incremental contract start-up costs 2014large municipal contract .
during 2018 and 2017 , we incurred costs of $ 5.7 million and $ 8.2 million , respectively , related to the implementation of a large municipal contract .
these costs did not meet the capitalization criteria prescribed by the new revenue recognition standard .
adoption of the tax act .
the tax act was enacted on december 22 , 2017 .
among other things , the tax act reduced the u.s .
federal corporate tax rate from 35% ( 35 % ) to 21% ( 21 % ) .
for the year ended december 31 , 2017 , we recorded provisional amounts based on our estimates of the tax act 2019s effect to our deferred taxes , uncertain tax positions , and one-time transition tax .
these adjustments reduced our tax provision by $ 463.9 million .
during 2018 , we adjusted the provisional amounts recorded as of december 31 , 2017 for the one-time transition tax , deferred taxes and uncertain tax positions .
these adjustments increased our tax provision by $ 0.3 million .
bridgeton insurance recovery , net .
during 2018 , we collected an insurance recovery of $ 40.0 million related to our closed bridgeton landfill in missouri , which we recognized as a reduction of remediation expenses in our cost of operations .
in addition , we incurred $ 12.0 million of incremental costs attributable to the bridgeton insurance recovery .
recent developments 2019 financial guidance in 2019 , we will continue to focus on managing the controllable aspects of our business by enhancing the quality of our revenue , investing in profitable growth opportunities and reducing costs .
our team remains focused on executing our strategy to deliver consistent earnings and free cash flow growth , and improve return on invested capital .
we are committed to an efficient capital structure , maintaining our investment grade credit ratings and increasing cash returned to our shareholders .
our guidance is based on current economic conditions and does not assume any significant changes in the overall economy in 2019 .
specific guidance follows : revenue we expect 2019 revenue to increase by approximately 4.25 to 4.75% ( 4.75 % ) comprised of the following : increase ( decrease ) .

                                         | increase ( decrease )
---------------------------------------- | ------------------------
average yield                            | 2.75% ( 2.75 % )
volume                                   | 0.0 to 0.25
energy services                          | 2013
fuel recovery fees                       | 0.25
recycling processing and commodity sales | 0.25 to 0.5
acquisitions / divestitures net          | 1.0
total change                             | 4.25 to 4.75% ( 4.75 % )

changes in price are restricted on approximately 50% ( 50 % ) of our annual service revenue .
the majority of these restricted pricing arrangements are tied to fluctuations in a specific index ( primarily a consumer price index ) as defined in the contract .
the consumer price index varies from a single historical stated period of time or an average of trailing historical rates over a stated period of time .
in addition , the initial effect of pricing resets typically lags 6 to 12 months from the end of the index measurement period to the date the revised pricing goes into effect .
as a result , current changes in a specific index may not manifest themselves in our reported pricing for several quarters into the future.


on a regular basis our special asset committee closely monitors loans , primarily commercial loans , that are not included in the nonperforming or accruing past due categories and for which we are uncertain about the borrower 2019s ability to comply with existing repayment terms .
these loans totaled $ .2 billion at both december 31 , 2014 and december 31 , 2013 .
home equity loan portfolio our home equity loan portfolio totaled $ 34.7 billion as of december 31 , 2014 , or 17% ( 17 % ) of the total loan portfolio .
of that total , $ 20.4 billion , or 59% ( 59 % ) , was outstanding under primarily variable-rate home equity lines of credit and $ 14.3 billion , or 41% ( 41 % ) , consisted of closed-end home equity installment loans .
approximately 3% ( 3 % ) of the home equity portfolio was on nonperforming status as of december 31 , 2014 .
as of december 31 , 2014 , we are in an originated first lien position for approximately 51% ( 51 % ) of the total portfolio and , where originated as a second lien , we currently hold or service the first lien position for approximately an additional 2% ( 2 % ) of the portfolio .
the remaining 47% ( 47 % ) of the portfolio was secured by second liens where we do not hold the first lien position .
the credit performance of the majority of the home equity portfolio where we are in , hold or service the first lien position , is superior to the portion of the portfolio where we hold the second lien position but do not hold the first lien .
lien position information is generally based upon original ltv at the time of origination .
however , after origination pnc is not typically notified when a senior lien position that is not held by pnc is satisfied .
therefore , information about the current lien status of junior lien loans is less readily available in cases where pnc does not also hold the senior lien .
additionally , pnc is not typically notified when a junior lien position is added after origination of a pnc first lien .
this updated information for both junior and senior liens must be obtained from external sources , and therefore , pnc has contracted with an industry-leading third-party service provider to obtain updated loan , lien and collateral data that is aggregated from public and private sources .
we track borrower performance monthly , including obtaining original ltvs , updated fico scores at least quarterly , updated ltvs semi-annually , and other credit metrics at least quarterly , including the historical performance of any mortgage loans regardless of lien position that we do or do not hold .
this information is used for internal reporting and risk management .
for internal reporting and risk management we also segment the population into pools based on product type ( e.g. , home equity loans , brokered home equity loans , home equity lines of credit , brokered home equity lines of credit ) .
as part of our overall risk analysis and monitoring , we segment the home equity portfolio based upon the delinquency , modification status and bankruptcy status of these loans , as well as the delinquency , modification status and bankruptcy status of any mortgage loan with the same borrower ( regardless of whether it is a first lien senior to our second lien ) .
in establishing our alll for non-impaired loans , we primarily utilize a delinquency roll-rate methodology for pools of loans .
in accordance with accounting principles , under this methodology , we establish our allowance based upon incurred losses , not lifetime expected losses .
the roll-rate methodology estimates transition/roll of loan balances from one delinquency state ( e.g. , 30-59 days past due ) to another delinquency state ( e.g. , 60-89 days past due ) and ultimately to charge-off .
the roll through to charge-off is based on pnc 2019s actual loss experience for each type of pool .
each of our home equity pools contains both first and second liens .
our experience has been that the ratio of first to second lien loans has been consistent over time and the charge-off amounts for the pools , used to establish our allowance , include losses on both first and second liens loans .
generally , our variable-rate home equity lines of credit have either a seven or ten year draw period , followed by a 20-year amortization term .
during the draw period , we have home equity lines of credit where borrowers pay either interest or principal and interest .
we view home equity lines of credit where borrowers are paying principal and interest under the draw period as less risky than those where the borrowers are paying interest only , as these borrowers have a demonstrated ability to make some level of principal and interest payments .
the risk associated with the borrower 2019s ability to satisfy the loan terms upon the draw period ending is considered in establishing our alll .
based upon outstanding balances at december 31 , 2014 , the following table presents the periods when home equity lines of credit draw periods are scheduled to end .
table 36 : home equity lines of credit 2013 draw period end in millions interest only product principal and interest product .

in millions         | interest onlyproduct | principal andinterest product
------------------- | -------------------- | -----------------------------
2015                | $ 1597               | $ 541
2016                | 1366                 | 437
2017                | 2434                 | 596
2018                | 1072                 | 813
2019 and thereafter | 3880                 | 5391
total ( a ) ( b )   | $ 10349              | $ 7778

( a ) includes all home equity lines of credit that mature in 2015 or later , including those with borrowers where we have terminated borrowing privileges .
( b ) includes approximately $ 154 million , $ 48 million , $ 57 million , $ 42 million and $ 564 million of home equity lines of credit with balloon payments , including those where we have terminated borrowing privileges , with draw periods scheduled to end in 2015 , 2016 , 2017 , 2018 and 2019 and thereafter , respectively .
76 the pnc financial services group , inc .
2013 form 10-k


notes to the consolidated financial statements union pacific corporation and subsidiary companies for purposes of this report , unless the context otherwise requires , all references herein to the 201ccorporation 201d , 201cupc 201d , 201cwe 201d , 201cus 201d , and 201cour 201d mean union pacific corporation and its subsidiaries , including union pacific railroad company , which will be separately referred to herein as 201cuprr 201d or the 201crailroad 201d .
1 .
nature of operations operations and segmentation 2013 we are a class i railroad operating in the u.s .
our network includes 31868 route miles , linking pacific coast and gulf coast ports with the midwest and eastern u.s .
gateways and providing several corridors to key mexican gateways .
we own 26020 miles and operate on the remainder pursuant to trackage rights or leases .
we serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers for the handling of freight to and from the atlantic coast , the pacific coast , the southeast , the southwest , canada , and mexico .
export and import traffic is moved through gulf coast and pacific coast ports and across the mexican and canadian borders .
the railroad , along with its subsidiaries and rail affiliates , is our one reportable operating segment .
although we provide and review revenue by commodity group , we analyze the net financial results of the railroad as one segment due to the integrated nature of our rail network .
the following table provides freight revenue by commodity group : millions 2012 2011 2010 .

millions                | 2012    | 2011    | 2010
----------------------- | ------- | ------- | -------
agricultural            | $ 3280  | $ 3324  | $ 3018
automotive              | 1807    | 1510    | 1271
chemicals               | 3238    | 2815    | 2425
coal                    | 3912    | 4084    | 3489
industrial products     | 3494    | 3166    | 2639
intermodal              | 3955    | 3609    | 3227
total freight revenues  | $ 19686 | $ 18508 | $ 16069
other revenues          | 1240    | 1049    | 896
total operatingrevenues | $ 20926 | $ 19557 | $ 16965

although our revenues are principally derived from customers domiciled in the u.s. , the ultimate points of origination or destination for some products transported by us are outside the u.s .
each of our commodity groups includes revenue from shipments to and from mexico .
included in the above table are revenues from our mexico business which amounted to $ 1.9 billion in 2012 , $ 1.8 billion in 2011 , and $ 1.6 billion in 2010 .
basis of presentation 2013 the consolidated financial statements are presented in accordance with accounting principles generally accepted in the u.s .
( gaap ) as codified in the financial accounting standards board ( fasb ) accounting standards codification ( asc ) .
2 .
significant accounting policies principles of consolidation 2013 the consolidated financial statements include the accounts of union pacific corporation and all of its subsidiaries .
investments in affiliated companies ( 20% ( 20 % ) to 50% ( 50 % ) owned ) are accounted for using the equity method of accounting .
all intercompany transactions are eliminated .
we currently have no less than majority-owned investments that require consolidation under variable interest entity requirements .
cash and cash equivalents 2013 cash equivalents consist of investments with original maturities of three months or less .
accounts receivable 2013 accounts receivable includes receivables reduced by an allowance for doubtful accounts .
the allowance is based upon historical losses , credit worthiness of customers , and current economic conditions .
receivables not expected to be collected in one year and the associated allowances are classified as other assets in our consolidated statements of financial position.


management 2019s discussion and analysis j.p .
morgan chase & co .
26 j.p .
morgan chase & co .
/ 2003 annual report $ 41.7 billion .
nii was reduced by a lower volume of commercial loans and lower spreads on investment securities .
as a compo- nent of nii , trading-related net interest income of $ 2.1 billion was up 13% ( 13 % ) from 2002 due to a change in the composition of , and growth in , trading assets .
the firm 2019s total average interest-earning assets in 2003 were $ 590 billion , up 6% ( 6 % ) from the prior year .
the net interest yield on these assets , on a fully taxable-equivalent basis , was 2.10% ( 2.10 % ) , compared with 2.09% ( 2.09 % ) in the prior year .
noninterest expense year ended december 31 .

( in millions )                          | 2003    | 2002    | change
---------------------------------------- | ------- | ------- | --------------
compensation expense                     | $ 11695 | $ 10983 | 6% ( 6 % )
occupancy expense                        | 1912    | 1606    | 19
technology and communications expense    | 2844    | 2554    | 11
other expense                            | 5137    | 5111    | 1
surety settlement and litigation reserve | 100     | 1300    | -92 ( 92 )
merger and restructuring costs           | 2014    | 1210    | nm
total noninterest expense                | $ 21688 | $ 22764 | ( 5 ) % (  % )

technology and communications expense in 2003 , technology and communications expense was 11% ( 11 % ) above the prior-year level .
the increase was primarily due to a shift in expenses : costs that were previously associated with compensation and other expenses shifted , upon the commence- ment of the ibm outsourcing agreement , to technology and communications expense .
also contributing to the increase were higher costs related to software amortization .
for a further dis- cussion of the ibm outsourcing agreement , see support units and corporate on page 44 of this annual report .
other expense other expense in 2003 rose slightly from the prior year , reflecting higher outside services .
for a table showing the components of other expense , see note 8 on page 96 of this annual report .
surety settlement and litigation reserve the firm added $ 100 million to the enron-related litigation reserve in 2003 to supplement a $ 900 million reserve initially recorded in 2002 .
the 2002 reserve was established to cover enron-related matters , as well as certain other material litigation , proceedings and investigations in which the firm is involved .
in addition , in 2002 the firm recorded a charge of $ 400 million for the settlement of enron-related surety litigation .
merger and restructuring costs merger and restructuring costs related to business restructurings announced after january 1 , 2002 , were recorded in their relevant expense categories .
in 2002 , merger and restructuring costs of $ 1.2 billion , for programs announced prior to january 1 , 2002 , were viewed by management as nonoperating expenses or 201cspecial items . 201d refer to note 8 on pages 95 201396 of this annual report for a further discussion of merger and restructuring costs and for a summary , by expense category and business segment , of costs incurred in 2003 and 2002 for programs announced after january 1 , 2002 .
provision for credit losses the 2003 provision for credit losses was $ 2.8 billion lower than in 2002 , primarily reflecting continued improvement in the quality of the commercial loan portfolio and a higher volume of credit card securitizations .
for further information about the provision for credit losses and the firm 2019s management of credit risk , see the dis- cussions of net charge-offs associated with the commercial and consumer loan portfolios and the allowance for credit losses , on pages 63 201365 of this annual report .
income tax expense income tax expense was $ 3.3 billion in 2003 , compared with $ 856 million in 2002 .
the effective tax rate in 2003 was 33% ( 33 % ) , compared with 34% ( 34 % ) in 2002 .
the tax rate decline was principally attributable to changes in the proportion of income subject to state and local taxes .
compensation expense compensation expense in 2003 was 6% ( 6 % ) higher than in the prior year .
the increase principally reflected higher performance-related incentives , and higher pension and other postretirement benefit costs , primarily as a result of changes in actuarial assumptions .
for a detailed discussion of pension and other postretirement benefit costs , see note 6 on pages 89 201393 of this annual report .
the increase pertaining to incentives included $ 266 million as a result of adopting sfas 123 , and $ 120 million from the reversal in 2002 of previously accrued expenses for certain forfeitable key employ- ee stock awards , as discussed in note 7 on pages 93 201395 of this annual report .
total compensation expense declined as a result of the transfer , beginning april 1 , 2003 , of 2800 employees to ibm in connection with a technology outsourcing agreement .
the total number of full-time equivalent employees at december 31 , 2003 was 93453 compared with 94335 at the prior year-end .
occupancy expense occupancy expense of $ 1.9 billion rose 19% ( 19 % ) from 2002 .
the increase reflected costs of additional leased space in midtown manhattan and in the south and southwest regions of the united states ; higher real estate taxes in new york city ; and the cost of enhanced safety measures .
also contributing to the increase were charges for unoccupied excess real estate of $ 270 million ; this compared with $ 120 million in 2002 , mostly in the third quarter of that year.


part iii item 10 .
directors , executive officers and corporate governance for the information required by this item 10 , other than information with respect to our executive officers contained at the end of item 1 of this report , see 201celection of directors , 201d 201cnominees for election to the board of directors , 201d 201ccorporate governance 201d and 201csection 16 ( a ) beneficial ownership reporting compliance , 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
the proxy statement for our 2015 annual meeting will be filed within 120 days of the close of our fiscal year .
for the information required by this item 10 with respect to our executive officers , see part i of this report on pages 11 - 12 .
item 11 .
executive compensation for the information required by this item 11 , see 201cexecutive compensation , 201d 201ccompensation committee report on executive compensation 201d and 201ccompensation committee interlocks and insider participation 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
item 12 .
security ownership of certain beneficial owners and management and related stockholder matters for the information required by this item 12 with respect to beneficial ownership of our common stock , see 201csecurity ownership of certain beneficial owners and management 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
the following table sets forth certain information as of december 31 , 2014 regarding our equity plans : plan category number of securities to be issued upon exercise of outstanding options , warrants and rights weighted-average exercise price of outstanding options , warrants and rights number of securities remaining available for future issuance under equity compensation plans ( excluding securities reflected in column ( a ) ( b ) ( c ) equity compensation plans approved by security holders 1233672 $ 75.93 4903018 item 13 .
certain relationships and related transactions , and director independence for the information required by this item 13 , see 201ccertain transactions 201d and 201ccorporate governance 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
item 14 .
principal accounting fees and services for the information required by this item 14 , see 201caudit and non-audit fees 201d and 201cpolicy on audit committee pre- approval of audit and non-audit services of independent registered public accounting firm 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference. .

plan category                                          | number of securitiesto be issued uponexercise ofoutstanding options warrants and rights ( a ) ( b ) | weighted-averageexercise price ofoutstanding options warrants and rights | number of securitiesremaining available forfuture issuance underequity compensationplans ( excludingsecurities reflected in column ( a ) ) ( c )
------------------------------------------------------ | --------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------
equity compensation plans approved by security holders | 1233672                                                                                | $ 75.93                                                                  | 4903018

part iii item 10 .
directors , executive officers and corporate governance for the information required by this item 10 , other than information with respect to our executive officers contained at the end of item 1 of this report , see 201celection of directors , 201d 201cnominees for election to the board of directors , 201d 201ccorporate governance 201d and 201csection 16 ( a ) beneficial ownership reporting compliance , 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
the proxy statement for our 2015 annual meeting will be filed within 120 days of the close of our fiscal year .
for the information required by this item 10 with respect to our executive officers , see part i of this report on pages 11 - 12 .
item 11 .
executive compensation for the information required by this item 11 , see 201cexecutive compensation , 201d 201ccompensation committee report on executive compensation 201d and 201ccompensation committee interlocks and insider participation 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
item 12 .
security ownership of certain beneficial owners and management and related stockholder matters for the information required by this item 12 with respect to beneficial ownership of our common stock , see 201csecurity ownership of certain beneficial owners and management 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
the following table sets forth certain information as of december 31 , 2014 regarding our equity plans : plan category number of securities to be issued upon exercise of outstanding options , warrants and rights weighted-average exercise price of outstanding options , warrants and rights number of securities remaining available for future issuance under equity compensation plans ( excluding securities reflected in column ( a ) ( b ) ( c ) equity compensation plans approved by security holders 1233672 $ 75.93 4903018 item 13 .
certain relationships and related transactions , and director independence for the information required by this item 13 , see 201ccertain transactions 201d and 201ccorporate governance 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference .
item 14 .
principal accounting fees and services for the information required by this item 14 , see 201caudit and non-audit fees 201d and 201cpolicy on audit committee pre- approval of audit and non-audit services of independent registered public accounting firm 201d in the proxy statement for our 2015 annual meeting , which information is incorporated herein by reference.


2022 net derivative losses of $ 13 million .
review by segment general we serve clients through the following segments : 2022 risk solutions acts as an advisor and insurance and reinsurance broker , helping clients manage their risks , via consultation , as well as negotiation and placement of insurance risk with insurance carriers through our global distribution network .
2022 hr solutions partners with organizations to solve their most complex benefits , talent and related financial challenges , and improve business performance by designing , implementing , communicating and administering a wide range of human capital , retirement , investment management , health care , compensation and talent management strategies .
risk solutions .

years ended december 31, | 2011             | 2010             | 2009
------------------------ | ---------------- | ---------------- | ----------------
revenue                  | $ 6817           | $ 6423           | $ 6305
operating income         | 1314             | 1194             | 900
operating margin         | 19.3% ( 19.3 % ) | 18.6% ( 18.6 % ) | 14.3% ( 14.3 % )

the demand for property and casualty insurance generally rises as the overall level of economic activity increases and generally falls as such activity decreases , affecting both the commissions and fees generated by our brokerage business .
the economic activity that impacts property and casualty insurance is described as exposure units , and is closely correlated with employment levels , corporate revenue and asset values .
during 2011 we began to see some improvement in pricing ; however , we would still consider this to be a 2018 2018soft market , 2019 2019 which began in 2007 .
in a soft market , premium rates flatten or decrease , along with commission revenues , due to increased competition for market share among insurance carriers or increased underwriting capacity .
changes in premiums have a direct and potentially material impact on the insurance brokerage industry , as commission revenues are generally based on a percentage of the premiums paid by insureds .
in 2011 , pricing showed signs of stabilization and improvement in both our retail and reinsurance brokerage product lines and we expect this trend to slowly continue into 2012 .
additionally , beginning in late 2008 and continuing through 2011 , we faced difficult conditions as a result of unprecedented disruptions in the global economy , the repricing of credit risk and the deterioration of the financial markets .
weak global economic conditions have reduced our customers 2019 demand for our brokerage products , which have had a negative impact on our operational results .
risk solutions generated approximately 60% ( 60 % ) of our consolidated total revenues in 2011 .
revenues are generated primarily through fees paid by clients , commissions and fees paid by insurance and reinsurance companies , and investment income on funds held on behalf of clients .
our revenues vary from quarter to quarter throughout the year as a result of the timing of our clients 2019 policy renewals , the net effect of new and lost business , the timing of services provided to our clients , and the income we earn on investments , which is heavily influenced by short-term interest rates .
we operate in a highly competitive industry and compete with many retail insurance brokerage and agency firms , as well as with individual brokers , agents , and direct writers of insurance coverage .
specifically , we address the highly specialized product development and risk management needs of commercial enterprises , professional groups , insurance companies , governments , health care providers , and non-profit groups , among others ; provide affinity products for professional liability , life , disability


the goldman sachs group , inc .
and subsidiaries management 2019s discussion and analysis net revenues the table below presents net revenues by line item. .

$ in millions                | year ended december 2018 | year ended december 2017 | year ended december 2016
---------------------------- | ------------------------ | ------------------------ | ------------------------
investment banking           | $ 7862                   | $ 7371                   | $ 6273
investment management        | 6514                     | 5803                     | 5407
commissions and fees         | 3199                     | 3051                     | 3208
market making                | 9451                     | 7660                     | 9933
other principal transactions | 5823                     | 5913                     | 3382
totalnon-interestrevenues    | 32849                    | 29798                    | 28203
interest income              | 19679                    | 13113                    | 9691
interest expense             | 15912                    | 10181                    | 7104
net interest income          | 3767                     | 2932                     | 2587
total net revenues           | $ 36616                  | $ 32730                  | $ 30790

in the table above : 2030 investment banking consists of revenues ( excluding net interest ) from financial advisory and underwriting assignments , as well as derivative transactions directly related to these assignments .
these activities are included in our investment banking segment .
2030 investment management consists of revenues ( excluding net interest ) from providing investment management services to a diverse set of clients , as well as wealth advisory services and certain transaction services to high-net-worth individuals and families .
these activities are included in our investment management segment .
2030 commissions and fees consists of revenues from executing and clearing client transactions on major stock , options and futures exchanges worldwide , as well as over-the-counter ( otc ) transactions .
these activities are included in our institutional client services and investment management segments .
2030 market making consists of revenues ( excluding net interest ) from client execution activities related to making markets in interest rate products , credit products , mortgages , currencies , commodities and equity products .
these activities are included in our institutional client services segment .
2030 other principal transactions consists of revenues ( excluding net interest ) from our investing activities and the origination of loans to provide financing to clients .
in addition , other principal transactions includes revenues related to our consolidated investments .
these activities are included in our investing & lending segment .
provision for credit losses , previously reported in other principal transactions revenues , is now reported as a separate line item in the consolidated statements of earnings .
previously reported amounts have been conformed to the current presentation .
operating environment .
during 2018 , our market- making activities reflected generally higher levels of volatility and improved client activity , compared with a low volatility environment in 2017 .
in investment banking , industry-wide mergers and acquisitions volumes increased compared with 2017 , while industry-wide underwriting transactions decreased .
our other principal transactions revenues benefited from company-specific events , including sales , and strong corporate performance , while investments in public equities reflected losses , as global equity prices generally decreased in 2018 , particularly towards the end of the year .
in investment management , our assets under supervision increased reflecting net inflows in liquidity products , fixed income assets and equity assets , partially offset by depreciation in client assets , primarily in equity assets .
if market-making or investment banking activity levels decline , or assets under supervision decline , or asset prices continue to decline , net revenues would likely be negatively impacted .
see 201csegment operating results 201d for further information about the operating environment and material trends and uncertainties that may impact our results of operations .
during 2017 , generally higher asset prices and tighter credit spreads were supportive of industry-wide underwriting activities , investment management performance and other principal transactions .
however , low levels of volatility in equity , fixed income , currency and commodity markets continued to negatively affect our market-making activities .
2018 versus 2017 net revenues in the consolidated statements of earnings were $ 36.62 billion for 2018 , 12% ( 12 % ) higher than 2017 , primarily due to significantly higher market making revenues and net interest income , as well as higher investment management revenues and investment banking revenues .
non-interest revenues .
investment banking revenues in the consolidated statements of earnings were $ 7.86 billion for 2018 , 7% ( 7 % ) higher than 2017 .
revenues in financial advisory were higher , reflecting an increase in industry-wide completed mergers and acquisitions volumes .
revenues in underwriting were slightly higher , due to significantly higher revenues in equity underwriting , driven by initial public offerings , partially offset by lower revenues in debt underwriting , reflecting a decline in leveraged finance activity .
investment management revenues in the consolidated statements of earnings were $ 6.51 billion for 2018 , 12% ( 12 % ) higher than 2017 , primarily due to significantly higher incentive fees , as a result of harvesting .
management and other fees were also higher , reflecting higher average assets under supervision and the impact of the recently adopted revenue recognition standard , partially offset by shifts in the mix of client assets and strategies .
see note 3 to the consolidated financial statements for further information about asu no .
2014-09 , 201crevenue from contracts with customers ( topic 606 ) . 201d 52 goldman sachs 2018 form 10-k


discount rate 2014the assumed discount rate is used to determine the current retirement related benefit plan expense and obligations , and represents the interest rate that is used to determine the present value of future cash flows currently expected to be required to effectively settle a plan 2019s benefit obligations .
the discount rate assumption is determined for each plan by constructing a portfolio of high quality bonds with cash flows that match the estimated outflows for future benefit payments to determine a single equivalent discount rate .
benefit payments are not only contingent on the terms of a plan , but also on the underlying participant demographics , including current age , and assumed mortality .
we use only bonds that are denominated in u.s .
dollars , rated aa or better by two of three nationally recognized statistical rating agencies , have a minimum outstanding issue of $ 50 million as of the measurement date , and are not callable , convertible , or index linked .
since bond yields are generally unavailable beyond 30 years , we assume those rates will remain constant beyond that point .
taking into consideration the factors noted above , our weighted average discount rate for pensions was 5.23% ( 5.23 % ) and 5.84% ( 5.84 % ) , as of december 31 , 2011 and 2010 , respectively .
our weighted average discount rate for other postretirement benefits was 4.94% ( 4.94 % ) and 5.58% ( 5.58 % ) as of december 31 , 2011 and 2010 , respectively .
expected long-term rate of return 2014the expected long-term rate of return on assets is used to calculate net periodic expense , and is based on such factors as historical returns , targeted asset allocations , investment policy , duration , expected future long-term performance of individual asset classes , inflation trends , portfolio volatility , and risk management strategies .
while studies are helpful in understanding current trends and performance , the assumption is based more on longer term and prospective views .
in order to reflect expected lower future market returns , we have reduced the expected long-term rate of return assumption from 8.50% ( 8.50 % ) , used to record 2011 expense , to 8.00% ( 8.00 % ) for 2012 .
the decrease in the expected return on assets assumption is primarily related to lower bond yields and updated return assumptions for equities .
unless plan assets and benefit obligations are subject to remeasurement during the year , the expected return on pension assets is based on the fair value of plan assets at the beginning of the year .
an increase or decrease of 25 basis points in the discount rate and the expected long-term rate of return assumptions would have had the following approximate impacts on pensions : ( $ in millions ) increase ( decrease ) in 2012 expense increase ( decrease ) in december 31 , 2011 obligations .

( $ in millions )                                    | increase ( decrease ) in 2012 expense | increase ( decrease ) in december 31 2011 obligations
---------------------------------------------------- | ------------------------------------- | -----------------------------------------------------
25 basis point decrease in discount rate             | $ 18                                  | $ 146
25 basis point increase in discount rate             | -17 ( 17 )                            | -154 ( 154 )
25 basis point decrease in expected return on assets | 8                                     | n.a .
25 basis point increase in expected return on assets | -8 ( 8 )                              | n.a .

differences arising from actual experience or changes in assumptions might materially affect retirement related benefit plan obligations and the funded status .
actuarial gains and losses arising from differences from actual experience or changes in assumptions are deferred in accumulated other comprehensive income .
this unrecognized amount is amortized to the extent it exceeds 10% ( 10 % ) of the greater of the plan 2019s benefit obligation or plan assets .
the amortization period for actuarial gains and losses is the estimated average remaining service life of the plan participants , which is approximately 10 years .
cas expense 2014in addition to providing the methodology for calculating retirement related benefit plan costs , cas also prescribes the method for assigning those costs to specific periods .
while the ultimate liability for such costs under fas and cas is similar , the pattern of cost recognition is different .
the key drivers of cas pension expense include the funded status and the method used to calculate cas reimbursement for each of our plans as well as our expected long-term rate of return on assets assumption .
unlike fas , cas requires the discount rate to be consistent with the expected long-term rate of return on assets assumption , which changes infrequently given its long-term nature .
as a result , changes in bond or other interest rates generally do not impact cas .
in addition , unlike under fas , we can only allocate pension costs for a plan under cas until such plan is fully funded as determined under erisa requirements .
other fas and cas considerations 2014we update our estimates of future fas and cas costs at least annually based on factors such as calendar year actual plan asset returns , final census data from the end of the prior year , and other actual and projected experience .
a key driver of the difference between fas and cas expense ( and consequently , the fas/cas adjustment ) is the pattern of earnings and expense recognition for gains and losses that arise when our asset and liability experiences differ from our assumptions under each set of requirements .
under fas , our net gains and losses exceeding the 10% ( 10 % ) corridor are amortized


shareowner return performance graph the following performance graph and related information shall not be deemed 201csoliciting material 201d or to be 201cfiled 201d with the sec , nor shall such information be incorporated by reference into any future filing under the securities act of 1933 or securities exchange act of 1934 , each as amended , except to the extent that the company specifically incorporates such information by reference into such filing .
the following graph shows a five year comparison of cumulative total shareowners 2019 returns for our class b common stock , the standard & poor 2019s 500 index , and the dow jones transportation average .
the comparison of the total cumulative return on investment , which is the change in the quarterly stock price plus reinvested dividends for each of the quarterly periods , assumes that $ 100 was invested on december 31 , 2007 in the standard & poor 2019s 500 index , the dow jones transportation average , and our class b common stock. .

                                 | 12/31/2007 | 12/31/2008 | 12/31/2009 | 12/31/2010 | 12/31/2011 | 12/31/2012
-------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
united parcel service inc .      | $ 100.00   | $ 80.20    | $ 86.42    | $ 112.60   | $ 116.97   | $ 121.46
standard & poor 2019s 500 index  | $ 100.00   | $ 63.00    | $ 79.67    | $ 91.68    | $ 93.61    | $ 108.59
dow jones transportation average | $ 100.00   | $ 78.58    | $ 93.19    | $ 118.14   | $ 118.15   | $ 127.07


in the ordinary course of business , based on our evaluations of certain geologic trends and prospective economics , we have allowed certain lease acreage to expire and may allow additional acreage to expire in the future .
if production is not established or we take no other action to extend the terms of the leases , licenses , or concessions , undeveloped acreage listed in the table below will expire over the next three years .
we plan to continue the terms of many of these licenses and concession areas or retain leases through operational or administrative actions. .

( in thousands )    | net undeveloped acres expiring 2013 | net undeveloped acres expiring 2014 | net undeveloped acres expiring 2015
------------------- | ----------------------------------- | ----------------------------------- | -----------------------------------
u.s .               | 436                                 | 189                                 | 130
canada              | 2014                                | 2014                                | 2014
total north america | 436                                 | 189                                 | 130
e.g .               | 2014                                | 36                                  | 2014
other africa        | 858                                 | 2014                                | 189
total africa        | 858                                 | 36                                  | 189
total europe        | 2014                                | 216                                 | 1155
other international | 2014                                | 2014                                | 49
worldwide           | 1294                                | 441                                 | 1523

marketing and midstream our e&p segment includes activities related to the marketing and transportation of substantially all of our liquid hydrocarbon and natural gas production .
these activities include the transportation of production to market centers , the sale of commodities to third parties and storage of production .
we balance our various sales , storage and transportation positions through what we call supply optimization , which can include the purchase of commodities from third parties for resale .
supply optimization serves to aggregate volumes in order to satisfy transportation commitments and to achieve flexibility within product types and delivery points .
as discussed previously , we currently own and operate gathering systems and other midstream assets in some of our production areas .
we are continually evaluating value-added investments in midstream infrastructure or in capacity in third-party systems .
delivery commitments we have committed to deliver quantities of crude oil and natural gas to customers under a variety of contracts .
as of december 31 , 2012 , those contracts for fixed and determinable amounts relate primarily to eagle ford liquid hydrocarbon production .
a minimum of 54 mbbld is to be delivered at variable pricing through mid-2017 under two contracts .
our current production rates and proved reserves related to the eagle ford shale are sufficient to meet these commitments , but the contracts also provide for a monetary shortfall penalty or delivery of third-party volumes .
oil sands mining segment we hold a 20 percent non-operated interest in the aosp , an oil sands mining and upgrading joint venture located in alberta , canada .
the joint venture produces bitumen from oil sands deposits in the athabasca region utilizing mining techniques and upgrades the bitumen to synthetic crude oils and vacuum gas oil .
the aosp 2019s mining and extraction assets are located near fort mcmurray , alberta and include the muskeg river and the jackpine mines .
gross design capacity of the combined mines is 255000 ( 51000 net to our interest ) barrels of bitumen per day .
the aosp base and expansion 1 scotford upgrader is at fort saskatchewan , northeast of edmonton , alberta .
as of december 31 , 2012 , we own or have rights to participate in developed and undeveloped leases totaling approximately 216000 gross ( 43000 net ) acres .
the underlying developed leases are held for the duration of the project , with royalties payable to the province of alberta .
the five year aosp expansion 1 was completed in 2011 .
the jackpine mine commenced production under a phased start- up in the third quarter of 2010 and began supplying oil sands ore to the base processing facility in the fourth quarter of 2010 .
the upgrader expansion was completed and commenced operations in the second quarter of 2011 .
synthetic crude oil sales volumes for 2012 were 47 mbbld and net of royalty production was 41 mbbld .
phase one of debottlenecking opportunities was approved in 2011 and is expected to be completed in the second quarter of 2013 .
future expansions and additional debottlenecking opportunities remain under review with no formal approvals expected until 2014 .
current aosp operations use established processes to mine oil sands deposits from an open-pit mine , extract the bitumen and upgrade it into synthetic crude oils .
ore is mined using traditional truck and shovel mining techniques .
the mined ore passes through primary crushers to reduce the ore chunks in size and is then sent to rotary breakers where the ore chunks are further reduced to smaller particles .
the particles are combined with hot water to create slurry .
the slurry moves through the extraction


entergy louisiana , llc and subsidiaries management 2019s financial discussion and analysis results of operations net income 2016 compared to 2015 net income increased $ 175.4 million primarily due to the effect of a settlement with the irs related to the 2010-2011 irs audit , which resulted in a $ 136.1 million reduction of income tax expense .
also contributing to the increase were lower other operation and maintenance expenses , higher net revenue , and higher other income .
the increase was partially offset by higher depreciation and amortization expenses , higher interest expense , and higher nuclear refueling outage expenses .
2015 compared to 2014 net income increased slightly , by $ 0.6 million , primarily due to higher net revenue and a lower effective income tax rate , offset by higher other operation and maintenance expenses , higher depreciation and amortization expenses , lower other income , and higher interest expense .
net revenue 2016 compared to 2015 net revenue consists of operating revenues net of : 1 ) fuel , fuel-related expenses , and gas purchased for resale , 2 ) purchased power expenses , and 3 ) other regulatory charges .
following is an analysis of the change in net revenue comparing 2016 to 2015 .
amount ( in millions ) .

                                              | amount ( in millions )
--------------------------------------------- | ----------------------
2015 net revenue                              | $ 2408.8
retail electric price                         | 69.0
transmission equalization                     | -6.5 ( 6.5 )
volume/weather                                | -6.7 ( 6.7 )
louisiana act 55 financing savings obligation | -17.2 ( 17.2 )
other                                         | -9.0 ( 9.0 )
2016 net revenue                              | $ 2438.4

the retail electric price variance is primarily due to an increase in formula rate plan revenues , implemented with the first billing cycle of march 2016 , to collect the estimated first-year revenue requirement related to the purchase of power blocks 3 and 4 of the union power station .
see note 2 to the financial statements for further discussion .
the transmission equalization variance is primarily due to changes in transmission investments , including entergy louisiana 2019s exit from the system agreement in august 2016 .
the volume/weather variance is primarily due to the effect of less favorable weather on residential sales , partially offset by an increase in industrial usage and an increase in volume during the unbilled period .
the increase


item 7 .
management 2019s discussion and analysis of financial condition and results of operations introduction the following discussion and analysis presents management 2019s perspective of our business , financial condition and overall performance .
this information is intended to provide investors with an understanding of our past performance , current financial condition and outlook for the future and should be read in conjunction with 201citem 8 .
financial statements and supplementary data 201d of this report .
overview of 2017 results during 2017 , we generated solid operating results with our strategy of operating in north america 2019s best resource plays , delivering superior execution , continuing disciplined capital allocation and maintaining a high degree of financial strength .
led by our development in the stack and delaware basin , we continued to improve our 90-day initial production rates .
with investments in proprietary data tools , predictive analytics and artificial intelligence , we are delivering industry-leading , initial-rate well productivity performance and improving the performance of our established wells .
compared to 2016 , commodity prices increased significantly and were the primary driver for improvements in devon 2019s earnings and cash flow during 2017 .
we exited 2017 with liquidity comprised of $ 2.7 billion of cash and $ 2.9 billion of available credit under our senior credit facility .
we have no significant debt maturities until 2021 .
we further enhanced our financial strength by completing approximately $ 415 million of our announced $ 1 billion asset divestiture program in 2017 .
we anticipate closing the remaining divestitures in 2018 .
in 2018 and beyond , we have the financial capacity to further accelerate investment across our best-in-class u.s .
resource plays .
we are increasing drilling activity and will continue to shift our production mix to high-margin products .
we will continue our premier technical work to drive capital allocation and efficiency and industry- leading well productivity results .
we will continue to maximize the value of our base production by sustaining the operational efficiencies we have achieved .
finally , we will continue to manage activity levels within our cash flows .
we expect this disciplined approach will position us to deliver capital-efficient , cash-flow expansion over the next two years .
key measures of our financial performance in 2017 are summarized in the following table .
increased commodity prices as well as continued focus on our production expenses improved our 2017 financial performance as compared to 2016 , as seen in the table below .
more details for these metrics are found within the 201cresults of operations 2013 2017 vs .
2016 201d , below. .

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


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

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

s&p 500 peer group


net cash used by investing activities in 2013 also included $ 38.2 million for the may 13 , 2013 acquisition of challenger .
see note 2 to the consolidated financial statements for information on the challenger acquisition .
capital expenditures in 2013 , 2012 and 2011 totaled $ 70.6 million , $ 79.4 million and $ 61.2 million , respectively .
capital expenditures in 2013 included continued investments related to the company 2019s execution of its strategic value creation processes around safety , quality , customer connection , innovation and rci initiatives .
capital expenditures in all three years included spending to support the company 2019s strategic growth initiatives .
in 2013 , the company continued to invest in new product , efficiency , safety and cost reduction initiatives to expand and improve its manufacturing capabilities worldwide .
in 2012 , the company completed the construction of a fourth factory in kunshan , china , following the 2011 construction of a new engineering and research and development facility in kunshan .
capital expenditures in all three years also included investments , particularly in the united states , in new product , efficiency , safety and cost reduction initiatives , as well as investments in new production and machine tooling to enhance manufacturing operations , and ongoing replacements of manufacturing and distribution equipment .
capital spending in all three years also included spending for the replacement and enhancement of the company 2019s global enterprise resource planning ( erp ) management information systems , as well as spending to enhance the company 2019s corporate headquarters and research and development facilities in kenosha , wisconsin .
snap-on believes that its cash generated from operations , as well as its available cash on hand and funds available from its credit facilities will be sufficient to fund the company 2019s capital expenditure requirements in 2014 .
financing activities net cash used by financing activities was $ 137.8 million in 2013 , $ 127.0 million in 2012 and $ 293.7 million in 2011 .
net cash used by financing activities in 2011 reflects the august 2011 repayment of $ 200 million of unsecured 6.25% ( 6.25 % ) notes upon maturity with available cash .
proceeds from stock purchase and option plan exercises totaled $ 29.2 million in 2013 , $ 46.8 million in 2012 and $ 25.7 million in 2011 .
snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans , stock options and other corporate purposes .
in 2013 , snap-on repurchased 926000 shares of its common stock for $ 82.6 million under its previously announced share repurchase programs .
as of 2013 year end , snap-on had remaining availability to repurchase up to an additional $ 191.7 million in common stock pursuant to its board of directors 2019 ( the 201cboard 201d ) authorizations .
the purchase of snap-on common stock is at the company 2019s discretion , subject to prevailing financial and market conditions .
snap-on repurchased 1180000 shares of its common stock for $ 78.1 million in 2012 ; snap-on repurchased 628000 shares of its common stock for $ 37.4 million in 2011 .
snap-on believes that its cash generated from operations , available cash on hand , and funds available from its credit facilities , will be sufficient to fund the company 2019s share repurchases , if any , in 2014 .
snap-on has paid consecutive quarterly cash dividends , without interruption or reduction , since 1939 .
cash dividends paid in 2013 , 2012 and 2011 totaled $ 92.0 million , $ 81.5 million and $ 76.7 million , respectively .
on november 8 , 2013 , the company announced that its board increased the quarterly cash dividend by 15.8% ( 15.8 % ) to $ 0.44 per share ( $ 1.76 per share per year ) .
quarterly dividends declared in 2013 were $ 0.44 per share in the fourth quarter and $ 0.38 per share in the first three quarters ( $ 1.58 per share for the year ) .
quarterly dividends declared in 2012 were $ 0.38 per share in the fourth quarter and $ 0.34 per share in the first three quarters ( $ 1.40 per share for the year ) .
quarterly dividends in 2011 were $ 0.34 per share in the fourth quarter and $ 0.32 per share in the first three quarters ( $ 1.30 per share for the year ) . .

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

cash dividends paid as a percent of prior-year retained earnings 4.5% ( 4.5 % ) 4.4% ( 4.4 % ) snap-on believes that its cash generated from operations , available cash on hand and funds available from its credit facilities will be sufficient to pay dividends in 2014 .
off-balance-sheet arrangements except as included below in the section labeled 201ccontractual obligations and commitments 201d and note 15 to the consolidated financial statements , the company had no off-balance-sheet arrangements as of 2013 year end .
2013 annual report 49


local consumer lending local consumer lending ( lcl ) , which constituted approximately 70% ( 70 % ) of citi holdings by assets as of december 31 , 2010 , includes a portion of citigroup 2019s north american mortgage business , retail partner cards , western european cards and retail banking , citifinancial north america and other local consumer finance businesses globally .
the student loan corporation is reported as discontinued operations within the corporate/other segment for the second half of 2010 only .
at december 31 , 2010 , lcl had $ 252 billion of assets ( $ 226 billion in north america ) .
approximately $ 129 billion of assets in lcl as of december 31 , 2010 consisted of u.s .
mortgages in the company 2019s citimortgage and citifinancial operations .
the north american assets consist of residential mortgage loans ( first and second mortgages ) , retail partner card loans , personal loans , commercial real estate ( cre ) , and other consumer loans and assets .
in millions of dollars 2010 2009 2008 % (  % ) change 2010 vs .
2009 % (  % ) change 2009 vs .
2008 .

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

nm not meaningful 2010 vs .
2009 revenues , net of interest expense decreased 11% ( 11 % ) from the prior year .
net interest revenue increased 6% ( 6 % ) due to the adoption of sfas 166/167 , partially offset by the impact of lower balances due to portfolio run-off and asset sales .
non-interest revenue declined 58% ( 58 % ) , primarily due to the absence of the $ 1.1 billion gain on the sale of redecard in the first quarter of 2009 and a higher mortgage repurchase reserve charge .
operating expenses decreased 18% ( 18 % ) , primarily due to the impact of divestitures , lower volumes , re-engineering actions and the absence of costs associated with the u.s .
government loss-sharing agreement , which was exited in the fourth quarter of 2009 .
provisions for credit losses and for benefits and claims decreased 38% ( 38 % ) , reflecting a net $ 1.8 billion credit reserve release in 2010 compared to a $ 5.8 billion build in 2009 .
lower net credit losses across most businesses were partially offset by the impact of the adoption of sfas 166/167 .
on a comparable basis , net credit losses were lower year-over-year , driven by improvement in u.s .
mortgages , international portfolios and retail partner cards .
assets declined 21% ( 21 % ) from the prior year , primarily driven by portfolio run-off , higher loan loss reserve balances , and the impact of asset sales and divestitures , partially offset by an increase of $ 41 billion resulting from the adoption of sfas 166/167 .
key divestitures in 2010 included the student loan corporation , primerica , auto loans , the canadian mastercard business and u.s .
retail sales finance portfolios .
2009 vs .
2008 revenues , net of interest expense decreased 24% ( 24 % ) from the prior year .
net interest revenue was 24% ( 24 % ) lower than the prior year , primarily due to lower balances , de-risking of the portfolio , and spread compression .
non-interest revenue decreased $ 1.6 billion , mostly driven by the impact of higher credit losses flowing through the securitization trusts , partially offset by the $ 1.1 billion gain on the sale of redecard in the first quarter of 2009 .
operating expenses declined 31% ( 31 % ) from the prior year , due to lower volumes and reductions from expense re-engineering actions , and the impact of goodwill write-offs of $ 3.0 billion in the fourth quarter of 2008 , partially offset by higher costs associated with delinquent loans .
provisions for credit losses and for benefits and claims increased 14% ( 14 % ) from the prior year , reflecting an increase in net credit losses of $ 6.1 billion , partially offset by lower reserve builds of $ 2.8 billion .
higher net credit losses were primarily driven by higher losses of $ 3.6 billion in residential real estate lending , $ 1.0 billion in retail partner cards , and $ 0.7 billion in international .
assets decreased $ 57 billion from the prior year , primarily driven by lower originations , wind-down of specific businesses , asset sales , divestitures , write- offs and higher loan loss reserve balances .
key divestitures in 2009 included the fi credit card business , italy consumer finance , diners europe , portugal cards , norway consumer and diners club north america.


the fair value for these options was estimated at the date of grant using a black-scholes option pricing model with the following weighted-average assumptions for 2006 , 2005 and 2004: .

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

the black-scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable .
in addition , option valuation models require the input of highly subjective assumptions , including the expected stock price volatility .
because the company 2019s employee stock options have characteristics significantly different from those of traded options , and because changes in the subjective input assumptions can materially affect the fair value estimate , in management 2019s opinion , the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options .
the total fair value of shares vested during 2006 , 2005 , and 2004 was $ 9413 , $ 8249 , and $ 6418 respectively .
the aggregate intrinsic values of options outstanding and exercisable at december 30 , 2006 were $ 204.1 million and $ 100.2 million , respectively .
the aggregate intrinsic value of options exercised during the year ended december 30 , 2006 was $ 42.8 million .
aggregate intrinsic value represents the positive difference between the company 2019s closing stock price on the last trading day of the fiscal period , which was $ 55.66 on december 29 , 2006 , and the exercise price multiplied by the number of options outstanding .
as of december 30 , 2006 , there was $ 64.2 million of total unrecognized compensation cost related to unvested share-based compensation awards granted to employees under the option plans .
that cost is expected to be recognized over a period of five years .
employee stock purchase plan the shareholders also adopted an employee stock purchase plan ( espp ) .
up to 2000000 shares of common stock have been reserved for the espp .
shares will be offered to employees at a price equal to the lesser of 85% ( 85 % ) of the fair market value of the stock on the date of purchase or 85% ( 85 % ) of the fair market value on the enrollment date .
the espp is intended to qualify as an 201cemployee stock purchase plan 201d under section 423 of the internal revenue code .
during 2006 , 2005 , and 2004 , 124693 , 112798 , and 117900 shares were purchased under the plan for a total purchase price of $ 3569 , $ 2824 , and $ 2691 , respectively .
at december 30 , 2006 , approximately 1116811 shares were available for future issuance.


14 .
leases we lease certain locomotives , freight cars , and other property .
the consolidated statement of financial position as of december 31 , 2008 and 2007 included $ 2024 million , net of $ 869 million of amortization , and $ 2062 million , net of $ 887 million of amortization , respectively , for properties held under capital leases .
a charge to income resulting from the amortization for assets held under capital leases is included within depreciation expense in our consolidated statements of income .
future minimum lease payments for operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of december 31 , 2008 were as follows : millions of dollars operating leases capital leases .

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

the majority of capital lease payments relate to locomotives .
rent expense for operating leases with terms exceeding one month was $ 747 million in 2008 , $ 810 million in 2007 , and $ 798 million in 2006 .
when cash rental payments are not made on a straight-line basis , we recognize variable rental expense on a straight-line basis over the lease term .
contingent rentals and sub-rentals are not significant .
15 .
commitments and contingencies asserted and unasserted claims 2013 various claims and lawsuits are pending against us and certain of our subsidiaries .
we cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations , financial condition , or liquidity ; however , to the extent possible , where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated , we have recorded a liability .
we do not expect that any known lawsuits , claims , environmental costs , commitments , contingent liabilities , or guarantees will have a material adverse effect on our consolidated results of operations , financial condition , or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters .
personal injury 2013 the cost of personal injuries to employees and others related to our activities is charged to expense based on estimates of the ultimate cost and number of incidents each year .
we use third-party actuaries to assist us in measuring the expense and liability , including unasserted claims .
the federal employers 2019 liability act ( fela ) governs compensation for work-related accidents .
under fela , damages are assessed based on a finding of fault through litigation or out-of-court settlements .
we offer a comprehensive variety of services and rehabilitation programs for employees who are injured at our personal injury liability is discounted to present value using applicable u.s .
treasury rates .
approximately 88% ( 88 % ) of the recorded liability related to asserted claims , and approximately 12% ( 12 % ) related to unasserted claims at december 31 , 2008 .
because of the uncertainty surrounding the ultimate outcome of personal injury claims , it is reasonably possible that future costs to settle these claims may range from


( a ) consists of pollution control revenue bonds and environmental revenue bonds , some of which are secured by collateral mortgage bonds .
( b ) pursuant to the nuclear waste policy act of 1982 , entergy 2019s nuclear owner/licensee subsidiaries have contracts with the doe for spent nuclear fuel disposal service . a0 a0the contracts include a one-time fee for generation prior to april 7 , 1983 . a0 a0entergy arkansas is the only entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee , plus accrued interest , in long-term debt .
( c ) see note 10 to the financial statements for further discussion of the waterford 3 lease obligation and entergy louisiana 2019s acquisition of the equity participant 2019s beneficial interest in the waterford 3 leased assets and for further discussion of the grand gulf lease obligation .
( d ) this note did not have a stated interest rate , but had an implicit interest rate of 7.458% ( 7.458 % ) .
( e ) the fair value excludes lease obligations of $ 34 million at system energy and long-term doe obligations of $ 183 million at entergy arkansas , and includes debt due within one year . a0 a0fair values are classified as level 2 in the fair value hierarchy discussed in note 15 to the financial statements and are based on prices derived from inputs such as benchmark yields and reported trades .
the annual long-term debt maturities ( excluding lease obligations and long-term doe obligations ) for debt outstanding as of december a031 , 2017 , for the next five years are as follows : amount ( in thousands ) .

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

in november 2000 , entergy 2019s non-utility nuclear business purchased the fitzpatrick and indian point 3 power plants in a seller-financed transaction .
as part of the purchase agreement with nypa , entergy recorded a liability representing the net present value of the payments entergy would be liable to nypa for each year that the fitzpatrick and indian point 3 power plants would run beyond their respective original nrc license expiration date .
in october 2015 , entergy announced a planned shutdown of fitzpatrick at the end of its fuel cycle .
as a result of the announcement , entergy reduced this liability by $ 26.4 million pursuant to the terms of the purchase agreement .
in august 2016 , entergy entered into a trust transfer agreement with nypa to transfer the decommissioning trust funds and decommissioning liabilities for the indian point 3 and fitzpatrick plants to entergy .
as part of the trust transfer agreement , the original decommissioning agreements were amended , and the entergy subsidiaries 2019 obligation to make additional license extension payments to nypa was eliminated .
in the third quarter 2016 , entergy removed the note payable of $ 35.1 million from the consolidated balance sheet .
entergy louisiana , entergy mississippi , entergy new orleans , entergy texas , and system energy have obtained long-term financing authorizations from the ferc that extend through october 2019 . a0 a0entergy arkansas has obtained long-term financing authorization from the apsc that extends through december 2018 .
entergy new orleans has also obtained long-term financing authorization from the city council that extends through june 2018 , as the city council has concurrent jurisdiction with the ferc over such issuances .
capital funds agreement pursuant to an agreement with certain creditors , entergy corporation has agreed to supply system energy with sufficient capital to : 2022 maintain system energy 2019s equity capital at a minimum of 35% ( 35 % ) of its total capitalization ( excluding short- term debt ) ; entergy corporation and subsidiaries notes to financial statements


table of contents other equity method investments infraservs .
we hold indirect ownership interests in several german infraserv groups that own and develop industrial parks and provide on-site general and administrative support to tenants .
our ownership interest in the equity investments in infraserv affiliates are as follows : as of december 31 , 2017 ( in percentages ) infraserv gmbh & co .
gendorf kg ( 1 ) ................................................................................................... .
39 .

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

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


part iii item 10 .
directors , executive officers and corporate governance the information required by this item is incorporated by reference to the 201celection of directors 201d section , the 201cdirector selection process 201d section , the 201ccode of conduct 201d section , the 201cprincipal committees of the board of directors 201d section , the 201caudit committee 201d section and the 201csection 16 ( a ) beneficial ownership reporting compliance 201d section of the proxy statement for the annual meeting of stockholders to be held on may 27 , 2010 ( the 201cproxy statement 201d ) , except for the description of our executive officers , which appears in part i of this report on form 10-k under the heading 201cexecutive officers of ipg . 201d new york stock exchange certification in 2009 , our ceo provided the annual ceo certification to the new york stock exchange , as required under section 303a.12 ( a ) of the new york stock exchange listed company manual .
item 11 .
executive compensation the information required by this item is incorporated by reference to the 201ccompensation of executive officers 201d section , the 201cnon-management director compensation 201d section , the 201ccompensation discussion and analysis 201d section and the 201ccompensation committee report 201d section of the proxy statement .
item 12 .
security ownership of certain beneficial owners and management and related stockholder matters the information required by this item is incorporated by reference to the 201coutstanding shares 201d section of the proxy statement , except for information regarding the shares of common stock to be issued or which may be issued under our equity compensation plans as of december 31 , 2009 , which is provided in the following table .
equity compensation plan information plan category number of shares of common stock to be issued upon exercise of outstanding options , warrants and rights ( a ) 12 weighted-average exercise price of outstanding stock options ( b ) number of securities remaining available for future issuance under equity compensation plans ( excluding securities reflected in column a ) ( c ) 3 equity compensation plans approved by security holders .
.
.
.
.
.
.
.
.
34317386 $ 16.11 52359299 equity compensation plans not approved by security holders 4 .
.
.
.
.
612500 $ 27.53 2014 .

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

1 includes a total of 6058967 performance-based share awards made under the 2004 , 2006 and 2009 performance incentive plan representing the target number of shares to be issued to employees following the completion of the 2007-2009 performance period ( the 201c2009 ltip share awards 201d ) , the 2008- 2010 performance period ( the 201c2010 ltip share awards 201d ) and the 2009-2011 performance period ( the 201c2011 ltip share awards 201d ) respectively .
the computation of the weighted-average exercise price in column ( b ) of this table does not take the 2009 ltip share awards , the 2010 ltip share awards or the 2011 ltip share awards into account .
2 includes a total of 3914804 restricted share unit and performance-based awards ( 201cshare unit awards 201d ) which may be settled in shares or cash .
the computation of the weighted-average exercise price in column ( b ) of this table does not take the share unit awards into account .
each share unit award actually settled in cash will increase the number of shares of common stock available for issuance shown in column ( c ) .
3 includes ( i ) 37885502 shares of common stock available for issuance under the 2009 performance incentive plan , ( ii ) 13660306 shares of common stock available for issuance under the employee stock purchase plan ( 2006 ) and ( iii ) 813491 shares of common stock available for issuance under the 2009 non-management directors 2019 stock incentive plan .
4 consists of special stock option grants awarded to certain true north executives following our acquisition of true north ( the 201ctrue north options 201d ) .
the true north options have an exercise price equal to the fair market value of interpublic 2019s common stock on the date of the grant .
the terms and conditions of these stock option awards are governed by interpublic 2019s 1997 performance incentive plan .
generally , the options become exercisable between two and five years after the date of the grant and expire ten years from the grant date.


edwards lifesciences corporation notes to consolidated financial statements ( continued ) 2 .
summary of significant accounting policies ( continued ) in may 2014 , the fasb issued an update to the accounting guidance on revenue recognition .
the new guidance provides a comprehensive , principles-based approach to revenue recognition , and supersedes most previous revenue recognition guidance .
the core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services .
the guidance also requires improved disclosures on the nature , amount , timing , and uncertainty of revenue that is recognized .
in august 2015 , the fasb issued an update to the guidance to defer the effective date by one year , such that the new standard will be effective for annual reporting periods beginning after december 15 , 2017 and interim periods therein .
the new guidance can be applied retrospectively to each prior reporting period presented , or retrospectively with the cumulative effect of the change recognized at the date of the initial application .
the company is assessing all of the potential impacts of the revenue recognition guidance and has not yet selected an adoption method .
the company will adopt the new guidance effective january 1 , although the company has not yet completed its assessment of the new revenue recognition guidance , the company 2019s analysis of contracts related to the sale of its heart valve therapy products under the new revenue recognition guidance supports the recognition of revenue at a point-in-time , which is consistent with its current revenue recognition model .
heart valve therapy sales accounted for approximately 80% ( 80 % ) of the company 2019s sales for the year ended december 31 , 2016 .
the company is currently assessing the potential impact of the guidance on contracts related to the sale of its critical care products , specifically sales outside of the united states .
3 .
intellectual property litigation expenses ( income ) , net in may 2014 , the company entered into an agreement with medtronic , inc .
and its affiliates ( 2018 2018medtronic 2019 2019 ) to settle all outstanding patent litigation between the companies , including all cases related to transcatheter heart valves .
pursuant to the agreement , all pending cases or appeals in courts and patent offices worldwide have been dismissed , and the parties will not litigate patent disputes with each other in the field of transcatheter valves for the eight-year term of the agreement .
under the terms of a patent cross-license that is part of the agreement , medtronic made a one-time , upfront payment to the company for past damages in the amount of $ 750.0 million .
in addition , medtronic will pay the company quarterly license royalty payments through april 2022 .
for sales in the united states , subject to certain conditions , the royalty payments will be based on a percentage of medtronic 2019s sales of transcatheter aortic valves , with a minimum annual payment of $ 40.0 million and a maximum annual payment of $ 60.0 million .
a separate royalty payment will be calculated based on sales of medtronic transcatheter aortic valves manufactured in the united states but sold elsewhere .
the company accounted for the settlement agreement as a multiple-element arrangement and allocated the total consideration to the identifiable elements based upon their relative fair value .
the consideration assigned to each element was as follows ( in millions ) : .

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


synopsys , inc .
notes to consolidated financial statements 2014continued the aggregate purchase price consideration was approximately us$ 417.0 million .
as of october 31 , 2012 , the total purchase consideration and the preliminary purchase price allocation were as follows: .

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

goodwill of $ 247.5 million , which is generally not deductible for tax purposes , primarily resulted from the company 2019s expectation of sales growth and cost synergies from the integration of springsoft 2019s technology and operations with the company 2019s technology and operations .
identifiable intangible assets , consisting primarily of technology , customer relationships , backlog and trademarks , were valued using the income method , and are being amortized over three to eight years .
acquisition-related costs directly attributable to the business combination were $ 6.6 million for fiscal 2012 and were expensed as incurred in the consolidated statements of operations .
these costs consisted primarily of employee separation costs and professional services .
fair value of equity awards : pursuant to the merger agreement , the company assumed all the unvested outstanding stock options of springsoft upon the completion of the merger and the vested options were exchanged for cash in the merger .
on october 1 , 2012 , the date of the completion of the tender offer , the fair value of the awards to be assumed and exchanged was $ 9.9 million , calculated using the black-scholes option pricing model .
the black-scholes option-pricing model incorporates various subjective assumptions including expected volatility , expected term and risk-free interest rates .
the expected volatility was estimated by a combination of implied and historical stock price volatility of the options .
non-controlling interest : non-controlling interest represents the fair value of the 8.4% ( 8.4 % ) of outstanding springsoft shares that were not acquired during the tender offer process completed on october 1 , 2012 and the fair value of the option awards that were to be assumed or exchanged for cash upon the follow-on merger .
the fair value of the non-controlling interest included as part of the aggregate purchase consideration was $ 42.8 million and is disclosed as a separate line in the october 31 , 2012 consolidated statements of stockholders 2019 equity .
during the period between the completion of the tender offer and the end of the company 2019s fiscal year on october 31 , 2012 , the non-controlling interest was adjusted by $ 0.5 million to reflect the non-controlling interest 2019s share of the operating loss of springsoft in that period .
as the amount is not significant , it has been included as part of other income ( expense ) , net , in the consolidated statements of operations.