note 17 financial derivatives use derivative financial instruments ) to manage exposure to interest rate market credit risk reduce effects changes in interest rates on net income fair value of assets liabilities cash flows.
 also enter into derivatives with customers to facilitate risk management activities.
 derivatives represent contracts between parties require little or no initial net investment result in one party delivering cash or another asset to other party based on notional amount underlying as specified in contract.
 derivative transactions often measured in terms of notional amount  amount not exchanged not recorded on balance sheet.
 notional amount is basis to underlying applied to determine required payments under derivative contract.
 underlying is referenced interest rate ( commonly libor ) security price  credit spread or other index.
 residential commercial real estate loan commitments associated with loans to be sold also qualify as derivative instruments.
 following table presents notional amounts gross fair values of all derivative assets liabilities held by pnc : table 127 : total gross derivatives.
 ( a ) included in other assets on consolidated balance sheet.
 ( b ) included in other liabilities on consolidated balance sheet.
 all derivatives carried on consolidated balance sheet at fair value.
 derivative balances presented on consolidated balance sheet on net basis consideration effects of legally enforceable master netting agreements related cash collateral exchanged with counterparties.
 further discussion regarding rights of setoff associated with legally enforceable master netting agreements included in offsetting , counterparty credit risk  contingent features section below.
 exposure related to risk participations sold protection discussed in credit derivatives section below.
 nonperformance risk  including credit risk  included in determination of estimated net fair value of derivatives.
 further discussion on how derivatives accounted for included in note 1 accounting policies.
derivatives designated as hedging instruments under gaap derivatives to manage interest rate risk asset and liability risk management activities are designated as accounting hedges under gaap.
 derivatives hedging risks with changes in fair value of assets or liabilities considered fair value hedges  derivatives hedging variability of expected future cash flows considered cash flow hedges  derivatives hedging net investment in foreign subsidiary considered net investment hedges.
 designating derivatives as accounting hedges allows for gains and losses on derivatives recognized in income statement in same period hedged items affect earnings.
 pnc financial services group , inc.
 2013 form 10-k 189

in millions                                                  | december 31 2013 notional/contractamount | december 31 2013 assetfairvalue ( a ) | december 31 2013 liabilityfairvalue ( b ) | december 31 2013 notional/contractamount | december 31 2013 assetfairvalue ( a ) | liabilityfairvalue ( b )
------------------------------------------------------------ | ---------------------------------------- | ------------------------------------- | ----------------------------------------- | ---------------------------------------- | ------------------------------------- | ------------------------
derivatives designated as hedging instruments under gaap     | $ 36197                                  | $ 1189                                | $ 364                                     | $ 29270                                  | $ 1872                                | $ 152
derivatives not designated as hedging instruments under gaap | 345059                                   | 3604                                  | 3570                                      | 337086                                   | 6696                                  | 6458
total gross derivatives                                      | $ 381256                                 | $ 4793                                | $ 3934                                    | $ 366356                                 | $ 8568                                | $ 6610


increased over 4% ( 4 % ) in 2005  costs for trucking services intermodal carriers remained flat reduced expenses network inefficiencies.
 higher diesel fuel prices increased sales use taxes 2005 resulted in higher state local taxes.
 contract expenses for equipment maintenance services increased 2005.
 2005 january west coast storm hurricanes katrina rita contributed to higher expenses 2005 net of insurance settlements received ).
 partially offsetting increases reduction in relocation expenses higher relocation costs moving support personnel to omaha  nebraska during 2004.
 non-operating items millions of dollars 2006 2005 2004 % ( % ) change 2006 v 2005 % ( % ) change 2005 v 2004.
 other income 2013 lower net gains from non-operating asset sales higher expenses due to rising interest rates sale of receivables program resulted reduction in other income in 2006 partially offset by higher rental income for right-of-way including 2006 settlements of rate disputes prior years ) cash investment returns due to higher interest rates.
 2005  other income increased higher gains from real estate sales offset by higher expenses due to rising interest rates sale of receivables program.
 interest expense 2013 lower interest expense in 2006 2005 due to declining weighted-average debt levels of $ 7. 1 billion , $ 7. 8 billion  $ 8. 1 billion in 2006  2005 2004.
 higher effective interest rate of 6. 7% ( 6. 7 % ) in 2006  compared 6. 5% ( 6. 5 % ) in 2005 and 2004 partially offset effects declining debt level.
 income taxes 2013 income tax expense $ 509 million higher in 2006 than 2005.
 higher pre-tax income resulted in additional taxes of $ 414 million and $ 118 million increase from one-time reduction in 2005.
 effective tax rate was 36.4% ( 36. 4 % ) and 28. 6% ( 28. 6 % ) in 2006 and 2005  respectively.
 income taxes greater in 2005 than 2004 due to higher pre-tax income offset by previously reported reduction in income tax expense.
 quarterly report on form 10-q quarter ended june 30 , 2005  corporation analyzed impact final settlements of pre-1995 tax years on recorded estimates deferred tax assets liabilities.
 completed analysis of final settlements for pre-1995 tax years internal revenue service examination reports for tax years 1995 through 2002 considered in review re-evaluation of corporation 2019s estimated deferred tax assets liabilities as of september 30, 2005  resulting in income tax expense reduction of $ 118 million in

millions of dollars | 2006         | 2005         | 2004         | % (  % ) change 2006 v 2005 | % (  % ) change 2005 v 2004
------------------- | ------------ | ------------ | ------------ | --------------------------- | ---------------------------
other income        | $ 118        | $ 145        | $ 88         | ( 19 ) % (  % )             | 65% ( 65 % )
interest expense    | -477 ( 477 ) | -504 ( 504 ) | -527 ( 527 ) | -5 ( 5 )                    | -4 ( 4 )
income taxes        | -919 ( 919 ) | -410 ( 410 ) | -252 ( 252 ) | 124                         | 63


item 7.
 management 2019s discussion analysis of financial condition results of operations management 2019s discussion analysis of financial condition results of operations ( md&a ) provided in addition to accompanying consolidated financial statements and notes to assist readers in understanding our results of operations , financial condition  cash flows.
 md&a organized follows : 2022 overview.
 discussion of our business analysis of financial other highlights affecting company provide context for remainder of md&a.
 2022 critical accounting estimates.
 accounting important to understanding assumptions judgments in reported financial results forecasts.
 2022 results of operations.
 analysis of financial results comparing 2013 to 2012 comparing 2012 to 2022 liquidity and capital resources.
 analysis of changes in balance sheets cash flows  discussion of financial condition potential sources of liquidity.
 2022 fair value of financial instruments.
 discussion of methodologies used in valuation of financial instruments.
 2022 contractual obligations and off-balance-sheet arrangements.
 overview of contractual obligations  contingent liabilities  commitments  off-balance-sheet arrangements outstanding as of december 28 , 2013  including expected payment schedule.
 various sections of md&a contain forward-looking statements involve risks uncertainties.
 words as 201canticipates , 201d 201cexpects  201d 201cintends  201cplans  201cbelieves  201d 201cseeks  201d 201cestimates  201d 201ccontinues  201d 201cmay  201d 201cwill  201d 201cshould  variations of such words similar expressions intended to identify forward-looking statements.
statements refer to projections of future financial performance , anticipated growth trends in businesses, uncertain events or assumptions  other characterizations of future events circumstances are forward-looking statements.
 such statements based on current expectations could be affected by uncertainties and risk factors described throughout this filing particularly in 201crisk factors 201d in part i , item 1a of form 10-k.
 actual results may differ materially  these forward-looking statements do not reflect potential impact of divestitures , mergers  acquisitions or other business combinations not completed as of february 14, 2014.
 overview results of operations for each period were follows:.
 revenue for 2013 was down 1% ( 1 % ) from 2012.
 pccg experienced lower platform unit sales in first half year saw offsetting growth in back half as pc market stabilization.
 dcg continued to benefit from build internet cloud computing strength of product portfolio resulting in increased platform volumes for dcg for year.
 higher factory start-up costs for next-generation 14nm process technology led to decrease in gross margin compared to 2012.
 in response to current business environment to align resources management approved restructuring actions including targeted workforce reductions exit of certain businesses and facilities.
 these actions resulted in restructuring and asset impairment charges of $ 240 million for 2013.
 table of contents

( dollars in millions except per share amounts ) | three months ended dec . 282013 | three months ended sept . 282013 | three months ended change | three months ended dec . 282013 | three months ended dec . 292012 | change
------------------------------------------------ | ------------------------------- | -------------------------------- | ------------------------- | ------------------------------- | ------------------------------- | ----------------
net revenue                                      | $ 13834                         | $ 13483                          | $ 351                     | $ 52708                         | $ 53341                         | $ -633 ( 633 )
gross margin                                     | $ 8571                          | $ 8414                           | $ 157                     | $ 31521                         | $ 33151                         | $ -1630 ( 1630 )
gross margin percentage                          | 62.0% ( 62.0 % )                | 62.4% ( 62.4 % )                 | ( 0.4 ) % (  % )          | 59.8% ( 59.8 % )                | 62.1% ( 62.1 % )                | ( 2.3 ) % (  % )
operating income                                 | $ 3549                          | $ 3504                           | $ 45                      | $ 12291                         | $ 14638                         | $ -2347 ( 2347 )
net income                                       | $ 2625                          | $ 2950                           | $ -325 ( 325 )            | $ 9620                          | $ 11005                         | $ -1385 ( 1385 )
diluted earnings per common share                | $ 0.51                          | $ 0.58                           | $ -0.07 ( 0.07 )          | $ 1.89                          | $ 2.13                          | $ -0.24 ( 0.24 )


for estimates of our oil sands mining reserves 33 years experience in petroleum engineering conducted surface mineable oil sands evaluations since 1986.
 member of spe  served as regional director from 1998 through 2001 registered practicing professional engineer in province of alberta.
 audits of estimates third-party consultants engaged to provide independent estimates for fields 80 percent of our total proved reserves over rolling four-year period for auditing in-house reserve estimates.
 met goal for four-year period ended december 31 , 2011.
 established tolerance level of 10 percent initial estimates by third-party consultants accepted if within 10 percent of our internal estimates.
 should third-party consultants 2019 initial analysis fail to reach tolerance level team and consultants re-examine information request additional data refine analysis if appropriate.
 resolution process continued until both estimates within 10 percent.
 process not result in significant changes to reserve estimates in 2011 or 2009.
 no third-party audits performed in 2010.
 during 2011  netherland , sewell & associates , inc.
 ( 201cnsai 201d ) prepared certification of december 31 , 2010 reserves for alba field in equatorial guinea.
 nsai summary report filed as exhibit to annual report on form 10-k.
 senior members of nsai team have over 50 years of industry experience worked for large international oil and gas companies before joining nsai.
 team lead has master of science in mechanical engineering member of spe.
 senior technical advisor has bachelor of science degree in geophysics member of society of exploration geophysicists, american association of petroleum geologists and european association of geoscientists and engineers.
 both licensed in state of texas.
 ryder scott company ( 201cryder scott 201d ) performed audits of several our fields in 2011 and 2009.
summary report on audits in 2011 exhibit to annual report on form 10-k.
 team lead for ryder scott has over 20 years industry experience worked for major international oil and gas company before ryder scott.
 has bachelor of science degree in mechanical engineering member of spe registered professional engineer in texas.
 corporate reserves group performs separate detailed technical reviews of reserve estimates for significant fields acquired recently or properties with other indicators excessively short or long lives performance above or below expectations changes in economic or operating conditions.
 changes in proved undeveloped reserves as of december 31 , 2011  395 mmboe of proved undeveloped reserves reported decrease of 10 mmboe from december 31 2010.
 table shows changes in total proved undeveloped reserves for 2011.
 significant additions to undeveloped reserves 2011 include 91 mmboe due to acreage acquisition in eagle ford shale 26 mmboe related to anadarko woodford shale development 10 mmboe for development drilling in bakken shale play 8 mmboe for additional drilling in norway.
 139 mmboe transferred from proved undeveloped to developed reserves due to startup jackpine upgrader expansion in canada.
 costs incurred in 2011 , 2010 2009 to development proved undeveloped reserves were $ 1107 million , $ 1463 million and $ 792 million.
 projects can remain in proved undeveloped reserves for extended periods in certain situations behind-pipe zones where reserves not accessed until primary producing zone depletes large development projects more than five years to complete timing of when additional gas compression needed.
 of 395 mmboe of proved undeveloped reserves at year end 2011 34 percent volume associated with projects included in proved reserves for more than five years.
majority of volume related to compression project in equatorial guinea sanctioned by our board of directors in 2004 expected to be completed by 2016.
 performance field exceeded expectations , estimates of initial dry gas place increased by roughly 10 percent between 2004 and 2010.
 production not expected to experience natural decline from facility-limited plateau production until 2014, or possibly 2015.
 timing of installation of compression driven by reservoir performance.

beginning of year                          | 405
------------------------------------------ | ------------
revisions of previous estimates            | 15
improved recovery                          | 1
purchases of reserves in place             | 91
extensions discoveries and other additions | 49
transfer to proved developed               | -166 ( 166 )
end of year                                | 395


note 2 2013 earnings per share weighted average number of shares outstanding used to compute earnings per common share follows ( in millions ) :.
 compute basic and diluted earnings per common share by dividing net earnings by weighted average number of common shares outstanding for periods presented.
 calculation of diluted earnings per common share includes dilutive effects for assumed vesting of outstanding restricted stock units ( rsus ) performance stock units ( psus ) exercise of outstanding stock options based on treasury stock method.
 no significant anti-dilutive equity awards for years ended december 31, 2018 , 2017 2016.
 note 3 2013 acquisition and divestitures consolidation of awe management limited on august 24, 2016 increased ownership interest in awe joint venture operates united kingdom 2019s nuclear deterrent program from 33% ( 33 % ) to 51% ( 51 % ).
 began consolidating awe operating results include 100% ( 100 % ) of awe 2019s sales 51% ( 51 % ) of operating profit.
 prior to increasing ownership interest accounted for investment in awe using equity method of accounting.
 recognized only 33% ( 33 % ) of awe 2019s earnings or losses no sales.
 prior to august 24 , 2016  obtained control recorded 33% ( 33 % ) of awe 2019s net earnings in operating results subsequent to august 24 , 2016 recognized 100% ( 100 % ) of awe 2019s sales and 51% ( 51 % ) of operating profit.
 accounted for transaction as 201cstep acquisition 201d.
 requires to consolidate and record assets and liabilities of awe at fair value.
 recorded intangible assets of $ 243 million related to customer relationships  $ 32 million of net liabilities noncontrolling interests of $ 107 million.
intangible assets amortized over eight years in accordance with pattern economic benefit reflected by future net cash flows.
 in 2016  recognized non-cash net gain of $ 104 million associated with obtaining controlling interest in awe , consisted of $ 127 million pretax gain in operating results of space business segment and $ 23 million of tax-related items at corporate office.
 gain represented fair value of our 51% ( 51 % ) interest in awe , less carrying value of previously held investment in awe and deferred taxes.
 gain recorded in other income , net on consolidated statements of earnings.
 fair value of awe ( including intangible assets ) , controlling interest , and noncontrolling interests determined using income approach.
 divestiture of information systems & global solutions business on august 16 , 2016  divested former is&gs business , merged with leidos , in reverse morris trust transaction ( 201ctransaction 201d ).
 transaction completed in multi-step process initially contributed is&gs business to abacus innovations corporation ( abacus ) , wholly owned subsidiary of lockheed martin to facilitate transaction common stock of abacus distributed to participating lockheed martin stockholders through exchange offer.
 under terms exchange offer lockheed martin stockholders had option to exchange shares of lockheed martin common stock for shares of abacus common stock.
 at conclusion of exchange offer all shares of abacus common stock exchanged for 9369694 shares of lockheed martin common stock held by lockheed martin stockholders in exchange.
 shares of lockheed martin common stock exchanged and accepted retired , reducing number of shares of common stock outstanding by approximately 3% ( 3 % ).
following exchange offer , abacus merged with subsidiary of leidos , abacus continuing as surviving corporation and wholly-owned subsidiary of leidos.
 part merger each share of abacus common stock automatically converted into one share of leidos common stock.
 we not receive shares of leidos common stock part of transaction and do not hold shares of leidos or abacus common stock following transaction.
 based on opinion of outside tax counsel subject to customary qualifications factual representations exchange offer and merger qualify as tax-free transactions to lockheed martin and stockholders , except to cash paid to lockheed martin stockholders in lieu of fractional shares.
 transaction abacus borrowed aggregate principal amount of approximately $ 1. 84 billion under term loan facilities with third party financial institutions proceeds used to one-time special cash payment of $ 1. 80 billion to lockheed martin and to pay associated borrowing fees and expenses.
 entire special cash payment used to repay debt  pay dividends repurchase stock during third and fourth quarters of 2016.
 obligations under abacus term loan facilities guaranteed by leidos part of transaction.

| 2018  | 2017  | 2016
------------------------------------------------------------------- | ----- | ----- | -----
weighted average common shares outstanding for basic computations   | 284.5 | 287.8 | 299.3
weighted average dilutive effect of equity awards                   | 2.3   | 2.8   | 3.8
weighted average common shares outstanding for diluted computations | 286.8 | 290.6 | 303.1


operated factory stores as of march 29 , 2014:.
 ( a ) includes australia , china , hong kong , japan , malaysia , south korea  taiwan.
 our factory stores in americas offer selections menswear , womenswear childrenswear  accessories  home furnishings  fragrances.
 ranging in size from approximately 2700 to 20000 square feet  average of approximately 10400 square feet  stores principally located in major outlet centers in 40 states in u. s. , canada  puerto rico.
 factory stores in europe offer selections menswear, womenswear childrenswear  accessories home furnishings  fragrances.
 ranging in size from approximately 1400 to 19700 square feet  average of approximately 7000 square feet  stores located in 12 countries  principally in major outlet centers.
 factory stores in asia offer selections menswear , womenswear  childrenswear  accessories  fragrances.
 ranging in size from approximately 1100 to 11800 square feet  average of approximately 6200 square feet  stores primarily located throughout china and japan , in hong kong  in or near other major cities in asia and australia.
 factory stores principally located in major outlet centers.
 obtain products from suppliers product licensing partners other retail stores and e-commerce operations serve as secondary distribution channel for excess and out-of-season products.
 concession-based shop-within-shops terms trade for largely conducted on concession basis  inventory continues to owned by us ( not department store ) until ultimate sale to end consumer.
 salespeople involved in sales transactions are generally our employees not department store.
as of march 29 , 2014 , we had 503 concession-based shop-within-shops at 243 retail locations dedicated to our products located in asia , australia new zealand europe.
 size of concession-based shop-within-shops ranges from 140 to 7400 square feet.
 we may share cost of building-out shop-within-shops with department store partners.
 e-commerce websites in addition to stores our retail segment sells products online through our e-commerce channel includes : 2022 north american e-commerce sites at www. ralphlauren. com and www. clubmonaco. com  club monaco site in canada at www. clubmonaco. ca ; 2022 ralph lauren e-commerce sites in europe  including www. ralphlauren. co. uk ( servicing united kingdom ) www. ralphlauren. fr ( servicing belgium  france italy luxembourg netherlands portugal spain )  www. ralphlauren. de ( servicing germany austria ) ; 2022 ralph lauren e-commerce sites in asia , including www. ralphlauren. co. jp servicing japan www. ralphlauren. co. kr servicing south korea.
 ralph lauren e-commerce sites in u. s. , europe  asia offer customers access to broad array of ralph lauren , rrl , polo , denim & supply apparel , accessories , fragrance  home products  reinforce luxury image of our brands.
 investing in e-commerce operations remains primary focus extension of investment in integrated omni-channel strategy operate our overall retail business e-commerce operations interdependent with physical stores.
 club monaco e-commerce sites in u. s.
canada offer domestic canadian customers access to our club monaco global assortment of womenswear , menswear  accessories product lines , select online exclusives.

location     | factory stores
------------ | --------------
the americas | 150
europe       | 50
asia ( a )   | 35
total        | 235


sales unregistered securities not applicable.
 repurchase equity securities table provides information regarding purchases equity securities during period from october 1  2016 to december 31 , 2016.
 total number of shares units ) purchased 1 average price paid per share unit ) 2 total number of shares units ) purchased as part of publicly announced plans or programs 3 maximum number approximate dollar value ) of shares units ) be purchased under plans or programs 3.
 1 included shares of common stock  par value $ 0. 10 per share , withheld under terms grants under employee stock-based compensation plans to offset tax withholding obligations occurred upon vesting and release of restricted shares ( 201cwithheld shares 201d ).
 repurchased no withheld shares in october 2016 , 1353 withheld shares in november 2016 10749 withheld shares in december 2016  for total of 12102 withheld shares during three-month period.
 2 average price per share for each months fiscal quarter and three-month period calculated by dividing sum of applicable period aggregate value of tax withholding obligations and aggregate amount paid for shares acquired under share repurchase program described in note 5 to consolidated financial statements by sum of number of withheld shares and number of shares acquired in share repurchase program.
 3 in february 2016  board authorized share repurchase program to repurchase up to $ 300. 0 million , excluding fees  of common stock ( 201c2016 share repurchase program 201d ).
 on february 10 , 2017  announced board approved new share repurchase program to repurchase up to $ 300. 0 million , excluding fees of common stock.
new authorization in addition to amounts remaining for repurchase under 2016 share repurchase program.
 no expiration date associated with share repurchase programs.

| total number ofshares ( or units ) purchased1 | average price paidper share ( or unit ) 2 | total number ofshares ( or units ) purchased as part ofpublicly announcedplans or programs3 | maximum number ( orapproximate dollar value ) of shares ( or units ) that may yet be purchasedunder the plans orprograms3
--------------- | --------------------------------------------- | ----------------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------
october 1 - 31  | 2099169                                       | $ 22.28                                   | 2099169                                                                                | $ 218620420
november 1 - 30 | 1454402                                       | $ 22.79                                   | 1453049                                                                                | $ 185500851
december 1 - 31 | 1269449                                       | $ 23.93                                   | 1258700                                                                                | $ 155371301
total           | 4823020                                       | $ 22.87                                   | 4810918                                                                                |


abiomed , inc.
 subsidiaries notes to consolidated financial statements 2014 continued ) note 15.
 commitments contingencies ) company applies disclosure provisions of fin no.
 45 , guarantor 2019s accounting disclosure requirements for guarantees  including guarantees of indebtedness of others interpretation of fasb statements no.
 5 , 57 107 rescission of fasb interpretation no.
 34 ( fin no.
 45 ) to agreements guarantee or indemnification clauses.
 disclosure provisions expand required by sfas no.
 5 , accounting for contingencies requiring guarantors disclose certain types of guarantees even if likelihood of requiring guarantor 2019s performance remote.
 addition to product warranties description of arrangements company is guarantor.
 indemnifications 2014in many sales transactions company indemnifies customers against possible claims patent infringement caused by company 2019s products.
 indemnifications within sales contracts usually do not include limits on claims.
 company never incurred material costs to defend lawsuits or settle patent infringement claims related to sales transactions.
 under provisions of fin no.
 45 , intellectual property indemnifications require disclosure only.
 company enters into agreements with other companies in ordinary course business typically with underwriters, contractors  clinical sites customers include indemnification provisions.
 under provisions company generally indemnifies holds harmless indemnified party for losses suffered incurred by indemnified party activities.
 indemnification provisions survive termination of underlying agreement.
 maximum potential amount of future payments company required to make under indemnification provisions is unlimited.
 abiomed never incurred material costs to defend lawsuits or settle claims related to these indemnification agreements.
 estimated fair value of these agreements is minimal.
company has no liabilities recorded for these agreements as of march 31 , 2008.
 clinical study agreements 2014in abiomed agreed to indemnify participating institutions against losses incurred for claims related to personal injury of subjects in study to uses of company 2019s devices in accordance with clinical study agreement  protocol for device abiomed 2019s instructions.
 indemnification provisions within clinical study agreements not include limits on claims.
 company never incurred material costs related to indemnification provisions in clinical study agreements.
 facilities leases 2014as of march 31 , 2008 company had entered into leases for facilities  including primary operating facility in danvers , massachusetts with terms through fiscal 2010.
 danvers lease may be extended at company 2019s option for two successive additional periods of five years each with monthly rent charges determined based on current fair rental values.
 company 2019s lease for aachen location expires in december 2012.
 total rent expense under these leases  in consolidated statements of operations approximated $ 2. 2 million , $ 1. 6 million , and $ 1. 3 million for fiscal years ended march 31 , 2008 , 2007 and 2006 .
 future minimum lease payments under all significant non-cancelable operating leases as of march 31 , 2008 are approximately as follows : fiscal year ending march 31 , operating leases ( in $ 000 2019s ).
 litigation 2014from company is involved in legal and administrative proceedings and claims of various types.
any litigation contains element of uncertainty , management believes outcome of each such other proceedings or claims pending or known to be threatened , or all combined , not expected to have material adverse effect on company 2019s financial position , cash flow and results.

fiscal year ending march 31,        | operating leases ( in $ 000 2019s )
----------------------------------- | -----------------------------------
2009                                | 2544
2010                                | 2220
2011                                | 1287
2012                                | 973
2013                                | 730
thereafter                          | 2014
total future minimum lease payments | $ 7754


item 2.
 properties principal offices located in boston , southborough woburn , massachusetts ; atlanta , georgia ; mexico city , mexico ; sao paulo , brazil.
 details of offices provided below:.
 ( 1 ) of total 30000 square feet in current leasehold consolidating operations into 20000 square feet during 2004 offering remaining 10000 square feet for re-lease or sub-lease.
 seven additional area offices in united states tower leasing and services businesses operated local basis.
 offices located in ontario , california ; marietta , georgia ; crest hill , illinois ; worcester , massachusetts ; new hudson , michigan ; mount pleasant , south carolina ; kent , washington.
 maintain smaller field offices within each areas at locations as needed time to.
 interests in individual communications sites of variety of fee and leasehold interests in land and/or buildings ( rooftops ).
 of approximately 15000 towers portfolio approximately 16% ( 16 % ) located on parcels of land we own approximately 84% ( 84 % ) located on parcels of land have leasehold interests created by long-term lease agreements , private easements easements , licenses or rights-of-way granted by government entities  or sites we manage for third parties.
 in rural areas wireless communications site typically consists of 10000 square foot tract supports towers , equipment shelters guy wires to stabilize structure broadcast tower site consists of tract of land of up to twenty-acres.
 less than 2500 square feet required for monopole or self-supporting tower structure typically used in metropolitan areas for wireless communication tower sites.
land leases have initial term five years with three or four additional automatic renewal periods of five years  for total of twenty to twenty-five years.
 pursuant to our credit facilities  lenders have liens on all towers , leasehold interests  tenant leases contracts relating to management of towers for others.
 we believe our owned and leased facilities are suitable adequate to meet our anticipated needs.
 item 3.
 legal proceedings we periodically become involved in claims and lawsuits incidental to our business.
 believe after consultation with counsel no matters pending would adverse outcome material impact on our consolidated financial position , results of operations or liquidity.
 item 4.
 submission of matters to vote of security holders

location     | function                                    | size ( square feet )               | property interest
------------ | ------------------------------------------- | ---------------------------------- | -----------------
boston       | corporate headquarters ; us tower division  | 30000 ( 1 )                        | leased
southborough | data center                                 | 13900                              | leased
woburn       | lease administration                        | 34000                              | owned
atlanta      | us tower and services division ; accounting | 17900 ( rental ) 4800 ( services ) | leased
mexico city  | mexico headquarters                         | 12300                              | leased
sao paulo    | brazil headquarters                         | 3200                               | leased


company 2019s stock performance graph compares cumulative total return of company 2019s common stock with cumulative total return of i nasdaq stock market-united states , and ii nasdaq biotechnology index.
 graph assumes $ 100 invested on july 31 , 2001 in each of company 2019s common stock , stocks nasdaq stock market-united states and stocks nasdaq biotechnology index , and b ) reinvestment of dividends.
 comparison of 65 month cumulative total return* among alexion pharmaceuticals , inc. , nasdaq composite index and nasdaq biotechnology index alexion pharmaceuticals , inc.
 nasdaq composite nasdaq biotechnology.

| 7/02   | 7/03   | 7/04   | 7/05   | 12/05  | 12/06  | 12/07
----------------------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------
alexion pharmaceuticals inc . | 100.00 | 108.38 | 102.64 | 167.89 | 130.56 | 260.41 | 483.75
nasdaq composite              | 100.00 | 128.98 | 142.51 | 164.85 | 168.24 | 187.43 | 204.78
nasdaq biotechnology          | 100.00 | 149.29 | 146.51 | 176.75 | 186.10 | 183.89 | 187.04


undesignated hedges was $ 41. 2 million and $ 42. 1 million  respectively.
 fair value of hedging instruments in company 2019s consolidated balance sheets as of october 29 , 2011 and october 30 , 2010 immaterial.
 interest rate exposure management 2014 on june 30 , 2009 company entered interest rate swap transactions related to outstanding 5. 0% ( 5. 0 % ) senior unsecured notes company swapped $ 375 million fixed rate debt at 5. 0% ( 5. 0 % ) into floating interest rate debt through july 1 , 2014.
 terms swaps company will receive on $ 375 million notional amount 5. 0% ( 5. 0 % ) annual interest payment paid in two installments 1st of every january and july  commencing january 1, 2010 through ending on maturity date ; pay on $ 375 million notional amount annual three month libor plus 2. 05% ( 2. 05 % ) ( 2. 42% ( 2. 42 % ) as of october 29, 2011 ) interest payment  payable in four installments 1st of every january , april  july october  commencing october 1 , 2009 ending maturity date.
 libor- based rate set quarterly three months prior to date interest payment.
 company designated swaps as fair value hedges.
 fair value of swaps at inception was zero subsequent changes in fair value interest rate swaps reflected in carrying value interest rate swaps on balance sheet.
 carrying value of debt on balance sheet adjusted by equal and offsetting amount.
 gain or loss on hedged item fixed-rate borrowings ) attributable to hedged benchmark interest rate risk and offsetting gain or loss on related interest rate swaps for fiscal year 2011 and fiscal year 2010 were as follows : statement of income.
amounts earned and owed under swap agreements accrued each period reported in interest expense.
 no ineffectiveness recognized in any periods presented.
 market risk associated with company 2019s derivative instruments results from currency exchange rate or interest rate movements expected to offset market risk of underlying transactions , assets and liabilities being hedged.
 counterparties to agreements relating to company 2019s derivative instruments consist of major international financial institutions with high credit ratings.
 based on credit ratings counterparties as of october 29 , 2011 , not believe significant risk of nonperformance by them.
 none of company 2019s derivative transactions subject to collateral or other security arrangements and none contain provisions dependent on company 2019s credit ratings from any credit rating agency.
 contract or notional amounts of derivative financial instruments provide one measure of volume of transactions , do not represent amount of company 2019s exposure to credit risk.
 amounts potentially subject to credit risk ( arising from possible inability of counterparties to meet terms of contracts ) generally limited to amounts , if any , by which counterparties 2019 obligations under contracts exceed obligations of company to counterparties.
 of company does not consider risk of counterparty default to be significant.
 company records fair value of derivative financial instruments in consolidated financial statements in other current assets , other assets or accrued liabilities , depending on net position , regardless of purpose or intent for holding derivative contract.
 changes in fair value of derivative financial instruments recognized periodically in earnings or in shareholders 2019 equity as component of oci.
 changes in fair value of cash flow hedges recorded in oci and reclassified into earnings when underlying contract matures.
changes in fair values of derivatives not qualifying for hedge accounting reported in earnings.
 total notional amounts of derivative instruments hedging instruments as of october 29 , 2011 and october 30, 2010 were $ 375 million of interest rate swap agreements accounted for as fair value hedges $ 153. 7 million $ 139. 9 million  cash flow hedges denominated in euros british pounds analog devices .
 notes to consolidated financial statements 2014

statement of income classification | statement of income loss on swaps | statement of income gain on note | statement of income net income effect | statement of income gain on swaps | loss on note       | net income effect
---------------------------------- | --------------------------------- | -------------------------------- | ------------------------------------- | --------------------------------- | ------------------ | -----------------
other income                       | $ -4614 ( 4614 )                  | $ 4614                           | $ 2014                                | $ 20692                           | $ -20692 ( 20692 ) | $ 2014


table summarizes changes in company 2019s valuation allowance:.
 included in 2013 is discrete tax benefit totaling $ 2979 associated with entity re-organization within company 2019s market-based segment allowed for utilization of state net operating loss carryforwards and release of associated valuation allowance.
 note 14 : employee benefits pension and other postretirement benefits company maintains noncontributory defined benefit pension plans covering eligible employees of regulated utility and shared services operations.
 benefits plans based on employee 2019s years of service and compensation.
 pension plans closed for all employees.
 closed for most employees hired after january 1 , 2006.
 union employees hired after january 1 , 2001 had accrued benefit frozen receive benefit as lump sum upon termination or retirement.
 union employees hired after january 1 , 2001 and non-union employees hired after january 1 , 2006 provided with 5. 25% (. % ) of base pay defined contribution plan.
 company does not participate in multiemployer plan.
 company 2019s pension funding practice is to contribute greater of minimum amount required by employee retirement income security act of 1974 or normal cost.
 company will consider additional contributions if needed to avoid 201cat risk 201d status and benefit restrictions under pension protection act of 2006.
 company may consider increased contributions based on other financial requirements and plans 2019 funded position.
 pension plan assets invested in actively managed indexed investments including equity and bond mutual funds fixed income securities guaranteed interest contracts with insurance companies real estate investment trusts.
 pension expense in excess of amount contributed to pension plans is deferred by certain regulated subsidiaries pending future recovery in rates charged for utility services as contributions made to plans.
see note 6 company has unfunded noncontributory supplemental non-qualified pension plans additional retirement benefits to certain employees.
 company maintains other postretirement benefit plans providing varying medical life insurance to eligible retirees.
 retiree welfare plans closed for union employees hired after january 1 , 2006.
 plans closed for non-union employees hired after january 1  2002.
 company 2019s policy is to fund other postretirement benefit costs for rate-making purposes.
 assets plans invested in equity mutual funds bond mutual funds fixed income securities.

balance at january 1 2011                 | $ 23788
----------------------------------------- | --------------
increases in current period tax positions | 1525
decreases in current period tax positions | -3734 ( 3734 )
balance at december 31 2011               | $ 21579
increases in current period tax positions | 0
decreases in current period tax positions | -2059 ( 2059 )
balance at december 31 2012               | $ 19520
increases in current period tax positions | 0
decreases in current period tax positions | -5965 ( 5965 )
balance at december 31 2013               | $ 13555


third-party sales for segment increased 4% ( 4 % ) in 2014 compared with 2013  primarily due to higher volumes acquisition of firth rixson ( $ 81 2014see ).
 higher volumes mostly related to aerospace ( commercial ) and commercial transportation end markets offset by lower volumes in industrial gas turbine end market.
 engineered products and solutions segment increased $ 16 in 2015 compared with 2014  principally result of net productivity improvements across most businesses, positive contribution from inorganic growth overall higher volumes in segment organic businesses.
 positive impacts partially offset by unfavorable price/product mix, higher costs related to growth projects  net unfavorable foreign currency movements  primarily related to weaker euro.
 atoi for segment climbed $ 10 in 2014 compared with 2013  mainly due to net productivity improvements across all businesses overall higher volumes partially offset by higher costs  primarily labor  unfavorable product in 2016 demand in commercial aerospace end market expected to remain strong driven by significant order backlog.
 third-party sales include positive impact due to full year of sales related to acquisitions of rti and tital.
 net productivity improvements anticipated pricing pressure across all markets expected.
 transportation and construction solutions.
 segment represents portion of alcoa 2019s downstream operations produces products used mostly in nonresidential building and construction commercial transportation end markets.
 products include integrated aluminum structural systems , architectural extrusions  forged aluminum commercial vehicle wheels sold directly to customers and through distributors.
 small part of segment also produces aluminum products for industrial products end market.
 sales and costs expenses segment transacted in local currency of respective operations mostly u.
 dollar , euro  brazilian real.
third-party sales for transportation and construction solutions segment decreased 7% ( 7 % ) in 2015 compared with 2014  driven by unfavorable foreign currency movements caused weaker euro brazilian real  lower volume related to building and construction end market  offset by higher volume commercial transportation end market.
 third-party sales for segment increased 4% ( 4 % ) in 2014 compared with 2013  mostly result of higher volume commercial transportation and building and construction end markets offset by lower volume in industrial products market.
 atoi transportation and construction solutions segment declined $ 14 in 2015 compared with 2014 due to higher costs net unfavorable foreign currency movements weaker euro brazilian real  unfavorable price/product mix.
 negative impacts offset by net productivity improvements across all businesses.
 atoi segment improved $ 13 in 2014 compared with 2013  principally attributable to net productivity improvements across all businesses higher volumes  partially offset by unfavorable product mix higher costs  primarily labor.
 in 2016  non-residential building and construction end market expected to improve through growth in north america slightly offset by overall weakness in europe.
 north america build rates in commercial

| 2015   | 2014   | 2013
----------------- | ------ | ------ | ------
third-party sales | $ 1882 | $ 2021 | $ 1951
atoi              | $ 166  | $ 180  | $ 167