non-operating investment activity resulted in net losses $ 12. 7 million in 2009 $ 52. 3 million in 2008.
 improvement of nearly $ 40 million attributable to reduction in temporary impairments on investments in sponsored mutual funds 2009 versus 2008.
 table details mutual fund investment gains and losses in millions ) past two years.
 lower income of $ 16 million from money market holdings due to lower interest rate environment offset improvement with fund investments.
 no impairment of mutual fund investments at december 31 , 2009.
 2009 provision for income taxes of pretax income is 37. 1% ( 37. 1 % ) down from 38. 4% ( 38. 4 % ) in 2008. 9% (. 9 % ) lower than estimate of 38. 0% ( 38. 0 % ) for 2010 effective tax rate.
 2009 provision includes reductions of prior years 2019 tax provisions nonrecurring benefits lowered 2009 effective tax rate by 1. 0% ( 1. 0 % ).
 2008 versus 2007.
 investment advisory revenues decreased 6. 3% ( 6. 3 % ) or $ 118 million  to $ 1. 76 billion in 2008 average assets under management decreased $ 16 billion to $ 358. 2 billion.
 average annualized fee rate earned on assets was 49. 2 basis points in 2008 down from 50. 2 basis points in 2007 lower equity market valuations resulted in percentage assets attributable to lower fee fixed income portfolios.
 stress on financial markets lower equity valuations resulted in lower average assets lower investment advisory fees lower net income.
 net revenues decreased 5% ( 5 % )  or $ 112 million to $ 2. 12 billion.
 operating expenses were $ 1. 27 billion in 2008 up 2. 9% ( 2. 9 % ) or $ 36 million from 2007.
 net operating income for 2008 decreased $ 147.9 million or 14. 8% (. 8 % ) to $ 848. 5 million.
 higher operating expenses in 2008 decreased market valuations 2008 lowered assets under management advisory revenues resulted in 2008 operating margin to 40. 1% (. 1 % ) from 44. 7% (. 7 % ) in 2007.
 non-operating investment losses in 2008 were $ 52. 3 million compared to investment income $ 80. 4 million in 2007.
 investment losses 2008 include non-cash charges of $ 91. 3 million for temporary impairment of firm investments in sponsored mutual funds.
 net income 2008 fell 27% ( 27 % ) or nearly $ 180 million from 2007.
 diluted earnings per share after new accounting guidance 2009 decreased to $ 1. 81  down $. 59 or 24. 6% (. 6 % ) from $ 2. 40 in 2007.
 non-operating charge temporary impairments of sponsored mutual fund investments reduced diluted earnings per share by $. 21 in 2008.
 investment advisory revenues from.
 price mutual funds decreased 8. 5% (. 5 % ) or $ 114. 5 million to $ 1. 24 billion.
 average mutual fund assets were $ 216. 1 billion in 2008 down $ 16. 7 billion from 2007.
 mutual fund assets at december 31  2008 were $ 164. 4 billion  down $ 81. 6 billion from 2007.
 net inflows to mutual funds 2008 were $ 3. 9 billion  including $ 1. 9 billion to money funds $ 1. 1 billion bond funds $. 9 billion to stock funds.
 value  equity index 500 emerging markets stock funds add $ 4. 1 billion mid-cap growth and equity income stock funds had net redemptions of $ 2. 2 billion.
net fund inflows of $ 6. 2 billion originated in target-date retirement funds invest in other.
 rowe price funds.
 fund net inflow amounts in 2008 net of $ 1. 3 billion transferred to target-date trusts from retirement funds.
 decreases in market valuations income not reinvested lowered mutual fund assets under management by $ 85. 5 billion 2008.
 investment advisory revenues on other investment portfolios decreased $ 3. 6 million to $ 522. 2 million.
 average assets portfolios were $ 142. 1 billion 2008 up slightly from $ 141. 4 billion in 2007.
 minor changes each less than 1% ( 1 % ) attributable to declining equity market valuations cash flows among separate account subadvised portfolios.
 net inflows  primarily from institutional investors were $ 13. 2 billion 2008 including $ 1. 3 billion transferred from retirement funds to target-date trusts.
 decreases in market valuations net income lowered assets under management portfolios by $ 55. 3 billion 2008.
 management 2019s discussion & analysis 21

| 2008             | 2009             | change
----------------------------------------------- | ---------------- | ---------------- | ------------
other than temporary impairments recognized     | $ -91.3 ( 91.3 ) | $ -36.1 ( 36.1 ) | $ 55.2
capital gain distributions received             | 5.6              | 2.0              | -3.6 ( 3.6 )
net gain ( loss ) realized on fund dispositions | -4.5 ( 4.5 )     | 7.4              | 11.9
net loss recognized on fund holdings            | $ -90.2 ( 90.2 ) | $ -26.7 ( 26.7 ) | $ 63.5


five-year stock performance graph graph illustrates cumulative total shareholder return on snap-on common stock since december 31  2008 assuming dividends reinvested.
 graph compares snap-on 2019s performance to standard & poor 2019s 500 stock index ( 201cs&p 500 201d ) peer group.
 snap-on incorporated total shareholder return ( 1 ) fiscal year ended 2 ) snap-on incorporated peer group ( 3 ) s&p 500.
 1 assumes $ 100 invested december 31, 2008 dividends reinvested quarterly.
 2 company's fiscal year ends saturday or nearest to december 31 each year ; for calculation fiscal year end assumed december 31.
 3 ) peer group consists of : stanley black & decker , inc. danaher corporation , emerson electric co. , genuine parts company , newell rubbermaid inc. pentair ltd.  spx corporation w.
 grainger , inc.
 24 snap-on incorporated 2009 2010 2011 2012 2013 snap-on incorporated peer group s&p 500

fiscal year ended ( 2 ) | snap-onincorporated | peer group ( 3 ) | s&p 500
----------------------- | ------------------- | ---------------- | --------
december 31 2008        | $ 100.00            | $ 100.00         | $ 100.00
december 31 2009        | 111.40              | 127.17           | 126.46
december 31 2010        | 153.24              | 169.36           | 145.51
december 31 2011        | 140.40              | 165.85           | 148.59
december 31 2012        | 223.82              | 195.02           | 172.37
december 31 2013        | 315.72              | 265.68           | 228.19


loss on contract may be recorded if necessary remaining deferred implementation revenues typically recognized over remaining service period through termination date.
 connection with long-term outsourcing service agreements customized implementation efforts often necessary to set up clients and human resource or benefit programs on our systems and operating processes.
 for outsourcing services sold separately or accounted for as separate unit accounting specific incremental direct costs of implementation incurred prior to services commencing are generally deferred and amortized over period related ongoing services revenue recognized.
 deferred costs assessed for recoverability on periodic basis to extent deferred cost exceeds related deferred revenue.
 pensions sponsor defined benefit pension plans throughout world.
 most significant plans located in u. s. , u. k.  netherlands and canada.
 significant u. s. k. netherlands canadian pension plans closed to new entrants.
 ceased crediting future benefits relating to salary and service for our u. s. u. k. netherlands canadian plans to extent statutorily permitted.
 in 2016 estimate pension and post-retirement net periodic benefit cost for major plans to increase by $ 15 million to benefit of approximately $ 54 million.
 increase benefit primarily due to change in approach to measuring service and interest cost.
 effective december 31 , 2015 for 2016 expense elected to utilize full yield curve approach in estimation of service and interest cost components of net periodic pension and post-retirement benefit cost for major pension other post-retirement benefit plans by applying specific spot rates along yield curve used in determination benefit obligation to relevant projected cash flows.
in 2015 and prior years  estimated components of net periodic pension and post-retirement benefit cost by applying single weighted-average discount rate  derived from yield curve used to measure benefit obligation at beginning of period.
 made this change to improve correlation between projected benefit cash flows and corresponding yield curve spot rates provide more precise measurement of service and interest costs.
 change not affect measurement of projected benefit obligation as change in service cost and interest cost offset in actuarial ( gain ) loss recorded in other comprehensive income.
 accounted for this change as change in estimate will account for it prospectively.
 recognition of gains and losses prior service certain changes in value of obligation and value of plan assets  occur due to factors changes in discount rate actuarial assumptions actual demographic experience/or plan asset performance not immediately recognized in net income.
 such changes recognized in other comprehensive income amortized into net income as part of net periodic benefit cost.
 unrecognized gains and losses deferred in other comprehensive income  amortized into compensation and benefits expense as component of periodic pension expense based on average life expectancy of u. s. , netherlands , canada , u. k.
 plan members.
 amortize any prior service expense or credits result of plan changes over period consistent with amortization of gains and losses.
 as of december 31 , 2015  our pension plans have deferred losses not yet recognized through income in consolidated financial statements.
 amortize unrecognized actuarial losses outside of corridor  defined as 10% ( 10 % ) of greater of market-related value of plan assets or projected benefit obligation.
 to extent not offset by future gains incremental amortization as calculated above will continue to affect future pension expense until fully amortized.
table discloses unrecognized actuarial gains and losses, number of years amortizing experience loss estimated 2016 amortization of loss by country ( amounts in millions ) :.
 unrecognized prior service cost ( income ) at december 31, 2015 was $ 9 million , $ 46 million , and $ ( 7 ) million in u. s. , u. k.
 other plans , respectively.
 for u. s.
 pension plans use market-related valuation of assets approach to determine expected return on assets component of net periodic benefit cost recognized in consolidated statements of income.
 approach

| u.k .   | u.s .  | other
--------------------------------------- | ------- | ------ | -------
unrecognized actuarial gains and losses | $ 1511  | $ 1732 | $ 382
amortization period ( in years )        | 10 - 32 | 7 - 28 | 15 - 41
estimated 2016 amortization of loss     | $ 37    | $ 52   | $ 10


58| | duke realty corporation annual report 2009 recognized loss of $ 1. 1 million upon acquisition represents difference between fair value of recognized assets and carrying value of pre-existing equity interest.
 acquisition date fair value of net recognized assets compared to acquisition date carrying value of outstanding advances and accrued interest  acquisition date carrying value of pre-existing equity interests shown as ( in thousands ) :.
 since april 1 , 2009  results of operations for both acquired entities included in continuing operations consolidated financial statements.
 due to significant pre-existing ownership and financing positions in two acquired entities inclusion of results of operations not have material effect on operating income.
 acquisitions acquired income producing real estate related assets of $ 32. 1 million , $ 60. 5 million and $ 219. 9 million in 2009 , 2008 2007 .
 in december 2007  to establish property positions around strategic port locations purchased portfolio of five industrial buildings in seattle , virginia houston  approximately 161 acres of undeveloped land and 12-acre container storage facility in houston.
 total price was $ 89. 7 million financed in part through assumption of secured debt fair value of $ 34. 3 million.
 of total purchase price  $ 64. 1 million allocated to in-service real estate assets  $ 20. 0 million to undeveloped land and container storage facility $ 5. 4 million allocated to lease related intangible assets remaining amount allocated to acquired working capital related assets and liabilities.
 results of operations for acquired properties since date of acquisition included in continuing rental operations in consolidated financial statements.
 all other acquisitions not individually material.
 disposed of income producing real estate related assets with gross proceeds of $ 267.0 million  $ 426. 2 million $ 590. 4 million in 2009 , 2008 2007  respectively.
 sold five properties in 2009 seven properties in 2008 to unconsolidated joint venture.
 gross proceeds totaled $ 84. 3 million $ 226. 2 million for years ended december 31 , 2009 2008.
 in march 2007  capital recycling program sold portfolio of eight suburban office properties totaling 894000 square feet in cleveland market.
 sales price totaled $ 140. 4 million  received net proceeds of $ 139. 3 million.
 sold portfolio of twelve flex and light industrial properties in july 2007 totaling 865000 square feet in st.
 louis market sales price $ 65. 0 million  received net proceeds of $ 64. 2 million.
 other dispositions not individually material.
 related party transactions provide property management  leasing  construction other tenant related services to unconsolidated companies have equity interests.
 for years ended december 31 , 2009  2008 2007  earned management fees of $ 8. 4 million , $ 7. 8 million $ 7. 1 million  leasing fees of $ 4. 2 million , $ 2. 8 million $ 4. 2 million construction and development fees of $ 10. 2 million , $ 12. 7 million $ 13. 1 million from these companies.
 recorded fees based on contractual terms approximate market rates for types

net fair value of acquired assets and liabilities                   | $ 206852
------------------------------------------------------------------- | ------------------
less advances to acquired entities eliminated upon consolidation    | -173006 ( 173006 )
less acquisition date carrying value of equity in acquired entities | -34908 ( 34908 )
loss on business combination                                        | $ -1062 ( 1062 )


our variable-rate home equity lines of credit have seven or ten year draw period  followed by 20 year amortization term.
 we have home equity lines credit where borrowers pay interest only and where borrowers pay principal and interest.
 based upon outstanding balances at december 31 , 2011 table presents periods when home equity lines of credit draw periods to end.
 home equity lines of credit - draw period end dates in millions interest only product principal and interest product.
 ( a ) includes approximately $ 306 million , $ 44 million , $ 60 million , $ 100 million, and $ 246 million of home equity lines of credit with balloon payments with draw periods to end in 2012 , 2013  2014  2015  2016.
 view home equity lines of credit where borrowers paying principal and interest under draw period as less risky than paying interest only these borrowers have demonstrated ability to make level of principal and interest payments.
 based outstanding balances excluding purchased impaired loans at december 31 , 2011  for home equity lines of credit for which borrower can no longer draw (. draw period ended or borrowing privileges terminated ) approximately 4. 32% ( 4. 32 % ) were 30-89 days past due approximately 5. 57% ( 5. 57 % ) were greater than or equal to 90 days past due.
 when borrower becomes 60 days past due , we terminate borrowing privileges privileges not reinstated.
 we continue collection/recovery processes may include loss mitigation loan modification in loan classified as tdr.
 see note 5 asset quality and allowances for loan and lease losses and unfunded loan commitments and letters of credit in notes to consolidated financial statements in item 8 of this report for additional information.
loan modifications troubled debt restructurings consumer loan modifications we modify loans under government and pnc-developed programs based commitment to help eligible homeowners borrowers avoid foreclosure  where appropriate.
 initially borrower evaluated for modification under government program.
 if borrower not qualify under government program, borrower then evaluated under pnc program.
 our programs utilize temporary and permanent modifications typically reduce interest rate  extend term/or defer principal.
 temporary and permanent modifications under programs involving change to loan terms generally classified as tdrs.
 certain payment plans trial payment arrangements do not include contractual change to loan terms may be classified as tdrs.
 additional detail on tdrs discussed below in note 5 asset quality allowances for loan and lease losses unfunded loan commitments letters of credit in notes to consolidated financial statements in item 8 of report.
 temporary modification  with term between three and 60 months  involves change in original loan terms for period of time reverts to original loan terms as of specific date or occurrence of event  as failure to pay in accordance with terms of modification.
 typically these modifications are for period of up to 24 months after interest rate reverts to original loan rate.
 permanent modification  with term greater than 60 months , is modification in terms of original loan are changed.
 permanent modifications include government-created home affordable modification program ( hamp ) or pnc-developed hamp-like modification programs.
 for consumer loan programs  residential mortgages home equity loans lines  we will enter into temporary modification when borrower has indicated temporary hardship willingness to bring current delinquent loan balance.
 examples of this situation often include delinquency due to illness or death in family  loss of employment.
permanent modifications entered into when confirmed borrower not possess income necessary to continue making loan payments at current amount  expectation is payments at lower amounts can be made.
 residential mortgage and home equity loans and lines modified with changes in terms for up to 60 months  majority involve periods three to 24 months.
 monitor success rates delinquency status of loan modification programs to assess effectiveness in serving customers 2019 needs mitigating credit losses.
 following tables provide number of accounts and unpaid principal balance of modified consumer real estate related loans number of accounts and unpaid principal balance of modified loans 60 days or more past due as of six months , nine months twelve months after modification date.
 78 pnc financial services group , inc.
 2013 form 10-k

in millions         | interest only product | principal and interest product
------------------- | --------------------- | ------------------------------
2012                | $ 904                 | $ 266
2013                | 1211                  | 331
2014                | 2043                  | 598
2015                | 1988                  | 820
2016 and thereafter | 6961                  | 5601
total ( a )         | $ 13107               | $ 7616


years.
 company not have robust annuitization experience because most clients 2019 policyholders not yet eligible to annuitize utilizing gmib.
 for certain clients several years of annuitization experience 2013 for clients annuitization function reflects actual experience has maximum annuitization rate per annum of 8 percent ( higher maximum applies in first year policy eligible to annuitize utilizing gmib 2013 over 13 percent ).
 for most clients no currently observable relevant annuitization behavior data we use weighted aver- age ( with heavier weighting on observed experience noted ) of three different annuitization functions with maximum annuitization rates per annum of 8 percent , 12 percent and 30 percent  ( with significantly higher rates in first year policy eligible to annuitize utilizing gmib ).
 gmib reinsurance treaties include claim limits to protect ace in event actual annuitization behavior significantly higher than expected.
 during 2010  company made changes to assumptions ( primarily annuitization and lapse ) and methods to calculate fair value.
 changes net effect of fair value of liability by $ 98 million ( dollar impact of each change measured in quarter in change implemented ).
 during 2010  recorded realized losses of $ 64 million due to increasing net fair value of reported glb reinsurance liabilities from impact of falling interest rates.
 excludes realized losses of $ 150 mil- lion during 2010 on derivative hedge instruments held to partially offset risk in va guarantee reinsurance portfolio.
 these derivatives do not receive hedge accounting treatment.
 refer to 201cnet realized gains ( losses ) 201d for breakdown of realized gains on glb reinsurance and realized losses on derivatives for 2010 and 2009.
 ace tempest life re employs strategy to manage financial market and policyholder behavior risks in reinsurance of va guarantees.
risk management begins underwriting prospective client guarantee design focus on protecting ace 2019s position from policyholder options anti-selective behavior could adversely impact our obligation.
 second layer of risk management is structure of reinsurance contracts.
 all va guarantee reinsurance contracts include annual or aggregate claim limit ( s ).
 exact limits vary by contract examples typical con- tract provisions include : 2022 annual claim limits  percentage of reinsured account or guaranteed value  for gmdbs and gmibs ; 2022 annual annuitization rate limits  percentage of annuitization eligible account or guaranteed value  for gmibs ; 2022 per policy claim limits  percentage of guaranteed value  for gmabs.
 third layer of risk management is hedging strategy focused mitigating long-term economic losses at portfolio level.
 ace tempest life re owned financial market instruments part of hedging strategy with fair value of $ 21 million and $ 47 million at december 31 , 2010 , and 2009 , respectively.
 instruments substantially collateralized by counterparties  daily basis.
 we limit aggregate amount of variable annuity reinsurance guarantee risk willing to assume.
 last substantive u. s.
 transaction quoted mid-2007 last transaction in japan quoted in late 2007.
 aggregate number of policyholders decreasing through policyholder withdrawals and deaths rate 5-10 per- cent annually.
 glb claims cannot occur for reinsured policy until reached end of 201cwaiting period 201d.
 majority of policies we reinsure reach end of 201cwaiting periods 201d in 2013 or later  as shown in table below.
 year of first payment eligibility percent of living benefit account values.

year of first payment eligibility | percent ofliving benefitaccount values
--------------------------------- | --------------------------------------
2010 and prior                    | 1% ( 1 % )
2011                              | 0% ( 0 % )
2012                              | 7% ( 7 % )
2013                              | 24% ( 24 % )
2014                              | 19% ( 19 % )
2015                              | 5% ( 5 % )
2016                              | 6% ( 6 % )
2017                              | 18% ( 18 % )
2018 and after                    | 20% ( 20 % )
total                             | 100% ( 100 % )


shareowner return performance graph performance graph and related information not deemed 201csoliciting material 201d or to be 201cfiled 201d with sec , nor information incorporated into future filing under securities act of 1933 or securities exchange act of 1934 , each as amended , except company specifically incorporates such information into such filing.
 graph shows five year comparison of cumulative total shareowners 2019 returns for class b common stock , standard & poor 2019s 500 index , and dow jones transportation average.
 comparison of total cumulative return on investment , is change in quarterly stock price plus reinvested dividends for each quarterly periods , assumes $ 100 invested on december 31 , 2009 in standard & poor 2019s 500 index , dow jones transportation average , and class b common stock.

| 12/31/2009 | 12/31/2010 | 12/31/2011 | 12/31/2012 | 12/31/2013 | 12/31/2014
-------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
united parcel service inc .      | $ 100.00   | $ 130.29   | $ 135.35   | $ 140.54   | $ 205.95   | $ 223.79
standard & poor 2019s 500 index  | $ 100.00   | $ 115.06   | $ 117.48   | $ 136.26   | $ 180.38   | $ 205.05
dow jones transportation average | $ 100.00   | $ 126.74   | $ 126.75   | $ 136.24   | $ 192.61   | $ 240.91


years ended december 31 , 2007 , 2006 2005 , $ 0. 5 million , $ 0. 8 million and $ 1. 4 million , respectively  of depreciation and amortization on assets under capital leases included in depreciation amortization expense.
 sponsorships other marketing commitments within normal course business  company enters into contractual commitments to promote company 2019s brand and products.
 commitments include sponsorship agreements with teams athletes collegiate professional levels  official supplier agreements  athletic event sponsorships other marketing commitments.
 schedule of company 2019s future minimum payments under sponsorship marketing agreements as of december 31, 2007 : ( in thousands ) december 31.
 amounts listed above are minimum obligations required be paid under company 2019s sponsorship marketing agreements.
 some agreements provide for additional incentives based on performance achievements while wearing using company 2019s products may include product supply obligations over terms agreements.
 company involved in routine legal matters incidental to business.
 management believes ultimate resolution of current proceedings claims not have material adverse effect on company 2019s consolidated financial position , results of operations or cash flows.
 certain key executives party to agreements with company include severance benefits upon involuntary termination or change in ownership company.
 8.
 stockholders 2019 equity in november 2005  company completed initial public offering issued additional 9. 5 million shares of common stock.
 part initial public offering , 1. 2 million outstanding shares of convertible common stock held by rosewood entities converted to class a common stock on three-for-one basis.
 company received proceeds of $ 112. 7 million net of $ 10. 8 million in stock issue costs used to repay $ 25. 0 million term note , balance outstanding under revolving credit facility of $ 12. 2 million , series a preferred stock of $ 12.0 million.
 recapitalization initial public offering , company 2019s stockholders approved amended restated charter provides for issuance of up to 100. 0 million shares of class a common stock and 16. 2 million shares of class b convertible common stock , par value $ 0. 0003 1/3 per share , permits amendments to charter without stockholder approval to increase or decrease aggregate number of shares of stock authorized , or number of shares of stock any class or series of stock authorized , classify or reclassify unissued shares of stock.
 initial public offering , 1. 0 million shares of class b convertible common stock converted into shares class a common stock one-for-one basis stock sale.

( in thousands )                                              | december 31 2007
------------------------------------------------------------- | ----------------
2008                                                          | $ 14684
2009                                                          | 14660
2010                                                          | 13110
2011                                                          | 10125
2012 and thereafter                                           | 1005
total future minimum sponsorship and other marketing payments | $ 53584


visa inc.
 notes to consolidated financial statements 2014 continued september 30 , 2013 market condition based on company 2019s total shareholder return ranked against other companies in standard & poor 2019s 500 index.
 fair value of performance- based shares market condition estimated on grant date using monte carlo simulation model.
 grant-date fair value of performance-based shares in fiscal 2013 , 2012 2011 was $ 164. 14 , $ 97. 84 $ 85. 05 per share.
 earned performance shares granted in fiscal 2013 and 2012 vest three years from initial grant date.
 performance shares granted in fiscal 2011 vest in two equal installments approximately two and three years from grant dates.
 performance awards subject to earlier vesting full under certain conditions.
 compensation cost for performance-based shares estimated based on target performance.
 recorded net of estimated forfeitures adjusted as appropriate throughout performance period.
 at september 30 , 2013  $ 15 million of total unrecognized compensation cost related to unvested performance-based shares expected to be recognized over weighted-average period of approximately 1. 0 years.
 note 17 2014commitments contingencies commitments.
 company leases premises equipment world with varying expiration dates.
 company incurred total rent expense of $ 94 million , $ 89 million $ 76 million in fiscal 2013 , 2012 2011 .
 future minimum payments on leases  marketing sponsorship agreements per fiscal year at september 30 , 2013  as follows.
 select sponsorship agreements require company to spend certain minimum amounts for advertising marketing promotion over life of contract.
 for commitments where individual years of spend not specified in contract company estimated timing of when amounts be spent.
addition to fixed payments, select sponsorship agreements require company to undertake marketing, promotional other activities up to stated monetary values to support events company sponsoring.
 stated monetary value of activities typically represents value in marketplace, may be significantly in excess of actual costs incurred by company.
 client incentives.
 company has agreements with financial institution clients business partners for programs designed to build payments volume  increase visa-branded card product acceptance win merchant routing transactions.
 these agreements  with original terms from one to thirteen years  can provide card issuance conversion support  volume/growth targets marketing program support based on specific performance requirements.
 agreements designed to encourage client business increase visa-branded payment and transaction volume , reducing per-unit transaction processing costs increasing brand awareness for all visa clients.
 payments made qualify for capitalization , obligations incurred under programs reflected on consolidated balance sheet.
 client incentives recognized primarily as a reduction

( in millions )            | 2014  | 2015  | 2016  | 2017 | 2018 | thereafter | total
-------------------------- | ----- | ----- | ----- | ---- | ---- | ---------- | -----
operating leases           | $ 100 | $ 77  | $ 43  | $ 35 | $ 20 | $ 82       | $ 357
marketing and sponsorships | 116   | 117   | 61    | 54   | 54   | 178        | 580
total                      | $ 216 | $ 194 | $ 104 | $ 89 | $ 74 | $ 260      | $ 937


masco corporation notes to consolidated financial statements continued ) h.
 goodwill other intangible assets continued ) goodwill at december 31 , accumulated impairment losses goodwill at december 31 , 2010 additions ) discontinued operations b ) pre-tax impairment charge other c ) goodwill at december 31 , cabinets related products.
.
.
.
.
.
.
.
.
.
.
 $ 587 $ ( 364 ) $ 223 $ 2014 $ 2014 $ ( 44 ) $ 2 $ 181.
 additions include acquisitions.
 during 2011 company reclassified goodwill related to business units for sale.
 subsequent reclassification company recognized charge for business units expected to be divested at loss ; charge included write-down of goodwill of $ 13 million.
 c includes effect of foreign currency translation purchase price adjustments related to prior-year acquisitions.
 fourth quarters of 2012 and 2011 company completed annual impairment testing of goodwill other indefinite-lived intangible assets.
 impairment test in 2012 indicated no impairment of goodwill for company 2019s reporting units.
 impairment test in 2011 indicated goodwill recorded for certain company 2019s reporting units was impaired.
 company recognized non-cash  pre-tax impairment charges in continuing operations for goodwill of $ 486 million ( $ 330 million , after tax ) for 2011.
 2011 pre-tax impairment charge in cabinets related products segment relates to european ready-to- assemble cabinet manufacturer reflects declining demand for certain products decreased operating margins.
 pre-tax impairment charge in decorative architectural products segment relates to builders 2019 hardware business reflects increasing competitive conditions for business.
pre-tax impairment charge in other specialty products segment relates to north american window and door business reflects weak new home construction activity in western u. s. reduced repair and remodel activity expectation recovery slower than anticipated.
 company assessed long-lived assets associated business units determined no impairment necessary at december 31 , 2011.
 other indefinite-lived intangible assets were $ 132 million and $ 174 million at december 31 , 2012 and 2011  included registered trademarks.
 in 2012 and 2011 impairment test indicated registered trademark for north american business unit in other specialty products segment and trademark north american business unit plumbing products segment ( 2011 only ) impaired due to changes in long-term outlook for business units.
 company recognized non-cash  pre-tax impairment charges for other indefinite- lived intangible assets of $ 42 million ( $ 27 million , after tax ) and $ 8 million ( $ 5 million, after tax ) in 2012 and 2011 .
 in 2010  company recognized non-cash pre-tax impairment charges for other indefinite-lived intangible assets of $ 10 million ( $ 6 million after tax ) related to installation and other services segment ( $ 9 million pre-tax ) and plumbing products segment ( $ 1 million pre-tax ).

| gross goodwill at december 31 2010 | accumulated impairment losses | net goodwill at december 31 2010 | additions ( a ) | discontinued operations ( b ) | pre-tax impairment charge | other ( c ) | net goodwill at december 31 2011
--------------------------------- | ---------------------------------- | ----------------------------- | -------------------------------- | --------------- | ----------------------------- | ------------------------- | ----------- | --------------------------------
cabinets and related products     | $ 587                              | $ -364 ( 364 )                | $ 223                            | $ 2014          | $ 2014                        | $ -44 ( 44 )              | $ 2         | $ 181
plumbing products                 | 536                                | -340 ( 340 )                  | 196                              | 9               | 2014                          | 2014                      | -4 ( 4 )    | 201
installation and other services   | 1819                               | -762 ( 762 )                  | 1057                             | 2014            | -13 ( 13 )                    | 2014                      | 2014        | 1044
decorative architectural products | 294                                | 2014                          | 294                              | 2014            | 2014                          | -75 ( 75 )                | 2014        | 219
other specialty products          | 980                                | -367 ( 367 )                  | 613                              | 2014            | 2014                          | -367 ( 367 )              | 2014        | 246
total                             | $ 4216                             | $ -1833 ( 1833 )              | $ 2383                           | $ 9             | $ -13 ( 13 )                  | $ -486 ( 486 )            | $ -2 ( 2 )  | $ 1891


notes consolidated financial statements 2014 ( continued ) note 12 2014related party transactions settling money transfer transactions purchase foreign currency from consultoria internacional casa de cambio ( 201ccisa 201d )  mexican company partially owned by employees.
 as of march 31 , 2008 .
 fal lim f3n cortes  10% ( % ) shareholder of cisa no longer employee no longer considered cisa related party.
 purchased 6. 1 billion mexican pesos for $ 560. 3 million during ten months ended march 31, 2008 and 8. 1 billion mexican pesos for $ 736. 0 million during fiscal 2007 from cisa.
 currency transactions executed at prevailing market exchange rates.
 money transfer transactions settled at destination facilities owned by cisa.
 incurred related settlement expenses included in cost of service in consolidated statements of income of $ 0. 5 million in ten months ended march 31 , 2008.
 in fiscal 2007 and 2006 incurred related settlement expenses included in cost of service in consolidated statements of income of $ 0. 7 and $ 0. 6 million  respectively.
 normal course business periodically utilize services of contractors provide software development services.
 one of employees  hired in april 2005  also employee , officer  and part owner of firm provides such services.
 services firm primarily relate to software development with planned next generation front-end processing system in united states.
 during fiscal 2008  capitalized fees paid to this firm of $ 0. 3 million.
 as of may 31 , 2008 and 2007  capitalized amounts paid to firm of $ 4. 9 million and $ 4. 6 million  included in property and equipment in consolidated balance sheets.
 expensed amounts paid to this firm of $ 0. 3 million , $ 0. 1 million and $ 0.5 million in years ended may 31 , 2008 , 2007 2006 , respectively.
 note 13 2014commitments contingencies leases conduct major part of operations using leased facilities equipment.
 many leases have renewal purchase options provide pay cost of property taxes  insurance maintenance.
 rent expense on all operating leases for fiscal 2008 , 2007 2006 was $ 30. 4 million , $ 27. 1 million , $ 24. 4 million , respectively.
 future minimum lease payments for all noncancelable leases at may 31 , 2008 were follows : operating leases.
 party to other claims lawsuits incidental to our business.
 opinion of management , reasonably possible outcome of such matters , individually aggregate  not have material adverse impact on financial position  liquidity results of operations.

| operating leases
----------------------------------- | ----------------
2009                                | $ 22883
2010                                | 16359
2011                                | 11746
2012                                | 5277
2013                                | 3365
thereafter                          | 7816
total future minimum lease payments | $ 67446


american tower corporation and subsidiaries notes to consolidated financial statements.
 acquisitions 2014during year ended december 31 , 2010 , company acquired 548 towers through multiple acquisitions in united states for aggregate purchase price of $ 329. 3 million contingent consideration of approximately $ 4. 6 million.
 acquisition towers consistent with company 2019s strategy to expand in selected geographic areas accounted for as business combinations.
 following table summarizes preliminary allocation of aggregate purchase consideration paid amounts of assets acquired liabilities assumed based on estimated fair value of acquired assets assumed liabilities at date of acquisition ( in thousands ) : purchase price allocation.
 1 consists of customer relationships of approximately $ 205. 4 million network location intangibles of approximately $ 55. 5 million.
 customer relationships network location intangibles amortized straight-line basis over period 20 years.
 2 goodwill expected to be deductible for income tax purposes.
 goodwill allocated to domestic rental and management segment.
 allocation of purchase price finalized upon completion of analyses of fair value of assets acquired liabilities assumed.
 south africa acquisition 2014on november 4 , 2010  company entered definitive agreement with cell c ( pty ) limited to purchase up to approximately 1400 existing towers  to 1800 additional towers under construction or will be constructed for aggregate purchase price of up to approximately $ 430 million.
 company anticipates closing purchase of up to 1400 existing towers during 2011  subject to customary closing conditions.
 other transactions transaction 2014on september 3 , 2010  company entered definitive agreement to purchase exclusive use rights for towers in colombia from colombia telecomunicaciones s.
.
 until 2023 , when ownership of towers will transfer to company at no additional cost.
pursuant agreement  company completed purchase of exclusive use rights for 508 towers for aggregate purchase price of $ 86. 8 million during year ended december 31 , 2010.
 company expects to complete purchase exclusive use rights for additional 180 towers by end of 2011 , subject to customary closing conditions.
 transaction accounted for as capital lease , aggregated purchase price allocated to property equipment non-current assets.
 joint venture with mtn group 2014on december 6 , 2010 , company entered definitive agreement with mtn group limited ( 201cmtn group 201d ) to establish joint venture in ghana ( 201ctowerco ghana 201d ).
 towerco ghana , managed by company owned by holding company wholly owned american tower subsidiary hold 51% ( 51 % ) share wholly owned mtn group subsidiary ( 201cmtn ghana 201d ) hold 49% ( 49 % ) share.
 transaction involves sale of up to 1876 of mtn ghana 2019s existing sites to

| purchase price allocation
--------------------------------- | -------------------------
non-current assets                | $ 442
property and equipment            | 64564
intangible assets ( 1 )           | 260898
current liabilities               | -360 ( 360 )
long-term liabilities             | -7802 ( 7802 )
fair value of net assets acquired | $ 317742
goodwill ( 2 )                    | 16131


operating lease agreements.
 included in amounts was contingent rent expense of $ 3. 6 million , $ 2. 0 million and $ 0. 6 million for years ended december 31 , 2011 , 2010 and 2009 , respectively.
 operating lease obligations above do not include contingent rent.
 sponsorships other marketing commitments within normal course of business , company enters into contractual commitments to promote company 2019s brand and products.
 commitments include sponsorship agreements with teams athletes on collegiate and professional levels , official supplier agreements  athletic event sponsorships other marketing commitments.
 schedule of company 2019s future minimum payments under sponsorship and other marketing agreements as of december 31, 2011 : ( in thousands ).
 amounts listed above are minimum obligations required to be paid under company 2019s sponsorship other marketing agreements.
 amounts do not include additional performance incentives and product supply obligations under certain agreements.
 not possible to determine how much company will spend on product supply obligations annual basis as contracts do not stipulate specific cash amounts to spent on products.
 amount of product provided to sponsorships depends on factors including general playing conditions  number of sporting events company 2019s decisions regarding product and marketing initiatives.
 costs to design , develop , source purchase products furnished to endorsers incurred over period of time not necessarily tracked separately from similar costs incurred for products sold to customers.
 company involved in routine legal matters incidental to business.
 company believes ultimate resolution of current proceedings claims will not have material adverse effect on its consolidated financial position , results of operations or cash flows.
 in connection with contracts agreements company agreed to indemnify counterparties against certain third party claims relating to infringement of intellectual property rights other items.
indemnification obligations not apply in situations counterparties negligent engage in willful misconduct or act in bad faith.
 based on company 2019s historical experience and estimated probability future loss company determined fair value of indemnifications not material to its consolidated financial position or results of operations.
 9.
 stockholders 2019 equity company 2019s class a common stock and class b convertible common stock have authorized number shares 100. 0 million and 11. 3 million shares  respectively each par value of $ 0. 0003 1/3 per share.
 holders of class a common stock and class b convertible common stock have identical rights including liquidation preferences except holders of class a common stock entitled to one vote per share and holders class b convertible common stock entitled to 10 votes per share on all matters submitted stockholder vote.
 class b convertible common stock only held by kevin plank

2012                                                          | $ 52855
------------------------------------------------------------- | --------
2013                                                          | 46910
2014                                                          | 42514
2015                                                          | 22689
2016                                                          | 3580
2017 and thereafter                                           | 966
total future minimum sponsorship and other marketing payments | $ 169514


american tower corporation and subsidiaries notes to consolidated financial statements recognizing customer revenue , company must assess collectability of amounts billed and portion recognized on straight-line basis.
 this assessment takes customer credit risk business industry conditions into consideration to determine collectability of amounts billed.
 extent amounts  based on management estimates may not be collectible , recognition is deferred until uncertainty resolved.
 any amounts previously recognized as revenue subsequently determined to be uncollectible are charged to bad debt expense.
 accounts receivable are reported net of allowances for doubtful accounts related to estimated losses resulting from customer 2019s inability to make required payments and reserves for amounts invoiced whose collectability not reasonably assured.
 allowances generally estimated based on payment patterns , days past due collection history  incorporate changes in economic conditions may not be reflected in historical trends such as customers in bankruptcy  liquidation reorganization.
 receivables are written-off against allowances when determined uncollectible.
 determination includes analysis consideration of particular conditions of account.
 changes in allowances were as follows for years ended december 31 , ( in thousands ) :.
 company 2019s largest international customer is iusacell , brand name under group of companies controlled by grupo iusacell .
.
 201cgrupo iusacell 201d ) operates.
 iusacell represented approximately 4% ( 4 % ) of company 2019s total revenue for year ended december 31 , 2010.
 grupo iusacell engaged in refinancing of majority of.
 dollar denominated debt  connection with process two of legal entities of group including grupo iusacell , voluntarily filed for pre-packaged concurso mercantil ( process equivalent to chapter 11 of u. s.
bankruptcy law ) backing of majority of financial creditors in december 2010.
 as of december 31 , 2010  iusacell notes receivable , net , and related assets ( include financing lease commitments and deferred rent asset primarily long-term ) were $ 19. 7 million and $ 51. 2 million , respectively.
 functional currency 2014as result of changes to organizational structure of company 2019s subsidiaries in latin america in 2010 , company determined effective january 1 , 2010, functional currency of foreign subsidiary in brazil is brazilian real.
 all assets and liabilities held by subsidiary in brazil translated into u. s.
 dollars at exchange rate at end of applicable reporting period.
 revenues and expenses translated at average monthly exchange rates cumulative translation effect included in stockholders 2019 equity.
 change in functional currency from u.
 dollars to brazilian real gave rise to increase in net value of certain non-monetary assets and liabilities.
 aggregate impact on such assets and liabilities was $ 39. 8 million with offsetting increase in accumulated other comprehensive income ( loss ).
 result of renegotiation of company 2019s agreements with largest international customer , iusacell , included converting all of iusacell 2019s contractual obligations to company from u. s.
 dollars to mexican pesos , company determined effective april 1, 2010 , functional currency of certain foreign subsidiaries in mexico is mexican peso.
 all assets and liabilities held by subsidiaries in mexico translated into u. s.
 dollars at exchange rate effect at end of applicable reporting period.
 revenues and expenses translated at average monthly exchange rates cumulative translation effect included in stockholders 2019 equity.
 change in functional

| 2010             | 2009           | 2008
-------------------------- | ---------------- | -------------- | --------------
balance as of january 1,   | $ 28520          | $ 11482        | $ 8850
current year increases     | 16219            | 26771          | 12059
recoveries and other       | -22234 ( 22234 ) | -9733 ( 9733 ) | -9427 ( 9427 )
balance as of december 31, | $ 22505          | $ 28520        | $ 11482


credit rating company $ 200 million term loan interest rate libor plus margin 175 basis points maturity dates in 2017.
 proceeds from borrowings used available cash to fund acquisition of temple- inland.
 during 2012  international paper repaid $ 1. 2 billion term loan.
 international paper utilizes interest rate swaps to change mix fixed variable rate debt manage interest expense.
 december 31 , 2012  international paper had interest rate swaps total notional amount $ 150 million maturities in 2013 ( see note 14 derivatives hedging activities on pages 70 through 74 of item 8.
 financial statements supplementary data ).
 during 2012 existing swaps amortization of deferred gains on previously terminated swaps decreased weighted average cost of debt from 6. 8% ( 6. 8 % ) to effective rate 6. 6% ( 6. 6 % ).
 inclusion offsetting interest income from short- term investments reduced effective rate to 6. 2% ( 6. 2 % ).
 other financing activities 2012 included issuance of approximately 1. 9 million shares of treasury stock  net restricted stock withholding 1. 0 million shares of common stock for incentive plans stock options exercises generated approximately $ 108 million of cash.
 payment of restricted stock withholding taxes totaled $ 35 million.
 off-balance sheet variable interest entities information off-balance interest entities in note 12 variable interest entities preferred securities subsidiaries on pages 67 through 69 of item 8.
 financial statements supplementary data for discussion.
 liquidity capital resources outlook for 2015 capital expenditures long-term debt international paper expects to meet projected capital expenditures service existing debt meet working capital dividend requirements during 2015 through current cash balances cash from operations.
 company has existing credit facilities totaling $ 2. 0 billion nothing used.
 company in compliance with all debt covenants at december 31 , 2014.
company 2019s financial covenants require minimum net worth $ 9 billion total debt-to- capital ratio less than 60% ( 60 % ).
 net worth defined as sum of common stock paid-in capital retained earnings less treasury stock plus cumulative goodwill impairment charges.
 calculation excludes accumulated other comprehensive income/ loss nonrecourse financial liabilities of special purpose entities.
 total debt-to-capital ratio defined as total debt divided by sum total debt plus net worth.
 at december 31 , 2014  international paper 2019s net worth was $ 14. 0 billion total-debt- to-capital ratio was 40% ( 40 % ).
 company will rely upon debt capital markets for majority of necessary long-term funding not by operating cash flows.
 funding decisions guided by capital structure planning objectives.
 primary goals are to maximize financial flexibility preserve liquidity while reducing interest expense.
 majority of international paper 2019s debt accessed through global public capital markets wide base investors.
 maintaining investment grade credit rating important element of 2019s financing strategy.
 at december 31, 2014 company held long-term credit ratings of bbb ( stable outlook ) and baa2 ( stable outlook ) by s&p and moody 2019s.
 contractual obligations for future payments under existing debt lease commitments purchase obligations at december 31 , 2014 were as follows:.
 ( 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 these obligations with investments held in entities.
 in consolidated balance sheet at december 31, 2014  international paper offset approximately $ 5. 2 billion of interests in entities against this $ 5.3 billion debt obligations held by entities ( see note 12 variable interest entities preferred securities of subsidiaries pages 67 through 69 item 8.
 financial statements supplementary data ).
 ( c ) includes $ 2. 3 billion relating to fiber supply agreements 2006 transformation plan forestland sales 2008 acquisition of weyerhaeuser company 2019s containerboard , packaging recycling business.
 ( d ) not included in above table due to uncertainty amount timing payment unrecognized tax benefits of approximately $ 119 million.
 discussed in note 12 variable interest entities preferred securities of subsidiaries pages 67 through 69 item 8.
 financial statements supplementary data , connection with 2006 international paper installment sale of forestlands , received $ 4. 8 billion of installment notes ( or timber notes ) contributed to certain non- consolidated borrower entities.
 installment notes mature in august 2016 ( unless extended ).
 deferred

in millions                                 | 2015   | 2016   | 2017  | 2018   | 2019   | thereafter
------------------------------------------- | ------ | ------ | ----- | ------ | ------ | ----------
maturities of long-term debt ( a )          | $ 742  | $ 543  | $ 71  | $ 1229 | $ 605  | $ 6184
debt obligations with right of offset ( b ) | 2014   | 5202   | 2014  | 2014   | 2014   | 2014
lease obligations                           | 142    | 106    | 84    | 63     | 45     | 91
purchase obligations ( c )                  | 3266   | 761    | 583   | 463    | 422    | 1690
total ( d )                                 | $ 4150 | $ 6612 | $ 738 | $ 1755 | $ 1072 | $ 7965


( 201cati 201d ) spectrasite communications , llc ( 201cspectrasite 201d ).
 conduct international operations through subsidiary , american tower international , inc. conducts operations through various international operating subsidiaries.
 international operations consist primarily of operations in mexico brazil  also include operations in india  established in second half of 2007.
 operate in two business segments : rental and management and network development services.
 for more information about business segments financial information about geographic areas operate see item 7 of annual report under caption 201cmanagement 2019s discussion analysis of financial condition results of operations 201d note 18 to consolidated financial statements in annual report.
 products and services rental and management primary business is communications site leasing business  conduct through rental and management segment.
 segment accounted for approximately 97% ( 97 % ), 98% ( 98 % ) and 98% ( 98 % ) of total revenues for years ended december 31 , 2008 , 2007 2006 ,.
 rental and management segment comprised of domestic and international site leasing business  including operation of wireless communications towers , broadcast communications towers das networks  rooftop management.
 wireless communications towers. leading owner and operator of wireless communications towers in united states , mexico brazil  based on number of towers and revenue.
 also own and operate communications towers in india  commenced operations in second half of 2007.
 owned wireless communications towers manage wireless communications sites for property owners in united states , mexico brazil.
 approximately 92% ( 92 % ) , 91% ( 91 % ) and 91% ( 91 % ) of rental and management segment revenue attributable to wireless communications towers for years ended december 31 , 2008 , 2007 2006 .
december 31, 2008 wireless communications tower portfolio included country number owned sites approx ) coverage area united states.
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 19400 coverage spans 49 states district of columbia ; 90% ( 90 % ) network provides coverage top 100 markets core areas high traffic interstate corridors.
 mexico.
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 2500 coverage concentrated populated areas including mexico city  monterrey  guadalajara acapulco.
 brazil.
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 1100 coverage concentrated major metropolitan areas central southern brazil  including sao paulo  rio de janeiro  brasilia curitiba.
 india.
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 200 initial-phase coverage operations established second half of 2007 ).
 lease space wireless communications towers customers diverse range wireless industries including personal communications services cellular enhanced specialized mobile radio  wimax.
 paging fixed microwave.
 major domestic wireless customers include at&t mobility  sprint nextel  verizon wireless merger with alltel january 2009 ) t-mobile usa.
 international wireless customers include grupo iusacell ( iusacell celular unefon in mexico ) nextel international in mexico brazil  telefonica ( movistar in mexico vivo brazil ) america movil ( telcel in mexico claro in brazil ) telecom italia mobile tim ) brazil.
 year ended december 31.
 201cati 201d ) spectrasite communications  llc ( 201cspectrasite 201d ).
conduct international operations through subsidiary  american tower international , inc. conducts operations through various international operating subsidiaries.
 international operations consist primarily of operations in mexico brazil  also include operations in india  established in second half of 2007.
 operate in two business segments : rental and management and network development services.
 for more information about business segments financial information about geographic areas operate see item 7 of annual report under caption 201cmanagement 2019s discussion and analysis of financial condition results of operations 201d note 18 to consolidated financial statements in annual report.
 products services rental and management primary business is communications site leasing business  conduct through rental and management segment.
 segment accounted for approximately 97% ( 97 % ), 98% ( 98 % ) and 98% ( 98 % ) of total revenues for years ended december 31 , 2008 , 2007 2006 .
 rental and management segment comprised of domestic and international site leasing business including operation of wireless communications towers  broadcast communications towers das networks  rooftop management.
 wireless communications towers. leading owner and operator of wireless communications towers in united states , mexico brazil  based on number of towers revenue.
 also own and operate communications towers in india  commenced operations in second half of 2007.
 wireless communications towers also manage wireless communications sites for property owners in united states , mexico brazil.
 approximately 92% ( 92 % ) , 91% ( 91 % ) and 91% ( 91 % ) of rental and management segment revenue attributable to wireless communications towers for years ended december 31 , 2008 , 2007 and 2006 .
 as of december 31 , 2008  wireless communications tower portfolio included : country number of owned sites ( approx ) coverage area united states.
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 19400 coverage spans 49 states district of columbia ; 90% ( 90 % ) network provides coverage top 100 markets core areas high traffic interstate corridors.
 mexico.
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 2500 coverage concentrated highly populated areas including mexico city  monterrey  guadalajara acapulco.
 brazil.
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 1100 coverage concentrated major metropolitan areas central southern brazil  including sao paulo rio de janeiro  brasilia curitiba.
 india.
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 200 initial-phase coverage operations established second half of 2007 ).
 lease space wireless communications towers customers diverse range wireless industries including personal communications services cellular  enhanced specialized mobile radio  wimax.
 paging fixed microwave.
 major domestic wireless customers include at&t mobility sprint nextel  verizon wireless merger with alltel january 2009 ) t-mobile usa.
 major international wireless customers include grupo iusacell iusacell celular unefon mexico ) nextel international in mexico brazil telefonica ( movistar in mexico vivo in brazil ) america movil ( telcel in mexico claro brazil ) telecom italia mobile tim brazil.
 year ended december 31

country       | number of owned sites ( approx ) | coverage area
------------- | -------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
united states | 19400                            | coverage spans 49 states and the district of columbia ; 90% ( 90 % ) of network provides coverage in the top 100 markets or core areas such as high traffic interstate corridors .
mexico        | 2500                             | coverage primarily concentrated in highly populated areas including mexico city monterrey guadalajara and acapulco .
brazil        | 1100                             | coverage primarily concentrated in major metropolitan areas in central and southern brazil including sao paulo rio de janeiro brasilia and curitiba .
india         | 200                              | initial-phase coverage ( operations established in the second half of 2007 ) .


course business we actively manage exposure to market risks by entering into hedging transactions  authorized under established policies clear controls on activities.
 counterparties in transactions are generally highly rated institutions.
 we establish credit limits for each counterparty.
 our hedging transactions include not to variety of derivative financial instruments.
 for information on interest rate  foreign exchange  commodity price  equity instrument risk see note 7 to consolidated financial statements in item 8 of this report.
 value at risk estimates in table below to measure maximum potential fair value we could lose from adverse changes in market interest rates foreign exchange rates commodity prices equity prices under normal market conditions.
 monte carlo value-at-risk ( var ) methodology used to quantify market risk for exposures.
 models assumed normal market conditions used 95 percent confidence level.
 var calculation used historical interest foreign exchange rates  commodity and equity prices from past year to estimate potential volatility correlation of rates in future.
 market data drawn from riskmetrics 2122 data set.
 calculations not intended to represent actual losses in fair value we expect to incur.
 since hedging instrument ( derivative ) inversely correlates with underlying exposure expect any loss or gain in fair value of derivatives would be generally offset by increase or decrease in fair value of underlying exposure.
 positions included in calculations were : debt ; investments ; interest rate swaps ; foreign exchange forwards ; commodity swaps , futures  options ; equity instruments.
 calculations do not include underlying foreign exchange and commodities or equity-related positions that offset by these market-risk-sensitive instruments.
table presents estimated maximum potential from one-day loss in fair value for our interest rate foreign currency commodity equity market-risk-sensitive instruments outstanding as of may 27 , 2018 and may 28 , 2017  and average fair value impact during year ended may 27 , 2018.

in millions                  | fair value impact may 27 2018 | fair value impact averageduringfiscal 2018 | fair value impact may 282017
---------------------------- | ----------------------------- | ------------------------------------------ | ----------------------------
interest rate instruments    | $ 33.2                        | $ 27.5                                     | $ 25.1
foreign currency instruments | 21.3                          | 23.1                                       | 24.6
commodity instruments        | 1.9                           | 2.1                                        | 3.2
equity instruments           | 2.0                           | 1.4                                        | 1.3


analog devices , inc.
 notes to consolidated financial statements 2014 summary of company 2019s restricted stock unit award activity as of october 31 , 2015 changes during fiscal year ended presented below : restricted stock units outstanding ( in thousands ) weighted- average grant- date fair value per share.
 as of october 31 , 2015  $ 108. 8 million of total unrecognized compensation cost related to unvested share- based awards stock options and restricted stock units.
 cost expected to be recognized over period of 1. 3 years.
 total grant-date fair value of shares vested during fiscal 2015, 2014 2013 was approximately $ 65. 6 million , $ 57. 4 million and $ 63. 9 million , respectively.
 common stock repurchase program company 2019s common stock repurchase program in place since august 2004.
 board of directors authorized company to repurchase $ 5. 6 billion of company 2019s common stock under program.
 company may repurchase outstanding shares of common stock in open market and through privately negotiated transactions.
 unless terminated by resolution board of directors repurchase program will expire when company repurchased all shares authorized under program.
 as of october 31 , 2015  company had repurchased total of approximately 140. 7 million shares of common stock for approximately $ 5. 0 billion under program.
 additional $ 544. 5 million remains available for repurchase of shares under current authorized program.
 repurchased shares held as authorized but unissued shares of common stock.
 company also repurchases shares in settlement of employee minimum tax withholding obligations due upon vesting of restricted stock units or exercise of stock options.
 withholding amount based on employees minimum statutory withholding requirement.
future common stock repurchases dependent upon factors , including company's financial performance , outlook  liquidity amount of cash company has available in united states.
 preferred stock company has 471934 authorized shares of $ 1. 00 par value preferred stock , none is issued or outstanding.
 board of directors authorized to fix designations  relative rights  preferences limitations on preferred stock at time of issuance.
 4.
 industry , segment geographic information company operates and tracks results in one reportable segment based on aggregation of six operating segments.
 company designs , develops , manufactures markets broad range of integrated circuits ( ics ).
 chief executive officer identified as company's chief operating decision maker.
 company determined all company operating segments share similar economic characteristics  meet criteria for operating segments to be aggregated into one reportable segment , : 2022 primary source of revenue for each operating segment is sale of integrated circuits.
 2022 integrated circuits sold by each company operating segments manufactured using similar semiconductor manufacturing processes raw materials in company 2019s own production facilities or by third-party wafer fabricators using proprietary processes.
 2022 company sells products to tens of thousands of customers worldwide.
 many customers use products spanning all operating segments in wide range of applications.
 2022 integrated circuits marketed by each company operating segments sold globally through direct sales force , third-party distributors , independent sales representatives via our website to same types of customers.
 all company operating segments share similar long-term financial model similar economic characteristics.
 causes for variation in operating and financial performance same among company operating segments include factors as ( i ) life cycle and price and cost fluctuations  ii ) number of competitors  iii ) product

| restrictedstock unitsoutstanding ( in thousands ) | weighted-average grant-date fair valueper share
----------------------------------------------------- | ------------------------------------------------- | -----------------------------------------------
restricted stock units outstanding at november 1 2014 | 3188                                              | $ 43.46
units granted                                         | 818                                               | $ 52.25
restrictions lapsed                                   | -1151 ( 1151 )                                    | $ 39.72
forfeited                                             | -157 ( 157 )                                      | $ 45.80
restricted stock units outstanding at october 31 2015 | 2698                                              | $ 47.59


abiomed , inc.
 subsidiaries notes to consolidated financial statements 2014 ( continued ) note 10.
 commitments and contingencies description of company 2019s significant arrangements company is a guarantor.
 indemnifications 2014in many sales transactions  company indemnifies customers against possible claims patent infringement caused by company 2019s products.
 indemnifications within sales contracts usually do not include limits on claims.
 company never incurred material costs to defend lawsuits or settle patent infringement claims related to sales transactions.
 company enters agreements with other companies ordinary business typically with underwriters, contractors  clinical sites customers include indemnification provisions.
 under provisions company generally indemnifies and holds harmless indemnified party for losses suffered or incurred by indemnified party result its activities.
 indemnification provisions generally survive termination of underlying agreement.
 maximum potential amount of future payments company could required to make under these indemnification provisions is unlimited.
 abiomed never incurred material costs to defend lawsuits or settle claims related to these indemnification agreements.
 estimated fair value of these agreements is immaterial.
 company has no liabilities recorded for these agreements as of march 31 , 2012.
 clinical study agreements 2014in company 2019s clinical study agreements abiomed agreed to indemnify participating institutions against losses incurred for claims related to personal injury of subjects taking part in study relate to uses of company 2019s devices in accordance with clinical study agreement, protocol for device abiomed 2019s instructions.
 indemnification provisions within company 2019s clinical study agreements do not generally include limits on claims.
 company never incurred material costs related to indemnification provisions in clinical study agreements.
facilities leases 2014the company rents danvers , massachusetts facility under operating lease agreement expires february 28 , 2016.
 monthly rent under facility lease is follows : 2022 base rent for november 2008 through june 2010 was $ 40000 per month ; 2022 base rent for july 2010 through february 2014 is $ 64350 per month ; 2022 base rent for march 2014 through february 2016 $ 66000 per month.
 company has rights to terminate facility lease early subject to payment specified termination fee based on timing termination outlined in lease amendment.
 company has lease for european headquarters in aachen , germany.
 lease payments are approximately 36000 20ac ( euro ) ( approximately.
 $ 50000 at march 31 , 2012 exchange rates ) per month lease term expires in december 2012.
 july 2008  company entered lease agreement for lease of 33000 square foot manufacturing facility in athlone , ireland.
 lease agreement for term of 25 years commencing july 18 , 2008.
 company relocated production equipment from athlone  ireland to aachen and danvers facilities fully vacated athlone facility in first quarter of fiscal 2011.
 in march 2011  company terminated lease agreement paid termination fee of approximately $ 0. 8 million of early termination lease.
 total rent expense for company 2019s operating leases in consolidated statements of operations approximated $ 1. 6 million , $ 2. 7 million and $ 2. 2 million for fiscal years ended march 31 , 2012 , 2011 , and 2010 .
 future minimum lease payments under significant non-cancelable operating leases as of march 31 , 2012 are approximately as follows : fiscal year ending march 31 , operating leases ( in $ 000s ).

fiscal year ending march 31,        | operating leases ( in $ 000s )
----------------------------------- | ------------------------------
2013                                | 1473
2014                                | 964
2015                                | 863
2016                                | 758
2017                                | 32
thereafter                          | 128
total future minimum lease payments | $ 4218


note 6 allowance uncollectible accounts following table changes allowances uncollectible accounts years ended december 31.
 note 7 regulatory assets regulatory assets assets costs recovery customers future rates.
 majority regulatory assets return.
 following table composition regulatory assets december 31 2018 2017 deferred pension expense.
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 362 $ removal costs recoverable.
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 292 269 regulatory balancing accounts.
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 85 89 expense.
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106 112 total regulatory assets.
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 $ 1156 $ 1061 company 2019s deferred pension expense includes portion underfunded status probable recovery through rates future periods of $ 352 million and $ 270 million as of december 31, 2018 2017.
 remaining portion is pension expense excess of amount contributed to pension plans deferred by subsidiaries recovered in future service rates as contributions made to pension plan.
 removal costs recoverable rates represent costs incurred for removal of property, plant equipment other retirement costs.
 regulatory balancing accounts accumulate differences between revenues recognized authorized revenue requirements until collected from customers or refunded.
 regulatory balancing accounts include low income programs purchased power and water accounts.
 san clemente dam project costs represent costs incurred deferred by company 2019s utility subsidiary in california efforts investigate alternatives remove dam due to potential earthquake flood safety concerns.
 june 2012 california public utilities commission ( 201ccpuc 201d ) issued decision authorizing project to reroute carmel river remove san clemente dam.
 project includes company 2019s utility subsidiary in california california state conservancy national marine fisheries services.
 under order 2019s terms cpuc authorized recovery for

| 2018         | 2017         | 2016
--------------------------------- | ------------ | ------------ | ------------
balance as of january 1           | $ -42 ( 42 ) | $ -40 ( 40 ) | $ -39 ( 39 )
amounts charged to expense        | -33 ( 33 )   | -29 ( 29 )   | -27 ( 27 )
amounts written off               | 34           | 30           | 29
recoveries of amounts written off | -4 ( 4 )     | -3 ( 3 )     | -3 ( 3 )
balance as of december 31         | $ -45 ( 45 ) | $ -42 ( 42 ) | $ -40 ( 40 )


restrictive covenants terms 2017 credit facility our senior unsecured notes include restrictions and covenants may limit  our ability to pay dividends , make certain types investments  incur additional indebtedness incur liens enter negative pledge agreements dispose of assets  require compliance with financial ratios relating to maximum ratio of total indebtedness to total asset value , minimum ratio of ebitda to fixed charges  maximum ratio of secured indebtedness to total asset value maximum ratio of unsecured indebtedness to unencumbered asset value.
 dividend restriction provides we will not during default continuing  make distributions with to common stock or other equity interests , except to enable company to continue to qualify as a reit for federal income tax purposes.
 as of december a031 , 2017 and 2016 , we in compliance with all such covenants.
 junior subordinated deferrable interest debentures in june a02005  company and operating partnership issued $ 100. 0 a0million in unsecured trust preferred securities through newly formed trust , sl a0green capital trust i , trust  wholly-owned subsidiary of operating partnership.
 securities mature in 2035 bear interest at floating rate of 125 a0basis points over three-month libor.
 interest payments may be deferred for up to eight consecutive quarters if operating partnership exercises right to defer such payments.
 trust preferred securities are redeemable at option of operating partnership , in whole or in part  with no prepayment premium.
 we do not consolidate trust even variable interest entity not the primary beneficiary.
 because trust not consolidated  we recorded debt on consolidated balance sheets related payments are classified as interest expense.
 interest rate risk exposed to changes in interest rates primarily from variable rate debt.
 exposure to interest rate fluctuations managed through interest rate derivative instru- ments and/or variable rate debt and preferred equity investments.
 hypothetical 100 a0basis point increase in interest rates curve for a02017 would increase consolidated annual interest cost , net of interest income from variable rate debt and preferred equity investments by $ 2. 7 a0mil- lion increase share of joint venture annual interest cost by $ 17. 2 a0million.
 at december a031 , 2017 , 61. 5% ( 61. 5 % ) of our $ 2. 1 a0bil- lion debt and preferred equity portfolio indexed to libor.
 recognize most derivatives on balance sheet at fair value.
 derivatives not hedges adjusted to fair value through income.
 if derivative considered hedge depending on changes in fair value derivative offset against change in fair value of hedged asset  liability firm commitment through earnings or recog- nized in other comprehensive income until hedged item recognized in earnings.
 ineffective portion of derivative change in fair value immediately recognized in a0earnings.
 long-term debt of $ 4. 3 a0billion bears interest at fixed rates fair value of instruments affected by changes in market interest rates.
 variable rate debt and variable rate joint venture debt as of december a031, 2017 bore interest based on spread of libor plus 100 a0basis points to libor plus 415 a0basis points.
contractual obligations combined aggregate principal maturities of mortgages other loans payable  2017 credit facility senior unsecured notes ( net of discount ) trust preferred securities share of joint venture debt including as-of-right extension options put options  estimated interest expense obligations under capital lease ground leases  as of december a031 , 2017 follows ( in a0thousands ) :.

| 2018     | 2019      | 2020      | 2021     | 2022      | thereafter | total
---------------------------------- | -------- | --------- | --------- | -------- | --------- | ---------- | ----------
property mortgages and other loans | $ 153593 | $ 42289   | $ 703018  | $ 11656  | $ 208003  | $ 1656623  | $ 2775182
mra facilities                     | 90809    | 2014      | 2014      | 2014     | 2014      | 2014       | 90809
revolving credit facility          | 2014     | 2014      | 2014      | 2014     | 2014      | 40000      | 40000
unsecured term loans               | 2014     | 2014      | 2014      | 2014     | 2014      | 1500000    | 1500000
senior unsecured notes             | 250000   | 2014      | 250000    | 2014     | 800000    | 100000     | 1400000
trust preferred securities         | 2014     | 2014      | 2014      | 2014     | 2014      | 100000     | 100000
capital lease                      | 2387     | 2411      | 2620      | 2794     | 2794      | 819894     | 832900
ground leases                      | 31049    | 31066     | 31436     | 31628    | 29472     | 703254     | 857905
estimated interest expense         | 226815   | 218019    | 184376    | 163648   | 155398    | 281694     | 1229950
joint venture debt                 | 200250   | 717682    | 473809    | 449740   | 223330    | 2119481    | 4184292
total                              | $ 954903 | $ 1011467 | $ 1645259 | $ 659466 | $ 1418997 | $ 7320946  | $ 13011038


as of december 31 , 2013 2012  liabilities associated with unrecognized tax benefits not material.
 we subsidiaries file income tax returns in u.
 federal jurisdiction foreign jurisdictions.
 with few exceptions statute of limitations no longer open for u. s.
 federal or non-u. s.
 income tax examinations for years before 2010 respect to refunds.
.
 income taxes and foreign withholding taxes not provided on earnings of $ 222 million, $ 211 million  $ 193 million not distributed by non-u. s.
 companies as of december 31, 2013  2012  2011.
 intention is to permanently reinvest these earnings indefinitely postponing remittance u.
 if earnings remitted estimate additional income taxes after foreign tax credits approximately $ 50 million in 2013  $ 45 million in 2012  $ 41 million in 2011.
 federal and foreign income tax payments  net of refunds received were $ 787 million in 2013  $ 890 million in 2012  $ 722 million in 2011.
 2013 net payments reflect $ 550 million refund from irs attributable to tax-deductible discretionary pension contributions fourth quarter of 2012 2012 net payments reflect $ 153 million refund from irs related to 2011 capital loss carryback claim 2011 net payments reflect $ 250 million refund from irs related to estimated taxes paid for 2010.
 as of december 31 , 2013 2012  had federal and foreign taxes receivable of $ 313 million and $ 662 million recorded within other current assets on balance sheet primarily attributable to tax-deductible discretionary pension contributions in fourth quarter of 2013 and 2012 debt exchange transaction in fourth quarter of 2012.
 note 9 2013 debt long-term debt consisted of following ( in millions ) :.
 in december 2012  issued notes totaling $ 1.3 billion fixed interest rate of 4. 07% ( 4. 07 % ) maturing december 2042 ( new notes ) in exchange for outstanding notes totaling $ 1. 2 billion interest rates ranging from 5. 50% ( 5. 50 % ) to 8. 50% ( 8. 50 % ) maturing 2023 to 2040 ( old notes ).
 connection with exchange  paid premium of $ 393 million $ 225 million paid in cash $ 168 million in form of new notes.
 premium  in addition to $ 194 million in remaining unamortized discounts related to old notes amortized as additional interest expense over term of new notes using effective interest method.
 may option redeem some or all new notes by paying principal amount of notes redeemed plus make-whole premium and accrued and unpaid interest.
 interest on new notes payable on june 15 and december 15 of each year beginning june 15 , 2013.
 new notes are unsecured senior obligations rank equally in right of payment with all existing and future unsecured and unsubordinated indebtedness.
 in september 2011  issued $ 2. 0 billion of long-term notes in registered public offering october 2011  used portion of proceeds to redeem all $ 500 million long-term notes maturing in 2013.
 in 2011  repurchased $ 84 million of long-term notes through open-market purchases.
 paid premiums of $ 48 million connection with early extinguishments of debt recognized in other non-operating income ( expense ) net.
 at december 31 , 2013 and 2012  had in place with group of banks $ 1. 5 billion revolving credit facility expires august 2016.
 may request banks may grant  discretion increase to credit facility by additional amount up to $ 500 million.
 no borrowings outstanding under credit facility through december 31 , 2013.
borrowings under credit facility unsecured bear interest at rates based  our option on eurodollar rate or base rate , as defined in credit facility.
 each bank 2019s obligation to make loans under credit facility is subject

| 2013         | 2012
--------------------------------------------------------------------------- | ------------ | ------------
notes with rates from 2.13% ( 2.13 % ) to 6.15% ( 6.15 % ) due 2016 to 2042 | $ 5642       | $ 5642
notes with rates from 7.00% ( 7.00 % ) to 7.75% ( 7.75 % ) due 2016 to 2036 | 916          | 930
notes with a rate of 7.38% ( 7.38 % ) due 2013                              | 2014         | 150
other debt                                                                  | 476          | 478
total long-term debt                                                        | 7034         | 7200
less : unamortized discounts                                                | -882 ( 882 ) | -892 ( 892 )
total long-term debt net of unamortized discounts                           | 6152         | 6308
less : current maturities of long-term debt                                 | 2014         | -150 ( 150 )
total long-term debt net                                                    | $ 6152       | $ 6158


liabilities recognized of consolidating entities do not represent additional claims on general assets company.
 creditors entities have claims only on assets of specific variable interest entities to they have advanced credit.
 obligations commitments ongoing operations company enters into arrangements obligate company to make future payments under contracts debt agreements, lease agreements  unconditional purchase obligations (. obligations to transfer funds in future for fixed minimum quantities of goods or services at fixed minimum prices  201ctake-or-pay contracts ).
 unconditional purchase obligation arrangements are entered into by company in normal course of business to ensure adequate levels of sourced product available company.
 capital lease and debt obligations , totaled $ 3. 5 billion at may 25 , 2008 , currently recognized as liabilities in company 2019s consolidated balance sheet.
 operating lease obligations and unconditional purchase obligations  totaled $ 1. 7 billion at may 25 , 2008  not recognized as liabilities in company 2019s consolidated balance sheet accounting principles.
 summary of company 2019s contractual obligations at end of fiscal 2008 was as follows ( including obligations of discontinued operations ) :.
 purchase obligations noted in table do not reflect approximately $ 374 million of open purchase orders some are not legally binding.
 these purchase orders settlable in ordinary course business in less than one year.
 company is also contractually obligated to pay interest on long-term debt obligations.
 weighted average interest rate of long-term debt obligations outstanding as of may 25 , 2008 was approximately 7. 2% ( 7. 2 % ).
 company consolidates assets and liabilities of certain entities from which it leases corporate aircraft.
entities determined to be variable interest entities company determined to be primary beneficiary of entities.
 amounts reflected in contractual obligations of long-term debt  in table above include $ 54 million of liabilities of these variable interest entities to creditors of entities.
 long-term debt recognized result of consolidating entities not represent additional claims on general assets of company.
 creditors entities have claims only on assets of specific variable interest entities.
 as of may 25 , 2008 , company obligated to make rental payments of $ 67 million to variable interest entities , of $ 7 million due in less than one year , $ 13 million due in one to three years , $ 47 million due in three to five years.
 such amounts not reflected in table  above.
 of ongoing operations  company enters into arrangements obligate company to make future cash payments only upon occurrence of future event ( e. g., guarantee debt or lease payments of third party should third party be unable to perform ).
 in accordance with generally accepted accounting principles following commercial commitments not recognized as liabilities in company 2019s

( $ in millions ) contractual obligations | ( $ in millions ) total | ( $ in millions ) less than 1 year | ( $ in millions ) 1-3 years | ( $ in millions ) 3-5 years | after 5 years
----------------------------------------- | ----------------------- | ---------------------------------- | --------------------------- | --------------------------- | -------------
long-term debt                            | $ 3531.4                | $ 15.4                             | $ 521.6                     | $ 751.8                     | $ 2242.6
lease obligations                         | 514.9                   | 89.2                               | 148.1                       | 106.9                       | 170.7
purchase obligations                      | 1199.6                  | 1078.6                             | 104.0                       | 16.3                        | 0.7
total                                     | $ 5245.9                | $ 1183.2                           | $ 773.7                     | $ 875.0                     | $ 2414.0


foodservice sales volumes increased in 2012 compared with 2011.
 average sales margins higher reflecting sales price increases for pass-through earlier cost increases.
 raw material costs for board and resins lower.
 operating costs and distribution costs higher.
 u.
 shorewood business sold december 31 , 2011 non-u. s.
 business sold in january first quarter of 2013 coated paperboard sales volumes expected to increase slightly from fourth quarter of 2012.
 average sales price realizations expected slightly lower margins benefit from favorable product mix.
 input costs expected higher for energy and wood.
 no planned main- tenance outages scheduled in first quarter.
 january 2013 company announced perma nent shutdown of coated paperboard machine at augusta mill with annual capacity of 140000 tons.
 foodservice sales volumes expected to increase.
 average sales margins expected to decrease due to sales price decreases january contract open- ers.
 input costs for board and resin expected lower operating costs expected to decrease.
 european consumer packaging net sales in 2012 were $ 380 million compared with $ 375 million in 2011 $ 345 million in 2010.
 operating profits in 2012 $ 99 million compared with $ 93 million in 2011 $ 76 million in 2010.
 sales volumes 2012 increased from 2011.
 average sales price realizations higher in russian markets lower in european markets.
 input costs decreased primarily for wood planned maintenance downtime costs lower in 2012 than 2011.
 first quarter of 2013 sales volumes expected to decrease in europe and russia.
 average sales price realizations expected higher in russia offset by decreases in europe.
 input costs expected to increase for wood and chemicals.
 no maintenance outages scheduled for first quarter.
 asian consumer packaging net sales were $ 830 million in 2012 compared with $ 855 million in 2011 and $ 705 million in 2010.
operating profits 2012 $ 4 million compared with $ 35 million 2011 $ 34 million in 2010.
 sales volumes increased 2012 2011 partially due to start-up new coated paperboard machine.
 average sales price realizations significantly lower partially offset by lower input costs for purchased pulp.
 start-up costs for new coated paperboard machine impacted operating profits 2012.
 first quarter of 2013 sales volumes expected to increase slightly.
 average sales price realizations for folding carton board bristols board expected lower reflecting increased competitive pressures seasonally weaker market demand.
 input costs should be higher for pulp and chemicals.
 costs related to ramp-up of new coated paperboard machine should be lower.
 distribution xpedx  distribution business one of north america 2019s leading business-to-business distributors to manufacturers facility managers printers providing customized solutions to improve efficiency reduce costs deliver results.
 customer demand sensitive to changes economic conditions consumer behavior segment specific activity including advertising promotional spending government spending domestic manufacturing activity.
 distribution 2019s margins stable across economic cycle.
 providing customers with best choice for value in products supply chain services key competitive factor.
 efficient customer service cost-effective logis- tics focused working capital management key factors in segment 2019s profitability.
 distribution.
 2019s 2012 annual sales decreased 9% ( 9 % ) from 2011 decreased 10% ( 10 % ) from 2010.
 operating profits 2012 were $ 22 million ( $ 71 million exclud- ing reorganization costs ) compared with $ 34 million ( $ 86 million excluding reorganization costs ) in 2011 $ 78 million in 2010.
 annual sales of printing papers graphic arts supplies equipment totaled $ 3. 5 billion in 2012 compared with $ 4. 0 billion in 2011 $ 4. 2 billion in 2010 reflecting declining demand exiting of unprofitable businesses.
trade margins percent sales for printing papers even with 2011 and 2010.
 revenue from packaging prod- ucts flat at $ 1. 6 billion in 2012 and 2011 up slightly compared to $ 1. 5 billion 2010.
 pack- aging margins increased 2012 2011 2010 reflecting strategic sourcing initiatives.
 facility supplies annual revenue $ 0. 9 billion in 2012 down compared to $ 1. 0 bil- lion in 2011 2010.
 operating profits 2012 included $ 49 million reorganization costs for severance professional services asset write-downs compared with $ 52

in millions      | 2012   | 2011   | 2010
---------------- | ------ | ------ | ------
sales            | $ 6040 | $ 6630 | $ 6735
operating profit | 22     | 34     | 78


host hotels & resorts , inc. subsidiaries notes to consolidated financial statements 2014 ( ) cash paid for income taxes  net of refunds received was $ 40 million , $ 15 million , and $ 9 million in 2017 , 2016  and 2015 .
 reconciliation of beginning and ending amount of unrecognized tax benefits is as follows ( in millions ) :.
 uncertain tax position amounts  if recognized impact reconciliation between income tax provision calculated at statutory.
 federal income tax rate of 35% ( 35 % ) ( 21% ( 21 % ) beginning with calendar year 2018 ) and actual income tax provision recorded each year.
 as of december 31 , 2017 tax years subject to examination by major tax jurisdictions include 2014-2017.
 no material interest or penalties recorded for years ended december 31 , 2017 , 2016  2015.
 7.
 leases taxable reit subsidiaries leases we lease all hotels to wholly owned subsidiary qualifies as taxable reit subsidiary due to federal income tax restrictions on reit ability to derive revenue directly from operation and management of hotel.
 ground leases as of december 31 , 2017  all or portion of 26 of hotels are subject to ground leases with multiple renewal options accounted for as operating leases.
 for lease agreements with scheduled rent increases recognize lease expense ratably over term of lease.
 certain leases contain provisions for payment of contingent rentals based on percentage of sales in excess of stipulated amounts.
 have leases on facilities used in former restaurant business  all subsequently subleased.
 these leases and subleases contain one or more renewal options generally for five- or ten-year periods.
 restaurant leases are accounted for as operating leases.
contingent liability related to leases is $ 9 million as of december 31 , 2017.
 consider likelihood of material funding related to leases to be remote.
 our leasing activity includes those entered into by our hotels for various types of equipment , computer equipment , vehicles telephone systems.
 equipment leases are accounted for as operating or capital leases, depending upon characteristics of lease arrangement.
 equipment leases characterized as capital leases classified as furniture and equipment depreciated over life of lease.
 amortization expense applicable to capitalized leases is included in depreciation expense.

| 2017 | 2016
---------------------- | ---- | ----
balance at january 1   | $ 11 | $ 11
balance at december 31 | $ 11 | $ 11