subsidiaries historically had significant presence in global capital markets.
 company 2019s capital markets funding activities primarily undertaken by two legal entities : ( i ) citigroup inc., issues long-term debt  medium-term notes  trust preferred securities  preferred common stock ; ( ii ) citigroup funding inc.
 ( cfi ) , first-tier subsidiary of citigroup , issues commercial paper  medium-term notes structured equity-linked and credit-linked notes  all guaranteed by citigroup.
 other significant elements of long- term debt on consolidated balance sheet include collateralized advances from federal home loan bank system  long-term debt related to consolidation of icg 2019s structured investment vehicles  asset-backed outstandings  certain borrowings of foreign subsidiaries.
 each of citigroup 2019s major operating subsidiaries finances operations consistent with capitalization  regulatory structure environment in it operates.
 attention paid to businesses for tax sovereign risk regulatory reasons cannot be freely readily funded in international markets.
 citigroup 2019s borrowings diversified by geography  investor  instrument currency.
 decisions regarding ultimate currency interest rate profile of liquidity generated through borrowings can be separated from actual issuance through use of derivative instruments.
 citigroup provider of liquidity facilities to commercial paper programs of two primary credit card securitization trusts with it transacts.
 citigroup may provide other support to trusts.
 result of recent economic downturn impact on cashflows of trusts response to credit rating agency reviews of trusts company increased credit enhancement in omni trust  plans to provide additional enhancement to master trust ( see note 23 to consolidated financial statements on page 175 for further discussion ).
 this support preserves investor sponsorship of our card securitization franchise , important source of liquidity.
banking subsidiaries legal limitations on ability of citigroup 2019s subsidiary depository institutions to extend credit pay dividends or supply funds to citigroup non-bank subsidiaries.
 approval of office of comptroller of currency  national banks or office of thrift supervision  federal savings banks  is required if total dividends declared in year exceed amounts by applicable agency 2019s regulations.
 state-chartered depository institutions subject to dividend limitations imposed by applicable state law.
 in determining declaration of dividends each depository institution must consider effect on risk-based capital and leverage ratio requirements policy statements of federal regulatory agencies indicate banking organizations should pay dividends out of current operating earnings.
 non-banking subsidiaries citigroup also receives dividends from non-bank subsidiaries.
 non-bank subsidiaries generally not subject to regulatory restrictions on dividends.
 discussed in 201ccapital resources and liquidity 201d on page 94  ability of cgmhi to declare dividends can be restricted by capital considerations of broker-dealer subsidiaries.
 cgmhi 2019s consolidated balance sheet is liquid  majority of assets of marketable securities and collateralized short-term financing agreements from securities transactions.
 cgmhi monitors and evaluates adequacy of capital and borrowing base daily to maintain liquidity ensure capital base supports regulatory capital requirements of subsidiaries.
 some of citigroup 2019s non-bank subsidiaries , including cgmhi , have credit facilities with citigroup 2019s subsidiary depository institutions , including citibank .
 borrowings under these facilities must be secured in accordance with section 23a of federal reserve act.
legal restrictions on extent bank holding company non-bank subsidiaries can borrow obtain credit from citigroup 2019s subsidiary depository institutions or engage in other transactions with them.
 restrictions require transactions on arm 2019s length terms secured by designated amounts specified collateral.
 see note 20 to consolidated financial statements on page 169.
 at december 31 , 2008  long-term debt commercial paper outstanding for citigroup , cgmhi cfi citigroup 2019s subsidiaries : 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 ).
 at december 31, 2008  approximately $ 67. 4 billion relates to collateralized advances from federal home loan bank.
 citigroup inc.
 guarantees all cfi 2019s debt cgmhi 2019s publicly issued securities.

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                        |


( 2 ) union-represented mainline employees covered by agreements not currently amendable.
 joint collective bargaining agreements ( jcbas ) reached with post-merger employee groups except maintenance , fleet service  stock clerks  maintenance control technicians maintenance training instructors represented by twu-iam association covered by separate cbas become amendable in third quarter of 2018.
 until agreements become amendable negotiations for jcbas conducted outside traditional rla bargaining process in no self-help permissible.
 ( 3 ) among wholly-owned regional subsidiaries psa mechanics and flight attendants have agreements now amendable engaged in traditional rla negotiations.
 envoy passenger service employees engaged in traditional rla negotiations for initial cba.
 piedmont fleet and passenger service employees reached tentative five-year agreement subject to membership ratification.
 for more discussion see part i , item 1a.
 risk factors 2013 201cunion disputes , employee strikes other labor-related disruptions may adversely affect operations. aircraft fuel operations and financial results significantly affected by availability and price of jet fuel  our second largest expense.
 based on 2018 forecasted mainline regional fuel consumption estimate one cent per gallon increase in aviation fuel price would increase 2018 annual fuel expense by $ 45 million.
 following table shows annual aircraft fuel consumption and costs  including taxes for mainline and regional operations for 2017 , 2016 2015 ( gallons and aircraft fuel expense in millions ).
 year gallons average price per gallon aircraft fuel expense percent of total operating expenses.
 as of december 31 , 2017  fuel hedging contracts outstanding to hedge fuel consumption.
assuming we not enter future transactions to hedge fuel consumption , we will continue exposed to fluctuations in fuel prices.
 our current policy is not to enter transactions to hedge fuel consumption , we review policy based on market conditions other factors.
 fuel prices fluctuated substantially over past years.
 we cannot predict future availability  price volatility cost of aircraft fuel.
 natural disasters ( including hurricanes events in u. s.
 southeast gulf coast where significant portion domestic refining capacity ) political disruptions or wars involving oil-producing countries changes in fuel-related governmental policy  strength of u. s.
 dollar against foreign currencies changes in access to petroleum product pipelines and terminals  speculation in energy futures markets  changes in aircraft fuel production capacity  environmental concerns other unpredictable events may result in fuel supply shortages  distribution challenges  additional fuel price volatility cost increases in future.
 see part i , item 1a.
 risk factors 2013 201cour business dependent on price and availability of aircraft fuel.
 continued periods of high volatility in fuel costs , increased fuel prices or significant disruptions in supply of aircraft fuel could negative impact on our operating results and liquidity. seasonality factors due to greater demand for air travel during summer months revenues in airline industry in second and third quarters of year tend to be greater than revenues first and fourth quarters year.
 general economic conditions  fears of terrorism or war  fare initiatives  fluctuations in fuel prices labor actions  weather  natural disasters  outbreaks of disease other factors could impact this seasonal pattern.
 quarterly results of operations not necessarily indicative of operating results for entire year historical operating results quarterly or annual period not necessarily indicative of future operating results.

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 % )


fourth quarter of 2002  aes lost voting control of one holding companies in cemig ownership structure.
 this holding company indirectly owns shares related to cemig investment and indirectly holds project financing debt related cemig.
 result loss voting control aes stopped consolidating holding company at december 31 , 2002.
.
 fourth quarter of 2003  company sold 25% ( 25 % ) ownership interest in medway power limited ( 2018 2018mpl 2019 2019 )  688 mw natural gas-fired combined cycle facility in united kingdom and aes medway operations limited ( 2018 2018aesmo 2019 2019 ) operating company for facility aggregate transaction valued at approximately a347 million ( $ 78 million ).
 sale resulted in gain of $ 23 million recorded in continuing operations.
 mpl aesmo reported in contract generation segment.
 second quarter of 2002 company sold investment in empresa de infovias s. a.
 ( 2018 2018infovias 2019 2019 )  telecommunications company in brazil  for proceeds of $ 31 million to cemig  affiliated company.
 loss recorded on sale was approximately $ 14 million recorded as loss on sale of assets and asset impairment expenses in consolidated statements of operations.
 second quarter of 2002 company recorded impairment charge of approximately $ 40 million after income taxes on equity method investment in telecommunications company in latin america held by edc.
 impairment charge resulted from sustained poor operating performance recent funding problems at invested company.
 2001  company lost operational control of central electricity supply corporation ( 2018 2018cesco 2019 2019 )  distribution company in state of orissa .
 state of orissa appointed administrator to operational control of cesco.
 cesco accounted for as cost method investment.
 aes 2019s investment in cesco is negative.
august 2000 , subsidiary company acquired 49% ( 49 % ) interest in songas for approximately $ 40 million.
 company acquired additional 16. 79% ( 16. 79 % ) of songas for approximately $ 12. 5 million company began consolidating entity in 2002.
 songas owns songo songo gas-to-electricity project in tanzania.
 december 2002  company signed sales purchase agreement to sell 100% ( 100 % ) ownership interest in songas.
 sale songas closed april 2003 ( see note 4 for further discussion transaction ).
 following tables present summarized comparative financial information ( in millions ) of entities company ability exercise significant influence but not control accounted for using equity method.
 1 ) includes information pertaining to eletropaulo and light prior to february 2002.
 2002 and 2001  results of operations financial position of cemig negatively impacted by devaluation of brazilian real impairment charge recorded 2002.
 brazilian real devalued 32% ( 32 % ) and 19% ( 19 % ) for years ended december 31, 2002 and 2001  respectively.

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


$ 44. 9 million  or $ 38. 2 million  net of taxes expected to reclassified to earnings next twelve months.
 enter foreign currency forward exchange contracts with terms one month to manage currency exposures for assets liabilities denominated in currency other than entity 2019s functional currency.
 foreign currency translation gains/losses recognized in earnings under sfas no.
 52 , 201cforeign currency translation 201d offset with gains/losses on foreign currency forward exchange contracts in same reporting period.
 other comprehensive income 2013 refers to revenues expenses gains losses under accepted accounting principles included in comprehensive income excluded from net earnings recorded as adjustment to stockholders 2019 equity.
 comprehensive income comprised of foreign currency translation adjustments unrealized foreign currency hedge gains and losses unrealized gains and losses on available-for-sale securities amortization of prior service costs unrecognized gains and losses in actuarial assumptions.
 components of accumulated other comprehensive income ( in millions ) : balance at december 31  comprehensive income ( loss ) balance at december 31.
 treasury stock 2013 account for repurchases of common stock under cost method present treasury stock as reduction of shareholders equity.
 may reissue common stock held in treasury for limited purposes.
 accounting pronouncements 2013 june 2006 fasb issued interpretation no.
 48 , 201caccounting for uncertainty in income taxes interpretation of fas 109  accounting income taxes 201d ( fin 48 ) create single model to address accounting for uncertainty in tax positions.
 see income tax disclosures in note 11 for more information adoption of fin 48.
 september 2006 fasb issued sfas no.
158 , 201cemployers 2019 accounting for defined benefit pension postretirement plans 2013 amendment of fasb statements no.
 87 , 88 , 106 132 ( r ). 201d statement requires recognition of funded status of benefit plan in statement of financial position.
 sfas no.
 158 requires recognition in comprehensive income of gains losses during period deferred under pension accounting rules modifies timing of reporting adds disclosures.
 statement provides recognition disclosure elements effective end of fiscal year after december 15, 2006 measurement elements effective for fiscal years ending after december 15, 2008.
 adopted sfas no.
 158 on december 31 , 2006.
 see pension postretirement disclosures in note 10.
 december 2004  fasb issued sfas no.
 123 ( r ) , 201cshare-based payment 201d , revision to sfas no.
 123.
 sfas 123 ( r ) requires share-based payments to employees including stock options expensed based on fair values.
 adopted sfas 123 ( r ) on january 1, 2006 using modified prospective method did not restate prior periods.
 in september 2006  fasb issued sfas no.
 157 , 201cfair value measurements 201d , defines fair value  establishes framework for measuring fair value in generally accepted accounting principles expands disclosures about fair value measurements.
 statement not require new fair value measurements provides guidance on to measure fair value providing fair value hierarchy classify source of information.
 sfas no.
 157 effective for financial statements issued for fiscal years beginning after november 15 , 2007 interim periods within fiscal years.
 february 2008 , fasb issued fasb staff position ( fsp ) no.
 sfas 157-2 , delays effective date of certain provisions of sfas no.
157 relating non-financial assets liabilities measured at fair value non-recurring basis until fiscal years after november 15 , 2008.
 adoption of sfas no.
 157 not expected material impact on consolidated financial statements results operations.
 february 2007  fasb issued sfas no.
 159 , 201cthe fair value option for financial assets financial liabilities 2013 including amendment of fasb statement no.
 115 201d ( sfas no.
 159 ).
 sfas no.
 159 creates 201cfair value option 201d entity elect record financial assets liabilities at fair value upon initial recognition.
 subsequent changes in fair value recognized in earnings changes occur.
 election fair value option made contract-by-contract basis need supported by concurrent documentation preexisting documented policy.
 sfas no.
 159 requires entity to separately disclose fair z i m m e r h o l d i n g s 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 )

| 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


2022 selling costs increased $ 25. 0 million to $ 94. 6 million in 2010 from $ 69. 6 million in 2009.
 increase due to higher personnel costs for expansion of direct to consumer distribution channel higher selling personnel costs including increased expenses for performance incentive plan prior year.
 percentage of net revenues selling costs increased to 8. 9% ( 8. 9 % ) in 2010 from 8. 1% ( 8. 1 % ) in 2009 due to higher personnel costs for expansion of 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 due to higher personnel costs for design sourcing expanding apparel, footwear accessories lines higher distribution facilities operating and personnel costs support growth in net revenues.
 higher expenses for performance incentive plan prior year.
 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 due.
 2022 corporate services costs increased $ 24. 0 million to $ 98. 6 million in 2010 from $ 74. 6 million in 2009.
 increase attributable to higher corporate facility costs, information technology initiatives corporate personnel costs including increased expenses for performance incentive plan prior year.
 percentage of net revenues corporate services costs increased to 9. 3% ( 9. 3 % ) in 2010 from 8. 7% ( 8. 7 % ) in 2009 due to.
 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 percentage of net revenues increased to 10. 6% ( 10. 6 % ) in 2010 from 10. 0% ( 10. 0 % ) in 2009.
 increase result of items discussed above.
interest expense net remained unchanged at $ 2. 3 million in 2010.
 other expense net increased $ 0. 7 million to $ 1. 2 million in 2010 from $ 0. 5 million in 2009.
 increase 2010 due to higher net losses on foreign currency exchange rate changes on transactions in euro canadian dollar derivative financial instruments 2009.
 provision for income taxes increased $ 4. 8 million to $ 40. 4 million in 2010 from $ 35. 6 million in 2009.
 effective tax rate was 37. 1% (. ) in 2010 compared to 43. 2% (. ) in 2009 due to tax planning strategies federal state tax credits reducing effective tax rate offset by valuation allowance against foreign net operating loss carryforward.
 segment results of operations year ended december 31, 2011 compared to 2010 net revenues by geographic region summarized.
 net revenues in north american operating segment increased $ 385. 5 million to $ 1383. 3 million in 2011 from $ 997. 8 million in 2010 due to items consolidated results operations.
 net revenues in other foreign countries increased by $ 23. 2 million to $ 89. 3 million in 2011 from $ 66. 1 million in 2010 due to footwear shipments to dome licensee unit sales growth to distributors in latin american operating segment.

( 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 % )


contractual obligations in 2011  issued $ 1200 million of senior notes entered into credit facility with third-party lenders amount of $ 1225 million.
 as of december 31 , 2011  total outstanding long-term debt was $ 1859 million  consisting of these senior notes and credit facility in addition to $ 105 million of third party debt remained outstanding subsequent to spin-off.
 connection with spin-off  entered transition services agreement with northrop grumman  northrop grumman subsidiaries provides us certain services to ensure orderly transition following distribution.
 under transition services agreement  northrop grumman provides for up to 12 months following spin-off  certain enterprise shared services ( including information technology , resource planning , financial , procurement human resource services )  benefits support services other specified services.
 original term of transition services agreement ends on march 31 , 2012 , right to cancelled certain services as transition to new third-party providers.
 services provided by northrop grumman charged at cost  limited number services may be extended for approximately six months to allow full information systems transition.
 see note 20 : related party transactions former parent company equity in item 8.
 connection with spin-off  entered tax matters agreement with northrop grumman ( 201ctax matters agreement 201d ) governs respective rights , responsibilities obligations of northrop grumman and us after spin-off with respect to tax liabilities benefits , tax attributes , tax contests other tax sharing regarding.
 federal , state , local foreign income taxes , other taxes related tax returns.
 several liabilities with northrop grumman irs for consolidated.
 federal income taxes of northrop grumman consolidated group relating to taxable periods in we were part of that group.
tax matters agreement specifies portion tax liability for we bear responsibility northrop grumman agreed to indemnify us against amounts for we not responsible.
 tax matters agreement provides special rules for allocating tax liabilities in spin-off  certain related transactions not tax-free.
 see note 20 : related party transactions and former parent company equity in item 8.
 we not expect transition services agreement or tax matters agreement to significant impact on our financial condition and results of operations.
 table presents our contractual obligations as of december 31, 2011 related estimated timing of future cash payments : ( $ in millions ) total 2012 2013 - 2014 2015 - 2016 2017 and beyond.
 1 interest payments include interest on $ 554 million of variable interest rate debt calculated based on interest rates at december 31 , 2011.
 2 ) 201cpurchase obligation 201d is defined as agreement to purchase goods or services enforceable and legally binding on us specifies significant terms including fixed or minimum quantities to be purchased ; fixed  variable price provisions ; approximate timing of transaction.
 these amounts primarily comprised of open purchase order commitments to vendors and subcontractors pertaining to funded contracts.
 3 ) other long-term liabilities consist of total accrued workers 2019 compensation reserves , deferred compensation other miscellaneous liabilities $ 201 million is current portion of workers 2019 compensation liabilities.
 excludes obligations for uncertain tax positions of $ 9 million  timing of payments cannot be reasonably estimated.
 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.
 government recoveries.
continue periodically evaluate make additional discretionary contributions.
 in 2012 , expect to make $ 35 million contributions for other postretirement plans , exclusive of any

( $ 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


september 2006  fasb issued sfas no.
 158 , 201cemployers 2019 accounting for defined benefit pension postretirement plans amendment of fasb statements no.
 87 , 88  106 132 ( r ). 201d standard eliminated requirement for 201cminimum pension liability adjustment 201d previously required under sfas no.
 87 required employers to recognize underfunded or overfunded status of defined benefit plan as asset or liability in statement of financial position.
 2006  implementation of sfas no.
 158  company recognized after-tax decrease in accumulated other comprehensive income of $ 1. 187 billion and $ 513 million for.
 international pension benefit plans  $ 218 million for postretirement health care life insurance benefit plan.
 see note 11 for additional detail.
 reclassification adjustments to avoid double counting in comprehensive income items recorded as part of net income.
 2007  net periodic benefit cost table note 11, $ 198 million pre-tax ( $ 123 million after-tax ) reclassified to earnings from accumulated other comprehensive income to pension postretirement expense income statement.
 pension postretirement expense amounts shown in table note 11 as amortization of transition ( asset ) obligation  amortization prior service cost ( benefit ) amortization of net actuarial ( gain ) loss.
 other reclassification adjustments except for cash flow hedging instruments adjustments in note 12 ) not material.
 no tax provision made for translation of foreign currency financial statements into.
 dollars.
 note 7.
 supplemental cash flow information.
 individual amounts in consolidated statement of cash flows exclude impacts of acquisitions  divestitures exchange rate impacts presented separately.
201cother 2013 net 201d consolidated statement of cash flows operating activities 2007 2006 includes changes liabilities related to 3m 2019s restructuring actions ( note 4 ) 2005 includes non-cash impact adopting fin 47 ( $ 35 million cumulative effect accounting change ).
 transactions related to investing financing activities with significant non-cash components : 2007, 3m purchased assets diamond productions , inc.
 for approximately 150 thousand shares of 3m common stock  market value approximately $ 13 million at acquisition 2019s measurement date.
 liabilities assumed from acquisitions provided in tables note 2.

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


performance graph shows five-year cumulative total stockholder return on applied common stock period from october 28 , 2012 through october 29 , 2017.
 compared with cumulative total return of standard & poor 2019s 500 stock index and rdg semiconductor composite index over same period.
 comparison assumes $ 100 invested on october 28 , 2012 in applied common stock and in each foregoing indices assumes reinvestment of dividends  if.
 dollar amounts in graph rounded to nearest whole dollar.
 performance represents past performance not indication of future performance.
 comparison of 5 year cumulative total return* among applied materials , inc. s&p 500 index 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 , division of s&p global.
 all rights reserved.
 dividends during fiscal 2017 , 2016 and 2015  applied 2019s board of directors declared four quarterly cash dividends $ 0. 10 per share.
 anticipates cash dividends will continue to be paid quarterly basis declaration of future cash dividend at discretion of board of directors on applied 2019s financial condition  results of operations  capital requirements  business conditions other factors determination by board of directors that cash dividends in 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

| 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


levels during 2008  indication efforts to improve network operations translated into better customer service.
 2022 fuel prices 2013 crude oil prices increased steady rate first seven months of 2008 closing record high $ 145. 29 a barrel in early july.
 economy worsened third and fourth quarters fuel prices dropped dramatically hitting $ 33. 87 per barrel in december near five-year low.
 despite price declines end of year 2008 average fuel price increased by 39% ( 39 % ) added $ 1. 1 billion operating expenses compared to 2007.
 fuel surcharge programs helped offset impact higher fuel prices.
 reduced consumption rate by 4% ( 4 % ) saving approximately 58 million gallons of fuel year.
 use of newer more fuel efficient locomotives ; fuel conservation programs improved network operations shift in commodity mix due to growth in bulk shipments contributed to improvement.
 2022 free cash flow 2013 cash generated by operating activities totaled record $ 4. 1 billion  yielding free cash flow of $ 825 million in 2008.
 free cash flow defined as cash provided by operating activities less cash used in investing activities dividends paid.
 free cash flow not considered financial measure under accounting principles accepted in united states ( gaap ) by sec regulation g item 10 of sec regulation s-k.
 believe free cash flow important in evaluating financial performance measures ability to generate cash without additional external financings.
 free cash flow considered in addition to substitute for cash provided by operating activities.
 following table reconciles cash provided by operating activities ( gaap measure ) to free cash flow ( non-gaap measure ) : millions of dollars 2008 2007 2006.
 2009 outlook 2022 safety 2013 operating safe railroad benefits employees customers shareholders public.
continue using multi-faceted approach to safety  utilizing technology , risk assessment  quality control  training engaging employees.
 plan to continue implementation of total safety culture ( tsc ) throughout operations.
 tsc , employee-focused initiative helped improve safety , is process designed to establish  maintain promote safety among co-workers.
 with respect to public safety  continue efforts to maintain , upgrade close crossings  install video cameras on locomotives educate public about crossing safety through railroad and industry programs  other activities.
 2022 transportation plan 2013 in 2009 , continue to evaluate traffic flows network logistic patterns to identify additional opportunities to simplify operations improve network efficiency asset utilization.
 plan to maintain adequate manpower locomotives improve productivity using industrial engineering techniques.
 2022 fuel prices 2013 on average  expect fuel prices to decrease substantially from average price paid in 2008.
 however due to economic uncertainty  global pressures  weather incidents , fuel prices could be volatile during year.
 to reduce impact of fuel price on earnings

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


summary of our floor space by business segment at december 31 , 2010 : ( square feet in millions ) owned leased government- owned total.
 some of our owned properties , primarily classified under corporate activities , are leased to third parties.
 in area of manufacturing , operations are of job-order nature , assembly line process , productive equipment has multiple uses for multiple products.
 management believes our major physical facilities are in good condition adequate for their intended use.
 item 3.
 legal proceedings we are a party to or have property subject to litigation and other proceedings, including matters under provisions relating to protection of environment.
 believe probability is remote that outcome of these matters have material adverse effect on corporation , notwithstanding unfavorable resolution of matter may have material effect on our net earnings in quarter.
 cannot predict outcome of legal proceedings with certainty.
 these matters include proceedings summarized in note 14 2013 legal proceedings , commitments, and contingencies beginning on page 78 of form 10-k.
 from time-to-time  agencies of u.
 government investigate our operations conducted in accordance with applicable regulatory requirements.
.
 government investigations to government contracts or for could result in administrative , civil , or criminal liabilities , including repayments, fines , or penalties or could lead to suspension or debarment from future.
 government contracting.
.
 government investigations often take years to complete many result in no adverse action against us.
 subject to federal and state requirements for protection of environment , including for discharge of hazardous materials and remediation of contaminated sites.
 we are a party to or have our property subject to various lawsuits or proceedings involving environmental protection matters.
due to complexity pervasiveness requirements resulted in us involved with related legal proceedings claims remediation obligations.
 extent of financial exposure cannot be reasonably estimated this time.
 for information regarding these matters including current estimates of amounts required for remediation clean-up extent estimable see 201ccritical accounting policies 2013 environmental matters 201d in management 2019s discussion analysis of financial condition results of operations on page 45 note 14 2013 legal proceedings , commitments  contingencies on page 78 of form 10-k.
 item 4.
 ( removed reserved ) item 4 ( a ).
 executive officers of registrant executive officers listed below information concerning age at december 31 , 2010  positions offices held with corporation principal occupation business experience over past five years.
 no family relationships among executive officers directors.
 all officers serve at pleasure of board of directors.
 linda r.
 gooden ( 57 ) , executive vice president 2013 information systems & global solutions.
 gooden served as executive vice president 2013 global solutions since january 2007.
 previously served as deputy executive vice president 2013 information & technology services from october 2006 to december 2006 president , lockheed martin information technology from september 1997 to december 2006.
 christopher j.
 gregoire ( 42 ) , vice president and controller ( chief accounting officer ).
 gregoire served as vice president and controller ( chief accounting officer ) since march 2010.
 previously employed by sprint nextel corporation from august 2006 to may 2009 recently as principal accounting officer and assistant controller partner at deloitte & touche llp from september 2003 to july 2006.

( square feet in millions )            | owned | leased | government-owned | total
-------------------------------------- | ----- | ------ | ---------------- | -----
aeronautics                            | 5.2   | 3.7    | 15.2             | 24.1
electronic systems                     | 10.3  | 11.5   | 7.1              | 28.9
information systems & global solutions | 2.6   | 7.9    | 2014             | 10.5
space systems                          | 8.6   | 1.6    | .9               | 11.1
corporate activities                   | 2.9   | .8     | 2014             | 3.7
total                                  | 29.6  | 25.5   | 23.2             | 78.3


five year summary ( a ) includes effects of items not considered in assessment operating performance business segments ( see section , 201cresults of operations 2013 unallocated corporate ( expense ) income , net 201d in management 2019s discussion analysis financial condition results operations md&a ) ) increased earnings from continuing operations before income taxes by $ 214 million , $ 139 million after tax ( $ 0. 31 per share ).
 includes reduction in income tax expense of $ 62 million ( $ 0. 14 per share ) from tax benefit related to additional extraterritorial income exclusion ( eti ) tax benefits.
 items increased earnings by $ 201 million after tax ( $ 0. 45 per share ).
 ( b ) includes effects of items not considered in assessment operating performance segments ( section  201cresults of operations 2013 unallocated corporate ( expense ) income , net 201d in md&a ) increased earnings from continuing operations before income taxes by $ 173 million , $ 113 million after tax ( $ 0. 25 per share ).
 ( c ) includes effects of items not considered in assessment operating performance business segments ( section , 201cresults of operations 2013 unallocated corporate ( expense ) income , net 201d in md&a ) decreased earnings from operations before income taxes by $ 215 million , $ 154 million after tax ( $ 0. 34 per share ).
 includes reduction in income tax expense from closure of internal revenue service examination of $ 144 million ( $ 0. 32 per share ).
 items reduced earnings by $ 10 million after tax ( $ 0. 02 per share ).
 ( d ) includes effects of items not considered in assessment operating performance decreased earnings from continuing operations before income taxes by $ 153 million , $ 102 million after tax ( $ 0.22 per share ).
 ( e ) includes effects of items not considered in assessment operating performance business segments combined decreased earnings from continuing operations before income taxes by $ 1112 million $ 632 million after tax ( $ 1. 40 per share ).
 ( f ) define return on invested capital ( roic ) as net earnings plus after-tax interest expense divided by average invested capital ( stockholders 2019 equity plus debt ) after adjusting stockholders 2019 equity by adding adjustments related to postretirement benefit plans.
 reporting roic provides investors visibility into capital invested in operations.
 use roic to evaluate multi-year investment decisions long-term performance measure factor in evaluating management performance under incentive compensation plans.
 roic not a measure of financial performance under gaap may not be defined and calculated by other companies same.
 roic not considered in isolation or alternative to net earnings indicator.
 calculate roic as follows : ( in millions ) 2006 2005 2004 2003 2002.
 1 represents after-tax interest expense utilizing federal statutory rate of 35% ( 35 % ).
 2 debt consists of long-term debt  current maturities short-term borrowings.
 3 equity includes non-cash adjustments primarily for additional minimum pension liability years adoption of fas 158 in 2006.
 4 average benefit plan adjustments reflect cumulative value of entries identified in statement of stockholders equity under captions 201cadjustment for adoption of fas 158 201d and 201cminimum pension liability. annual benefit plan adjustments to equity were : 2006 = ( $ 1883 ) million ; 2005 = ( $ 105 ) million ; 2004 = ( $ 285 ) million 2003 = $ 331 million 2002 = ( $ 1537 ) million.
entries recorded in fourth quarter , value added back to average equity in given year is cumulative impact of all prior year entries plus 20% ( 20 % ) of current year entry value.
 5 yearly averages calculated using balances at start of year and end of each quarter.

( in millions )                                   | 2006             | 2005             | 2004             | 2003           | 2002
------------------------------------------------- | ---------------- | ---------------- | ---------------- | -------------- | --------------
net earnings                                      | $ 2529           | $ 1825           | $ 1266           | $ 1053         | $ 500
interest expense ( multiplied by 65% ( 65 % ) ) 1 | 235              | 241              | 276              | 317            | 378
return                                            | $ 2764           | $ 2066           | $ 1542           | $ 1370         | $ 878
average debt2 5                                   | $ 4727           | $ 5077           | $ 5932           | $ 6612         | $ 7491
average equity3 5                                 | 7686             | 7590             | 7015             | 6170           | 6853
average benefit plan adjustments3 45              | 2006             | 1545             | 1296             | 1504           | 341
average invested capital                          | $ 14419          | $ 14212          | $ 14243          | $ 14286        | $ 14685
return on invested capital                        | 19.2% ( 19.2 % ) | 14.5% ( 14.5 % ) | 10.8% ( 10.8 % ) | 9.6% ( 9.6 % ) | 6.0% ( 6.0 % )


table sets forth refined products sales by product group average sales price for last three years.
 refined product sales ( thousands of barrels per day ) 2009 2008 2007.
 we sell gasoline , gasoline blendstocks no.
 1 and no.
 2 fuel oils ( including kerosene , jet fuel diesel fuel ) to wholesale marketing customers in midwest , upper great plains  gulf coast southeastern regions of united states.
 sold 51 percent of gasoline volumes 87 percent of distillates volumes wholesale or spot market basis in 2009.
 demand for gasoline is seasonal in markets demand highest levels during summer months.
 blended ethanol into gasoline for over 20 years began expanding blending program in 2007  due to federal regulations require to use specified volumes of renewable fuels.
 ethanol volumes sold in blended gasoline were 60 mbpd in 2009, 54 mbpd in 2008 40 mbpd in 2007.
 future expansion or contraction of ethanol blending program driven by economics of ethanol supply government regulations.
 sell reformulated gasoline , also blended with ethanol  in parts of marketing territory  including : chicago, illinois ; louisville , kentucky ; northern kentucky ; milwaukee , wisconsin  hartford , illinois.
 also sell biodiesel-blended diesel in minnesota , illinois kentucky.
 produce propane at all seven refineries.
 propane primarily used for home heating cooking  feedstock within petrochemical industry  for grain drying fuel for trucks other vehicles.
 propane sales typically split evenly between home heating market and industrial consumers.
 we a producer and marketer of petrochemicals specialty products.
product availability varies by refinery includes benzene  cumene dilute naphthalene oil  molten maleic anhydride molten sulfur  propylene  toluene xylene.
 market propylene  cumene sulfur domestically to customers in chemical industry.
 sell maleic anhydride throughout united states canada.
 capacity to produce 1400 tons per day of anode grade coke at robinson refinery used to make carbon anodes for aluminum smelting industry 5500 tons per day of fuel grade coke at garyville refinery used for power generation miscellaneous industrial applications.
 in early 2009 discontinued production and sales of petroleum pitch and aliphatic solvents at catlettsburg refinery.
 produce and market heavy residual fuel oil or related components at all seven of refineries.
 another product of crude oil  heavy residual fuel oil  primarily used in utility ship bunkering ( fuel ) industries other more specialized uses of product.
 refinery based asphalt production capacity of up to 108 mbpd.
 market asphalt through 33 owned or leased terminals throughout midwest and southeast.
 broad customer base  including approximately 675 asphalt-paving contractors government entities ( states counties cities townships ) asphalt roofing shingle manufacturers.
 sell asphalt in wholesale and cargo markets via rail and barge.
 produce asphalt cements  polymer modified asphalt emulsified asphalt industrial asphalts.
 in 2007  acquired 35 percent interest in entity owns operates 110-million-gallon-per-year ethanol production facility in clymers , indiana.
we also own 50 percent interest in entity owns 110-million-gallon-per-year ethanol production facility in greenville , ohio.
 greenville plant began production in february 2008.
 both facilities managed by co-owner.

( thousands of barrels per day )           | 2009    | 2008     | 2007
------------------------------------------ | ------- | -------- | -------
gasoline                                   | 830     | 756      | 791
distillates                                | 357     | 375      | 377
propane                                    | 23      | 22       | 23
feedstocks and special products            | 75      | 100      | 103
heavy fuel oil                             | 24      | 23       | 29
asphalt                                    | 69      | 76       | 87
total                                      | 1378    | 1352     | 1410
average sales price ( dollars per barrel ) | $ 70.86 | $ 109.49 | $ 86.53


38 2013 ppg annual report form 10-k notes to consolidated financial statements 1.
 summary of significant accounting policies principles of consolidation consolidated financial statements include accounts of ppg industries , inc.
 ( 201cppg 201d or 201ccompany 201d ) all subsidiaries , both u. s.
 and non-u. s. , it controls.
 ppg owns more than 50% ( 50 % ) of voting stock of most subsidiaries it controls.
 for consolidated subsidiaries in company 2019s ownership less than 100% ( 100 % ), outside shareholders 2019 interests shown as noncontrolling interests.
 investments in companies ppg owns 20% ( 20 % ) to 50% ( 50 % ) of voting stock ability exercise significant influence over operating financial policies of investee accounted for using equity method of accounting.
 ppg 2019s share of earnings or losses of equity affiliates included in consolidated statement of income ppg 2019s share of these companies 2019 shareholders 2019 equity included in "investments" in consolidated balance sheet.
 transactions between ppg and subsidiaries eliminated in consolidation.
 use of estimates in preparation of financial statements preparation of financial statements in conformity with u. s.
 generally accepted accounting principles requires management to make estimates assumptions affect reported amounts assets liabilities disclosure of contingent assets liabilities at date of financial statements reported amounts income and expenses during reporting period.
 such estimates include fair value of assets acquired liabilities assumed result of allocations of purchase price of business combinations.
 actual outcomes could differ from estimates.
 revenue recognition company recognizes revenue when earnings process complete.
revenue from sales recognized by all operating segments when goods shipped title to inventory risk of loss passes to customer or services rendered.
 shipping and handling costs amounts billed to customers for shipping handling reported in 201cnet sales 201d consolidated statement of income.
 shipping and handling costs incurred by company for delivery of goods to customers included in 201ccost of sales  exclusive of depreciation and amortization 201d consolidated statement of income.
 selling , general and administrative costs amounts presented as 201cselling , general administrative 201d income comprised of selling  customer service  distribution advertising costs costs of providing corporate- wide functional support in areas finance  law  human resources planning.
 distribution costs pertain to movement and storage of finished goods inventory at company- owned and leased warehouses  terminals other distribution facilities.
 advertising costs advertising costs expensed in year incurred totaled $ 345 million , $ 288 million and $ 245 million in 2013 , 2012 2011  respectively.
 research and development costs  primarily of employee related costs charged to expense as incurred.
 research and development costs for years ended december 31:.
 legal costs legal costs expensed as incurred.
 legal costs incurred by ppg include legal costs associated with acquisition and divestiture transactions  general litigation  environmental regulation compliance  patent and trademark protection other general corporate purposes.
 foreign currency translation functional currency of significant non-u.
 operations is local currency.
 assets and liabilities of operations translated into.
 dollars using year-end exchange rates income and expenses translated using average exchange rates for reporting period.
 unrealized foreign currency translation adjustments deferred in accumulated other comprehensive loss separate component of shareholders 2019 equity.
cash equivalents are highly liquid investments ( valued at cost approximates fair value ) acquired with original maturity three months or less.
 short-term investments are highly liquid  high credit quality investments ( valued at cost plus accrued interest ) stated maturities greater than three months to one year.
 purchases and sales classified as investing activities in consolidated statement of cash flows.
 marketable equity securities company 2019s investment in marketable equity securities recorded at fair market value reported in 201cother current assets 201d and 201cinvestments 201d in consolidated balance sheet with changes in fair market value recorded in income for securities as trading securities and other comprehensive income net of tax for available for sale securities.

( millions )                             | 2013  | 2012  | 2011
---------------------------------------- | ----- | ----- | -----
research and development 2013 total      | $ 505 | $ 468 | $ 443
less depreciation on research facilities | 17    | 15    | 15
research and development net             | $ 488 | $ 453 | $ 428


adobe systems incorporated notes to consolidated financial statements continued note 8.
 other assets assets as of november 27 , 2009 and november 28 , 2008 consisted of in thousands ) :.
 acquired rights to use technology purchased during fiscal 2009 and fiscal 2008 was $ 6. 0 million and $ 100. 4 million .
 cost for fiscal 2008  estimated $ 56. 4 million related to future licensing rights capitalized amortized straight-line basis over estimated useful lives up to fifteen years.
 remaining costs for fiscal 2008  estimated $ 27. 2 million related to historical use of licensing rights expensed as cost of sales residual of $ 16. 8 million for fiscal 2008 expensed as general and administrative costs.
 ability to acquire additional rights to use technology in future.
 see note 17 for further information contractual commitments.
 acquired rights to use technology amortized over estimated useful lives of 3 to 15 years.
 included in investments are indirect investments through limited partnership interest in adobe ventures of approximately $ 37. 1 million and $ 39. 0 million as of november 27, 2009 and november 28 , 2008  consolidated in accordance with provisions for consolidating variable interest entities.
 partnership controlled by granite ventures  independent venture capital firm and sole general partner of adobe ventures.
 we are primary beneficiary of adobe ventures and bear all risks and rewards related to ownership.
 investment in adobe ventures not significant impact on our consolidated financial position results of operations or cash flows.
 adobe ventures carries investments in equity securities at estimated fair value investment gains and losses included in consolidated statements of income.
all investments held by adobe ventures at november 27 , 2009 and november 28 , 2008 not publicly traded no established market for these securities.
 to determine fair value of these investments we use recent round of financing involving new non-strategic investors or estimates of current market value by granite ventures.
 our policy to evaluate fair value of these investments by adobe ventures our direct investments  on regular basis.
 this evaluation includes reviewing each company 2019s cash position , financing needs , earnings and revenue outlook  operational performance  management and ownership changes and competition.
 in case of privately-held companies evaluation based on information we request from these companies.
 information not subject to same disclosure regulations as.
 publicly traded companies basis for evaluations subject to timing and accuracy of data received from these companies.
 see note 4 for further information regarding adobe ventures.
 also included in investments are our direct investments in privately-held companies of approximately $ 26. 4 million and $ 37. 6 million as of november 27 , 2009 and november 28 , 2008  accounted for based on cost method.
 we assess these investments for impairment in value as circumstances dictate.
 see note 4 for further information regarding cost method investments.
 we entered into purchase and sale agreement  effective may 12 , 2008 , for acquisition of real property in waltham , massachusetts.
 purchased property upon completion of construction of office building shell core parking structure  and site improvements.
 purchase price for property was $ 44. 7 million closed on june 16 , 2009.
 made initial deposit of $ 7. 0 million included in security and other deposits as of november 28 , 2008 remaining balance paid at closing.
deposit held in escrow until closing then applied to purchase price.

| 2009     | 2008
--------------------------------- | -------- | --------
acquired rights to use technology | $ 84313  | $ 90643
investments                       | 63526    | 76589
security and other deposits       | 11692    | 16087
prepaid royalties                 | 12059    | 9026
deferred compensation plan assets | 9045     | 7560
restricted cash                   | 4650     | 7361
prepaid land lease                | 3209     | 3185
prepaid rent                      | 1377     | 2658
other                             | 1394     | 3420
other assets                      | $ 191265 | $ 216529


company has restricted stock plan for non-employee directors reserves for issuance of 300000 shares of company 2019s common stock.
 no restricted shares issued in 2009.
 company has directors 2019 deferral plan provides means to defer director compensation from time to time on deferred stock or cash basis.
 as of september 30 , 2009  86643 shares held in trust 4356 shares represented directors 2019 compensation in 2009 with provisions plan.
 under plan unfunded directors have unsecured contractual commitment from company.
 has deferred compensation plan allows highly-compensated employees including executive officers to defer salary annual incentive awards and equity-based compensation.
 as of september 30 , 2009 557235 shares were issuable under this plan.
 note 16 2014 earnings per share weighted average common shares used in computations of basic and diluted earnings per share for years ended september 30 were as follows:.
 average common and equivalent shares outstanding 2014 assuming dilution.
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 246798 252681 254810 note 17 2014 segment data company 2019s organizational structure based upon three principal business segments : medical ( 201cmedical 201d diagnostics ( 201cdiagnostics 201d ) and biosciences ( 201cbiosciences 201d ).
principal product lines in medical segment include needles  syringes intravenous catheters for medication delivery ; safety-engineered auto-disable devices ; prefilled iv flush syringes ; syringes pen needles for self-injection of insulin other drugs in treatment diabetes ; prefillable drug delivery devices pharmaceutical companies sold end-users as drug/device combinations ; surgical blades/scalpels regional anesthesia needles trays critical care monitoring devices ophthalmic surgical instruments sharps disposal containers.
 principal products services in diagnostics segment include integrated systems for specimen collection ; safety-engineered specimen blood collection products systems ; plated media automated blood culturing systems molecular testing systems for sexually transmitted diseases healthcare-associated infections microorganism identification drug susceptibility systems liquid-based cytology systems for cervical cancer screening rapid diagnostic assays.
 principal product lines biosciences segment include fluorescence activated cell sorters analyzers ; cell imaging systems monoclonal antibodies kits for cell analysis reagent systems for life sciences research tools drug discovery growth of tissue cells cell culture media supplements for biopharmaceutical manufacturing diagnostic assays.
 company evaluates performance business segments based operating income.
 segment operating income represents revenues reduced by product costs operating expenses.
 company hedges against forecasted sales of u. s. -produced products sold outside united states.
 gains losses associated with foreign currency translation hedges reported in segment revenues based upon proportionate share of international sales of u. s. -produced products.
 becton , dickinson company notes to consolidated financial statements 2014 ( )

| 2009   | 2008   | 2007
----------------------------------------------------------------------------- | ------ | ------ | ------
average common shares outstanding                                             | 240479 | 244323 | 244929
dilutive share equivalents from share-based plans                             | 6319   | 8358   | 9881
average common and common equivalent sharesoutstanding 2014 assuming dilution | 246798 | 252681 | 254810


retail electric price variance due to increase in formula rate plan revenues implemented with first billing cycle of march 2016 collect estimated first-year revenue requirement related to purchase of power blocks 3 and 4 of union power station march 2016 provision recorded 2016 related to settlement of waterford 3 replacement steam generator prudence review proceeding.
 see note 2 to financial statements for discussion of formula rate plan revenues waterford 3 replacement steam generator prudence review proceeding.
 louisiana act 55 financing savings obligation variance results from regulatory charge recorded in 2016 for tax savings shared with customers per agreement approved by lpsc.
 tax savings resulted from 2010-2011 irs audit settlement on treatment louisiana act 55 financing of storm costs for hurricane gustav and hurricane ike.
 see note 3 to financial statements for discussion settlement benefit sharing.
 volume/weather variance due to effect of less favorable weather on residential and commercial sales decreased usage during unbilled sales period.
 decrease partially offset by increase of 1237 gwh  or 4% ( 4 % ) in industrial usage due to increase in demand from existing customers expansion projects in chemicals industry.
 2016 compared to 2015 net revenue consists of operating revenues net of fuel , fuel-related expenses  gas purchased for resale 2 purchased power expenses  3 other regulatory charges.
 analysis of change in net revenue comparing 2016 to 2015.
 amount ( in millions ).
 retail electric price variance due to increase in formula rate plan revenues implemented with first billing cycle of march 2016 collect estimated first-year revenue requirement related to purchase of power blocks 3 and 4 union power station.
 see note 2 to financial statements for further discussion.
volume/weather variance primarily due to effect less favorable weather on residential sales partially offset by increase in industrial usage increase volume during unbilled period.
 increase in industrial usage due to increased demand from new customers expansion projects primarily in chemicals industry.
 louisiana act 55 financing savings obligation variance results from regulatory charge for tax savings shared with customers per agreement approved by lpsc.
 tax savings resulted from 2010-2011 irs audit settlement on treatment louisiana act 55 financing of storm costs for hurricane gustav and hurricane ike.
 see note 3 to financial statements for additional discussion of settlement benefit sharing.
 included in provision of $ 23 million recorded in 2016 related to settlement of waterford 3 replacement steam generator prudence review proceeding offset by provision of $ 32 million recorded in 2015 related to uncertainty associated with resolution of waterford 3 replacement steam generator prudence entergy louisiana, llc subsidiaries management 2019s financial discussion and analysis

| amount ( in millions )
--------------------------------------------- | ----------------------
2015 net revenue                              | $ 2408.8
retail electric price                         | 62.5
volume/weather                                | -6.7 ( 6.7 )
louisiana act 55 financing savings obligation | -17.2 ( 17.2 )
other                                         | -9.0 ( 9.0 )
2016 net revenue                              | $ 2438.4


consolidated financial statements 2013 amounts in millions except per share amounts assumptions affect estimate fair value results operations impacted.
 no stock options granted during years ended december 31 2015 and 2014.
 weighted-average grant-date fair value per option year ended december 31 2013 was $ 4. 14.
 fair value of each option grant estimated with weighted-average assumptions.
 expected volatility 1.
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 40. 2% ( 40. 2 % ) expected term ( years ) 2.
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 6. 9 risk-free interest rate 3.
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 1. 3% ( 1. 3 % ) expected dividend yield 4.
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 2. 4% ( 2. 4 % ) 1 expected volatility to estimate fair value of stock options based on blend of historical volatility of common stock for periods equal expected term stock options implied volatility of tradable forward put call options to purchase and sell shares common stock.
2 estimate of expected term based on average of i ) assumption all outstanding options exercised upon achieving full vesting date and ii ) assumption all outstanding options exercised at midpoint between current date (. date awards have ratably vested through ) and full contractual term.
 determining estimate considered several factors including historical option exercise behavior of employees terms and vesting periods of options.
 risk-free interest rate determined using implied yield available for zero-coupon u. s.
 government issuers with remaining term equal to expected term of options.
 4 expected dividend yield calculated based on annualized dividend of $ 0. 30 per share in 2013.
 stock-based compensation we grant other stock-based compensation awards stock-settled awards, cash-settled awards performance- based awards ( settled in cash or shares ) to certain key employees.
 number of shares or units received by employee for performance-based awards depends on company performance against specific performance targets could range from 0% ( 0 % ) to 300% ( 300 % ) of target amount of shares originally granted.
 incentive awards subject to restrictions and vesting requirements as determined by compensation committee.
 fair value of shares on grant date amortized over vesting period generally three years.
 upon completion of vesting period for cash-settled awards grantee entitled to receive payment in cash based on fair market value of corresponding number of shares of common stock.
 no monetary consideration paid by recipient for any incentive award.
 fair value of cash-settled awards adjusted each quarter based on share price.
 holders of stock-settled awards have absolute ownership interest in underlying shares of common stock prior to vesting includes right to vote and receive dividends.
 dividends declared on common stock accrued during vesting period and paid when award vests.
holders of cash-settled performance-based awards have no ownership interest in underlying shares of common stock until awards vest shares common stock are issued.

| year ended december 31 2013
------------------------- | ---------------------------
expected volatility1      | 40.2% ( 40.2 % )
expected term ( years ) 2 | 6.9
risk-free interest rate3  | 1.3% ( 1.3 % )
expected dividend yield4  | 2.4% ( 2.4 % )


contribution incurred in 2013 foreign currency remeasurement partially offset by $ 50 million reduction of indemnification asset.
 adjusted.
 expense increased $ 362 million or 6% ( 6 % ) to $ 6518 million in 2014 from $ 6156 million in 2013.
 increase in total expense attributable to higher employee compensation benefits direct fund expense.
 amounts related to reduction of indemnification asset charitable contribution excluded from adjusted results.
 2013 compared with 2012.
 expense increased $ 510 million or 9% ( 9 % ) from 2012 reflecting higher revenue-related expense $ 124 million expense related to charitable contribution.
 employee compensation benefits expense increased $ 273 million or 8% ( 8 % ) to $ 3560 million in 2013 from $ 3287 million in 2012 reflecting higher headcount higher incentive compensation driven by higher operating income higher performance fees.
 employees at december 31 , 2013 totaled approximately 11400 compared with 10500 at december 31 2012.
 distribution and servicing costs totaled $ 353 million in 2013 compared with $ 364 million in 2012.
 costs included payments to bank of america/merrill lynch global distribution agreement payments to pnc other third parties associated with distribution servicing of client investments in blackrock products.
 distribution servicing costs for 2013 and 2012 included $ 184 million and $ 195 million attributable to bank of america/merrill lynch.
 direct fund expense increased $ 66 million reflecting higher average aum related to ishares blackrock pays certain nonadvisory expense funds.
 general and administration expense increased $ 181 million driven by $ 124 million expense related to charitable contribution higher marketing promotional costs lease exit costs.
 full year 2012 included one-time $ 30 million contribution to stifs.
adjusted.
 expense  increased $ 393 million or 7% ( 7 % ) to $ 6156 million in 2013 from $ 5763 million 2012.
 increase total expense primarily attributable to higher employee compensation benefits direct fund expense general administration expense.
 nonoperating results income expense ) less net income ( loss ) attributable to nci for 2014 2013 2012 follows : ( in millions ) 2014 2013 2012 nonoperating income expense ) $ ( 79 ) $ 116 $ ( 54 ) less net income ( loss ) attributable to nci ( 1 ) ( 30 ) 19 ( 18 ) nonoperating income ( expense ) ( 2 ) ( 49 ) 97 ( 36 ) gain related to charitable contribution 2014 ( 80 ) 2014 compensation expense related to appreciation ) depreciation on deferred compensation plans ( 7 ) ( 10 ) ( 6 ) nonoperating income ( expense ) adjusted ( 2 ) $ ( 56 ) $ 7 $ ( 42 ) ( 1 ) included losses of $ 41 million and $ 38 million attributable to consolidated variable interest entities for 2014 2012.
 during 2013 company record nonoperating income ( loss ) or net income ( loss ) attributable to vies on consolidated statements of income.
 2 ) net net income ( loss ) attributable to nci.
 contribution incurred in 2013 foreign currency remeasurement partially offset by $ 50 million reduction of indemnification asset.
 adjusted.
 expense increased $ 362 million or 6% ( 6 % ) to $ 6518 million in 2014 from $ 6156 million 2013.
 increase in total expense primarily attributable to higher employee compensation benefits direct fund expense.
 amounts related to reduction of indemnification asset charitable contribution excluded from adjusted results.
 2013 compared with 2012.
expense increased $ 510 million or 9% ( 9 % )  from 2012 reflecting higher revenue-related expense $ 124 million expense to charitable contribution.
 employee compensation and benefits expense increased $ 273 million or 8% ( 8 % ) to $ 3560 million in 2013 from $ 3287 million in 2012 reflecting higher headcount higher incentive compensation driven by higher operating income higher performance fees.
 employees at december 31 , 2013 totaled approximately 11400 compared with 10500 at december 2012.
 distribution and servicing costs totaled $ 353 million in 2013 compared with $ 364 million in 2012.
 costs included payments to bank of america/merrill lynch payments to pnc  other third parties associated with distribution servicing of client investments in blackrock products.
 distribution and servicing costs for 2013 and 2012 included $ 184 million and $ 195 million attributable to bank of america/merrill lynch.
 direct fund expense increased $ 66 million reflecting higher average aum related to ishares  blackrock pays nonadvisory expense funds.
 general and administration expense increased $ 181 million driven by $ 124 million expense to charitable contribution higher marketing and promotional costs lease exit costs.
 full year 2012 included one-time $ 30 million contribution to stifs.
 adjusted.
 expense  increased $ 393 million or 7% ( 7 % ) to $ 6156 million in 2013 from $ 5763 million in 2012.
 increase in total expense attributable to higher employee compensation and benefits direct fund expense general and administration expense.
nonoperating results income expense ) less net income loss ) to nci for 2014 2013 2012 : in millions ) 2014 2013 2012 nonoperating income expense ) gaap basis $ ( 79 ) $ 116 $ ( 54 ) less net income ( loss ) attributable to nci ( 1 ) ( 30 ) 19 ( 18 ) nonoperating income expense ) ( 2 ) ( 49 ) 97 ( 36 ) gain related charitable contribution 2014 ( 80 ) 2014 compensation expense related appreciation depreciation deferred compensation plans ( 7 ) ( 10 ) ( 6 ) nonoperating income expense ) adjusted ( 2 ) $ ( 56 ) $ 7 $ ( 42 ) ( 1 ) amounts included losses of $ 41 million and $ 38 million consolidated variable interest entities ( ) for 2014 2012 .
 2013  company record nonoperating income loss or net income ( loss ) vies consolidated statements income.
 ( 2 ) net net income ( loss ) attributable to nci.

( in millions )                                                                              | 2014         | 2013       | 2012
-------------------------------------------------------------------------------------------- | ------------ | ---------- | ------------
nonoperating income ( expense ) gaap basis                                                   | $ -79 ( 79 ) | $ 116      | $ -54 ( 54 )
less : net income ( loss ) attributableto nci ( 1 )                                          | -30 ( 30 )   | 19         | -18 ( 18 )
nonoperating income ( expense ) ( 2 )                                                        | -49 ( 49 )   | 97         | -36 ( 36 )
gain related to the charitable contribution                                                  | 2014         | -80 ( 80 ) | 2014
compensation expense related to ( appreciation ) depreciation on deferred compensation plans | -7 ( 7 )     | -10 ( 10 ) | -6 ( 6 )
nonoperating income ( expense ) asadjusted ( 2 )                                             | $ -56 ( 56 ) | $ 7        | $ -42 ( 42 )


54| duke realty corporation annual report 2009 net income ( loss ) per common share basic net income loss ) per common computed by dividing net income ( loss ) attributable to common shareholders less dividends on share-based awards expected to vest by weighted average number of common shares outstanding for period.
 diluted net income ( loss ) per common share computed by dividing sum of basic net income loss ) attributable to common shareholders and noncontrolling interest in earnings allocable to units not owned by us units dilutive ) by sum of weighted average number of common shares outstanding and limited partnership units outstanding potential dilutive securities for period.
 during first quarter of 2009  adopted new accounting standard ( fasb asc 260-10 ) on participating securities applied retrospectively to prior period calculations of basic and diluted earnings per common share.
 new standard certain share-based awards considered participating securities earn dividend equivalents not forfeited even if underlying award does not vest.
 following table reconciles components of basic and diluted net income ( loss ) per common share ( in thousands ) :.
 weighted average number of common shares and potential diluted securities 201206 154553 149250 ( 1 ) partnership units anti-dilutive for year ended december 31 , 2009 result of net loss for period.
 6687 units ( in thousands ) excluded from weighted average number of common shares and potential dilutive securities for year ended december 31 , 2009 $ 11099 noncontrolling interest in earnings of common unitholders thousands ) excluded from diluted net loss attributable to common shareholders for year ended december 31 , 2009.
( 2 ) excludes in thousands of shares ) 7872 ; 8219 1144 anti-dilutive shares for years ended december 31 , 2009 , 2008 2007 , respectively related to stock-based compensation plans.
 also excludes thousands shares ) exchangeable notes have 8089 ; 11771 11751 of anti-dilutive shares for years ended december 31, 2009 , 2008 2007  respectively.
 federal income taxes elected to be taxed as real estate investment trust ( 201creit 201d ) under internal revenue code of 1986 , as amended.
 to qualify as reit , must meet organizational operational requirements including requirement to distribute least 90% ( 90 % ) of adjusted taxable income to stockholders.
 management intends to continue adhere to these requirements maintain reit status.
 as reit entitled to tax deduction for some or all dividends we pay to shareholders.
 accordingly generally not subject to federal income taxes as long as distribute amount equal to or in excess of taxable income currently to shareholders.
 also generally subject to federal income taxes on any taxable income not currently distributed to shareholders.
 if fail to qualify as a reit in taxable year subject to federal income taxes may not able to qualify as a reit for four subsequent taxable years.
 reit qualification reduces but does not eliminate amount of state and local taxes we pay.
 financial statements include operations of taxable corporate subsidiaries not entitled to dividends paid deduction subject to corporate federal , state local income taxes.
 as reit  we may also be subject to certain federal excise taxes if engage in certain types of transactions.

| 2009                 | 2008           | 2007
-------------------------------------------------------------------------- | -------------------- | -------------- | --------------
net income ( loss ) attributable to common shareholders                    | $ -333601 ( 333601 ) | $ 50408        | $ 211942
less : dividends on share-based awards expected to vest                    | -1759 ( 1759 )       | -1631 ( 1631 ) | -1149 ( 1149 )
basic net income ( loss ) attributable to common shareholders              | -335360 ( 335360 )   | 48777          | 210793
noncontrolling interest in earnings of common unitholders ( 1 )            | -                    | 2640           | 13998
diluted net income ( loss ) attributable to common shareholders            | $ -335360 ( 335360 ) | $ 51417        | $ 224791
weighted average number of common shares outstanding                       | 201206               | 146915         | 139255
weighted average partnership units outstanding                             | -                    | 7619           | 9204
other potential dilutive shares ( 2 )                                      | -                    | 19             | 791
weighted average number of common shares and potential dilutive securities | 201206               | 154553         | 149250


fair value of grants receivable determined using discounted cash flow model discounts future cash flows using appropriate yield curve.
 as of december 28 , 2013  and december 29 , 2012  carrying amount of grants receivable classified within other current assets and long-term assets , applicable.
 our long-term debt recognized at amortized cost comprised of senior notes and convertible debentures.
 fair value of senior notes determined using active market prices classified as level 1.
 fair value of convertible long-term debt determined using discounted cash flow models with observable market inputs consideration variables interest rate changes , comparable securities , subordination discount  credit-rating changes  classified as level 2.
 nvidia corporation ( nvidia ) cross-license agreement liability in preceding table incurred as result of entering long-term patent cross-license agreement with nvidia in january 2011.
 agreed to make payments to nvidia over six years.
 as of december 28 , 2013 , and december 29 , 2012  carrying amount of liability arising from agreement classified within other accrued liabilities and other long-term liabilities  applicable.
 fair value determined using discounted cash flow model discounts future cash flows using incremental borrowing rates.
 note 5 : cash and investments cash investments at end of each period were as follows : ( in millions ) dec 28 , dec 29.
 in third quarter of 2013  sold shares in clearwire corporation , accounted for as available-for-sale marketable equity securities , and interest in clearwire communications , llc ( clearwire llc )  accounted for as equity method investment.
total received proceeds $ 470 million on transactions recognized gain $ 439 million included in gains ( losses ) on equity investments net on consolidated statements of income.
 proceeds received gains recognized for each investment included in "available-for-sale investments" and "equity method investments" sections follow.
 table of contents intel corporation notes to consolidated financial statements ( continued )

( in millions )                        | dec 282013 | dec 292012
-------------------------------------- | ---------- | ----------
available-for-sale investments         | $ 18086    | $ 14001
cash                                   | 854        | 593
equity method investments              | 1038       | 992
loans receivable                       | 1072       | 979
non-marketable cost method investments | 1270       | 1202
reverse repurchase agreements          | 800        | 2850
trading assets                         | 8441       | 5685
total cash and investments             | $ 31561    | $ 26302


2014 compared to 2013 mst 2019s net sales decreased $ 305 million  or 3% ( 3 % )  2014.
 net sales decreased $ 305 million due to wind-down completion of c4isr programs primarily ptds ) ; $ 85 million for undersea systems programs due to decreased volume deliveries $ 55 million related to settlements of contract cost matters on programs in 2013 not repeated in 2014 ( including terminated presidential helicopter program ).
 decreases partially offset by higher net sales of $ 80 million for integrated warfare systems and sensors programs due to increased volume primarily space fence ) $ 40 million for training and logistics solutions programs due to increased deliveries ( primarily close combat tactical trainer ).
 mst 2019s operating profit decreased $ 129 million or 12% ( 12 % )  in 2014 2013.
 decrease primarily attributable to lower operating profit of $ 120 million related to settlements of contract cost matters on programs in 2013 not repeated in 2014 including terminated presidential helicopter program ) $ 55 million due to lower c4isr program sales performance matters on international program $ 45 million due to higher reserves on training and logistics solutions programs.
 decreases partially offset by higher operating profit of $ 45 million for performance matters and reserves recorded in 2013 not repeated in 2014 $ 60 million for programs due to increased risk retirements ( including mh-60 and radar surveillance programs ).
 adjustments not related to volume  including net profit booking rate adjustments other matters approximately $ 85 million lower for 2014 compared to 2013.
 backlog backlog increased in 2015 compared to 2014 primarily due to addition of sikorsky backlog  higher orders on new program starts ( australian defence force pilot training system ).
 backlog increased in 2014 compared to 2013 primarily due to higher orders on new program starts ( space fence ).
expect mst 2019s 2016 net sales to increase mid-double digit percentage range compared to 2015 net sales due to inclusion sikorsky programs year partially offset by decline in volume due to wind-down or completion of certain programs.
 operating profit expected equivalent to 2015 on higher volume operating margin expected decline due to costs associated sikorsky acquisition including impact purchase accounting adjustments integration costs inherited restructuring costs with actions committed sikorsky prior to acquisition.
 space systems business segment engaged in research development design engineering production of satellites  strategic defensive missile systems space transportation systems.
 systems provides network-enabled situational awareness integrates complex global systems help customers gather analyze distribute critical intelligence data.
 responsible for classified systems services support vital national security systems.
 space systems 2019 major programs include trident ii d5 fleet ballistic missile ( fbm ) orion  space based infrared system ( sbirs )  aehf  gps-iii  geostationary operational environmental satellite r-series ( goes )  muos.
 operating profit for space systems business segment includes share of earnings for investment in ula  provides expendable launch services to u. s.
 government.
 space systems 2019 operating results included in millions ).
 2015 compared to 2014 space systems 2019 net sales in 2015 decreased $ 97 million  or 1% ( 1 % )  compared to 2014.
 decrease attributable to approximately $ 335 million lower net sales for government satellite programs due to decreased volume ( primarily aehf ) wind-down or completion of mission solutions programs approximately $ 55 million for strategic missile and defense systems due to lower volume.
 decreases partially offset by higher net sales of approximately $ 235 million for businesses acquired in 2014 approximately $ 75 million for orion program due to increased volume.

| 2015             | 2014             | 2013
------------------- | ---------------- | ---------------- | ----------------
net sales           | $ 9105           | $ 9202           | $ 9288
operating profit    | 1171             | 1187             | 1198
operating margins   | 12.9% ( 12.9 % ) | 12.9% ( 12.9 % ) | 12.9% ( 12.9 % )
backlog at year-end | $ 17400          | $ 20300          | $ 21400


increased investment in programming support subscriber growth  higher offer costs continued investment in presto  partially offset by lower depreciation expense from foxtel 2019s reassessment of useful lives of cable and satellite installations.
 net income decreased of lower operating income partially offset by lower income tax expense.
 other equity affiliates , net for fiscal year ended june 30 , 2016 includes losses primarily from company 2019s interests in draftstars and elara technologies  owns proptiger.
 interest  net 2014interest , net for fiscal year ended june 30 , 2016 decreased $ 13 million, or 23% ( 23 % ) compared to fiscal 2015 primarily due to negative impact of foreign currency fluctuations and interest expense associated with rea facility.
 ( see note 9 to consolidated financial statements ).
 other net 2014 for fiscal years ended june 30.
 rea group recognized gain of $ 29 million from revaluation of previously held equity interest in iproperty during fiscal year ended june 30 , 2016.
 see note 3 to consolidated financial statements ).
 company recorded write-offs and impairments of certain investments in fiscal years ended june 30 , 2016 and 2015.
 write-offs impairments taken result of deteriorating financial position of investee or due to other-than-temporary impairment from sustained losses limited prospects for recovery.
 see note 6 to consolidated financial statements. in august 2014  rea group completed sale of minority interest in marketable securities for total cash consideration of $ 104 million.
 sale rea group recognized pre-tax gain of $ 29 million reclassified out of accumulated other comprehensive income included in other , net in statement of operations.
income tax benefit ( expense ) 2014the company 2019s income tax benefit and effective tax rate for fiscal year ended june 30  2016 were $ 54 million and ( 30% ( 30 % ) )  respectively compared to income tax expense and effective tax rate of $ 185 million and 34% ( 34 % )  for fiscal 2015.
 fiscal years ended june 30  2016 company recorded tax benefit of $ 54 million on pre-tax income of $ 181 million effective tax rate lower than u. s.
 statutory tax.
 lower tax rate due to tax benefit of approximately $ 106 million related to release of established valuation allowances certain u.
 federal net operating losses and state deferred tax assets.
 benefit recognized with management 2019s plan to dispose of company 2019s digital education business in first quarter of fiscal 2016  company expects to generate sufficient.
 taxable income to utilize deferred tax assets prior to expiration.
 effective tax rate impacted by $ 29 million non-taxable gain from revaluation of rea group 2019s previously equity interest in iproperty.
 for fiscal year ended june 30 , 2015 company 2019s effective tax rate lower than u.
 statutory tax rate due to impact from foreign operations subject to lower tax rates partially offset by impact of nondeductible items and changes in accrued liabilities for uncertain tax positions.
 ( see note 18 to consolidated financial statements ).

( in millions )                                                       | for the fiscal years ended june 30 , 2016 | for the fiscal years ended june 30 , 2015
--------------------------------------------------------------------- | ----------------------------------------- | -----------------------------------------
gain on iproperty transaction ( a )                                   | $ 29                                      | $ 2014
impairment of marketable securities and cost method investments ( b ) | -21 ( 21 )                                | -5 ( 5 )
gain on sale of marketable securities ( c )                           | 2014                                      | 29
dividends received from cost method investments                       | 2014                                      | 25
gain on sale of cost method investments                               | 2014                                      | 15
other                                                                 | 10                                        | 11
total other net                                                       | $ 18                                      | $ 75


future minimum lease commitments under leases at december 31 , 2010 are as follows ( in thousands ) : years ending december 31:.
 rental expense for operating leases was approximately $ 66. 9 million , $ 57. 2 million and $ 49. 0 million during years ended december 31 , 2010 , 2009 and 2008 , respectively.
 in connection with acquisitions of businesses , we entered agreements with sellers of businesses , some became stockholders of acquisitions for lease of certain properties used in our operations.
 typical lease terms include initial term of five years  three to five five-year renewal options and purchase options various times throughout lease periods.
 we maintain right of first refusal concerning sale of leased property.
 lease payments to employee who became officer of company after acquisition business were approximately $ 1. 0 million , $ 0. 9 million and $ 0. 9 million during each years ended december 31 , 2010 , 2009 and 2008 ,.
 we guarantee residual values of majority of truck and equipment operating leases.
 residual values decline over lease terms to defined percentage of original cost.
 in event lessor not realize residual value when equipment is sold we be responsible for portion of shortfall.
 if lessor realizes more than residual value when equipment is sold  we would be paid amount realized over residual value.
 had terminated all operating leases subject to guarantees at december 31 , 2010 , guaranteed residual value would have totaled approximately $ 31. 4 million.
 not recorded a liability for guaranteed residual value of equipment under operating leases as recovery on disposition of equipment under leases expected to approximate guaranteed residual value.
litigation related contingencies in december 2005 may 2008 , ford global technologies , llc filed complaints with international trade commission against us others alleging certain aftermarket parts imported into u. s.
 infringed on ford design patents.
 parties settled matters in april 2009 settlement arrangement expires september 2011.
 pursuant settlement  we ( and our designees ) became sole distributor in u. s.
 of aftermarket automotive parts correspond to ford collision parts covered by u. s.
 design patent.
 we paid ford upfront fee for rights will pay royalty for each such part we sell.
 amortization of upfront fee royalty expenses reflected in cost of goods sold on accompanying consolidated statements of income.
 have certain other contingencies resulting from litigation , claims other commitments subject to variety of environmental pollution control laws regulations incident to ordinary course of business.
 expect resolution of contingencies will not materially affect our financial position , results of operations or cash flows.

2011                          | $ 62465
----------------------------- | --------
2012                          | 54236
2013                          | 47860
2014                          | 37660
2015                          | 28622
thereafter                    | 79800
future minimum lease payments | $ 310643


catlettsburg , kentucky refinery  map completed $ 440 million multi-year investment program to upgrade product yield realizations reduce fixed variable manufacturing expenses.
 program involves expansion , conversion retirement of refinery processing units improving profitability allow refinery begin producing low-sulfur ( tier 2 ) gasoline.
 project startup first quarter of 2004.
 fourth quarter of 2003  map commenced $ 300 million in new capital projects for 74000 bpd detroit , michigan refinery.
 one projects $ 110 million expansion project , expected to raise crude oil capacity refinery by 35 percent to 100000 bpd.
 other projects expected to enable refinery produce new clean fuels control regulated air emissions.
 completion of projects scheduled for fourth quarter of 2005.
 marathon will loan map funds necessary for upgrade expansion projects.
 marketing in 2003  map 2019s refined product sales volumes ( excluding matching buy/sell transactions ) totaled 19. 8 billion gallons ( 1293000 bpd ).
 excluding sales related to matching buy/sell transactions  wholesale distribution of petroleum products to private brand marketers large commercial industrial consumers primarily located in midwest, upper great plains southeast  sales in spot market  accounted for 70 percent of map 2019s refined product sales volumes in 2003.
 approximately 50 percent of map 2019s gasoline volumes 91 percent of distillate volumes sold wholesale or spot market basis to independent unbranded customers or other wholesalers in 2003.
 approximately half of map 2019s propane sold into home heating markets industrial consumers purchase balance.
 propylene , cumene , aromatics , aliphatics , sulfur marketed to customers in chemical industry.
 base lube oils slack wax sold throughout united states.
 pitch sold domestically approximately 13 percent pitch products exported into growing markets canada mexico india south america.
 map markets asphalt through owned leased terminals throughout midwest southeast.
 map customer base includes approximately 900 asphalt-paving contractors government entities ( states counties cities townships ) asphalt roofing shingle manufacturers.
 following table volume of map 2019s consolidated refined product sales by product group for last three years : refined product sales ( thousands of barrels per day ) 2003 2002 2001.
 map sells reformulated gasoline in marketing territory primarily chicago , illinois louisville , kentucky northern kentucky milwaukee , wisconsin.
 map sells low-vapor-pressure gasoline in nine states.
 as of december 31 , 2003  map supplied petroleum products to approximately 3900 marathon ashland branded retail outlets primarily in michigan , ohio indiana kentucky illinois.
 branded retail outlets also located in florida , georgia , wisconsin , west virginia, minnesota, tennessee, virginia pennsylvania north carolina south carolina alabama.

( thousands of barrels per day )            | 2003 | 2002 | 2001
------------------------------------------- | ---- | ---- | ----
gasoline                                    | 776  | 773  | 748
distillates                                 | 365  | 346  | 345
propane                                     | 21   | 22   | 21
feedstocks and special products             | 97   | 82   | 71
heavy fuel oil                              | 24   | 20   | 41
asphalt                                     | 74   | 75   | 78
total                                       | 1357 | 1318 | 1304
matching buy/sell volumes included in above | 64   | 71   | 45