Commodity price risk
long-term debt issues and derivative tinancial instruments
such as tloating-to-tixed interest rate swaps and cross-
currency tloating-to-tixed interest rate swaps, which allow
us to maintain a target range ot tloating interest rate debt.
Occasionally we enter into tixed-to-tloating interest rate
swaps to hedge tair value interest rate risk arising where
tixed rate borrowings are in excess ot the target. As ot
January 1, 2006 approximately EUR 1.0 billion or 22%
ot our long-term borrowings (excluding our tinance lease
liabilities, tinancing obligations and our cumulative
preterred tinancing shares, but including interest rate
swaps) bear interest on a tloating rate basis.
For a tull discussion on interest rate risk, including a tabular
sensitivity analysis, see Note 34 to our consolidated tinancial
statements included in this annual report.
We are exposed to the risk ot an increase in the prices ot
tuels that are used in the transportation ot goods primarily
in our U.S. operations. Fuel price volatility is caused by
supply conditions, political and economic variables and
other unpredictable tactors. In addition to tixed price
contracts, we may use commodity derivative contracts to
hedge against tuel price risk tor our expected consumption.
As ot January 1, 2006, no commodity contracts were
outstanding, but we may enter into such contracts in the
tuture.
The toregoing discussion about our risk management
activities includes "torward-looking statements" that involve
risk and uncertainties. Actual results could ditter materially
trom those provided in the torward-looking statements,
depending on market conditions.
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