debt issuance costs reflected as direct deduction of long-term debt balance on consolidated balance sheets.
 incurred debt issuance costs of $ 15 million in 2018 $ 53 million in 2016.
 debt issuance costs in 2017 insignificant.
 unamortized debt issuance costs were $ 115 million at december 29, 2018 $ 114 million at december 30 , 2017 $ 124 million at december 31 , 2016.
 amortization of debt issuance costs was $ 16 million in 2018 $ 16 million in 2017 $ 14 million in 2016.
 debt premium unamortized debt premiums presented on balance sheets as direct addition to carrying amount debt.
 unamortized debt premium  net was $ 430 million at december 29 2018 $ 505 million at december 30 , 2017.
 amortization of debt premium net was $ 65 million in 2018 $ 81 million in 2017 $ 88 million in 2016.
 debt repayments : in july august 2018 repaid $ 2. 7 billion aggregate principal amount of senior notes matured period.
 funded long debt repayments primarily with proceeds from new notes issued in june 2018.
 in june 2017 repaid $ 2. 0 billion aggregate principal amount of senior notes matured.
 funded debt repayments primarily with cash on hand commercial paper programs.
 fair value of debt : at december 29 , 2018 aggregate fair value of total debt was $ 30. 1 billion compared with carrying value $ 31. 2 billion.
 at december 30 , 2017 aggregate fair value total debt was $ 33. 0 billion $ 31. 5 billion.
 short-term debt and commercial paper had carrying values approximated fair values at december 29  2018 december 30 , 2017.
 determined fair value of long-term debt using level 2 inputs.
fair values estimated based on quoted market prices for identical or similar instruments.
 note 20.
 capital stock preferred stock second amended restated certificate of incorporation authorizes issuance of up to 920000 shares of preferred stock.
 on june 7 , 2016 redeemed all 80000 outstanding shares of series a preferred stock for $ 8. 3 billion.
 funded redemption through long-term debt in may 2016 other sources of liquidity including.
 commercial paper program .
 securitization program  cash on hand.
 connection with redemption all series a preferred stock canceled automatically retired.
 common stock second amended restated certificate of incorporation authorizes issuance of up to 5. 0 billion shares of common stock.
 shares of common stock issued treasury outstanding were ( in millions of shares ) : shares issued treasury shares shares outstanding.

| shares issued | treasury shares | shares outstanding
------------------------------------------------------------------ | ------------- | --------------- | ------------------
balance at january 3 2016                                          | 1214          | 2014            | 1214
exercise of stock options issuance of other stock awards and other | 5             | -2 ( 2 )        | 3
balance at december 31 2016                                        | 1219          | -2 ( 2 )        | 1217
exercise of stock options issuance of other stock awards and other | 2             | 2014            | 2
balance at december 30 2017                                        | 1221          | -2 ( 2 )        | 1219
exercise of stock options issuance of other stock awards and other | 3             | -2 ( 2 )        | 1
balance at december 29 2018                                        | 1224          | -4 ( 4 )        | 1220


table shows annual aircraft fuel consumption costs  including taxes for our mainline and regional operations for 2018 , 2017 2016 ( 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 , 2018  fuel hedging contracts outstanding to hedge our fuel consumption.
 assuming not enter future transactions to hedge fuel consumption we will continue to be fully exposed to fluctuations in fuel prices.
 current policy is not to enter transactions to hedge fuel consumption review policy based on market conditions other factors.
 fuel prices fluctuated substantially over past years.
 cannot predict future availability  price volatility cost of aircraft fuel.
 natural disasters ( including hurricanes events in.
 southeast gulf coast where significant portion of domestic refining capacity located ) political disruptions or wars involving oil-producing countries economic sanctions against oil-producing countries or specific industry participants  changes in fuel-related governmental policy  strength of.
 dollar against foreign currencies  changes in cost to transport or store petroleum products 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 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 have negative impact on operating results and liquidity.201d seasonality other factors due to greater demand for air travel during summer months , revenues in airline industry in second and third quarters year 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.
 domestic and global regulatory landscape general airlines subject to extensive domestic international regulatory requirements.
 domestically the dot and federal aviation administration ( faa ) exercise significant regulatory authority over air carriers.
 dot  oversees domestic international codeshare agreements , international route authorities , competition consumer protection matters advertising , denied boarding compensation baggage liability.
 antitrust division of department of justice ( doj )  along with dot in have jurisdiction over airline antitrust matters.

year | gallons | average priceper gallon | aircraft fuelexpense | percent of totaloperating expenses
---- | ------- | ----------------------- | -------------------- | ----------------------------------
2018 | 4447    | $ 2.23                  | $ 9896               | 23.6% ( 23.6 % )
2017 | 4352    | 1.73                    | 7510                 | 19.6% ( 19.6 % )
2016 | 4347    | 1.42                    | 6180                 | 17.6% ( 17.6 % )


contractual obligations as of december 29 , 2018 were:.
 capital purchase obligations1 9029 7888 795 345 1 other purchase obligations commitments2 3249 1272 1781 178 18 tax obligations3 4732 143 426 1234 2929 long-term debt obligations4 40187 1518 7583 6173 24913 other long-term liabilities5 1626 722 708 95 101 total6 $ 59658 $ 11772 $ 11607 $ 8196 $ 28083 1 capital purchase obligations represent commitments for construction or purchase of property  plant equipment.
 not recorded as liabilities on consolidated balance sheets as of december 29, 2018 not yet received related goods nor taken title to property.
 2 other purchase obligations commitments include payments due under licenses agreements to purchase goods services payments under non-contingent funding obligations.
 3 tax obligations represent future cash payments related to tax reform 2017 for one-time transition tax on previously untaxed foreign earnings.
 further information see 201cnote 9 : income taxes 201d consolidated financial statements.
 4 amounts represent principal payments for all debt obligations interest payments for fixed-rate debt obligations.
 interest payments on floating-rate debt obligations impact of fixed-rate to floating-rate debt swaps excluded.
 debt obligations classified based on stated maturity date regardless of classification consolidated balance sheets.
 future settlement of convertible debt impact cash payments.
 5 amounts represent future cash payments to satisfy other long-term liabilities recorded on consolidated balance sheets including short-term portion liabilities.
 derivative instruments excluded from preceding table not represent amounts may ultimately be paid.
6 total excludes contractual obligations recorded on consolidated balance sheets as current liabilities except for short-term portions of long-term debt obligations and other long-term liabilities.
 expected timing of payments of obligations in preceding table is estimated based on current information.
 timing of payments and actual amounts paid may be different  depending on time of receipt of goods or services or changes to agreed- upon amounts for some obligations.
 contractual obligations for purchases of goods or services included in 201cother purchase obligations and commitments 201d in preceding table include agreements enforceable and legally binding specify all significant terms including fixed or minimum quantities to be purchased ; fixed variable price provisions ; approximate timing of transaction.
 for obligations with cancellation provisions  amounts included in preceding table limited to non-cancelable portion of agreement terms or minimum cancellation fee.
 for purchase of raw materials entered into certain agreements specify minimum prices and quantities based on percentage of total available market or percentage of future purchasing requirements.
 due to uncertainty of future market and future purchasing requirements non-binding nature of these agreements obligations under these agreements excluded from preceding table.
 purchase orders for other products are based on current manufacturing needs fulfilled by vendors within short time horizons.
 some purchase orders represent authorizations to purchase rather than binding agreements.
 contractual obligations contingent upon achievement of certain milestones excluded from preceding table.
 most of milestone-based contracts are tooling related for purchase of capital equipment.
 arrangements not considered contractual obligations until milestone met by counterparty.
 as of december 29 , 2018 assuming all future milestones are met additional required payments would be approximately $ 688 million.
for majority of restricted stock units ( rsus ) granted , number of shares of common stock issued on date rsus vest is net of minimum statutory withholding requirements we pay in cash to appropriate taxing authorities on behalf of employees.
 obligation to pay relevant taxing authority excluded from preceding table , as amount contingent upon continued employment.
 in amount of obligation is unknown , based in part on market price of our common stock when awards vest.
 md&a consolidated results and analysis 42

( in millions )                             | payments due by period total | payments due by period less than1 year | payments due by period 1 20133 years | payments due by period 3 20135 years | payments due by period more than5 years
------------------------------------------- | ---------------------------- | -------------------------------------- | ------------------------------------ | ------------------------------------ | ---------------------------------------
operating lease obligations                 | $ 835                        | $ 229                                  | $ 314                                | $ 171                                | $ 121
capital purchase obligations1               | 9029                         | 7888                                   | 795                                  | 345                                  | 1
other purchase obligations and commitments2 | 3249                         | 1272                                   | 1781                                 | 178                                  | 18
tax obligations3                            | 4732                         | 143                                    | 426                                  | 1234                                 | 2929
long-term debt obligations4                 | 40187                        | 1518                                   | 7583                                 | 6173                                 | 24913
other long-term liabilities5                | 1626                         | 722                                    | 708                                  | 95                                   | 101
total6                                      | $ 59658                      | $ 11772                                | $ 11607                              | $ 8196                               | $ 28083


stock-based awards under plan stock options 2013 marathon grants stock options under 2007 plan previously granted options under 2003 plan.
 marathon 2019s stock options represent right to purchase shares common stock at fair market value common stock on date of grant.
 through 2004 , certain stock options granted under 2003 plan with tandem stock appreciation right allows recipient to elect to receive cash and/or common stock equal to excess of fair market value of shares common stock as determined in with 2003 plan  over option price shares.
 stock options granted under 2007 plan and 2003 plan vest ratably over three-year period maximum term of ten years from date granted.
 stock appreciation rights 2013 prior to 2005 , marathon granted sars under 2003 plan.
 no stock appreciation rights granted under 2007 plan.
 similar to stock options stock appreciation rights represent right to receive payment equal to excess of fair market value of shares of common stock on date right exercised over grant price.
 under 2003 plan  certain sars granted as stock-settled sars others granted in tandem with stock options.
 sars granted under 2003 plan vest ratably over three-year period have maximum term of ten years from date granted.
 stock-based performance awards 2013 prior to 2005 , marathon granted stock-based performance awards under 2003 plan.
 no stock-based performance awards granted under 2007 plan.
 beginning in 2005 , marathon discontinued granting stock-based performance awards instead now grants cash-settled performance units to officers.
 all stock-based performance awards granted under 2003 plan either vested or forfeited.
 no outstanding stock-based performance awards.
 restricted stock 2013 marathon grants restricted stock restricted stock units under 2007 plan previously granted such awards under 2003 plan.
 in 2005 , compensation committee began granting time-based restricted stock to certain u. s.-based officers of marathon consolidated subsidiaries annual long-term incentive package.
 restricted stock awards to officers vest three years from date of grant contingent on recipient continued employment.
 marathon grants restricted stock to non-officer employees international employees ( 201crestricted stock awards 201d ) based on performance within guidelines for retention purposes.
 restricted stock awards to non-officers vest in one-third increments over three-year period contingent on recipient continued employment.
 prior to vesting all restricted stock recipients have right to vote stock receive dividends.
 non-vested shares not transferable held by marathon 2019s transfer agent.
 common stock units 2013 marathon maintains equity compensation program for non-employee directors under 2007 plan previously 2003 plan.
 all non-employee directors other than chairman receive annual grants of common stock units required to hold units until leave board of directors.
 when dividends paid on marathon common stock directors receive dividend equivalents in additional common stock units.
 stock-based compensation expense 2013 total employee stock-based compensation expense was $ 80 million , $ 83 million $ 111 million in 2007 , 2006 2005.
 total related income tax benefits were $ 29 million , $ 31 million $ 39 million.
 in 2007 2006 cash received upon exercise of stock option awards was $ 27 million and $ 50 million.
 tax benefits realized for deductions during 2007 and 2006 in excess of stock-based compensation expense for options exercised other stock-based awards vested totaled $ 30 million and $ 36 million.
 cash settlements of stock option awards totaled $ 1 million and $ 3 million in 2007 and 2006.
 stock option awards granted 2013 during 2007  2006 2005 marathon granted stock option awards to both officer and non-officer employees.
weighted average grant date fair value of awards based on following black-scholes assumptions:.

| 2007           | 2006           | 2005
--------------------------------------------------------------------- | -------------- | -------------- | --------------
weighted average exercise price per share                             | $ 60.94        | $ 37.84        | $ 25.14
expected annual dividends per share                                   | $ 0.96         | $ 0.80         | $ 0.66
expected life in years                                                | 5.0            | 5.1            | 5.5
expected volatility                                                   | 27% ( 27 % )   | 28% ( 28 % )   | 28% ( 28 % )
risk-free interest rate                                               | 4.1% ( 4.1 % ) | 5.0% ( 5.0 % ) | 3.8% ( 3.8 % )
weighted average grant date fair value of stock option awards granted | $ 17.24        | $ 10.19        | $ 6.15


2018 emerson annual report  51 as of september 30 , 2018 1874750 shares awarded in 2016 outstanding contingent on company achieving performance objectives through 2018.
 objectives for shares met at 97 percent level end of 2018 1818508 shares distributed in early 2019.
 rights to receive maximum of 2261700 and 2375313 common shares awarded in 2018 and 2017 under new performance shares program outstanding and contingent upon company achieving performance objectives through 2020 and 2019.
 incentive shares plans include restricted stock awards distribution of common stock to key management employees subject to cliff vesting at end of service periods three to ten years.
 fair value of restricted stock awards determined based on average of high and low market prices of company 2019s common stock on date of grant compensation expense recognized ratably over applicable service period.
 in 2018  310000 shares of restricted stock vested participants fulfilling service requirements.
 167837 shares issued 142163 shares withheld for income taxes minimum withholding requirements.
 as of september 30 , 2018 1276200 shares of unvested restricted stock outstanding.
 total fair value of shares distributed under incentive shares plans was $ 20 , $ 245 and $ 11  in 2018 , 2017 2016  $ 9 , $ 101 and $ 4 paid in cash primarily for tax withholding.
 as of september 30 , 2018  10. 3 million shares remained available for award under incentive shares plans.
 changes in shares outstanding but not yet earned under incentive shares plans during year ended september 30 , 2018 follow ( shares in thousands assumes 100 percent payout of unvested awards ) : average grant date shares fair value per share.
compensation expense for stock options incentive shares was $ 216 , $ 115 $ 159 for 2018  2017 2016  $ 5 and $ 14 included in discontinued operations for 2017 2016 .
 increase in expense for 2018 reflects increase company 2019s stock price progress toward performance objectives.
 decrease in expense for 2017 reflects impact of changes in stock price.
 income tax benefits recognized in income statement for compensation arrangements during 2018  2017 2016 were $ 42 , $ 33 $ 45 .
 as of september 30 , 2018  unrecognized compensation expense to unvested shares awarded under plans was $ 182  expected to be recognized over weighted-average period of 1. 1 years.
 to employee stock option incentive shares plans in 2018 company awarded 12228 shares of restricted stock 2038 restricted stock units under restricted stock plan for non-management directors.
 as of september 30 , 2018 159965 shares available for issuance under plan.
 common preferred stock at september 30  2018 37. 0 million shares of common stock reserved for issuance under company 2019s stock-based compensation plans.
 during 2018  15. 1 million common shares purchased 2. 6 million treasury shares reissued.
 in 2017  6. 6 million common shares purchased 5. 5 million treasury shares reissued.
 at september 30 , 2018 2017 company had 5. 4 million shares of $ 2. 50 par value preferred stock authorized none issued.

| shares       | average grant datefair value per share
----------------- | ------------ | --------------------------------------
beginning of year | 4999         | $ 50.33
granted           | 2295         | $ 63.79
earned/vested     | -310 ( 310 ) | $ 51.27
canceled          | -86 ( 86 )   | $ 56.53
end of year       | 6898         | $ 54.69


december 31 , 2015 carrying amount accumulated amortization.
 computer software consists primarily of software costs associated with enterprise business solution ( ebs ) within arconic to drive common systems among all businesses.
 amortization expense related to intangible assets in tables above for years ended december 31 , 2016 , 2015  and 2014 was $ 65 , $ 67 , and $ 55 , respectively expected to range of approximately $ 56 to $ 64 annually from 2017 to 2021.
 f.
 acquisitions and divestitures pro forma results of company assuming all acquisitions made at beginning of earliest prior period not materially different from results reported.
 2016 divestitures.
 in april 2016  arconic completed sale of remmele medical business to lisi medical for $ 102 in cash ( $ 99 net of transaction costs ) included in proceeds from sale of assets and businesses on accompanying statement of consolidated cash flows.
 business  part of rti international metals inc.
 rti ) acquisition manufactures precision-machined metal products for customers in minimally invasive surgical device and implantable device markets.
 transaction within year of completion of rti acquisition  no gain recorded transaction excess of proceeds over carrying value of net assets business reflected as purchase price adjustment ( decrease to goodwill of $ 44 ) to final allocation of purchase price related to arconic 2019s acquisition of rti.
 owned by arconic operating results and assets liabilities of business included in engineered products and solutions segment.
 business generated sales of approximately $ 20 from january 1 , 2016 through divestiture date , april 29 , 2016 at time of divestiture had approximately 330 employees.
 transaction no longer subject to post-closing adjustments.
 2015 acquisitions.
march 2015  arconic completed acquisition of aerospace structural castings company , tital , for $ 204 ( 20ac188 ) in cash ( additional $ 1 ( 20ac1 ) paid in september 2015 to settle working capital purchase agreement ).
 tital , privately held company with approximately 650 employees in germany produces aluminum titanium investment casting products for aerospace defense markets.
 purpose acquisition is to capture increasing demand for advanced jet engine components titanium  establish titanium-casting capabilities in europe  expand existing aluminum casting capacity.
 assets , including associated goodwill , liabilities of business included within arconic 2019s engineered products and solutions segment since date of acquisition.
 preliminary allocation of purchase price  goodwill of $ 118 recorded for transaction.
 first quarter of 2016  allocation purchase price finalized based part on completion third-party valuation of certain assets acquired resulting in $ 1 reduction of initial goodwill amount.
 none of $ 117 in goodwill deductible for income tax purposes no other intangible assets identified.
 transaction no longer subject to post-closing adjustments.
 july 2015  arconic completed acquisition of rti , u. s.
 company publicly traded on new york stock exchange under ticker symbol 201crti. 201d arconic purchased all outstanding shares of rti common stock in stock-for-stock transaction valued at $ 870 ( based on $ 9. 96 per share july 23 , 2015 closing price of arconic 2019s

december 31 2015                            | gross carrying amount | accumulated amortization
------------------------------------------- | --------------------- | ------------------------
computer software                           | $ 793                 | $ -643 ( 643 )
patents and licenses                        | 110                   | -98 ( 98 )
other intangibles ( f )                     | 961                   | -64 ( 64 )
total amortizable intangible assets         | 1864                  | -805 ( 805 )
indefinite-lived trade names and trademarks | 45                    | -
total other intangible assets               | $ 1909                | $ -805 ( 805 )


note 15 : chipset design issue in january 2011 ongoing quality assurance procedures identified design issue with intel ae 6 series express chipset family.
 issue affected chipsets sold fourth quarter of 2010 and january 2011.
 implemented silicon fix began shipping updated version affected chipset in february 2011.
 total cost 2011 to repair and replace affected materials and systems customers market was $ 422 million.
 not expect significant future adjustments issue.
 note 16 : borrowings short-term debt as of december 28 , 2013 short-term debt consisted of drafts payable of $ 257 million notes payable of $ 24 million ( drafts payable $ 264 million notes payable $ 48 million as of december 29 , 2012 ).
 ongoing authorization from board of directors to borrow up to $ 3. 0 billion including through issuance of commercial paper.
 maximum borrowings under commercial paper program 2013 were $ 300 million ( $ 500 million during 2012 ).
 commercial paper rated a-1+ by standard & poor 2019s and p-1 by moody 2019s as of december 28 , 2013.
 long-term debt long-term debt end of each period follows : ( in millions ) dec 28 , dec 29.
 senior notes in fourth quarter of 2012 issued $ 6. 2 billion aggregate principal amount of senior unsecured notes for general corporate purposes to repurchase shares of common stock authorized common stock repurchase program.
 third quarter of 2011 issued $ 5. 0 billion aggregate principal amount of senior unsecured notes primarily to repurchase shares of common stock authorized common stock repurchase program for general corporate purposes.
 senior notes pay fixed rate of interest semiannually.
 may redeem senior notes  in whole or in part at any time at our option at specified redemption prices.
senior notes rank equally in right of payment with other existing future senior unsecured indebtedness effectively rank junior to all liabilities subsidiaries.
 table of contents intel corporation notes to consolidated financial statements continued )

( in millions )                                                              | dec 282013 | dec 292012
---------------------------------------------------------------------------- | ---------- | ----------
2012 senior notes due 2017 at 1.35% ( 1.35 % )                               | $ 2997     | $ 2997
2012 senior notes due 2022 at 2.70% ( 2.70 % )                               | 1494       | 1494
2012 senior notes due 2032 at 4.00% ( 4.00 % )                               | 744        | 743
2012 senior notes due 2042 at 4.25% ( 4.25 % )                               | 924        | 924
2011 senior notes due 2016 at 1.95% ( 1.95 % )                               | 1499       | 1498
2011 senior notes due 2021 at 3.30% ( 3.30 % )                               | 1996       | 1996
2011 senior notes due 2041 at 4.80% ( 4.80 % )                               | 1490       | 1489
2009 junior subordinated convertible debentures due 2039 at 3.25% ( 3.25 % ) | 1075       | 1063
2005 junior subordinated convertible debentures due 2035 at 2.95% ( 2.95 % ) | 946        | 932
total long-term debt                                                         | $ 13165    | $ 13136


consolidated income statement review net income 2009 was $ 2. 4 billion 2008 $ 914 million.
 amounts 2009 include operating results national city fourth quarter impact $ 687 million after-tax gain related to blackrock 2019s acquisition bgi.
 increases in income statement comparisons to 2008 primarily due to operating results national city.
 consolidated income statement presented in item 8 report.
 net interest income net interest margin year ended december 31 dollars in millions 2009 2008.
 changes in net interest income margin result from interaction volume composition of interest-earning assets related yields interest-bearing liabilities related rates paid noninterest-bearing sources of funding.
 see statistical information 2013 analysis of year-to-year changes in net interest unaudited ) income average consolidated balance sheet net interest analysis in item 8 report for additional information.
 higher net interest income for 2009 compared 2008 reflected increase in average interest-earning assets due to national city improvement in net interest margin.
 net interest margin was 3. 82% ( 3. 82 % ) for 2009 3. 37% ( 3. 37 % ) for 2008.
 factors impacted comparison : 2022 decrease in rate accrued on interest-bearing liabilities 97 basis points.
 rate accrued on interest-bearing deposits largest component decreased 107 basis points.
 2022 factors partially offset by 45 basis point decrease in yield on interest-earning assets.
 yield on loans largest portion of earning assets in 2009 decreased 30 basis points.
 2022 impact of noninterest-bearing sources of funding decreased 7 basis points.
 comparing broader market average federal funds rate was. 16% (. 16 % ) for 2009 compared with 1. 94% ( 1. 94 % ) for 2008.
expect net interest income for 2010 likely modestly lower result cash recoveries on purchased impaired loans 2009 additional run-off of higher- yielding assets mitigated by rising interest rates.
 assumes current expectations for interest rates economic conditions 2013 include current economic assumptions underlying forward-looking statements in cautionary statement forward-looking information section item 7.
 noninterest income summary noninterest income was $ 7. 1 billion for 2009 $ 2. 4 billion for 2008.
 noninterest income 2009 included 2022 gain on blackrock/bgi transaction $ 1. 076 billion  2022 net credit-related other-than-temporary impairments ( otti ) on debt equity securities $ 577 million  2022 net gains on sales of securities $ 550 million  2022 gains on hedging of residential mortgage servicing rights $ 355 million  2022 valuation sale income commercial mortgage loans for sale net of hedges $ 107 million  2022 gains of $ 103 million related to blackrock ltip shares adjustment first quarter net losses on private equity alternative investments of $ 93 million.
 noninterest income for 2008 included 2022 net otti on debt equity securities $ 312 million  2022 gains of $ 246 million related to blackrock ltip shares adjustment  2022 valuation sale losses commercial mortgage loans for sale net of hedges $ 197 million  2022 impairment and other losses related to private equity alternative investments of $ 180 million  2022 income from hilliard lyons totaling $ 164 million including first quarter gain of $ 114 million from sale business 2022 net gains on sales of securities $ 106 million 2022 gain of $ 95 million related to redemption of portion of visa class b common shares related to visa 2019s march 2008 initial public offering.
asset management revenue increased $ 172 million to $ 858 million in 2009 compared with $ 686 million 2008.
 increase reflected improving equity markets new business generation shift assets into higher yielding equity investments second half 2009.
 assets managed totaled $ 103 billion at december 31 , 2009 and 2008 including impact national city.
 asset management group section business segments review section item 7 includes discussion assets under management.
 consumer services fees totaled $ 1. 290 billion in 2009 compared with $ 623 million 2008.
 service charges on deposits totaled $ 950 million 2009 and $ 372 million for 2008.
 increases driven by impact national city acquisition.
 reduced consumer spending

year ended december 31 dollars in millions | 2009             | 2008
------------------------------------------ | ---------------- | ----------------
net interest income                        | $ 9083           | $ 3854
net interest margin                        | 3.82% ( 3.82 % ) | 3.37% ( 3.37 % )


2013.
 in 2011  asset returns lower than expected by $ 471 million discount rates declined resulting in unfavorable mark-to-market adjustment recorded in earnings in fourth quarter of 2011.
 portion of 2011 pension mark-to- market adjustment capitalized as inventoriable cost at end of 2011.
 amount recorded in earnings in first quarter of 2012.
 mark-to-market adjustments for commodities reflect changes in fair value of contracts for difference between contract and market prices for underlying commodities.
 resulting gains/losses recognized in quarter they occur.
 c ) costs incurred related to execution of project k , four-year efficiency and effectiveness program.
 focus program to strengthen existing businesses in core markets increase growth in developing and emerging markets drive increased value-added innovation.
 program expected to provide benefits including optimized supply chain infrastructure implementation of global business services new global focus on categories.
 d ) underlying gross margin , underlying sga% ( sga % ) underlying operating margin are non-gaap measures exclude impact of pension plans commodity contracts mark-to- market adjustments project k costs.
 believe use of non-gaap measures provides increased transparency assists in understanding underlying operating performance.
 underlying gross margin declined by 110 basis points in 2013 due to impact of inflation  net of productivity savings lower operating leverage due to lower sales volume impact of lower margin structure of pringles business.
 underlying sg&a% ( sg&a % ) improved by 110 basis points result of favorable overhead leverage synergies from pringles acquisition  reduced investment in consumer promotions.
 underlying gross margin declined by 180 basis points in 2012 result of cost inflation  net of cost savings lower margin structure of pringles business.
underlying sga% ( ) consistent with 2011.
 underlying gross profit , sga  operating profit measures reconciled to comparable gaap measure.
 ( a ) gross profit equal to net sales less cost of goods sold.
 ( b ) includes mark-to-market adjustments for pension plans commodity contracts reflected in selling  general administrative expense cost of goods sold.
 actuarial gains/losses for pension plans recognized in year they occur.
 in 2013  asset returns exceeds expectations by $ 545 million discount rates exceeded expectations by 65 basis points favorable mark-to-market adjustment recorded in earnings fourth quarter of 2013.
 portion of mark-to-market adjustment capitalized as inventoriable cost at end of 2013.
 in 2012  asset returns exceeded expectations by $ 211 million discount rates fell almost 100 basis points unfavorable mark-to-market adjustment recorded in earnings fourth quarter of 2012.
 portion of 2012 pension mark-to-market adjustment capitalized as inventoriable cost at end of 2012.
 recorded in earnings in first quarter of 2013.
 in 2011  asset returns lower than expected by $ 471 million discount rates declined unfavorable mark-to-market adjustment recorded in earnings in fourth quarter of 2011.
 portion of 2011 pension mark-to- market adjustment capitalized as inventoriable cost at end of 2011.
 amount recorded in earnings in first quarter of 2012.
 mark-to-market adjustments for commodities reflect changes in fair value of contracts for difference between contract and market prices for underlying commodities.
 resulting gains/losses recognized in quarter they occur.
 c ) costs incurred related to execution of project k , four-year efficiency and effectiveness program.
focus of program to strengthen existing businesses in core markets  increase growth in developing and emerging markets  drive increased value-added innovation.
 program expected to provide benefits  including optimized supply chain infrastructure  implementation of global business services  new global focus on categories.
 ( d ) underlying gross profit , underlying sga  underlying operating profit are non-gaap measures exclude impact of pension plans commodity contracts mark-to- market adjustments project k costs.
 believe use of non-gaap measures provides increased transparency assists in understanding underlying operating performance.
 restructuring and cost reduction activities view continued spending on restructuring cost reduction activities as part of ongoing operating principles to provide greater visibility in achieving long-term profit growth targets.
 initiatives undertaken expected to recover cash implementation costs within five-year period of completion.
 upon completion ( or as each major stage completed in multi-year programs ) project begins to deliver cash savings/or reduced depreciation.
 cost reduction initiatives prior to announcement project k in 2013  commenced various cogs and sga cost reduction initiatives.
 cogs initiatives intended to optimize global manufacturing network reduce waste develop best practices global basis.
 sga initiatives focus on improvements in efficiency effectiveness of global support functions.
 during 2013  recorded $ 42 million of charges associated with cost reduction initiatives.
 charges

( dollars in millions )           | 2013         | 2012         | 2011
--------------------------------- | ------------ | ------------ | ------------
reported gross profit ( a )       | $ 6103       | $ 5434       | $ 5152
mark-to-market ( cogs ) ( b )     | 510          | -259 ( 259 ) | -377 ( 377 )
project k ( cogs ) ( c )          | -174 ( 174 ) | 2014         | 2014
underlying gross profit ( d )     | $ 5767       | $ 5693       | $ 5529
reported sga                      | $ 3266       | $ 3872       | $ 3725
mark-to-market ( sga ) ( b )      | 437          | -193 ( 193 ) | -305 ( 305 )
project k ( sga ) ( c )           | -34 ( 34 )   | 2014         | 2014
underlying sga ( d )              | $ 3669       | $ 3679       | $ 3420
reported operating profit         | $ 2837       | $ 1562       | $ 1427
mark-to-market ( b )              | 947          | -452 ( 452 ) | -682 ( 682 )
project k ( c )                   | -208 ( 208 ) | 2014         | 2014
underlying operating profit ( d ) | $ 2098       | $ 2014       | $ 2109


investment policy  described in note 15 employee benefit plans in notes to consolidated financial statements in item 8 of this report.
 we calculate expense associated with pension plan assumptions methods include policy of reflecting trust assets at fair market value.
 on annual basis  review actuarial assumptions related to pension plan including discount rate rate of compensation increase expected return on plan assets.
 discount rate and compensation increase assumptions not significantly affect pension expense.
 expected long-term return on assets assumption significantly affect pension expense.
 expected long- term return on plan assets for determining net periodic pension expense has been 8. 25% ( 8. 25 % ) for past three years.
 expected return on plan assets is long-term assumption established by considering historical and anticipated returns of asset classes invested in by pension plan and allocation strategy in classes.
 analysis gives consideration to recent asset performance and historical returns assumption represents long-term prospective return.
 we review this assumption at each measurement date and adjust it if warranted.
 for assumption 201clong- term 201d refers to period over plan 2019s projected benefit obligation will be disbursed.
 year-to-year annual returns can vary significantly ( rates of return for reporting years of 2009, 2008  2007 were +20. 61% ( +20. 61 % ), -32. 91% ( -32. 91 % )  and +7. 57% ( +7. 57 % )  assumption represents our estimate of long-term average prospective returns.
 selection process references historical data and current environment primarily utilizes qualitative judgment regarding future return expectations.
 recent annual returns may differ but recognizing volatility and unpredictability of investment returns we generally do not change assumption unless we modify investment strategy or identify events alter expectations of future returns.
evaluate reasonableness of our assumption we examine variety of viewpoints and data.
 various studies shown portfolios primarily of us equity securities returned approximately 10% ( 10 % ) over long periods time us debt securities returned approximately 6% ( 6 % ) annually over long periods.
 application of these historical returns to plan 2019s allocation of equities and bonds produces result between 8% ( 8 % ) and 8. 5% ( 8. 5 % ) is one point of reference  among other factors taken into consideration.
 we also examine plan 2019s actual historical returns over various periods.
 recent experience considered in evaluation with consideration especially for short periods recent returns not reliable indicators of future returns in low returns in recent periods are followed by higher returns in future periods ( and vice versa ).
 acknowledging wide range for assumption we annually examine assumption used by other companies with similar pension investment strategies ascertain whether our determinations differ from other observers.
 this data informs our process places emphasis on qualitative judgment of future investment returns given conditions existing at each annual measurement date.
 expected long-term return on plan assets for determining net periodic pension cost for 2009 was 8. 25% ( 8. 25 % ) , unchanged from 2008.
 during 2010  intend to decrease midpoint of plan 2019s target allocation range for equities by approximately five percentage points.
 result of this change factors pnc will change expected long-term return on plan assets to 8. 00% ( 8. 00 % ) for determining net periodic pension cost for 2010.
 under current accounting rules difference between expected long-term returns and actual returns is accumulated and amortized to pension expense over future periods.
one percentage point difference in actual return compared with expected return causes expense in subsequent years to change by up to $ 8 million as impact amortized into results operations.
 table below reflects estimated effects on pension expense of changes in annual assumptions, using 2010 estimated expense as baseline.
 change in assumption ( a ) estimated increase to 2010 pension expense ( in millions ).
 impact is effect of changing specified assumption while holding all other assumptions constant.
 currently estimate pretax pension expense of $ 41 million in 2010 compared with pretax $ 117 million in 2009.
 year-over-year reduction primarily due to amortization impact of favorable 2009 investment returns compared with expected long-term return assumption.
 pension plan contribution requirements not sensitive to actuarial assumptions.
 investment performance most impact on contribution requirements will drive amount of permitted contributions in future years.
 current law , including provisions pension protection act of 2006, sets limits to minimum and maximum contributions to plan.
 expect minimum required contributions under law will be zero for 2010.
 maintain other defined benefit plans less significant effect on financial results  including

change in assumption ( a )                                   | estimatedincrease to 2010pensionexpense ( inmillions )
------------------------------------------------------------ | ------------------------------------------------------
.5% ( .5 % ) decrease in discount rate                       | $ 10
.5% ( .5 % ) decrease in expected long-term return on assets | $ 18
.5% ( .5 % ) increase in compensation rate                   | $ 3


company expects to amortize $ 1. 7 million of actuarial loss from accumulated other comprehensive income ( loss ) into net periodic benefit costs in 2011.
 at december 31 , 2010  anticipated benefit payments from plan in future years as follows:.
 savings plans.
 cme maintains defined contribution savings plan pursuant to section 401 ( k ) of internal revenue code all.
 employees are participants option to contribute to plan.
 cme matches employee contributions up to 3% ( 3 % ) of employee 2019s base salary make additional discretionary contributions up to 2% ( 2 % ) of base salary.
 certain cme london-based employees eligible to participate in defined contribution plan.
 for london plan provides for company contributions of 10% ( 10 % ) of earnings vesting requirements.
 salary and cash bonuses paid included in definition of earnings.
 aggregate expense for all defined contribution savings plans amounted to $ 6. 3 million , $ 5. 2 million and $ 5. 8 million in 2010, 2009 and 2008  respectively.
 cme non-qualified plans.
 cme maintains non-qualified plans  participants may make assumed investment choices amounts contributed on behalf.
 not required cme invests contributions in assets mirror assumed investment choices.
 balances in plans subject to claims of general creditors exchange totaled $ 28. 8 million and $ 23. 4 million at december 31 , 2010 and 2009 .
 value of plans recorded as asset in consolidated balance sheets equal and offsetting liability.
 investment results of plans have no impact on net income investment results recorded in equal amounts to both investment income and compensation and benefits expense.
supplemental savings plan 2014cme maintains supplemental plan benefits for employees impacted by statutory limits under qualified pension and savings plan.
 all cme employees hired prior to january 1 , 2007 immediately vested in supplemental plan benefits.
 all cme employees hired on or after january 1 , 2007 subject to vesting requirements of underlying qualified plans.
 total expense for supplemental plan was $ 0. 9 million , $ 0. 7 million and $ 1. 3 million for 2010 , 2009 2008 .
 deferred compensation plan 2014a plan maintained by cme  eligible officers and members board of directors may contribute percentage of compensation and defer income taxes until time of distribution.
 nymexmembers 2019 retirement plan and benefits.
 nymex maintained retirement and benefit plan under commodities exchange , inc.
 ( comex ) members 2019 recognition and retention plan ( mrrp ).
 plan provides benefits to certain members of comex division based on long-term membership participation limited to individuals comex division members prior to nymex 2019s acquisition of comex in 1994.
 no new participants permitted into plan after date acquisition.
 company required to fund plan with minimum annual contribution of $ 0. 4 million until fully funded.
 benefits paid under mrrp based on reasonable actuarial assumptions amounts available and expected to be available pay benefits.
 total contributions to plan were $ 0. 8 million for each of 2010 , 2009 and for period august 23 through december 31 , 2008.
 at december 31 , 2010 and 2009  total obligation for mrrp totaled $ 20. 7 million and $ 20. 5 million

( in millions ) | year
--------------- | -----
2011            | $ 7.2
2012            | 8.2
2013            | 8.6
2014            | 9.5
2015            | 10.0
2016-2020       | 62.8


jpmorgan chase & co. /2010 annual report 187 trading assets liabilities assets include debt equity instruments for trading purposes jpmorgan chase owns ( 201clong 201d positions ) certain loans managed on fair value basis firm elected fair value option  physical commodities inventories accounted for at lower of cost or fair value.
 trading liabilities include debt equity instruments firm sold to other parties but not own ( 201cshort 201d positions ).
 firm obligated to purchase instruments future date to cover short positions.
 included in trading assets liabilities are reported receivables ( unrealized gains ) payables ( unre- alized losses ) related to derivatives.
 trading assets liabilities carried at fair value on consolidated balance sheets.
 bal- ances reflect reduction of securities owned ( long positions ) by amount securities sold but not yet purchased ( short posi- tions ) when long short positions identical committee uniform security identification procedures ( 201ccusips 201d ).
 trading assets liabilities 2013average balances trading assets liabilities for periods indicated.
 ( a ) balances reflect reduction of securities owned ( long positions ) by amount of securities sold not yet purchased ( short positions ) when long short positions identical.
 ( b ) primarily represent securities sold not yet purchased.
 note 4 2013 fair value option option provides option to elect fair value as alternative measurement for selected financial assets  financial liabilities unrecognized firm commitments written loan com- mitments not previously carried at fair value.
elections elections made by firm to : 2022 mitigate income statement volatility by differences in measurement basis of elected instruments ( for cer- tain instruments elected previously accounted for on accrual basis ) associated risk management arrange- ments accounted for on fair value basis ; 2022 eliminate complexities of applying certain accounting models (. hedge accounting bifurcation accounting for hybrid in struments ) ; 2022 better reflect instruments managed on fair value basis.
 elections include : 2022 loans purchased or originated as part of securitization ware- housing activity  subject to bifurcation accounting or man- aged on fair value basis.
 2022 securities financing arrangements with embedded deriva- tive maturity of greater than one year.
 2022 owned beneficial interests in securitized financial assets contain embedded credit derivatives required separately accounted for.
 2022 certain tax credits and other equity investments acquired part of washington mutual transaction.
 2022 structured notes issued part of ib 2019s client-driven activities.
 structured notes financial instruments contain em- bedded derivatives. 2022 long-term beneficial interests issued by ib 2019s consolidated securitization trusts where underlying assets carried at fair value.

year ended december 31 ( in millions )                           | 2010     | 2009     | 2008
---------------------------------------------------------------- | -------- | -------- | --------
trading assets 2013 debt and equity instruments ( a )            | $ 354441 | $ 318063 | $ 384102
trading assets 2013 derivative receivables                       | 84676    | 110457   | 121417
trading liabilities 2013 debt and equity instruments ( a ) ( b ) | 78159    | 60224    | 78841
trading liabilities 2013 derivative payables                     | 65714    | 77901    | 93200


transfer agent and registrar for common stock is : computershare shareowner services llc 480 washington boulevard 29th floor jersey city , new jersey 07310 telephone : ( 877 ) 363-6398 sales of unregistered securities not applicable.
 repurchase of equity securities table provides information regarding our purchases of equity securities during period from october 1  2013 to december 31 , 2013.
 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 includes shares of common stock  par value $ 0. 10 per share , withheld under terms grants employee stock-based compensation plans to offset tax withholding obligations upon vesting release of restricted shares ( 201cwithheld shares 201d ).
 repurchased 1067 withheld shares in october 2013.
 no withheld shares purchased in november or december 2013.
 average price per share for each months fiscal quarter three-month period calculated by dividing sum of applicable period of aggregate value of tax withholding obligations and aggregate amount paid for shares acquired under stock repurchase program described in note 6 to consolidated financial statements by sum of number of withheld shares and number of shares acquired in stock repurchase program.
 in february 2013  board authorized new share repurchase program to repurchase up to $ 300. 0 million , excluding fees of our common stock ( 201c2013 share repurchase program 201d ).
 in march 2013 board authorized increase in amount available under 2013 share repurchase program up to $ 500. 0 million , excluding fees of common stock.
february 14, 2014 , announced board approved new share repurchase program to repurchase time to time up to $ 300. 0 million , excluding fees , of our common stock.
 new authorization addition to amounts remaining available for repurchase under 2013 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 ( or approximate dollar value ) of shares ( or units ) that mayyet be purchased under theplans or programs3
--------------- | --------------------------------------------- | ----------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------
october 1 - 31  | 3351759                                       | $ 16.63                                   | 3350692                                                                                | $ 263702132
november 1 - 30 | 5202219                                       | $ 17.00                                   | 5202219                                                                                | $ 175284073
december 1 - 31 | 3323728                                       | $ 17.07                                   | 3323728                                                                                | $ 118560581
total           | 11877706                                      | $ 16.91                                   | 11876639                                                                                |


part i item 1.
 business company founded in 1886  american water works company , inc.
 ( 201ccompany 201d or 201camerican water 201d ) is holding company incorporated in delaware.
 american water largest most geographically diverse investor owned publicly-traded united states water and wastewater utility company  measured by operating revenues population served.
 employ approximately 6700 professionals provide drinking water , wastewater related services to estimated 15 million people in 47 states , district of columbia and ontario  canada.
 operating segments conduct business primarily through regulated businesses segment.
 also operate several market-based businesses provide broad range of related complementary water and wastewater services include four operating segments not meet criteria of reportable segment accordance with accepted accounting principles in united states ( 201cgaap 201d ).
 four non- reportable operating segments collectively presented as 201cmarket-based businesses , 201d consistent with management assesses results of businesses.
 additional information in item 7 2014management 2019s discussion analysis of financial condition and results of operations note 19 2014segment information in notes to consolidated financial statements.
 regulated businesses primary business involves ownership of subsidiaries provide water and wastewater utility services to residential , commercial industrial other customers including sale for resale public authority customers.
 subsidiaries provide services operate in approximately 1600 communities in 16 states united states subject to regulation by state commissions or entities utility regulation  referred as public utility commissions or ( 201cpucs 201d ).
 federal and state governments also regulate environmental , health and safety  water quality matters.
 report results of services provided by utilities in regulated businesses segment.
regulated businesses segment 2019s operating revenues were $ 2743 million 2015  $ 2674 million 2014 $ 2594 million 2013 accounting for 86. 8% (. 8 % ) , 88. 8% (. 8 % ) 90. 1% ( 90. 1 % )  of total operating revenues for same periods.
 following table summarizes regulated businesses 2019 operating revenues  number customers estimated population served by state each as of december 31, 2015 : operating revenues ( in millions ) % ( % ) of total number customers % ) total estimated population served ( in millions ) % total.
 a ) includes illinois-american water company american lake water company.
 b ) includes west virginia-american water company subsidiary bluefield valley water works company.
 c ) includes data from utilities in states : georgia  hawaii  iowa kentucky maryland michigan new york  tennessee virginia.

new jersey                    | operatingrevenues ( in millions ) $ 704 | % (  % ) of total 25.7% ( 25.7 % ) | number ofcustomers 660580 | % (  % ) of total 20.3% ( 20.3 % ) | estimatedpopulationserved ( in millions ) 2.7 | % (  % ) of total 22.3% ( 22.3 % )
----------------------------- | --------------------------------------- | ---------------------------------- | ------------------------- | ---------------------------------- | --------------------------------------------- | ----------------------------------
pennsylvania                  | 614                                     | 22.4% ( 22.4 % )                   | 672407                    | 20.7% ( 20.7 % )                   | 2.3                                           | 19.0% ( 19.0 % )
illinois ( a )                | 270                                     | 9.8% ( 9.8 % )                     | 313058                    | 9.6% ( 9.6 % )                     | 1.3                                           | 10.7% ( 10.7 % )
missouri                      | 269                                     | 9.8% ( 9.8 % )                     | 473245                    | 14.5% ( 14.5 % )                   | 1.5                                           | 12.4% ( 12.4 % )
indiana                       | 206                                     | 7.5% ( 7.5 % )                     | 295994                    | 9.1% ( 9.1 % )                     | 1.3                                           | 10.7% ( 10.7 % )
california                    | 198                                     | 7.2% ( 7.2 % )                     | 174942                    | 5.4% ( 5.4 % )                     | 0.6                                           | 5.0% ( 5.0 % )
west virginia ( b )           | 129                                     | 4.7% ( 4.7 % )                     | 169037                    | 5.2% ( 5.2 % )                     | 0.6                                           | 5.0% ( 5.0 % )
subtotal ( top seven states ) | 2390                                    | 87.1% ( 87.1 % )                   | 2759263                   | 84.8% ( 84.8 % )                   | 10.3                                          | 85.1% ( 85.1 % )
other ( c )                   | 353                                     | 12.9% ( 12.9 % )                   | 493428                    | 15.2% ( 15.2 % )                   | 1.8                                           | 14.9% ( 14.9 % )
total regulated businesses    | $ 2743                                  | 100.0% ( 100.0 % )                 | 3252691                   | 100.0% ( 100.0 % )                 | 12.1                                          | 100.0% ( 100.0 % )


table identifies company 2019s aggregate contractual obligations due by payment period : payments due by period.
 points significant to understanding cash flows estimated for obligations under property and casualty contracts : reserves for property & casualty unpaid claim and claim adjustment expenses include case reserves for reported claims and reserves for claims incurred but not reported ( ibnr ).
 payments due on claim reserves are considered contractual obligations relate to insurance policies issued by company, ultimate amount to be paid to settle both case reserves and ibnr is an estimate , subject to significant uncertainty.
 actual amount to paid not determined until company reaches settlement with claimant.
 final claim settlements may vary significantly from present estimates, since many claims will not be settled until into future.
 in estimating timing of future payments by year , company has assumed historical payment patterns will continue.
 actual timing of future payments will likely vary materially from estimates due to changes in claim reporting and payment patterns and large unanticipated settlements.
 in significant uncertainty over claim payment patterns of asbestos and environmental claims.
 estimated payments in 2005 do not include payments on claims incurred in 2005 on policies in force as of december 31 , 2004.
 table does not include future cash flows related to receipt of premiums used to fund loss payments.
 under company only permitted to discount reserves for claim and claim adjustment expenses in cases where payment pattern and ultimate loss costs are fixed and reliably determinable on individual claim basis.
 for these include claim settlements with permanently disabled claimants and certain structured settlement contracts that fund loss runoffs for unrelated parties.
as of december 31 , 2004 total property casualty reserves in above table of $ 21885 are gross of reserve discount of $ 556.
 estimated life  annuity disability obligations include death disability claims policy surrenders policyholder dividends trail commissions offset by expected future deposits premiums on in-force contracts.
 estimated contractual policyholder obligations based on mortality morbidity lapse assumptions comparable with life 2019s historical experience modified for recent observed trends.
 life assumed market growth interest crediting consistent with assumptions in amortizing deferred acquisition costs.
 contrast to table majority of life 2019s obligations recorded on balance sheet at current account value in critical accounting estimates do not incorporate expectation of future market growth interest crediting future deposits.
 estimated contractual policyholder obligations in table exceed liabilities recorded in reserve for future policy benefits unpaid claims claim adjustment expenses other policyholder funds benefits payable separate account liabilities.
 due to assumptions amounts presented could differ from actual results.
 separate account obligations legally insulated from general account obligations account fully funded by cash flows from separate account assets.
 life expects to fully fund general account obligations from cash flows from general account investments future deposits premiums.
 [3] includes contractual principal interest payments.
 payments exclude amounts associated with fair-value hedges of company 2019s long-term debt.
 all long-term debt obligations have fixed rates of interest.
 long-term debt obligations includes principal and interest payments of $ 700 and $ 2. 4 billion  respectively related to junior subordinated debentures callable beginning in 2006.
 see note 14 of notes to consolidated financial statements for additional discussion of long-term debt obligations.
 [4] includes $ 1.4 billion commitments to purchase investments including $ 330 limited partnerships $ 299 mortgage loans.
 outstanding commitments under limited partnerships mortgage loans included in payments due less than 1 year timing funding commitments cannot be estimated.
 remaining $ 759 relates to payables for securities purchased reflected on company 2019s consolidated balance sheet.
 [5] includes estimated contribution of $ 200 to company 2019s pension plan in 2005.
 [6] as of december 31 , 2004  company accepted cash collateral of $ 1. 6 billion with company 2019s securities lending program derivative instruments.
 timing return collateral uncertain  return collateral included in payments due in less than 1 year.
 [7] includes $ 52 collateralized loan obligations ( 201cclos 201d ) issued to third-party investors by consolidated investment management entity sponsored by company connection with synthetic clo transactions.
 clo investors no recourse to company 2019s assets other than dedicated assets collateralizing clos.
 refer to note 4 of notes consolidated financial statements for additional discussion

| total    | less than 1 year | 1-3 years | 3-5 years | more than 5 years
----------------------------------------------------------------- | -------- | ---------------- | --------- | --------- | -----------------
property and casualty obligations [1]                             | $ 21885  | $ 5777           | $ 6150    | $ 3016    | $ 6942
life annuity and disability obligations [2]                       | 281998   | 18037            | 37318     | 40255     | 186388
long-term debt obligations [3]                                    | 9093     | 536              | 1288      | 1613      | 5656
operating lease obligations                                       | 723      | 175              | 285       | 162       | 101
purchase obligations [4] [5]                                      | 1764     | 1614             | 120       | 14        | 16
other long-term liabilities reflected onthe balance sheet [6] [7] | 1642     | 1590             | 2014      | 52        | 2014
total                                                             | $ 317105 | $ 27729          | $ 45161   | $ 45112   | $ 199103


note 17.
 accumulated other comprehensive losses : pmi's accumulated comprehensive losses , net of taxes consisted of following:.
 reclassifications from other comprehensive earnings movements in accumulated other comprehensive losses related tax impact  for components due to current period activity and reclassifications to income statement shown on consolidated statements of comprehensive earnings for years ended december 31 , 2014 , 2013  and 2012.
 movement in currency translation adjustments for year ended december 31 , 2013 impacted by purchase of remaining shares of mexican tobacco business.
 $ 5 million and $ 12 million of net currency translation adjustment gains transferred from other comprehensive earnings to marketing , administration and research costs in consolidated statements of earnings for years ended december 31 , 2014 and 2013  upon liquidation of subsidiary.
 for additional information see note 13.
 benefit plans and note 15.
 financial instruments for disclosures related to pmi's pension and other benefits and derivative financial instruments.
 note 18.
 colombian investment and cooperation agreement : on june 19 , 2009  pmi announced signed agreement with republic of colombia  departments of colombia and capital district of bogota to promote investment and cooperation colombian tobacco market fight counterfeit and contraband tobacco products.
 investment cooperation agreement provides $ 200 million in funding to colombian governments over 20-year period to address issues mutual interest combating illegal cigarette trade  threat of counterfeit tobacco products increasing quality and quantity of locally grown tobacco.
 result of investment agreement pmi recorded pre-tax charge of $ 135 million in operating results of latin america & canada segment during second quarter of 2009.
december 31 , 2014 and 2013  pmi had $ 71 million and $ 74 million respectively discounted liabilities associated with colombian investment cooperation agreement.
 discounted liabilities primarily reflected in other long-term liabilities on consolidated balance sheets expected paid through 2028.
 note 19.
 rbh legal settlement : july 31 , 2008  rothmans inc.
 ( "rothmans ) announced finalization of cad 550 million settlement ( or approximately $ 540 million based prevailing exchange rate ) between itself rothmans , benson & hedges inc.
 ( "rbh" ) one government of canada all 10 provinces  other hand.
 settlement resolved royal canadian mounted police's investigation relating to products exported from canada by rbh during 1989-1996 period.
 rothmans' sole holding was 60% ( 60 % ) interest in rbh.
 remaining 40% ( 40 % ) interest rbh owned by pmi.

( losses ) earnings ( in millions )          | ( losses ) earnings 2014 | ( losses ) earnings 2013 | 2012
-------------------------------------------- | ------------------------ | ------------------------ | ----------------
currency translation adjustments             | $ -3929 ( 3929 )         | $ -2207 ( 2207 )         | $ -331 ( 331 )
pension and other benefits                   | -3020 ( 3020 )           | -2046 ( 2046 )           | -3365 ( 3365 )
derivatives accounted for as hedges          | 123                      | 63                       | 92
total accumulated other comprehensive losses | $ -6826 ( 6826 )         | $ -4190 ( 4190 )         | $ -3604 ( 3604 )


cash provided by operating activities dependent upon payment terms of license agreements.
 classified as upfront revenue we require 75% ( 75 % ) of term or perpetual license fee be paid within first year.
 payment terms for tsls extended license fee paid quarterly or annually in even increments over term of license.
 receive cash from upfront license revenue sooner than from time-based licenses revenue.
 fiscal 2008 to fiscal 2009.
 cash from operating activities decreased result of decrease in deferred revenue due to timing of billings and cash payments from certain customers increased payments to vendors compared to fiscal 2008 tax prepayment for irs settlement.
 see note 9 of notes to consolidated financial statements.
 fiscal 2007 to fiscal 2008.
 cash from operating activities decreased due to timing of billings and cash payments from customers compared to fiscal 2007 lower cash inflows during fiscal 2008 result of litigation settlement of $ 12. 5 million received from magma during fiscal 2007.
 cash used in investing activities fiscal 2008 to fiscal 2009.
 decrease in cash used relates to decrease in purchases of marketable securities and cash paid for acquisitions fiscal 2008 offset by timing of maturities of marketable securities.
 fiscal 2007 to 2008.
 decrease in cash used relates to sale of marketable securities for acquisition of synplicity lower capital expenditures during fiscal 2008 compared to fiscal 2007.
 cash provided by used in financing activities fiscal 2008 to fiscal 2009.
 increase in cash provided relates to absence of common stock repurchases in fiscal 2009 offset by decrease in number of options exercised by employees compared to fiscal 2008.
 fiscal 2007 to 2008.
 increase in cash used relates to more common stock repurchases under stock repurchase program and options exercised by employees compared to fiscal 2007.
see note 7 of notes to consolidated financial statements for details stock repurchase program.
 hold cash  cash equivalents short-term investments in united states foreign accounts  primarily in ireland , bermuda japan.
 as of october 31 , 2009  held aggregate of $ 612. 4 million in cash  cash equivalents short-term investments in united states aggregate $ 555. 9 million in foreign accounts.
 funds in foreign accounts generated from revenue outside north america.
 foreign funds considered to indefinitely reinvested in foreign countries to extent of indefinitely reinvested foreign earnings as described in note 9 of notes to consolidated financial statements.
 expect cash provided by operating activities to fluctuate in future periods result of factors  including timing of billings and collections  operating results  timing amount of tax other liability payments cash used in future acquisitions.
 accounts receivable , net october 31.

2009                    | 2008                    | $ change         | % (  % ) change
----------------------- | ----------------------- | ---------------- | ---------------
( dollars in millions ) | ( dollars in millions ) |                  |
$ 127.0                 | $ 147.4                 | $ -20.4 ( 20.4 ) | ( 14 ) % (  % )


management 2019s discussion analysis liquidity risk management liquidity critical importance to financial institutions.
 most failures of financial institutions occurred in due to insufficient liquidity.
 the firm has comprehensive conservative liquidity and funding policies to address firm-specific and broader industry or market liquidity events.
 principal objective is to to fund firm enable core businesses to continue serve clients generate revenues  even under adverse circumstances.
 we manage liquidity risk according to principles : excess liquidity.
 maintain substantial excess liquidity to meet broad potential cash outflows collateral needs in stressed environment.
 asset-liability management.
 assess anticipated holding periods for assets and expected liquidity in stressed environment.
 manage maturities diversity of funding across markets  products counterparties  maintain liabilities of appropriate tenor relative to asset base.
 contingency funding plan.
 maintain contingency funding plan framework for analyzing responding to liquidity crisis situation or market stress.
 framework sets forth plan of action to fund normal business activity in emergency stress situations.
 principles discussed in more detail below.
 excess liquidity important liquidity policy is to pre-fund estimated potential cash and collateral needs during liquidity crisis hold excess liquidity in form of unencumbered , highly liquid securities and cash.
 believe securities held in our global core excess would be readily convertible to cash in days , through liquidation , by entering repurchase agreements or from maturities of resale agreements this cash would allow us to meet immediate obligations without needing to sell other assets or depend on additional funding from credit-sensitive markets.
 as of december 2013 and december 2012  fair value of securities and certain overnight cash deposits included in our gce totaled $ 184. 07 billion and $ 174. 62 billion , respectively.
based on results of our internal liquidity risk model  discussed below consideration of other factors including assessment of potential intraday liquidity needs qualitative assessment of condition of financial markets and firm , we believe our liquidity position as of both december 2013 and december 2012 was appropriate.
 table below presents fair value of securities and certain overnight cash deposits included in our gce.
 average for year ended december in millions 2013 2012.
. s.
 dollar-denominated excess is composed of i ) unencumbered.
 government and federal agency obligations ( including highly liquid.
 federal agency mortgage-backed obligations ) eligible as collateral in federal reserve open market operations and ii ) certain overnight.
 dollar cash deposits.
 non- u.
 dollar-denominated excess composed of only unencumbered german , french , japanese united kingdom government obligations and certain overnight cash deposits in highly liquid currencies.
 we limit excess liquidity to this narrowly defined list of securities and cash because highly liquid  even in difficult funding environment.
 do not include other potential sources of excess liquidity less liquid unencumbered securities or committed credit facilities in our gce.
 goldman sachs 2013 annual report 83

in millions                  | average for theyear ended december 2013 | average for theyear ended december 2012
---------------------------- | --------------------------------------- | ---------------------------------------
u.s . dollar-denominated     | $ 136824                                | $ 125111
non-u.s . dollar-denominated | 45826                                   | 46984
total                        | $ 182650                                | $ 172095


not under obligation ( expressly disclaim obligation ) to update or alter our forward- looking statements , result of new information, future events or otherwise.
 consider possibility actual results may differ from forward-looking statements.
 item 1b.
 unresolved staff comments.
 item 2.
 properties.
 our corporate headquarters located in jacksonville , florida  in owned facility.
 fnf occupies and pays us rent for approximately 121000 square feet in facility.
 we lease office space as follows : number of locations ( 1 ).
 ( 1 ) represents number of locations in each state listed.
 also lease approximately 81 locations outside united states.
 believe properties adequate for our business presently conducted.
 item 3.
 legal proceedings.
 business involved in various pending and threatened litigation matters related to operations some include claims for punitive or exemplary damages.
 believe no actions , other than matters listed below depart from customary litigation incidental to business.
 background to disclosure note following : these matters raise difficult complicated factual and legal issues subject to many uncertainties and complexities.
 review these matters on on-going basis follows provisions of statement of financial accounting standards ( 201csfas 201d ) no.
 5 , 201caccounting for contingencies , 201d when making accrual and disclosure decisions.
 assessing reasonably possible probable outcomes base decision on assessment of ultimate outcome following all appeals.
 company and certain employees named on march 6 , 2006 as defendants in civil lawsuit brought by grace & digital information technology co. , ltd.
 ( 201cgrace 201d ) chinese company formerly acted as sales agent for alltel information services ( 201cais 201d ).
grace filed suit december 2004 in state court monterey county , california , alleging company breached sales agency agreement by failing to pay commissions associated with sales contracts signed in 2001 and 2003.
 2001 contracts never completed.
 2003 contracts , grace provided no assistance, for different project executed one and one-half years after grace 2019s sales agency agreement terminated.
 in addition to breach of contract claim grace alleged company violated foreign corrupt practices act ( fcpa ) in dealings with bank customer in china.
 company denied grace 2019s allegations in california lawsuit.

state                  | number of locations ( 1 )
---------------------- | -------------------------
california             | 57
florida                | 26
georgia                | 22
texas                  | 19
minnesota new york     | 9
illinois ohio maryland | 8
pennsylvania           | 7
other                  | 63


approximately 161 acres of undeveloped land 12-acre container storage facility in houston.
 total price was $ 89. 7 million financed in part through assumption secured debt fair value of $ 34. 3 million.
 of total purchase price  $ 64. 1 million allocated to in-service real estate assets  $ 20. 0 million allocated to undeveloped land container storage facility $ 5. 4 million allocated to lease related intangible assets remaining amount allocated to acquired working capital related assets and liabilities.
 results of operations for acquired properties since acquisition included in continuing rental operations in consolidated financial statements.
 in february 2007  completed acquisition of bremner healthcare real estate ( 201cbremner 201d ) national health care development and management firm.
 primary reason for acquisition to expand development capabilities within health care real estate market.
 initial consideration paid to sellers totaled $ 47. 1 million  sellers may be eligible for further contingent payments over three-year period following acquisition.
 approximately $ 39. 0 million of total purchase price allocated to goodwill attributable to value of bremner 2019s overall development capabilities in-place workforce.
 results of operations for bremner since acquisition included in continuing operations in consolidated financial statements.
 in february 2006  acquired majority of washington , d.
 metropolitan area portfolio of suburban office and light industrial properties ( 201cmark winkler portfolio 201d ).
 assets acquired for purchase price of approximately $ 867. 6 million of 32 in-service properties with approximately 2. 9 million square feet for rental , 166 acres of undeveloped land  certain related assets of mark winkler company real estate management company.
 acquisition financed primarily through assumed mortgage loans and new borrowings.
assets acquired liabilities assumed recorded at estimated fair value at date of acquisition summarized below ( in thousands ) :.
 purchase price  net of assumed liabilities $ 713202 in december 2006 contributed 23 in-service properties acquired from mark winkler portfolio basis of $ 381. 6 million real estate investments acquired lease related intangible assets to two new unconsolidated subsidiaries.
 remaining nine in-service properties , eight contributed to two unconsolidated subsidiaries in 2007 one remains in continuing operations as of december 31 , 2008.
 eight properties contributed in 2007 had basis of $ 298. 4 million real estate investments acquired lease related intangible assets debt secured by properties of $ 146. 4 million also assumed by unconsolidated subsidiaries.
 third quarter of 2006  finalized purchase of portfolio of industrial real estate properties in savannah , georgia.
 completed majority of purchase in january 2006.
 assets acquired for purchase price of approximately $ 196. 2 million of 18 buildings approximately 5. 1 million square feet for rental over 60 acres of undeveloped land.
 acquisition financed in part through assumed mortgage loans.
 results of operations for acquired properties since date acquisition included in continuing rental operations in consolidated financial statements.

operating rental properties               | $ 602011
----------------------------------------- | ------------------
undeveloped land                          | 154300
total real estate investments             | 756311
other assets                              | 10478
lease related intangible assets           | 86047
goodwill                                  | 14722
total assets acquired                     | 867558
debt assumed                              | -148527 ( 148527 )
other liabilities assumed                 | -5829 ( 5829 )
purchase price net of assumed liabilities | $ 713202


valuation of long-lived assets we estimate useful lives assets make estimates concerning undiscounted cash flows to review for impairment whenever events or changes in circumstances indicate carrying amount of asset or asset group ) may not be recoverable.
 fair value measured using discounted cash flows or independent appraisals as appropriate.
 intangible assets goodwill and other indefinite-lived intangible assets not subject to amortization tested for impairment annually whenever events changes circumstances indicate impairment may occurred.
 estimates of fair value for goodwill impairment testing determined based on discounted cash flow model.
 use inputs from long-range planning process to determine growth rates for sales and profits.
 make estimates of discount rates , perpetuity growth assumptions  market comparables  other factors.
 evaluate useful lives of other intangible assets , mainly brands  to determine if they are finite or indefinite-lived.
 reaching determination on useful life requires significant judgments and assumptions regarding future effects of obsolescence , demand  competition economic factors ( stability of industry known technological advances legislative action uncertain changing regulatory environment expected changes in distribution channels ) level of required maintenance expenditures expected lives of other related groups of assets.
 intangible assets deemed to have definite lives amortized on straight-line basis  over useful lives  generally ranging from 4 to 30 years.
 estimate of fair value of brand assets based on discounted cash flow model using inputs include projected revenues from long-range plan assumed royalty rates payable if not own brands discount rate.
 as of may 26 , 2019  had $ 20. 6 billion of goodwill and indefinite-lived intangible assets.
we believe fair value of each intangible exceeds carrying value intangibles classified contribute indefinitely to cash flows , different assumptions regarding future performance businesses or different weighted-average cost of capital could result in material impairment losses amortization expense.
 performed fiscal 2019 assessment of intangible assets first day of second quarter of fiscal 2019.
 result of lower sales projections in long-range plans for businesses supporting progresso , food should taste good , mountain high brand intangible assets recorded impairment charges : in millions impairment charge fair value nov.
 25 , 2018 progresso $ 132. 1 $ 330. 0 food should taste good 45. 1 - mountain high 15. 4 -.
 significant assumptions in assessment included long-range cash flow projections for businesses , royalty rates , weighted-average cost of capital rates  tax rates.

in millions            | impairment charge | fair value as of nov . 25 2018
---------------------- | ----------------- | ------------------------------
progresso              | $ 132.1           | $ 330.0
food should taste good | 45.1              | -
mountain high          | 15.4              | -
total                  | $ 192.6           | $ 330.0


measurement point december 31 booking holdings nasdaq index s&p 500 internet.

measurement pointdecember 31 | booking holdings inc . | nasdaqcomposite index | s&p 500index | rdg internetcomposite
---------------------------- | ---------------------- | --------------------- | ------------ | ---------------------
2013                         | 100.00                 | 100.00                | 100.00       | 100.00
2014                         | 98.09                  | 114.62                | 113.69       | 96.39
2015                         | 109.68                 | 122.81                | 115.26       | 133.20
2016                         | 126.12                 | 133.19                | 129.05       | 140.23
2017                         | 149.50                 | 172.11                | 157.22       | 202.15
2018                         | 148.18                 | 165.84                | 150.33       | 201.16


e nt e r g y c o r p o r a t i o n a n d s u b s i d i a r i e s 2 0 0 7 increase of $ 16 million in fossil operating costs due to purchase attala plant january 2006 perryville plant online july 2005 ; increase of $ 12 million related to storm reserves.
 increase not include costs hurricanes katrina and rita increase of $ 12 million due to return to normal expense patterns in 2006 versus deferral capitalization of storm costs in 2005.
 other operation and maintenance expenses increased for non- utility nuclear from $ 588 million in 2005 to $ 637 million in 2006 due to timing of refueling outages increased benefit insurance costs  increased nrc fees.
 taxes other than income taxes taxes increased for utility from $ 322 million in 2005 to $ 361 million in 2006 due to increase in city franchise taxes in arkansas due to change in 2006 in accounting for city franchise tax revenues apsc.
 change results in increase in taxes other than income taxes with increase in rider revenue no effect on net income.
 contributing to increase higher franchise tax expense at entergy gulf states , inc.
 higher gross revenues in 2006 customer refund in 2005.
 other income income increased for utility from $ 111 million in 2005 to $ 156 million in 2006 due to carrying charges on storm restoration costs.
 other income increased for non-utility nuclear due to miscellaneous income of $ 27 million ( $ 16. 6 million net-of-tax ) from reduction in decommissioning liability for plant revised decommissioning cost study changes in assumptions regarding timing decommissioning plant.
 other income increased for parent & other due to gain related to entergy-koch investment of approximately $ 55 million ( net-of-tax ) in fourth quarter of 2006.
2004  entergy-koch sold energy trading pipeline businesses to third parties.
 entergy received $ 862 million sales proceeds cash distribution by entergy-koch.
 due to november 2006 expiration of contingencies on sale of entergy-koch 2019s trading business corresponding release to entergy-koch of sales proceeds held in escrow entergy received additional cash distributions approximately $ 163 million fourth quarter of 2006 recorded gain of approximately $ 55 million ( net-of-tax ).
 entergy expects future cash distributions upon liquidation partnership less than $ 35 million.
 interest charges interest charges increased for utility parent & other due to additional borrowing fund storm restoration costs associated with hurricanes katrina rita.
 discontinued operations april 2006 entergy sold retail electric portion of competitive retail services business in electric reliability council of texas ( ercot ) region texas now reports portion business as discontinued operation.
 earnings for 2005 negatively affected by $ 44. 8 million ( net-of-tax ) of discontinued operations due to planned sale.
 amount includes net charge of $ 25. 8 million ( net-of-tax ) related to impairment reserve for remaining net book value of competitive retail services business 2019 information technology systems.
 results for 2006 include $ 11. 1 million gain ( net-of-tax ) on sale of retail electric portion of competitive retail services business in ercot region texas.
 income taxes effective income tax rates for 2006 and 2005 were 27. 6% ( 27. 6 % ) and 36. 6% ( 36. 6 % ).
 lower effective income tax rate in 2006 primarily due to tax benefits net of reserves tax capital loss recognized with liquidation of entergy power international holdings entergy 2019s holding company for entergy-koch.
contributing to lower rate for 2006 is irs audit settlement allowed entergy to release from tax reserves settled issues to 1996-1998 audit cycle.
 see note 3 to financial statements for reconciliation of federal statutory rate of 35. 0% (. % ) to effective income tax rates for additional discussion regarding income taxes.
 liquidity capital resources section discusses entergy 2019s capital structure  capital spending plans other uses of capital sources capital cash flow activity in cash flow statement.
 capital structure entergy 2019s capitalization is balanced between equity and debt shown in following table.
 increase in debt to capital percentage from 2006 to 2007 result of additional borrowings under entergy corporation 2019s revolving credit facility decrease in shareholders 2019 equity due to repurchases of common stock.
 increase debt to capital percentage in line with entergy 2019s financial and risk management aspirations.
 decrease in debt to capital percentage from 2005 to 2006 result of increase in shareholders 2019 equity  due to increase retained earnings  offset by repurchases of common stock.
 net debt consists of debt less cash and cash equivalents.
 debt consists of notes payable  capital lease obligations  preferred stock with sinking fund  long-term debt currently maturing portion.
 capital consists of debt  shareholders 2019 equity  preferred stock without sinking fund.
 net capital consists of capital less cash and cash equivalents.
 entergy uses net debt to net capital ratio in analyzing financial condition provides useful information to investors creditors evaluating entergy 2019s financial condition.
 2019s f i n anc ial d i scuss ion an alys is co n t i n u e d

| 2007             | 2006             | 2005
---------------------------------------------- | ---------------- | ---------------- | ----------------
net debt to net capital at the end of the year | 54.6% ( 54.6 % ) | 49.4% ( 49.4 % ) | 51.5% ( 51.5 % )
effect of subtracting cash from debt           | 3.0% ( 3.0 % )   | 2.9% ( 2.9 % )   | 1.6% ( 1.6 % )
debt to capital at the end of the year         | 57.6% ( 57.6 % ) | 52.3% ( 52.3 % ) | 53.1% ( 53.1 % )


pre-construction costs interim dam safety measures environmental costs construction costs.
 authorized costs recovered via surcharge over twenty-year period began october 2012.
 unrecovered balance of project costs incurred including cost of capital net surcharges totaled $ 85 million and $ 89 million as of december 31 , 2018 and 2017  respectively.
 surcharges collected were $ 8 million and $ 7 million for years ended december 31 , 2018 and 2017.
 general rate case approved in december 2018 approval to reset twenty-year amortization period to begin january 1, 2018 establish annual revenue requirement of $ 8 million recovered through base rates.
 debt expense amortized over lives of respective issues.
 call premiums on redemption of long- term debt unamortized debt expense deferred and amortized to extent recovered through future service rates.
 purchase premium recoverable through rates recovery of acquisition premiums related to asset acquisition by company 2019s utility subsidiary in california during 2002  acquisitions in 2007 by company 2019s utility subsidiary in new jersey.
 authorized for recovery by california new jersey pucs costs amortized to depreciation and amortization on consolidated statements of operations through november 2048.
 tank painting costs deferred and amortized to operations and maintenance expense on consolidated statements of operations straight-line basis over periods five to fifteen years authorized by regulatory authorities in determination of rates charged for service.
 result of prepayment by american water capital corp.  company 2019s wholly owned finance subsidiary ( 201cawcc 201d ) of 5. 62% ( 5. 62 % ) series c senior notes due upon maturity on december 21 , 2018 ( 201cseries c notes 201d ) , 5. 62% ( 5.62 % ) series e senior notes due march 29 , 2019 ( 201cseries e notes 201d ) 5. 77% ( 5. 77 % ) series f senior notes due december 21 , 2022 ( 201cseries f notes , 201d series e notes , 201cseries notes 201d ) make-whole premium of $ 10 million paid to holders series notes on september 11 , 2018.
 all early debt extinguishment costs allocable to company 2019s utility subsidiaries recorded as regulatory assets company believes probable of recovery in future rates.
 other regulatory assets include construction costs for treatment facilities  property tax stabilization  employee-related costs  deferred postretirement benefit expense  business services project expenses  coastal water project costs  rate case expenditures environmental remediation costs.
 costs deferred because amounts recovered in rates or probable of recovery through rates in future periods.
 regulatory liabilities liabilities represent amounts probable of being credited or refunded to customers through rate-making process.
 if costs expected to be incurred in future currently recovered through rates company records expected future costs as regulatory liabilities.
 following table provides composition of regulatory liabilities as of december 31:.

| 2018   | 2017
----------------------------------------------------------- | ------ | ------
income taxes recovered through rates                        | $ 1279 | $ 1242
removal costs recovered through rates                       | 309    | 315
postretirement benefit liability                            | 209    | 33
pension and other postretirement benefit balancing accounts | 46     | 48
tcja reserve on revenue                                     | 36     | 2014
other                                                       | 28     | 26
total regulatory liabilities                                | $ 1907 | $ 1664