item 7.
 management 2019s discussion and analysis of financial condition results of operations introduction following discussion analysis presents management 2019s perspective of our business , financial condition overall performance.
 this information intended to provide investors with understanding of our past performance  current financial condition outlook for future should be read in conjunction with 201citem 8.
 financial statements supplementary data 201d report.
 overview of 2017 results during 2017  generated solid operating results with strategy of operating in north america 2019s best resource plays  delivering superior execution disciplined capital allocation maintaining high degree of financial strength.
 led by development in stack and delaware basin  to improve 90-day initial production rates.
 with investments in proprietary data tools  predictive analytics artificial intelligence delivering industry-leading  initial-rate well productivity performance improving performance of established wells.
 compared to 2016  commodity prices increased significantly primary driver for improvements in devon 2019s earnings cash flow during 2017.
 exited 2017 with liquidity of $ 2. 7 billion of cash $ 2. 9 billion of available credit under senior credit facility.
 no significant debt maturities until 2021.
 enhanced financial strength by completing approximately $ 415 million of announced $ 1 billion asset divestiture program in 2017.
 anticipate closing remaining divestitures in 2018.
 2018 beyond financial capacity to accelerate investment across best-in-class u.
 resource plays.
 increasing drilling activity continue to shift production mix to high-margin products.
 continue premier technical work to drive capital allocation efficiency industry- leading well productivity results.
 continue to maximize value of base production by sustaining operational efficiencies achieved.
 continue to manage activity levels within cash flows.
 expect this disciplined approach will position us to deliver capital-efficient , cash-flow expansion over next two years.
key measures of financial performance in 2017 summarized in following table.
 increased commodity prices continued focus on production expenses improved 2017 financial performance compared to 2016, seen in table below.
 more details for these metrics found within 201cresults of operations 2013 2017 vs.
 2016 201d , below.

net earnings ( loss ) attributable to devon                          | 2017 $ 898 | change +185% ( +185 % ) | 2016* $ -1056 ( 1056 ) | change +92% ( +92 % ) | 2015* $ -12896 ( 12896 )
-------------------------------------------------------------------- | ---------- | ----------------------- | ---------------------- | --------------------- | ------------------------
net earnings ( loss ) per diluted share attributable to devon        | $ 1.70     | +181% ( +181 % )        | $ -2.09 ( 2.09 )       | +93% ( +93 % )        | $ -31.72 ( 31.72 )
core earnings ( loss ) attributable to devon ( 1 )                   | $ 427      | +217% ( +217 % )        | $ -367 ( 367 )         | - 430% ( 430 % )      | $ 111
core earnings ( loss ) per diluted share attributable to devon ( 1 ) | $ 0.81     | +210% ( +210 % )        | $ -0.73 ( 0.73 )       | - 382% ( 382 % )      | $ 0.26
retained production ( mboe/d )                                       | 541        | - 4% ( 4 % )            | 563                    | - 3% ( 3 % )          | 580
total production ( mboe/d )                                          | 543        | - 11% ( 11 % )          | 611                    | - 10% ( 10 % )        | 680
realized price per boe ( 2 )                                         | $ 25.96    | +39% ( +39 % )          | $ 18.72                | - 14% ( 14 % )        | $ 21.68
operating cash flow                                                  | $ 2909     | +94% ( +94 % )          | $ 1500                 | - 69% ( 69 % )        | $ 4898
capitalized expenditures including acquisitions                      | $ 2937     | - 25% ( 25 % )          | $ 3908                 | - 32% ( 32 % )        | $ 5712
shareholder and noncontrolling interests distributions               | $ 481      | - 8% ( 8 % )            | $ 525                  | - 19% ( 19 % )        | $ 650
cash and cash equivalents                                            | $ 2673     | +36% ( +36 % )          | $ 1959                 | - 15% ( 15 % )        | $ 2310
total debt                                                           | $ 10406    | +2% ( +2 % )            | $ 10154                | - 22% ( 22 % )        | $ 13032
reserves ( mmboe )                                                   | 2152       | +5% ( +5 % )            | 2058                   | - 6% ( 6 % )          | 2182


2 0 0 8 a n n u a l r e p o r t stock performance graph graph performance of our series a series b series c common stock for period september 18 , 2008 through december 31 , 2008 compared with performance standard and poor 2019s 500 index peer group index walt disney company , time warner inc. cbs corporation class b common stock  viacom , inc.
 class b common stock news corporation class a common stock scripps network interactive , inc.
 graph assumes $ 100 invested september 18 , 2006 all subsequent dividends reinvested in additional shares.
 september 18 , september 30 , december 31 , 2008 2008 2008.
 s&p 500 peer group

| september 18 2008 | september 30 2008 | december 31 2008
---------- | ----------------- | ----------------- | ----------------
disca      | $ 100.00          | $ 103.19          | $ 102.53
discb      | $ 100.00          | $ 105.54          | $ 78.53
disck      | $ 100.00          | $ 88.50           | $ 83.69
s&p 500    | $ 100.00          | $ 96.54           | $ 74.86
peer group | $ 100.00          | $ 92.67           | $ 68.79


net cash investing activities in 2013 included $ 38. 2 million for may 13 , 2013 acquisition of challenger.
 see note 2 to consolidated financial statements for information on challenger acquisition.
 capital expenditures in 2013 , 2012 2011 totaled $ 70. 6 million , $ 79. 4 million $ 61. 2 million  respectively.
 capital expenditures in 2013 included continued investments related to company 2019s strategic value creation processes around safety  quality customer connection innovation rci initiatives.
 capital expenditures all three years included spending support company 2019s strategic growth initiatives.
 in 2013 company continued invest in new product  efficiency safety cost reduction initiatives to expand improve manufacturing capabilities worldwide.
 2012  company completed construction of fourth factory in kunshan , china following 2011 construction new engineering and research development facility in kunshan.
 capital expenditures all three years included investments particularly in united states  in new product  efficiency safety cost reduction initiatives investments in new production machine tooling enhance manufacturing operations ongoing replacements of manufacturing distribution equipment.
 capital spending three years included spending for replacement enhancement of company 2019s global enterprise resource planning ( erp ) management information systems spending to enhance company corporate headquarters research and development facilities in kenosha , wisconsin.
 snap-on believes cash generated from operations available cash on hand funds from credit facilities will sufficient to fund company 2019s capital expenditure requirements in 2014.
 financing activities net cash used was $ 137. 8 million in 2013  $ 127. 0 million in 2012 $ 293. 7 million in 2011.
 net cash financing activities 2011 reflects august 2011 repayment of $ 200 million of unsecured 6. 25% ( 6. 25 % ) notes upon maturity with available cash.
 proceeds from stock purchase and option plan exercises totaled $ 29.2 million in 2013  $ 46. 8 million 2012 $ 25. 7 million in 2011.
 snap-on undertaken stock repurchases to offset dilution shares for employee franchisee stock purchase plans stock options corporate purposes.
 2013 snap-on repurchased 926000 shares common stock for $ 82. 6 million under previously announced share repurchase programs.
 as of 2013 year end snap-on had remaining availability to repurchase up to additional $ 191. 7 million common stock board of directors 2019 ( 201cboard 201d ) authorizations.
 purchase snap-on common stock at company 2019s discretion subject to prevailing financial market conditions.
 snap-on repurchased 1180000 shares common stock for $ 78. 1 million in 2012 repurchased 628000 shares common stock for $ 37. 4 million in 2011.
 believes cash from operations available cash on hand funds from credit facilities sufficient to fund company 2019s share repurchases if in 2014.
 snap-on paid consecutive quarterly cash dividends without interruption reduction since 1939.
 cash dividends paid in 2013 , 2012 2011 totaled $ 92. 0 million , $ 81. 5 million $ 76. 7 million  respectively.
 november 8 , 2013 company board increased quarterly cash dividend by 15. 8% ( 15. 8 % ) to $ 0. 44 per share ( $ 1. 76 per share per year ).
 quarterly dividends declared in 2013 were $ 0. 44 per share in fourth quarter $ 0. 38 per share in first three quarters ( $ 1. 58 per share for the year ).
 quarterly dividends 2012 were $ 0. 38 per share fourth quarter $ 0. 34 per share in first three quarters ( $ 1. 40 per share for year ).
 quarterly dividends 2011 were $ 0.34 per share fourth quarter $ 0. 32 per share first three quarters ( $ 1. 30 per share for year ).
 cash dividends paid percent of prior-year retained earnings 4. 5% ( 4. 5 % ) 4. 4% ( 4. 4 % ) snap-on believes cash generated from operations, available cash on hand funds from credit facilities sufficient to pay dividends 2014.
 off-balance-sheet arrangements except included below section 201ccontractual obligations and commitments 201d note 15 consolidated financial statements, company had no off-balance-sheet arrangements as 2013 year end.
 2013 annual report 49

| 2013           | 2012           | 2011
---------------------------------------------------------------- | -------------- | -------------- | --------------
cash dividends paid per common share                             | $ 1.58         | $ 1.40         | $ 1.30
cash dividends paid as a percent of prior-year retained earnings | 4.5% ( 4.5 % ) | 4.4% ( 4.4 % ) | 4.7% ( 4.7 % )


local consumer lending ( lcl )  constituted 70% ( % ) of citi holdings assets as of december 31 , 2010 includes portion of citigroup 2019s north american mortgage business  retail partner cards  western european cards retail banking  citifinancial north america other local consumer finance businesses globally.
 student loan corporation reported as discontinued operations corporate/other segment for second half of 2010.
 at december 31 , 2010 lcl had $ 252 billion assets ( $ 226 billion in north america ).
 approximately $ 129 billion assets in lcl as of december 31  2010 consisted of.
 mortgages in company 2019s citimortgage citifinancial operations.
 north american assets consist of residential mortgage loans retail partner card loans personal loans  commercial real estate other consumer loans assets.
 in millions of dollars 2010 2009 2008 % ( % ) change 2010 vs.
 2009 % ( % ) change 2009 vs.
 2008.
 2010 vs.
 2009 revenues net of interest expense decreased 11% ( 11 % ) from prior year.
 net interest revenue increased 6% ( 6 % ) due to adoption of sfas 166/167 offset by impact lower balances due to portfolio run-off asset sales.
 non-interest revenue declined 58% ( 58 % ) due to absence of $ 1. billion gain on sale of redecard in first quarter 2009 higher mortgage repurchase reserve charge.
 operating expenses decreased 18% ( 18 % ) due to impact divestitures lower volumes re-engineering actions absence of costs associated with.
 government loss-sharing agreement  exited in fourth quarter of 2009.
 provisions for credit losses benefits and claims decreased 38% ( 38 % ) reflecting net $ 1. 8 billion credit reserve release in 2010 compared to $ 5. 8 billion build in 2009.
lower net credit losses across businesses partially offset by impact adoption of sfas 166/167.
 comparable net credit losses lower year-over-year driven by improvement in.
 mortgages  international portfolios retail partner cards.
 assets declined 21% ( 21 % ) from prior year driven by portfolio run-off higher loan loss reserve balances impact of asset sales divestitures partially offset by increase of $ 41 billion from adoption of sfas 166/167.
 key divestitures in 2010 included student loan corporation  primerica  auto loans  canadian mastercard business.
 retail sales finance portfolios.
 2009 vs.
 2008 revenues net of interest expense decreased 24% ( 24 % ) from prior year.
 net interest revenue 24% ( 24 % ) lower prior year due to lower balances de-risking portfolio spread compression.
 non-interest revenue decreased $ 1. 6 billion driven by impact higher credit losses securitization trusts offset by $ 1. 1 billion gain on sale of redecard in first quarter of 2009.
 operating expenses declined 31% ( 31 % ) from prior year due to lower volumes reductions from expense re-engineering actions impact of goodwill write-offs of $ 3. 0 billion in fourth quarter of 2008 partially offset by higher costs associated with delinquent loans.
 provisions for credit losses for benefits claims increased 14% ( 14 % ) from prior year increase in net credit losses of $ 6. 1 billion partially offset by lower reserve builds of $ 2. 8 billion.
 higher net credit losses driven by higher losses of $ 3. 6 billion in residential real estate lending  $ 1. 0 billion in retail partner cards $ 0. 7 billion in international.
assets decreased $ 57 billion from prior year driven by lower originations wind-down businesses asset sales divestitures write- offs higher loan loss reserve balances.
 key divestitures 2009 included fi credit card business  italy consumer finance  diners europe  portugal cards  norway consumer diners club north america.

in millions of dollars                                   | 2010             | 2009               | 2008               | % (  % ) change 2010 vs . 2009 | % (  % ) change 2009 vs . 2008
-------------------------------------------------------- | ---------------- | ------------------ | ------------------ | ------------------------------ | ------------------------------
net interest revenue                                     | $ 13831          | $ 12995            | $ 17136            | 6% ( 6 % )                     | ( 24 ) % (  % )
non-interest revenue                                     | 1995             | 4770               | 6362               | -58 ( 58 )                     | -25 ( 25 )
total revenues net of interest expense                   | $ 15826          | $ 17765            | $ 23498            | ( 11 ) % (  % )                | ( 24 ) % (  % )
total operating expenses                                 | $ 8064           | $ 9799             | $ 14238            | ( 18 ) % (  % )                | ( 31 ) % (  % )
net credit losses                                        | $ 17040          | $ 19185            | $ 13111            | ( 11 ) % (  % )                | 46% ( 46 % )
credit reserve build ( release )                         | -1771 ( 1771 )   | 5799               | 8573               | nm                             | -32 ( 32 )
provision for benefits and claims                        | 775              | 1054               | 1192               | -26 ( 26 )                     | -12 ( 12 )
provision for unfunded lending commitments               | 2014             | 2014               | 2014               | 2014                           | 2014
provisions for credit losses and for benefits and claims | $ 16044          | $ 26038            | $ 22876            | ( 38 ) % (  % )                | 14% ( 14 % )
( loss ) from continuing operations before taxes         | $ -8282 ( 8282 ) | $ -18072 ( 18072 ) | $ -13616 ( 13616 ) | 54% ( 54 % )                   | ( 33 ) % (  % )
benefits for income taxes                                | -3289 ( 3289 )   | -7656 ( 7656 )     | -5259 ( 5259 )     | 57                             | -46 ( 46 )
( loss ) from continuing operations                      | $ -4993 ( 4993 ) | $ -10416 ( 10416 ) | $ -8357 ( 8357 )   | 52% ( 52 % )                   | ( 25 ) % (  % )
net income attributable to noncontrolling interests      | 8                | 33                 | 12                 | -76 ( 76 )                     | nm
net ( loss )                                             | $ -5001 ( 5001 ) | $ -10449 ( 10449 ) | $ -8369 ( 8369 )   | 52% ( 52 % )                   | ( 25 ) % (  % )
average assets ( in billions of dollars )                | $ 324            | $ 351              | $ 420              | ( 8 ) % (  % )                 | -16 ( 16 )
net credit losses as a percentage of average loans       | 6.20% ( 6.20 % ) | 6.38% ( 6.38 % )   | 3.80% ( 3.80 % )   |                                |


fair value for options estimated at date of grant using black-scholes option pricing model with weighted-average assumptions for 2006 , 2005 2004:.
 black-scholes option valuation model developed for estimating fair value of traded options no vesting restrictions fully transferable.
 option valuation models require input subjective assumptions including expected stock price volatility.
 company 2019s employee stock options have characteristics different from traded options changes in subjective input assumptions can affect fair value estimate in management 2019s opinion existing models do not provide reliable single measure of fair value of employee stock options.
 total fair value of shares vested during 2006 , 2005  2004 was $ 9413 , $ 8249 , and $ 6418 respectively.
 aggregate intrinsic values of options outstanding and exercisable at december 30 , 2006 were $ 204. 1 million and $ 100. 2 million  respectively.
 aggregate intrinsic value of options exercised during year ended december 30 , 2006 was $ 42. 8 million.
 aggregate intrinsic value represents positive difference between company 2019s closing stock price on last trading day of fiscal period $ 55. 66 on december 29, 2006  and exercise price multiplied by number of options outstanding.
 as of december 30 , 2006  was $ 64. 2 million of total unrecognized compensation cost related to unvested share-based compensation awards granted to employees under option plans.
 cost expected to be recognized over five years.
 employee stock purchase plan shareholders adopted employee stock purchase plan ( espp ).
 up to 2000000 shares of common stock reserved for espp.
 shares offered to employees at price equal to lesser of 85% ( 85 % ) of fair market value of stock on date of purchase or 85% ( 85 % ) of fair market value on enrollment date.
espp intended qualify as 201cemployee stock purchase plan 201d under section 423 internal revenue code.
 during 2006 , 2005 2004 , 124693 , 112798  117900 shares purchased under plan for total purchase price $ 3569 , $ 2824 $ 2691 , respectively.
 at december 30 , 2006  approximately 1116811 shares available for future issuance.

| 2006             | 2005             | 2004
---------------------------------------------- | ---------------- | ---------------- | ----------------
weighted average fair value of options granted | $ 20.01          | $ 9.48           | $ 7.28
expected volatility                            | 0.3534           | 0.3224           | 0.3577
distribution yield                             | 1.00% ( 1.00 % ) | 0.98% ( 0.98 % ) | 1.30% ( 1.30 % )
expected life of options in years              | 6.3              | 6.3              | 6.3
risk-free interest rate                        | 5% ( 5 % )       | 4% ( 4 % )       | 4% ( 4 % )


14.
 leases we lease certain locomotives  freight cars  other property.
 consolidated statement of financial position as of december 31 , 2008 and 2007 included $ 2024 million , net of $ 869 million of amortization  and $ 2062 million , net of $ 887 million of amortization  for properties under capital leases.
 charge to income from amortization for assets capital leases included within depreciation expense in consolidated statements of income.
 future minimum lease payments for operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of december 31, 2008 were : millions of dollars operating leases capital leases.
 majority of capital lease payments relate to locomotives.
 rent expense for operating leases with terms exceeding one month was $ 747 million in 2008  $ 810 million in 2007  $ 798 million in 2006.
 when cash rental payments not made straight-line basis recognize variable rental expense straight-line basis over lease term.
 contingent rentals and sub-rentals not significant.
 15.
 commitments contingencies asserted and unasserted claims 2013 various claims lawsuits pending against us and subsidiaries.
 cannot fully determine effect of all asserted claims on consolidated results of operations  financial condition liquidity ; where asserted claims considered probable reasonably estimated recorded liability.
 do not expect any known lawsuits , claims  environmental costs  commitments contingent liabilities or guarantees will have material adverse effect on consolidated results of operations  financial condition or liquidity after taking account liabilities and insurance recoveries previously recorded for these matters.
personal injury 2013 cost of personal injuries to employees related to activities charged to expense based on estimates ultimate cost number of incidents each year.
 use third-party actuaries to assist measuring expense and liability including unasserted claims.
 federal employers 2019 liability act ( fela ) governs compensation for work-related accidents.
 under fela damages assessed based on finding fault through litigation or out-of-court settlements.
 offer comprehensive variety of services rehabilitation programs for employees injured personal injury liability discounted to present value using applicable u. s.
 treasury rates.
 approximately 88% ( 88 % ) of recorded liability related to asserted claims approximately 12% ( 12 % ) related to unasserted claims at december 31 , 2008.
 uncertainty surrounding ultimate outcome of personal injury claims possible future costs to settle claims may range from

millions of dollars                     | operatingleases | capitalleases
--------------------------------------- | --------------- | -------------
2009                                    | $ 657           | $ 188
2010                                    | 614             | 168
2011                                    | 580             | 178
2012                                    | 465             | 122
2013                                    | 389             | 152
later years                             | 3204            | 1090
total minimum lease payments            | $ 5909          | $ 1898
amount representing interest            | n/a             | 628
present value of minimum lease payments | n/a             | $ 1270


a ) consists of pollution control revenue bonds and environmental revenue bonds  secured by collateral mortgage bonds.
 b pursuant to nuclear waste policy act of 1982  entergy 2019s nuclear owner/licensee subsidiaries have contracts with doe for spent nuclear fuel disposal service. contracts include one-time fee for generation prior to april 7 , 1983. a0entergy arkansas only entergy company generated electric power with nuclear fuel prior to date includes one-time fee  plus accrued interest  in long-term debt.
 see note 10 to financial statements for discussion of waterford 3 lease obligation entergy louisiana 2019s acquisition of equity participant 2019s beneficial interest in waterford 3 leased assets for discussion grand gulf lease obligation.
 d ) this note stated interest rate had implicit interest rate of 7. 458% ( 7. 458 % ).
 e fair value excludes lease obligations of $ 34 million at system energy long-term doe obligations of $ 183 million at entergy arkansas  includes debt due within one year. a0fair values classified as level 2 in fair value hierarchy discussed in note 15 to financial statements based on prices from benchmark yields reported trades.
 annual long-term debt maturities ( excluding lease obligations long-term doe obligations ) for debt outstanding as of december a031 , 2017  for next five years are as follows : amount ( in thousands ).
 in november 2000 , entergy 2019s non-utility nuclear business purchased fitzpatrick and indian point 3 power plants in seller-financed transaction.
 purchase agreement with nypa entergy recorded liability representing net present value of payments entergy liable to nypa for each year fitzpatrick and indian point 3 power plants run beyond original nrc license expiration date.
 october 2015  entergy announced planned shutdown of fitzpatrick end of fuel cycle.
 result announcement entergy reduced liability by $ 26. 4 million terms of purchase agreement.
 august 2016 entergy entered trust transfer agreement with nypa to transfer decommissioning trust funds and decommissioning liabilities for indian point 3 and fitzpatrick plants to entergy.
 trust transfer agreement original decommissioning agreements amended entergy subsidiaries 2019 obligation to make additional license extension payments to nypa eliminated.
 third quarter 2016 entergy removed note payable of $ 35. 1 million from consolidated balance sheet.
 entergy louisiana , entergy mississippi  entergy new orleans  entergy texas  system energy obtained long-term financing authorizations from ferc extend through october 2019. a0entergy arkansas obtained long-term financing authorization from apsc extends through december 2018.
 entergy new orleans obtained long-term financing authorization from city council extends through june 2018 city council has concurrent jurisdiction with ferc over such issuances.
 capital funds agreement agreement with certain creditors entergy corporation agreed to supply system energy with sufficient capital to : 2022 maintain system energy 2019s equity capital at minimum of 35% ( 35 % ) of total capitalization ( excluding short- term debt ) ; entergy corporation and subsidiaries notes to financial statements

| amount ( in thousands )
---- | -----------------------
2018 | $ 760000
2019 | $ 857679
2020 | $ 898500
2021 | $ 960764
2022 | $ 1304431


table of contents other equity method investments infraservs.
 we hold indirect ownership interests in several german infraserv groups that own and develop industrial parks and provide on-site general and administrative support to tenants.
 our ownership interest in the equity investments in infraserv affiliates are as follows : as of december 31 , 2017 ( in percentages ) infraserv gmbh & co.
 gendorf kg ( 1 ).
 39.
 infraserv gmbh & co.
 knapsack kg ( 1 ).
 27 ______________________________ ( 1 ) see note 29 - subsequent events in the accompanying consolidated financial statements for further information.
 research and development our business models leverage innovation and conduct research and development activities to develop new , and optimize existing , production technologies , as well as to develop commercially viable new products and applications.
 research and development expense was $ 72 million , $ 78 million and $ 119 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively.
 we consider the amounts spent during each of the last three fiscal years on research and development activities to be sufficient to execute our current strategic initiatives.
intellectual property we attach importance to protecting our intellectual property , including safeguarding confidential information through patents , trademarks copyrights  to preserve our investment in research and development , manufacturing marketing.
 patents may cover processes , equipment  products  intermediate products product uses.
 seek to register trademarks protecting brand names of our company products.
 patents.
 in most industrial countries  patent protection exists for new substances formulations for certain unique applications production processes.
 , we do business in regions world where intellectual property protection may be limited difficult to enforce.
 confidential information.
 we maintain stringent information security policies and procedures wherever do business.
 such information security policies procedures include data encryption  controls over disclosure safekeeping of confidential information trade secrets employee awareness training.
 trademarks.
amcel ae  aoplus ae ateva ae avicor ae celanese ae celanex ae  celcon ae celfx ae  celstran ae celvolit ae  clarifoil ae dur- o-set ae ecomid ae ecovae ae forflex ae forprene ae  frianyl ae fortron ae  ghr ae  gumfit ae gur ae  hostaform ae  laprene ae metalx ae  mowilith ae  mt ae nilamid ae nivionplast ae  nutrinova ae  nylfor ae  pibiflex ae pibifor ae pibiter ae  polifor ae  resyn ae  riteflex ae  slidex ae  sofprene ae sofpur ae  sunett ae  talcoprene ae tecnoprene ae thermx ae  tufcor ae  vantage ae  vectra ae  vinac ae vinamul ae  vitaldose ae  zenite ae certain other branded products and services in document are registered reserved trademarks or service marks owned licensed by celanese.
 not exhaustive comprehensive list of all registered trademarks service marks by celanese.
 fortron ae registered trademark of fortron industries llc.
 hostaform ae registered trademark of hoechst gmbh.
 mowilith ae nilamid ae registered trademarks of celanese in most european countries.
 we monitor competitive developments defend against infringements on intellectual property rights.
 neither celanese nor business segment dependent upon any one patent  trademark  copyright or trade secret.
environmental other regulation matters pertaining environmental regulations discussed in item 1a.
 risk factors , note 2 - summary of accounting policies, note 16 - environmental note 24 - commitments contingencies in accompanying consolidated financial statements.

| as of december 31 2017 ( in percentages )
--------------------------------------- | -----------------------------------------
infraserv gmbh & co . gendorf kg ( 1 )  | 39
infraserv gmbh & co . hoechst kg        | 32
infraserv gmbh & co . knapsack kg ( 1 ) | 27


part iii item 10.
 directors  executive officers corporate governance information required incorporated by reference to 201celection of directors 201d section  201cdirector selection process 201d section 201ccode of conduct 201d section 201cprincipal committees of board of directors 201d section 201caudit committee 201d section 201csection 16 ( a ) beneficial ownership reporting compliance 201d section proxy statement for annual meeting of stockholders may 27 , 2010 201cproxy statement 201d ) except description of executive officers appears in part i of report on form 10-k under heading 201cexecutive officers of ipg. 201d new york stock exchange certification 2009  ceo provided annual ceo certification to new york stock exchange required under section 303a. 12 ( a ) of new york stock exchange listed company manual.
 item 11.
 executive compensation information incorporated reference 201ccompensation of executive officers 201d section 201cnon-management director compensation 201d section 201ccompensation discussion and analysis 201d section 201ccompensation committee report 201d section proxy statement.
 item 12.
 security ownership of certain beneficial owners management related stockholder matters information incorporated by reference to 201coutstanding shares 201d section of proxy statement except for information regarding shares of common stock to be issued may issued under equity compensation plans as of december 31 , 2009  provided in following table.
 equity compensation plan information plan category number of shares of common stock to be issued upon exercise of outstanding options  warrants rights ( a ) 12 weighted-average exercise price of outstanding stock options ( b ) number of securities remaining available for future issuance under equity compensation plans ( excluding securities reflected in column a ) ( c ) 3 equity compensation plans approved by security holders.
.
.
.
.
.
.
.
.
 34317386 $ 16. 11 52359299 equity compensation plans not approved by security holders 4.
.
.
.
.
 612500 $ 27. 53 2014.
 1 includes 6058967 performance-based share awards under 2004 , 2006 2009 performance incentive plan representing target number of shares to be issued to employees following 2007-2009 performance period ( 201c2009 ltip share awards 201d ) 2008- 2010 period 201c2010 ltip awards 201d ) and 2009-2011 performance period ( 201c2011 ltip share awards 201d ).
 computation of weighted-average exercise price in column ( b ) table not take 2009 ltip 2010 or 2011 ltip share awards into account.
 2 includes 3914804 restricted share unit and performance-based awards ( 201cshare unit awards 201d ) may be settled in shares or cash.
 computation weighted-average exercise price in column ( b ) table does not take share unit awards into account.
 each share unit award settled in cash will increase number of shares of common stock available for issuance shown in column ( c ).
 3 includes i 37885502 shares of common stock for under 2009 performance incentive plan, 13660306 shares common stock for under employee stock purchase plan ( 2006 ) and iii ) 813491 shares common stock for under 2009 non-management directors 2019 stock incentive plan.
 4 consists of special stock option grants awarded to certain true north executives following acquisition of true north ( 201ctrue north options 201d ).
 true north options have exercise price equal to fair market value of interpublic 2019s common stock on date of grant.
 terms and conditions of stock option awards governed by interpublic 2019s 1997 performance incentive plan.
generally , options become exercisable between two and five years after date grant expire ten years from grant date.

plan category                                               | number of shares of common stock to be issued upon exercise of outstandingoptions warrants and rights ( a ) 12 | weighted-average exercise price of outstanding stock options ( b ) | number of securities remaining available for futureissuance under equity compensation plans ( excluding securities reflected in column a ) ( c ) 3
----------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------
equity compensation plans approved by security holders      | 34317386                                                                                | $ 16.11                                                            | 52359299
equity compensation plans not approved by security holders4 | 612500                                                                                | $ 27.53                                                            | 2014
total                                                       | 34929886                                                                                | $ 16.31                                                            | 52359299


edwards lifesciences corporation notes to consolidated financial statements ( continued ) 2.
 summary of significant accounting policies ( continued ) in may 2014  fasb issued update to accounting guidance on revenue recognition.
 new guidance provides comprehensive  principles-based approach to revenue recognition supersedes previous revenue recognition guidance.
 core principle guidance is entity should recognize revenue to depict transfer of promised goods or services to customers in amount reflects consideration to entity expects to be entitled in exchange for goods or services.
 guidance requires improved disclosures on nature , amount  timing  uncertainty of revenue recognized.
 in august 2015  fasb issued update to guidance to defer effective date by one year new standard effective for annual reporting periods beginning after december 15 , 2017 and interim periods therein.
 new guidance can be applied retrospectively to each prior reporting period or retrospectively with cumulative effect of change recognized at date of initial application.
 company is assessing potential impacts of revenue recognition guidance not yet selected adoption method.
 company will adopt new guidance effective january 1 , company not yet completed assessment of new revenue recognition guidance company 2019s analysis of contracts related to sale of heart valve therapy products under new revenue recognition guidance supports recognition of revenue at point-in-time consistent with current revenue recognition model.
 heart valve therapy sales accounted for approximately 80% ( 80 % ) of company 2019s sales for year ended december 31 , 2016.
 company currently assessing potential impact of guidance on contracts related to sale of critical care products  specifically sales outside of united states.
 3.
 intellectual property litigation expenses ( income ) , net in may 2014  company entered into agreement with medtronic , inc.
affiliates ( 2018 2018medtronic 2019 2019 ) to settle all outstanding patent litigation between companies  including cases related to transcatheter heart valves.
 pursuant agreement, all pending cases or appeals in courts patent offices worldwide dismissed parties will not litigate patent disputes with each other in field transcatheter valves for eight-year term of agreement.
 under terms patent cross-license part of agreement , medtronic made one-time upfront payment to company for past damages amount $ 750. 0 million.
 medtronic will pay company quarterly license royalty payments through april 2022.
 for sales in united states , subject to certain conditions , royalty payments based on percentage of medtronic 2019s sales of transcatheter aortic valves , minimum annual payment of $ 40. 0 million maximum annual payment of $ 60. 0 million.
 separate royalty payment calculated based on sales of medtronic transcatheter aortic valves manufactured in united states but sold elsewhere.
 company accounted for settlement agreement as multiple-element arrangement allocated total consideration to identifiable elements based upon relative fair value.
 consideration assigned to each element was as follows ( in millions ) :.

past damages        | $ 754.3
------------------- | --------
license agreement   | 238.0
covenant not to sue | 77.7
total               | $ 1070.0


synopsys , inc.
 notes to consolidated financial statements 2014continued aggregate purchase price consideration was approximately us$ 417. 0 million.
 as of october 31 , 2012  total purchase consideration and preliminary purchase price allocation were as follows:.
 goodwill of $ 247. 5 million  not deductible for tax primarily resulted from company 2019s expectation of sales growth and cost synergies from integration of springsoft 2019s technology and operations with company 2019s technology.
 identifiable intangible assets  primarily of technology , customer relationships  backlog trademarks  valued using income method amortized over three to eight years.
 acquisition-related costs attributable to business combination were $ 6. 6 million for fiscal 2012 expensed as incurred in consolidated statements of operations.
 costs consisted primarily of employee separation costs and professional services.
 fair value of equity awards : merger agreement  company assumed all unvested outstanding stock options of springsoft upon completion merger vested options exchanged for cash in merger.
 on october 1 , 2012 completion tender offer fair value of awards to be assumed and exchanged was $ 9. 9 million , calculated using black-scholes option pricing model.
 option model incorporates subjective assumptions including expected volatility  expected term risk-free interest rates.
 expected volatility estimated by combination of implied and historical stock price volatility of options.
 non-controlling interest : non-controlling interest represents fair value of 8. 4% (. 4 % ) of outstanding springsoft shares not acquired during tender offer process completed on october 1, 2012 and fair value of option awards to be assumed or exchanged for cash upon follow-on merger.
fair value of non-controlling interest included part of aggregate purchase consideration was $ 42. 8 million disclosed as separate line in october 31 , 2012 consolidated statements of stockholders 2019 equity.
 during period between completion tender offer and end of company 2019s fiscal year on october 31 , 2012 , non-controlling interest adjusted by $ 0. 5 million to reflect non interest 2019s share of operating loss of springsoft in period.
 amount is not significant  included as part of other income ( expense ) , net , in consolidated statements of operations.

| ( in thousands )
--------------------------------------------------------------- | ----------------
cash paid                                                       | $ 373519
fair value of shares to be acquired through a follow-on merger  | 34054
fair value of equity awards allocated to purchase consideration | 9383
total purchase consideration                                    | $ 416956
goodwill                                                        | 247482
identifiable intangibles assets acquired                        | 108867
cash and other assets acquired                                  | 137222
liabilities assumed                                             | -76615 ( 76615 )
total purchase allocation                                       | $ 416956


part ii item 5.
 market for registrant 2019s common equity  related stockholder matters issuer purchases of equity securities vornado 2019s common shares traded on new york stock exchange under symbol 201cvno. 201d quarterly high and low sales prices common shares dividends paid per share for years ended december 31 , 2011 2010 follows : year ended year ended december 31 , 2011 december 31 , 2010.
 as of february 1 , 2012  1230 holders of record of common shares.
 recent sales unregistered securities fourth quarter of 2011  issued 20891 common shares upon redemption of class a units of operating partnership held by persons received units private placements exchange for interests in limited partnerships owned real estate.
 common shares issued without registration under securities act of 1933 reliance section 4 ( 2 ) act.
 information relating compensation plans under equity securities authorized for issuance set forth under part iii , item 12 of annual report on form 10-k information incorporated by reference herein.
 recent purchases of equity securities in december 2011  received 410783 vornado common shares average price $ 76. 36 per share as payment for exercise certain employee options.

quarter | year ended december 31 2011 high | year ended december 31 2011 low | year ended december 31 2011 dividends | year ended december 31 2011 high | year ended december 31 2011 low | dividends
------- | -------------------------------- | ------------------------------- | ------------------------------------- | -------------------------------- | ------------------------------- | ---------
1st     | $ 93.53                          | $ 82.12                         | $ 0.69                                | $ 78.40                          | $ 61.25                         | $ 0.65
2nd     | 98.42                            | 86.85                           | 0.69                                  | 86.79                            | 70.06                           | 0.65
3rd     | 98.77                            | 72.85                           | 0.69                                  | 89.06                            | 68.59                           | 0.65
4th     | 84.30                            | 68.39                           | 0.69                                  | 91.67                            | 78.06                           | 0.65


stock performance graph graph sets cumulative total shareholder return on our series a, series b series c common stock compared with cumulative total return of companies in standard and poor 2019s 500 stock index ( 201cs&p 500 index 201d ) and peer group of companies cbs corporation class b common stock  scripps network interactive  inc.
 acquired by company in march 2018 ) time warner , inc.
 acquired by at&t inc.
 in june 2018 ) twenty-first century fox , inc.
 class a common stock ( news corporation class a common stock prior to june 2013 ) viacom , inc.
 class b common stock walt disney company.
 graph assumes $ 100 originally invested on december 31 , 2013 in each of series a common stock series b common stock series c common stock , s&p 500 index  and stock of peer group companies  including reinvestment of dividends  for years ended december 31 , 2014 , 2015  2016  2017 2018.
 two peer companies  scripps networks interactive .
 time warner , inc. acquired in 2018.
 stock performance chart shows peer group including scripps networks interactive .
 time warner  inc.
 excluding both acquired companies for entire five year period.
 december 31 , december 31 .
 equity compensation plan information information regarding securities authorized for issuance under equity compensation plans in definitive proxy statement for 2019 annual meeting of stockholders under caption 201csecurities authorized for issuance under equity compensation plans , 201d incorporated herein by reference.

| december 312013 | december 312014 | december 312015 | december 312016 | december 312017 | december 312018
------------------------------------ | --------------- | --------------- | --------------- | --------------- | --------------- | ---------------
disca                                | $ 100.00        | $ 74.58         | $ 57.76         | $ 59.34         | $ 48.45         | $ 53.56
discb                                | $ 100.00        | $ 80.56         | $ 58.82         | $ 63.44         | $ 53.97         | $ 72.90
disck                                | $ 100.00        | $ 80.42         | $ 60.15         | $ 63.87         | $ 50.49         | $ 55.04
s&p 500                              | $ 100.00        | $ 111.39        | $ 110.58        | $ 121.13        | $ 144.65        | $ 135.63
peer group incl . acquired companies | $ 100.00        | $ 116.64        | $ 114.02        | $ 127.96        | $ 132.23        | $ 105.80
peer group ex . acquired companies   | $ 100.00        | $ 113.23        | $ 117.27        | $ 120.58        | $ 127.90        | $ 141.58


2018 a0form 10-k18 item 7.
 management 2019s discussion analysis of financial condition results of operations.
 management discussion analysis read conjunction with discussion of cautionary statements significant risks to company business under item 1a.
 risk factors of 2018 form a010-k.
 overview sales revenues for 2018 were $ 54. 722 billion 20 a0percent increase from 2017 sales revenues $ 45. 462 a0billion.
 increase primarily due to higher sales volume improved demand across all regions three primary segments.
 profit per share for 2018 was $ 10. 26 compared to $ 1. 26 in 2017.
 profit was $ 6. 147 billion in 2018 compared with $ 754 million in 2017.
 increase primarily due to lower tax expense higher sales volume decreased restructuring costs improved price realization.
 increase partially offset by higher manufacturing costs selling  general administrative research and development ( r&d ) expenses lower profit from financial products segment.
 fourth-quarter 2018 sales revenues were $ 14. 342 billion  up $ 1. 446 billion or 11 percent  from $ 12. 896 billion in fourth quarter 2017.
 fourth-quarter 2018 profit was $ 1. 78 per share  compared with loss of $ 2. 18 per share in 2017.
 fourth-quarter 2018 profit was $ 1. 048 billion  compared with loss of $ 1. 299 billion in 2017.
 highlights for 2018 include sales revenues 2018 were $ 54. 722 billion  up 20 a0percent from 2017.
 sales improved in all regions across three primary segments.
 operating profit as percent of sales revenues was 15. 2 a0percent in 2018 compared with 9. 8 percent in 2017.
 adjusted operating profit margin was 15. 9 percent in 2018 compared with 12. 5 percent in 2017.
zz profit was $ 10. 26 per share for 2018 , excluding items in table below adjusted profit per share was $ 11. 22.
 for 2017 profit was $ 1. 26 per share  excluding items table below adjusted profit per share was $ 6. 88.
 zz for results meaningful separately quantified impact of several significant items:.
 zz machinery , energy & transportation ( me&t ) operating cash flow for 2018 was about $ 6. 3 billion  sufficient to cover capital expenditures and dividends.
 me&t operating cash flow for 2017 $ 5. 5 billion.
 restructuring costs recent years incurred substantial restructuring costs achieve flexible competitive cost structure.
 during 2018  incurred $ 386 million of restructuring costs related to restructuring actions across company.
 2017  incurred $ 1. 256 billion of restructuring costs half related to closure of facility in gosselies , belgium remainder related to other restructuring actions across company.
 expect restructuring to continue ongoing business activities restructuring costs should be lower in 2019 than 2018.
 notes : zz glossary of terms on pages 33-34 ; first occurrence of terms shown in bold italics.
 zz information on non-gaap financial measures on pages 42-43.

( millions of dollars )                      | full year 2018 profit before taxes | full year 2018 profitper share | full year 2018 profit before taxes | profitper share
-------------------------------------------- | ---------------------------------- | ------------------------------ | ---------------------------------- | ---------------
profit                                       | $ 7822                             | $ 10.26                        | $ 4082                             | $ 1.26
restructuring costs                          | 386                                | 0.50                           | 1256                               | 1.68
mark-to-market losses                        | 495                                | 0.64                           | 301                                | 0.26
deferred tax valuation allowance adjustments | 2014                               | -0.01 ( 0.01 )                 | 2014                               | -0.18 ( 0.18 )
u.s . tax reform impact                      | 2014                               | -0.17 ( 0.17 )                 | 2014                               | 3.95
gain on sale of equity investment            | 2014                               | 2014                           | -85 ( 85 )                         | -0.09 ( 0.09 )
adjusted profit                              | $ 8703                             | $ 11.22                        | $ 5554                             | $ 6.88


operating/performance statistics railroad performance measures reported to aar other performance measures included in table below : 2010 2009 2008 % ( % ) change 2010 v 2009 % ( % ) change v 2008.
 average train speed 2013 average train speed calculated by dividing train miles by hours operated on main lines between terminals.
 maintenance activities weather disruptions higher volume levels led to 4% ( 4 % ) decrease in average train speed in 2010 compared to record in 2009.
 continued operating fluid efficient network year.
 lower volume levels network management initiatives productivity improvements contributed to 16% ( 16 % ) improvement in average train speed in 2009 compared to 2008.
 average terminal dwell time 2013 average dwell time is average time rail car spends at terminals.
 lower average terminal dwell time improves asset utilization service.
 terminal dwell time increased 2% ( 2 % ) in 2010 compared to 2009 driven by network plan to increase length of trains improve efficiency resulted in higher terminal dwell time for some cars.
 average terminal dwell time improved slightly in 2009 compared to 2008 due to lower volume levels initiatives to expedite delivering rail cars to interchange partners customers.
 average rail car inventory 2013 inventory is daily average number of rail cars on lines including rail in storage.
 lower average rail car inventory reduces congestion in yards sidings increases train speed reduces average terminal dwell time improves rail car utilization.
 average rail car inventory decreased 3% ( 3 % ) in 2010 compared to 2009 handled 13% ( 13 % ) increases in carloads period compared to 2009.
 maintained more freight cars off-line retired old freight cars drove decreases.
rail car inventory decreased 6% ( 6 % ) in 2009 compared to 2008 driven by 16% ( 16 % ) decrease in volume.
 carloads decreased stored more freight cars off-line.
 gross revenue ton-miles 2013 gross ton-miles calculated by multiplying weight loaded empty freight cars by number miles hauled.
 revenue ton-miles calculated multiplying weight freight by number tariff miles.
 gross revenue-ton-miles increased 10% ( 10 % ) and 9% ( 9 % ) in 2010 compared to 2009 due to 13% ( 13 % ) increase in carloads.
 commodity mix changes notably automotive shipments drove variance year-over-year growth between gross ton-miles revenue ton-miles carloads.
 gross revenue ton-miles decreased 17% ( 17 % ) and 15% ( 15 % ) in 2009 compared to 2008 due to 16% ( 16 % ) decrease in carloads.
 commodity mix changes ( notably automotive shipments 30% ( 30 % ) lower 2009 versus 2008 drove difference declines between gross ton-miles revenue ton- miles.
 operating ratio 2013 ratio operating expenses percentage of operating revenue.
 improved 5. 5 points to 70. 6% ( 70. 6 % ) in 2010 1. 3 points to 76. 1% ( 76. 1 % ) in 2009.
 leveraging volume increases core pricing gains productivity initiatives drove improvement 2010 offset impact higher fuel prices.
 core pricing gains lower fuel prices network management initiatives improved productivity drove improvement 2009 offset 16% ( 16 % ) volume decline.
 employees 2013 employee levels down 1% ( 1 % ) in 2010 compared to 2009 despite 13% ( 13 % ) increase in volume levels.
 leveraged additional volumes through network efficiencies productivity initiatives.
, we successfully managed growth our full-time-equivalent train and engine force levels at less than half of our carload growth in 2010.
 all other operating functions

| 2010  | 2009  | 2008   | % (  % ) change 2010 v 2009 | % (  % ) change2009 v 2008
---------------------------------------- | ----- | ----- | ------ | --------------------------- | --------------------------
average train speed ( miles per hour )   | 26.2  | 27.3  | 23.5   | ( 4 ) % (  % )              | 16% ( 16 % )
average terminal dwell time ( hours )    | 25.4  | 24.8  | 24.9   | 2% ( 2 % )                  | -
average rail car inventory ( thousands ) | 274.4 | 283.1 | 300.7  | ( 3 ) % (  % )              | ( 6 ) % (  % )
gross ton-miles ( billions )             | 932.4 | 846.5 | 1020.4 | 10% ( 10 % )                | ( 17 ) % (  % )
revenue ton-miles ( billions )           | 520.4 | 479.2 | 562.6  | 9% ( 9 % )                  | ( 15 ) % (  % )
operating ratio                          | 70.6  | 76.1  | 77.4   | ( 5.5 ) pt                  | ( 1.3 ) pt
employees ( average )                    | 42884 | 43531 | 48242  | ( 1 ) % (  % )              | ( 10 ) % (  % )
customer satisfaction index              | 89    | 88    | 83     | 1 pt                        | 5 pt


intel corporation notes consolidated financial statements continued ) note 16 : other comprehensive income ( loss ) changes in accumulated income loss ) component related tax effects each period follows : in millions ) unrealized holding losses ) on available- for-sale investments deferred tax asset valuation allowance unrealized holding losses derivatives service credits costs ) actuarial losses ) foreign currency translation adjustment total.

( in millions )                                                             | unrealized holding gains ( losses ) on available-for-sale investments | deferred tax asset valuation allowance | unrealized holding gains ( losses ) on derivatives | prior service credits ( costs ) | actuarial gains ( losses ) | foreign currency translation adjustment | total
--------------------------------------------------------------------------- | --------------------------------------------------------------------- | -------------------------------------- | -------------------------------------------------- | ------------------------------- | -------------------------- | --------------------------------------- | --------------
december 27 2014                                                            | $ 2459                                                                | $ 26                                   | $ -423 ( 423 )                                     | $ -47 ( 47 )                    | $ -1004 ( 1004 )           | $ -345 ( 345 )                          | $ 666
other comprehensive income ( loss ) before reclassifications                | -999 ( 999 )                                                          | 2014                                   | -298 ( 298 )                                       | -2 ( 2 )                        | 73                         | -187 ( 187 )                            | -1413 ( 1413 )
amounts reclassified out of accumulated other comprehensive income ( loss ) | -93 ( 93 )                                                            | 2014                                   | 522                                                | 10                              | 67                         | 2014                                    | 506
tax effects                                                                 | 382                                                                   | -18 ( 18 )                             | -67 ( 67 )                                         | -1 ( 1 )                        | -12 ( 12 )                 | 17                                      | 301
other comprehensive income ( loss )                                         | -710 ( 710 )                                                          | -18 ( 18 )                             | 157                                                | 7                               | 128                        | -170 ( 170 )                            | -606 ( 606 )
december 26 2015                                                            | 1749                                                                  | 8                                      | -266 ( 266 )                                       | -40 ( 40 )                      | -876 ( 876 )               | -515 ( 515 )                            | 60
other comprehensive income ( loss ) before reclassifications                | 1170                                                                  | 2014                                   | -26 ( 26 )                                         | 2014                            | -680 ( 680 )               | -4 ( 4 )                                | 460
amounts reclassified out of accumulated other comprehensive income ( loss ) | -530 ( 530 )                                                          | 2014                                   | 38                                                 | 2014                            | 170                        | 2014                                    | -322 ( 322 )
tax effects                                                                 | -225 ( 225 )                                                          | -8 ( 8 )                               | -5 ( 5 )                                           | 2014                            | 146                        | 2014                                    | -92 ( 92 )
other comprehensive income ( loss )                                         | 415                                                                   | -8 ( 8 )                               | 7                                                  | 2014                            | -364 ( 364 )               | -4 ( 4 )                                | 46
december 31 2016                                                            | $ 2164                                                                | $ 2014                                 | $ -259 ( 259 )                                     | $ -40 ( 40 )                    | $ -1240 ( 1240 )           | $ -519 ( 519 )                          | $ 106


gross margin percentage decreased to 59. 8% ( 59. 8 % ) in 2013 from 62. 1% ( 62. 1 % ) in 2012.
 decrease primarily due to decrease in pccg.
 derived most gross margin dollars in 2013 and 2012 from sale of platforms in pccg and dcg operating segments.
 net revenue for 2012  included 52 weeks  decreased by $ 658 million  or 1% ( 1 % ) compared to 2011 included 53 weeks.
 pccg and dcg platform unit sales decreased 1% ( 1 % ) average selling prices unchanged.
 lower netbook platform unit sales and multi-comm average selling prices primarily discrete modems contributed to decrease.
 decreases partially offset by mcafee operating segment  acquired in q1 2011.
 mcafee contributed $ 469 million of additional revenue in 2012 compared to 2011.
 overall gross margin dollars for 2012 decreased by $ 606 million  or 2% ( 2 % ) , compared to 2011.
 decrease due to $ 494 million of excess capacity charges  lower revenue from pccg and dcg platform.
 approximately $ 390 million of higher unit costs on pccg and dcg platform lower netbook and multi-comm revenue contributed to decrease.
 decrease partially offset by $ 643 million of lower factory start-up costs as transition from 22nm process technology to next- generation 14nm process technology $ 422 million of charges recorded in 2011 to repair and replace materials and systems impacted by design issue related to intel ae 6 series express chipset family.
 decrease partially offset by two additional months of results from acquisition of mcafee  occurred on february 28 , 2011 contributing approximately $ 334 million of additional gross margin dollars in 2012 compared to 2011.
amortization of acquisition-related intangibles resulted in $ 557 million reduction to gross margin dollars in 2012 compared to $ 482 million in 2011 primarily due to acquisitions completed in q1 2011.
 gross margin percentage 2012 flat from 2011 higher excess capacity charges higher unit costs on pccg and dcg platform offset by lower factory start-up costs no impact 2012 for design issue related to intel 6 series express chipset family.
 derived majority of gross margin dollars in 2012 and 2011 from sale of platforms in pccg and dcg operating segments.
 revenue and operating income for pccg operating segment each.
 net revenue for pccg operating segment decreased by $ 1. 5 billion  or 4% ( 4 % ) in 2013 compared to 2012.
 pccg platform unit sales down 3% ( 3 % ) primarily on softness traditional pc demand.
 decrease revenue driven by lower notebook and desktop platform unit sales down 4% ( 4 % ) and 2% ( 2 % ) .
 pccg platform average selling prices flat 6% ( 6 % ) higher desktop platform average prices offset by 4% ( 4 % ) lower notebook platform average selling prices.
 operating income decreased by $ 1. 3 billion  or 10% ( 10 % ) in 2013 compared to 2012 driven by $ 1. 5 billion lower gross margin partially offset by $ 200 million lower operating expenses.
 decrease gross margin driven by $ 1. 5 billion higher factory start-up costs next-generation 14nm process technology lower pccg platform revenue.
 decreases partially offset by $ 520 million lower pccg platform unit costs $ 260 million lower excess capacity charges higher sell-through of previously non- qualified units.
 net revenue for pccg operating segment decreased by $ 1. 1 billion  or 3% ( 3 % )  in 2012 compared to 2011.
pccg revenue impacted by growth tablets devices compete with pcs for consumer sales.
 platform average selling prices unit sales decreased 2% ( 2 % ) 1% ( 1 % ).
 decrease driven by 6% ( 6 % ) lower notebook platform selling prices 5% ( 5 % ) lower desktop platform unit sales.
 decreases partially offset by 4% ( 4 % ) increase in desktop platform average selling prices 2% ( 2 % ) increase notebook platform unit sales.
 table of contents management 2019s discussion analysis of financial condition results operations continued

( in millions )  | 2013    | 2012    | 2011
---------------- | ------- | ------- | -------
net revenue      | $ 33039 | $ 34504 | $ 35624
operating income | $ 11827 | $ 13106 | $ 14840


for determining entergy corporation's relative performance for 2006-2008 period , committee used philadelphia utility index as peer group.
 based on market data recommendation of management , committee compared entergy corporation's total shareholder return against total shareholder return of companies philadelphia utility index.
 based on comparison of entergy corporation's performance to philadelphia utility index committee concluded entergy corporation exceeded performance targets for 2006-2008 performance cycle with entergy finishing in first quartile resulted in payment of 250% ( 250 % ) of target ( maximum amount payable ).
 each performance unit automatically converted into cash at rate $ 83. 13 per unit , closing price of entergy corporation common stock on last trading day of performance cycle ( december 31, 2008 ), plus dividend equivalents accrued over three-year performance cycle.
 see 2008 option exercises and stock vested table for amount paid to each named executive officers for 2006-2008 performance unit cycle.
 stock options personnel committee and named executive officers ( mr.
 leonard  mr.
 denault mr.
 smith ) , entergy's chief executive officer and named executive officer's supervisor consider several factors in determining amount of stock options grant under entergy's equity ownership plans to named executive officers  including : individual performance ; prevailing market practice in stock option grants ; targeted long-term value created by use of stock options ; number of participants eligible for stock options , resulting "burn rate" (. number of stock options authorized divided by total number of shares outstanding ) to assess potential dilutive effect ; committee's assessment of other elements of compensation provided to named executive officer for stock option awards to named executive officers mr.
leonard ) committee's assessment of individual performance of each named executive officer in consultation with entergy corporation's chief executive officer is important factor in determining number of options awarded.
 following table sets forth number of stock options granted to each named executive officer in 2008.
 exercise price for each option was $ 108. 20 closing fair market value of entergy corporation common stock on date of grant.
 option grants awarded to named executive officers ( other.
 leonard and.
 lewis ) ranged between 5000 and 50000 shares.
 mr.
 lewis did receive stock option awards in 2008.
 in case of mr.
 leonard received 175000 stock options committee took special note of his performance as entergy corporation's chief executive officer.
 committee noted

named exeutive officer    | stock options
------------------------- | -------------
j . wayne leonard         | 175000
leo p . denault           | 50000
richard j . smith         | 35000
e . renae conley          | 15600
hugh t . mcdonald         | 7000
haley fisackerly          | 5000
joseph f . domino         | 7000
roderick k . west         | 8000
theodore h . bunting jr . | 18000
carolyn shanks            | 7000


exchanged installment notes totaling approximately $ 4. 8 billion $ 400 million of inter- national paper promissory notes for interests in enti- ties formed to monetize notes.
 international paper determined not primary benefi- ciary of entities should not consolidate investments in entities.
 during 2006  entities acquired additional $ 4. 8 bil- lion of international paper debt securities for cash total approximately $ 5. 2 billion international paper debt obligations held entities at december 31 , 2006.
 international paper has intends to legal right to offset obligations under debt instruments with investments in entities offset $ 5. 0 billion interest in entities against $ 5. 0 billion international paper debt obligations held entities as of december 31 , 2007.
 international paper holds variable interests in two financing entities used to monetize long-term notes received from sales of forestlands in 2002 and 2001.
 see note 8 of notes to consolidated financial statements item 8.
 financial statements supplementary data for further discussion of transactions.
 capital resources outlook for 2008 international paper expects to to meet pro- jected capital expenditures service existing debt meet working capital dividend requirements during 2008 through current cash balances cash from operations supplemented by existing credit facilities.
 international paper has approximately $ 2. 5 billion of committed bank credit agreements management believes adequate to cover expected operating cash flow variability during industry 2019s economic cycles.
 agreements provide for interest rates at floating rate index plus pre-determined margin dependent upon international paper 2019s credit rating.
 agreements include $ 1. 5 billion fully commit- ted revolving bank credit agreement expires in march 2011 facility fee of 0. 10% ( 0. % ) payable quarterly.
 agreements include up to $ 1.0 billion available commercial paper-based financ- ings under receivables securitization program expires october 2009 with facility fee of 0. 10% ( 0. % ).
 at december 31 , 2007 no borrowings under bank credit agreements or receiv- ables securitization program.
 company will continue rely upon debt capital markets for majority of necessary long-term funding not by operating cash flows.
 funding decisions guided by capi- tal structure planning objectives.
 primary goals company capital structure planning to maximize financial flexibility preserve liquidity reducing interest expense.
 majority of international paper 2019s debt accessed through global public capital markets wide base of investors.
 company in compliance with debt covenants at december 31 , 2007.
 principal financial covenants include maintenance minimum net worth sum common stock  paid-in capital retained earnings less treasury stock plus goodwill impairment charges of $ 9 billion ; maximum total debt to capital ratio total debt divided by total debt plus net worth of 60% ( 60 % ).
 maintaining investment grade credit rating important element of international paper 2019s financing strategy.
 at december 31, 2007 company held long-term credit ratings of bbb ( stable outlook ) and baa3 ( stable outlook ) by standard & poor 2019s ( s&p ) moody 2019s investor services.
 company has short-term credit ratings by s&p and moody 2019s of a-2 and p-3 .
 contractual obligations for future payments under existing debt lease commitments purchase obligations at december 31 , 2007 were as follows : in millions 2008 2009 2010 2011 2012 maturities of long-term debt ( a ) $ 267 $ 1300 $ 1069 $ 396 $ 532 $ 3056 debt obligations with right of offset ( b ) 2013 2013 5000.
( a ) total debt includes scheduled principal payments only.
 ( b ) represents debt obligations borrowed from non-consolidated variable interest entities for international paper has intends to legal right to offset obligations with investments in entities.
 in con- solidated balance sheet at december 31, 2007 international paper offset approximately $ 5. 0 billion of interests in entities against $ 5. 0 billion debt obligations held by entities ( see note 8 in consolidated financial statements ).
 ( c ) includes $ 2. 1 billion relating to fiber supply agreements at transformation plan forestland sales.
 ( d ) not included table unrecognized tax benefits of approximately $ 280 million.

in millions                                 | 2008   | 2009   | 2010   | 2011  | 2012  | thereafter
------------------------------------------- | ------ | ------ | ------ | ----- | ----- | ----------
maturities of long-term debt ( a )          | $ 267  | $ 1300 | $ 1069 | $ 396 | $ 532 | $ 3056
debt obligations with right of offset ( b ) | 2013   | 2013   | 2013   | 2013  | 2013  | 5000
lease obligations                           | 136    | 116    | 101    | 84    | 67    | 92
purchase obligations ( c )                  | 1953   | 294    | 261    | 235   | 212   | 1480
total ( d )                                 | $ 2356 | $ 1710 | $ 1431 | $ 715 | $ 811 | $ 9628


2022 timing of available information , performance of first lien positions  2022 limitations of available historical data.
 pnc 2019s determination of alll for non-impaired loans sensitive to risk grades commercial loans loss rates for consumer loans.
 several other qualitative quantitative factors considered in determining alll.
 this sensitivity analysis not reflect nature extent of future changes in alll.
 intended to provide insight into impact of adverse changes to risk grades loss rates only not imply expectation of future deterioration in risk ratings or loss rates.
 given current processes used believe risk grades and loss rates currently assigned are appropriate.
 hypothetical event aggregate weighted average commercial loan risk grades experience 1% ( 1 % ) deterioration , assuming other variables constant allowance for commercial loans would increase by approximately $ 35 million as of december 31 , 2014.
 hypothetical consumer loss rates increase by 10% ( 10 % ), all other variables constant allowance for consumer loans increase by approximately $ 37 million at december 31 , 2014.
 purchased impaired loans initially recorded at fair value accounting guidance prohibits carry over or creation of valuation allowances at acquisition.
 initial fair values loans reflect credit component additional reserves established when performance expected to worse than expectations as of acquisition date.
 at december 31 , 2014  had established reserves of $. 9 billion for purchased impaired loans.
 loans ( purchased impaired and non- impaired ) acquired after january 1 , 2009 recorded at fair value.
 no allowance for loan losses carried over no allowance created at date of acquisition.
 see note 4 purchased loans in notes to consolidated financial statements in item 8 of report for additional information.
determining appropriateness of alll  make specific allocations to impaired loans and allocations to portfolios of commercial and consumer loans.
 allocate reserves provide coverage for probable losses incurred in portfolio at balance sheet date based upon current market conditions may not be reflected in historical loss data.
 commercial lending largest category of credits sensitive to changes in assumptions and judgments determination alll.
 allocated approximately $ 1. 6 billion , or 47% ( 47 % ), of alll at december 31 , 2014 to commercial lending category.
 consumer lending allocations made based on historical loss experience adjusted for recent activity.
 approximately $ 1. 7 billion , or 53% ( 53 % ) , of alll at december 31 , 2014 allocated to these consumer lending categories.
 in addition to alll maintain allowance for unfunded loan commitments and letters of credit.
 report allowance as liability on consolidated balance sheet.
 maintain allowance for unfunded loan commitments letters of credit at level believe appropriate to absorb estimated probable losses on unfunded credit facilities.
 determine this amount using estimates of probability of ultimate funding and losses related to credit exposures.
 methodology similar to for determining our alll.
 refer to note 1 accounting policies and note 3 asset quality in notes to consolidated financial statements in item 8 of report for further information on key asset quality indicators to evaluate portfolios establish allowances.
 table 41 : allowance for loan and lease losses.
 includes charge-offs of $ 134 million taken pursuant to alignment with interagency guidance on practices for loans and lines of credit related to consumer lending in first quarter of 2013.
 provision for credit losses totaled $ 273 million for 2014 compared to $ 643 million for 2013.
primary drivers of decrease were improved credit quality lower consumer loan delinquencies increasing value of residential real estate resulted in greater expected cash flows from purchased impaired loans.
 for 2014  provision for commercial lending credit losses increased by $ 64 million or 178% ( 178 % )  from 2013 due to growth in commercial book slowing of reserve releases related to credit quality improvement.
 provision for consumer lending credit losses decreased $ 434 million or 71% ( 71 % )  from 2013.
 pnc financial services group  inc.
 2013 form 10-k 81

dollars in millions                                                         | 2014           | 2013
--------------------------------------------------------------------------- | -------------- | ----------------
january 1                                                                   | $ 3609         | $ 4036
total net charge-offs ( a )                                                 | -531 ( 531 )   | -1077 ( 1077 )
provision for credit losses                                                 | 273            | 643
net change in allowance for unfunded loan commitments and letters of credit | -17 ( 17 )     | 8
other                                                                       | -3 ( 3 )       | -1 ( 1 )
december 31                                                                 | $ 3331         | $ 3609
net charge-offs to average loans ( for the year ended ) ( a )               | .27% ( .27 % ) | .57% ( .57 % )
allowance for loan and lease losses to total loans                          | 1.63           | 1.84
commercial lending net charge-offs                                          | $ -55 ( 55 )   | $ -249 ( 249 )
consumer lending net charge-offs ( a )                                      | -476 ( 476 )   | -828 ( 828 )
total net charge-offs                                                       | $ -531 ( 531 ) | $ -1077 ( 1077 )
net charge-offs to average loans ( for the year ended )                     |                |
commercial lending                                                          | .04% ( .04 % ) | .22% ( .22 % )
consumer lending ( a )                                                      | 0.62           | 1.07


republic services , inc.
 notes to consolidated financial statements 2014 letters of credit use $ 909. 4 million and $ 950. 2 million as of december 31 , 2012 and 2011  respectively of availability under our credit facilities.
 surety bonds expire dates through 2026.
 financial instruments issued in normal course of business not debt.
 no liability for this financial assurance  not reflected in consolidated balance sheets.
 recorded capping , closure post-closure obligations and self-insurance reserves as incurred.
 underlying financial assurance obligations in excess of reflected in consolidated balance sheets would be recorded if probable we unable to fulfill related obligations.
 do not expect this to occur.
 restricted cash and marketable securities deposits include restricted marketable securities held for capital expenditures under certain debt facilities restricted cash marketable securities pledged to regulatory agencies and governmental entities as financial guarantees of performance related to final capping , closure post-closure obligations at landfills.
 following table summarizes our restricted cash and marketable securities as of december 31:.
 own a 19. 9% ( 19. 9 % ) interest in company that issues financial surety bonds to secure capping , closure and post-closure obligations for companies operating in solid waste industry.
 account for this investment under cost method of accounting.
 no identified events or changes in circumstances may have significant adverse effect on recoverability of investment.
 investee company and parent company investee had written surety bonds for us relating primarily to our landfill operations for capping , closure and post-closure , of which $ 1152. 1 million was outstanding as of december 31 , 2012.
reimbursement obligations under bonds secured by indemnity agreement with investee and letters of credit totaling $ 23. 4 million and $ 45. 0 million as of december 31 , 2012 and 2011.
 off-balance sheet arrangements no off-balance sheet debt or similar obligations  other than operating leases and financial assurances discussed above not classified as debt.
 no transactions or obligations with related parties not disclosed, consolidated into or reflected in reported financial position or results of operations.
 not guaranteed third-party debt.
 guarantees enter into contracts in normal course of business include indemnification clauses.
 indemnifications relating to known liabilities recorded in consolidated financial statements based on best estimate of required future payments.
 certain indemnifications relate to contingent events or occurrences imposition of additional taxes due to change in tax law or adverse interpretation of tax law  indemnifications in divestiture agreements indemnify buyer for liabilities relate to activities prior to divestiture may become known in future.
 not believe these contingent obligations have material effect on consolidated financial position , results of operations or cash flows.

| 2012    | 2011
----------------------------------------------- | ------- | -------
financing proceeds                              | $ 24.7  | $ 22.5
capping closure and post-closure obligations    | 54.8    | 54.9
self-insurance                                  | 81.3    | 75.2
other                                           | 3.4     | 37.0
total restricted cash and marketable securities | $ 164.2 | $ 189.6


humana inc.
 notes to consolidated financial statements 2014 continued ) value  excess of market value over exercise or purchase price of stock options exercised and restricted stock awards vested during period.
 actual tax benefit realized for deductions on tax returns from option exercises and restricted stock vesting totaled $ 16. 3 million in 2009  $ 16. 9 million in 2008  $ 48. 0 million in 2007.
 no capitalized stock-based compensation expense.
 stock plans provide one restricted share equivalent to 1. 7 stock options.
 at december 31 , 2009 12818855 shares reserved for stock award plans including 4797304 shares of common stock available for future grants assuming all stock options or 2821944 shares available for future grants assuming all restricted shares.
 stock options stock options granted with exercise price equal to average market value of underlying common stock on date of grant.
 stock plans define average market value as average of highest and lowest stock prices reported by new york stock exchange on given date.
 exercise provisions vary most options vest in whole or in part 1 to 3 years after grant expire 7 to 10 years after grant.
 upon grant stock options assigned fair value based on black-scholes valuation model.
 compensation expense recognized straight-line basis over total requisite service period total vesting period for entire award.
 for stock options granted on or after january 1 , 2010 to retirement eligible employees compensation expense recognized straight-line basis over shorter of requisite service period or period from date of grant to employee 2019s eligible retirement date.
 weighted-average fair value of each option granted during 2009 , 2008 2007 provided below.
 fair value estimated on date of grant using black-scholes pricing model with weighted-average assumptions indicated below.
valuing employee stock options stratify employee population into three homogenous groups historically similar exercise behaviors.
 these groups are executive officers , directors  all other employees.
 value stock options based on unique assumptions for each these employee groups.
 calculate expected term for employee stock options based on historical employee exercise behavior base risk-free interest rate on traded zero-coupon u. s.
 treasury bond with term equal to option 2019s expected term.
 volatility used to value employee stock options based on historical volatility.
 calculate historical volatility using simple-average calculation methodology based on daily price intervals measured over expected term of option.

| 2009             | 2008             | 2007
----------------------------------------- | ---------------- | ---------------- | ----------------
weighted-average fair value at grant date | $ 14.24          | $ 17.95          | $ 21.07
expected option life ( years )            | 4.6              | 5.1              | 4.8
expected volatility                       | 39.2% ( 39.2 % ) | 28.2% ( 28.2 % ) | 28.9% ( 28.9 % )
risk-free interest rate at grant date     | 1.9% ( 1.9 % )   | 2.9% ( 2.9 % )   | 4.5% ( 4.5 % )
dividend yield                            | none             | none             | none


income tax liabilities liabilities related to unrecognized tax benefits as of 30 september 2018 were $ 233. 6.
 tax liabilities excluded from contractual obligations table impractical to determine cash impact by year payments vary according to changes in tax laws tax rates operating results.
 uncertainties in timing of effective settlement of uncertain tax positions with taxing authorities.
 contractual obligations table includes accrued liability of approximately $ 184 for deemed repatriation tax payable over eight years related to tax act.
 refer to note 22, income taxes consolidated financial statements for additional information.
 obligation for future contribution to equity affiliate on 19 april 2015 joint venture between air products and acwa holding entered 20-year oxygen and nitrogen supply agreement to supply saudi aramco 2019s oil refinery and power plant built in jazan saudi arabia.
 air products owns 25% ( 25 % ) of joint venture guarantees repayment of share of equity bridge loan.
 expect to invest approximately $ 100 in joint venture.
 as of 30 september 2018  recorded noncurrent liability of $ 94. 4 for obligation to make future equity contributions in 2020 based on proportionate share of advances received by joint venture under loan.
 expected investment in joint venture on 12 august 2018  air products entered agreement to form gasification/power joint venture ( ) with saudi aramco and acwa in jazan saudi arabia.
 air products will own at least 55% ( 55 % ) of jv  with saudi aramco and acwa power owning balance.
 jv will purchase gasification assets , power block  associated utilities from saudi aramco for approximately $ 8 billion.
 expected investment excluded from contractual obligations table pending closing expected in fiscal year 2020.
jv own operate facility under 25-year contract for fixed monthly fee.
 saudi aramco supply feedstock to jv jv produce power  hydrogen utilities for saudi aramco.
 pension benefits company subsidiaries sponsor defined benefit pension plans defined contribution plans cover substantial portion worldwide employees.
 principal defined benefit pension plans are u. s.
 salaried pension plan u. k.
 pension plan.
 plans closed to new participants in 2005, after defined contribution plans offered to new employees.
 shift to defined contribution plans expected to reduce volatility of plan expense contributions.
 fair market value of plan assets for defined benefit pension plans as of 30 september 2018 measurement date decreased to $ 4273. 1 from $ 4409. 2 at end of fiscal year 2017.
 projected benefit obligation for plans was $ 4583. 3 and $ 5107. 2 at end of fiscal years 2018 and 2017.
 net unfunded liability decreased $ 387. 8 from $ 698. 0 to $ 310. 2, primarily due to higher discount rates favorable asset experience.
 refer to note 16 , retirement benefits , consolidated financial statements for comprehensive detailed disclosures on postretirement benefits.
 pension expense.

| 2018           | 2017           | 2016
-------------------------------------------------------------------- | -------------- | -------------- | --------------
pension expense 2013 continuing operations                           | $ 91.8         | $ 72.0         | $ 55.8
settlements termination benefits and curtailments ( included above ) | 48.9           | 15.0           | 6.0
weighted average discount rate 2013 service cost                     | 3.2% ( 3.2 % ) | 2.9% ( 2.9 % ) | 4.1% ( 4.1 % )
weighted average discount rate 2013 interest cost                    | 2.9% ( 2.9 % ) | 2.5% ( 2.5 % ) | 3.4% ( 3.4 % )
weighted average expected rate of return on plan assets              | 6.9% ( 6.9 % ) | 7.4% ( 7.4 % ) | 7.5% ( 7.5 % )
weighted average expected rate of compensation increase              | 3.5% ( 3.5 % ) | 3.5% ( 3.5 % ) | 3.5% ( 3.5 % )


table of contents 3.
 bankruptcy settlement obligations as of december 31 , 2013 components of "claims and other bankruptcy settlement obligations" on american's consolidated balance sheet are as follows ( in millions ) :.
 mechanism for satisfying double-dip unsecured claims and portion of single-dip unsecured claims  plan of reorganization provided claimholders receive mandatorily convertible aag series a preferred stock.
 aag's series preferred stock  while outstanding votes and participates in accordance with terms of underlying certificate of designation.
 one quarter of shares of aag series stock is mandatorily convertible on each 30 th , 60th , 90th and 120th days after effective date.
 subject to limitations holders of aag series preferred stock may elect to convert up to 10 million shares of aag series stock during each 30-day period following effective date reducing number of aag series preferred stock to be converted on 120 th day after effective date.
 initial stated value of each share of aag series a preferred stock is $ 25. 00 accrues dividends at 6. 25% (. ) per annum , calculated daily outstanding.
 aag series preferred stock converts to aag common stock based upon volume weighted average price of shares of aag common stock on five trading days preceding conversion date at 3. 5% (. ) fixed discount  subject to conversion price floor of $ 10. 875 per share and conversion price cap of $ 33. 8080 per share, below or above conversion rate remains fixed.
 aag series a preferred stock embodies unconditional obligation to transfer variable number of shares based on fixed monetary amount known at inception not treated as equity of aag  but as a liability until converted to aag common stock.
american reflected claims satisfied through issuance of aag series a preferred stock as liability included within "bankruptcy settlement obligations" line on american 2019s consolidated balance sheets will reflect obligations as liability until satisfied through issuance of aag common stock.
 upon satisfaction of bankruptcy settlement obligations with aag common stock , company will record increase in additional paid-in capital through intercompany equity transfer while derecognizing related bankruptcy settlement obligation.
 as of february 19 , 2014 , approximately 107 million shares of aag series a preferred stock converted into 95 million shares of aag common stock.
 single-dip equity obligations , while outstanding, do not vote or participate in accordance with terms of plan.
 these equity contract obligations  representing total single-dip unsecured creditor obligations not satisfied through issuance of aag series a preferred stock at effective date represent unconditional obligation to transfer variable number of shares of aag common stock based on fixed monetary amount known at inception not treated as equity  but as liabilities until 120 th day after emergence.
 at 120 th day after emergence aag will issue variable amount of aag common stock necessary to satisfy obligation amount at emergence  plus accrued dividends of 12% ( 12 % ) per annum , calculated daily  through 120 th day after emergence based on volume weighted average price of shares of aag common stock  at 3. 5% ( 3. 5 % ) discount , as specified in plan subject to sufficient number of shares remaining for issuance to unsecured creditors under plan.
exchange for employees' contributions to reorganization of aag  including reductions in pay and benefits aag and american agreed plan to provide each employee group a deemed claim used to provide distribution of portion of equity of reorganized entity to employees.
 each employee group received a deemed claim amount based upon fixed percentage of distributions to general unsecured claimholders.
 fair value based on expected number of shares to distributed to claim was approximately $ 1. 7 billion.
 effective date aag made initial distribution of $ 595 million in common stock and american paid approximately $ 300 million in cash to cover payroll taxes related to equity distribution.
 as of december 31 , 2013  remaining liability to certain american labor groups and employees of $ 849 million is based upon estimated fair value of shares of aag common stock expected to be issued in satisfaction of obligation measured as if obligation settled using trading price of aag common stock at december 31 , 2013.
 increases in trading price aag common stock after december 31 , 2013 could cause decrease in fair value measurement of remaining obligation vice-versa.
 american will record this obligation at fair value through 120 th day after emergence obligation be materially settled.

aag series a preferred stock  | $ 3329
----------------------------- | ------
single-dip equity obligations | 1246
labor-related deemed claim    | 849
total                         | $ 5424


american tower corporation subsidiaries notes consolidated financial statements 2014 continued ) 7.
 derivative financial instruments under terms credit facility company required to enter interest rate protection agreements on 50% ( 50 % ) of variable rate debt.
 agreements company exposed to credit risk counterparty fails to meet terms contract.
 exposure limited to current value contract at time counterparty fails perform.
 company believes contracts as of december 31 , 2004 with credit worthy institutions.
 december 31 , 2004 company had two interest rate caps outstanding aggregate notional amount $ 350. 0 million ( each at interest rate of 6. 0% ( 6. 0 % ) ) expire in 2006.
 as of december 31 , 2003 company had three interest rate caps outstanding aggregate notional amount of $ 500. 0 million ( each at rate of 5. 0% ( 5. 0 % ) ) expired in 2004.
 december 31 , 2004 2003 no fair value associated with interest rate caps.
 year ended december 31 , 2003 company recorded unrealized loss of approximately $ 0. 3 million ( net of tax benefit of approximately $ 0. 2 million ) other comprehensive loss for change in fair value of cash flow hedges reclassified $ 5. 9 million ( net of tax benefit of approximately $ 3. 2 million ) into results of operations.
 year ended december 31 , 2002  company recorded unrealized loss of approximately $ 9. 1 million ( net of tax benefit of approximately $ 4. 9 million ) in other comprehensive loss for change in fair value of cash flow hedges reclassified $ 19. 5 million ( net of tax benefit approximately $ 10. 5 million ) into results of operations.
 hedge ineffectiveness resulted in gain of approximately $ 1. 0 million for year ended december 31 , 2002 recorded in other expense in accompanying consolidated statement of operations.
company records changes in fair value of derivative instruments not accounted for as hedges other expense.
 company did not reclassify derivative losses into statement of operations for year ended december 31 , 2004 and not anticipate reclassifying derivative losses into statement operations within next twelve months no amounts included in other comprehensive loss as of december 31 , 2004.
 8.
 commitments contingencies lease obligations 2014the company leases land , office tower space under operating leases that expire over various terms.
 many leases contain renewal options with specified increases in lease payments upon exercise renewal option.
 escalation clauses in operating leases excluding tied cpi inflation indices are straight-lined over term of lease.
 note 1. future minimum rental payments under non-cancelable operating leases include payments for certain renewal periods at company option failure to renew could result in loss of tower site and related revenues from tenant leases assured company will renew lease.
 such payments in effect at december 31 , 2004 are as follows ( in thousands ) : year ending december 31.
 aggregate rent expense ( including effect of straight-line rent expense ) under operating leases for years ended december 31 , 2004 , 2003 2002 approximated $ 118741000 , $ 113956000 , $ 109644000  respectively.

2005       | $ 106116
---------- | ---------
2006       | 106319
2007       | 106095
2008       | 106191
2009       | 106214
thereafter | 1570111
total      | $ 2101046