the following table presents the estimated future amortization of deferred stock compensation reported in both cost of revenue and operating expenses : fiscal year ( in thousands ) .

fiscal year                                                        | ( in thousands )
------------------------------------------------------------------ | ----------------
2004                                                               | $ 3677
2005                                                               | 2403
2006                                                               | 840
2007                                                               | 250
total estimated future amortization of deferred stock compensation | $ 7170

impairment of intangible assets .
in fiscal 2002 , we recognized an aggregate impairment charge of $ 3.8 million to reduce the amount of certain intangible assets associated with prior acquisitions to their estimated fair value .
approximately $ 3.7 million and $ 0.1 million are included in integration expense and amortization of intangible assets , respectively , on the consolidated statement of operations .
the impairment charge is primarily attributable to certain technology acquired from and goodwill related to the acquisition of stanza , inc .
( stanza ) in 1999 .
during fiscal 2002 , we determined that we would not allocate future resources to assist in the market growth of this technology as products acquired in the merger with avant! provided customers with superior capabilities .
as a result , we do not anticipate any future sales of the stanza product .
in fiscal 2001 , we recognized an aggregate impairment charge of $ 2.2 million to reduce the amount of certain intangible assets associated with prior acquisitions to their estimated fair value .
approximately $ 1.8 million and $ 0.4 million are included in cost of revenues and amortization of intangible assets , respectively , on the consolidated statement of operations .
the impairment charge is attributable to certain technology acquired from and goodwill related to the acquisition of eagle design automation , inc .
( eagle ) in 1997 .
during fiscal 2001 , we determined that we would not allocate future resources to assist in the market growth of this technology .
as a result , we do not anticipate any future sales of the eagle product .
there were no impairment charges during fiscal 2003 .
other ( expense ) income , net .
other income , net was $ 24.1 million in fiscal 2003 and consisted primarily of ( i ) realized gain on investments of $ 20.7 million ; ( ii ) rental income of $ 6.3 million ; ( iii ) interest income of $ 5.2 million ; ( iv ) impairment charges related to certain assets in our venture portfolio of ( $ 4.5 ) million ; ( vii ) foundation contributions of ( $ 2.1 ) million ; and ( viii ) interest expense of ( $ 1.6 ) million .
other ( expense ) , net of other income was ( $ 208.6 ) million in fiscal 2002 and consisted primarily of ( i ) ( $ 240.8 ) million expense due to the settlement of the cadence design systems , inc .
( cadence ) litigation ; ( ii ) ( $ 11.3 ) million in impairment charges related to certain assets in our venture portfolio ; ( iii ) realized gains on investments of $ 22.7 million ; ( iv ) a gain of $ 3.1 million for the termination fee on the ikos systems , inc .
( ikos ) merger agreement ; ( v ) rental income of $ 10.0 million ; ( vi ) interest income of $ 8.3 million ; and ( vii ) and other miscellaneous expenses including amortization of premium forwards and foreign exchange gains and losses recognized during the fiscal year of ( $ 0.6 ) million .
other income , net was $ 83.8 million in fiscal 2001 and consisted primarily of ( i ) a gain of $ 10.6 million on the sale of our silicon libraries business to artisan components , inc. ; ( ii ) ( $ 5.8 ) million in impairment charges related to certain assets in our venture portfolio ; ( iii ) realized gains on investments of $ 55.3 million ; ( iv ) rental income of $ 8.6 million ; ( v ) interest income of $ 12.8 million ; and ( vi ) other miscellaneous income including amortization of premium forwards and foreign exchange gains and losses recognized during the fiscal year of $ 2.3 million .
termination of agreement to acquire ikos systems , inc .
on july 2 , 2001 , we entered into an agreement and plan of merger and reorganization ( the ikos merger agreement ) with ikos systems , inc .
the ikos merger agreement provided for the acquisition of all outstanding shares of ikos common stock by synopsys.


the company has also encountered various quality issues on its aircraft carrier construction and overhaul programs and its virginia-class submarine construction program at its newport news location .
these primarily involve matters related to filler metal used in pipe welds identified in 2007 , and issues associated with non-nuclear weld inspection and the installation of weapons handling equipment on certain submarines , and certain purchased material quality issues identified in 2009 .
the company does not believe that resolution of these issues will have a material effect upon its consolidated financial position , results of operations or cash flows .
environmental matters 2014the estimated cost to complete environmental remediation has been accrued where it is probable that the company will incur such costs in the future to address environmental conditions at currently or formerly owned or leased operating facilities , or at sites where it has been named a potentially responsible party ( 201cprp 201d ) by the environmental protection agency , or similarly designated by another environmental agency , and these costs can be estimated by management .
these accruals do not include any litigation costs related to environmental matters , nor do they include amounts recorded as asset retirement obligations .
to assess the potential impact on the company 2019s consolidated financial statements , management estimates the range of reasonably possible remediation costs that could be incurred by the company , taking into account currently available facts on each site as well as the current state of technology and prior experience in remediating contaminated sites .
these estimates are reviewed periodically and adjusted to reflect changes in facts and technical and legal circumstances .
management estimates that as of december 31 , 2011 , the probable future costs for environmental remediation is $ 3 million , which is accrued in other current liabilities .
factors that could result in changes to the company 2019s estimates include : modification of planned remedial actions , increases or decreases in the estimated time required to remediate , changes to the determination of legally responsible parties , discovery of more extensive contamination than anticipated , changes in laws and regulations affecting remediation requirements , and improvements in remediation technology .
should other prps not pay their allocable share of remediation costs , the company may have to incur costs exceeding those already estimated and accrued .
in addition , there are certain potential remediation sites where the costs of remediation cannot be reasonably estimated .
although management cannot predict whether new information gained as projects progress will materially affect the estimated liability accrued , management does not believe that future remediation expenditures will have a material effect on the company 2019s consolidated financial position , results of operations or cash flows .
financial arrangements 2014in the ordinary course of business , hii uses standby letters of credit issued by commercial banks and surety bonds issued by insurance companies principally to support the company 2019s self-insured workers 2019 compensation plans .
at december 31 , 2011 , there were $ 121 million of standby letters of credit issued but undrawn and $ 297 million of surety bonds outstanding related to hii .
u.s .
government claims 2014from time to time , the u.s .
government advises the company of claims and penalties concerning certain potential disallowed costs .
when such findings are presented , the company and u.s .
government representatives engage in discussions to enable hii to evaluate the merits of these claims as well as to assess the amounts being claimed .
the company does not believe that the outcome of any such matters will have a material effect on its consolidated financial position , results of operations or cash flows .
collective bargaining agreements 2014the company believes that it maintains good relations with its approximately 38000 employees of which approximately 50% ( 50 % ) are covered by a total of 10 collective bargaining agreements .
the company expects to renegotiate renewals of each of its collective bargaining agreements between 2013 and 2015 as they approach expiration .
collective bargaining agreements generally expire after three to five years and are subject to renegotiation at that time .
it is not expected that the results of these negotiations , either individually or in the aggregate , will have a material effect on the company 2019s consolidated results of operations .
operating leases 2014rental expense for operating leases was $ 44 million in 2011 , $ 44 million in 2010 , and $ 48 million in 2009 .
these amounts are net of immaterial amounts of sublease rental income .
minimum rental commitments under long- term non-cancellable operating leases for the next five years and thereafter are : ( $ in millions ) .

2012       | $ 21
---------- | -----
2013       | 17
2014       | 15
2015       | 13
2016       | 10
thereafter | 48
total      | $ 124


z i m m e r h o l d i n g s , i n c .
a n d s u b s i d i a r i e s 2 0 0 2 f o r m 1 0 - k contractual obligations the company has entered into contracts with various third parties in the normal course of business which will require future payments .
the following table illustrates the company 2019s contractual obligations : than 1 1 - 3 4 - 5 after 5 contractual obligations total year years years years .

contractual obligations       | total   | less than 1 year | 1 - 3 years | 4 - 5 years | after 5 years
----------------------------- | ------- | ---------------- | ----------- | ----------- | -------------
short-term debt               | $ 156.7 | $ 156.7          | $ 2013      | $ 2013      | $ 2013
operating leases              | 36.9    | 8.3              | 12.7        | 7.3         | 8.6
minimum purchase commitments  | 25.0    | 25.0             | 2013        | 2013        | 2013
total contractual obligations | $ 218.6 | $ 190.0          | $ 12.7      | $ 7.3       | $ 8.6

critical accounting policies equipment based on historical patterns of use and physical and technological characteristics of assets , as the financial results of the company are affected by the appropriate .
in accordance with statement of financial selection and application of accounting policies and methods .
accounting standards ( 2018 2018sfas 2019 2019 ) no .
144 , 2018 2018accounting for significant accounting policies which , in some cases , require the impairment or disposal of long-lived assets , 2019 2019 the management 2019s judgment are discussed below .
company reviews property , plant and equipment for revenue recognition 2013 a significant portion of the com- impairment whenever events or changes in circumstances pany 2019s revenue is recognized for field based product upon indicate that the carrying value of an asset may not be notification that the product has been implanted or used .
recoverable .
an impairment loss would be recognized for all other transactions , the company recognizes when estimated future cash flows relating to the asset revenue when title is passed to customers , generally are less than its carrying amount .
upon shipment .
estimated returns and allowances are derivative financial instruments 2013 critical aspects of recorded as a reduction of sales when the revenue is the company 2019s accounting policy for derivative financial recognized .
instruments include conditions which require that critical inventories 2013 the company must determine as of each terms of a hedging instrument are essentially the same as balance sheet date how much , if any , of its inventory may a hedged forecasted transaction .
another important ele- ultimately prove to be unsaleable or unsaleable at its ment of the policy requires that formal documentation be carrying cost .
reserves are established to effectively maintained as required by the sfas no .
133 , 2018 2018accounting adjust any such inventory to net realizable value .
to for derivative instruments and hedging activities . 2019 2019 fail- determine the appropriate level of reserves , the company ure to comply with these conditions would result in a evaluates current stock levels in relation to historical and requirement to recognize changes in market value of expected patterns of demand for all of its products .
a hedge instruments in earnings as they occur .
manage- series of algorithms is applied to the data to assist ment routinely monitors significant estimates , assump- management in its evaluation .
management evaluates the tions and judgments associated with derivative need for changes to valuation reserves based on market instruments , and compliance with formal documentation conditions , competitive offerings and other factors on a requirements .
regular basis .
further information about inventory stock compensation 2013 the company applies the provi- reserves is provided in notes to the consolidated financial sions of apb opinion no .
25 , 2018 2018accounting for stock statements .
issued to employees , 2019 2019 in accounting for stock-based instruments 2013 the company , as is customary in the compensation ; therefore , no compensation expense has industry , consigns surgical instruments for use in been recognized for its fixed stock option plans as orthopaedic procedures with the company 2019s products .
options are granted at fair market value .
sfas no .
123 , the company 2019s accounting policy requires that the full 2018 2018accounting for stock-based compensation 2019 2019 provides an cost of instruments be recognized as an expense in the alternative method of accounting for stock options based year in which the instruments are placed in service .
an on an option pricing model , such as black-scholes .
the alternative to this method is to depreciate the cost of company has adopted the disclosure requirements of instruments over their useful lives .
the company may sfas no .
123 and sfas no .
148 , 2018 2018accounting for stock- from time to time consider a change in accounting for based compensation-transition and disclosure . 2019 2019 informa- instruments to better align its accounting policy with tion regarding compensation expense under the alterna- certain company competitors .
tive method is provided in notes to the consolidated financial statements .
property , plant and equipment 2013 the company deter- mines estimated useful lives of property , plant and


a significant portion of our natural gas production in the lower 48 states of the u.s .
is sold at bid-week prices or first-of-month indices relative to our specific producing areas .
average settlement date henry hub natural gas prices have been relatively stable for the periods of this report ; however , a decline began in september 2011 which has continued in 2012 with february averaging $ 2.68 per mmbtu .
should u.s .
natural gas prices remain depressed , an impairment charge related to our natural gas assets may be necessary .
our other major natural gas-producing regions are europe and eg .
natural gas prices in europe have been significantly higher than in the u.s .
in the case of eg our natural gas sales are subject to term contracts , making realized prices less volatile .
the natural gas sales from eg are at fixed prices ; therefore , our worldwide reported average natural gas realized prices may not fully track market price movements .
oil sands mining osm segment revenues correlate with prevailing market prices for the various qualities of synthetic crude oil we produce .
roughly two-thirds of the normal output mix will track movements in wti and one-third will track movements in the canadian heavy sour crude oil marker , primarily western canadian select .
output mix can be impacted by operational problems or planned unit outages at the mines or the upgrader .
the operating cost structure of the oil sands mining operations is predominantly fixed and therefore many of the costs incurred in times of full operation continue during production downtime .
per-unit costs are sensitive to production rates .
key variable costs are natural gas and diesel fuel , which track commodity markets such as the canadian alberta energy company ( 201caeco 201d ) natural gas sales index and crude oil prices , respectively .
recently aeco prices have declined , much as henry hub prices have .
we would expect a significant , continued declined in natural gas prices to have a favorable impact on osm operating costs .
the table below shows average benchmark prices that impact both our revenues and variable costs. .

benchmark                                                | 2011    | 2010    | 2009
-------------------------------------------------------- | ------- | ------- | -------
wti crude oil ( dollars per bbl )                        | $ 95.11 | $ 79.61 | $ 62.09
western canadian select ( dollars per bbl ) ( a )        | 77.97   | 65.31   | 52.13
aeco natural gas sales index ( dollars per mmbtu ) ( b ) | $ 3.68  | $ 3.89  | $ 3.49

wti crude oil ( dollars per bbl ) $ 95.11 $ 79.61 $ 62.09 western canadian select ( dollars per bbl ) ( a ) 77.97 65.31 52.13 aeco natural gas sales index ( dollars per mmbtu ) ( b ) $ 3.68 $ 3.89 $ 3.49 ( a ) monthly pricing based upon average wti adjusted for differentials unique to western canada .
( b ) monthly average day ahead index .
integrated gas our integrated gas operations include production and marketing of products manufactured from natural gas , such as lng and methanol , in eg .
world lng trade in 2011 has been estimated to be 241 mmt .
long-term , lng continues to be in demand as markets seek the benefits of clean burning natural gas .
market prices for lng are not reported or posted .
in general , lng delivered to the u.s .
is tied to henry hub prices and will track with changes in u.s .
natural gas prices , while lng sold in europe and asia is indexed to crude oil prices and will track the movement of those prices .
we have a 60 percent ownership in an lng production facility in equatorial guinea , which sells lng under a long-term contract at prices tied to henry hub natural gas prices .
gross sales from the plant were 4.1 mmt , 3.7 mmt and 3.9 mmt in 2011 , 2010 and 2009 .
we own a 45 percent interest in a methanol plant located in equatorial guinea through our investment in ampco .
gross sales of methanol from the plant totaled 1039657 , 850605 and 960374 metric tonnes in 2011 , 2010 and 2009 .
methanol demand has a direct impact on ampco 2019s earnings .
because global demand for methanol is rather limited , changes in the supply-demand balance can have a significant impact on sales prices .
world demand for methanol in 2011 has been estimated to be 55.4 mmt .
our plant capacity of 1.1 mmt is about 2 percent of total demand .
operating and financial highlights significant operating and financial highlights during 2011 include : 2022 completed the spin-off of our downstream business on june 30 , 2011 2022 acquired a significant operated position in the eagle ford shale play in south texas 2022 added net proved reserves , for the e&p and osm segments combined , of 307 mmboe , excluding dispositions , for a 212 percent reserve replacement ratio


zimmer biomet holdings , inc .
2015 form 10-k annual report notes to consolidated financial statements ( continued ) interest to the date of redemption .
in addition , the merger notes and the 3.375% ( 3.375 % ) senior notes due 2021 may be redeemed at our option without any make-whole premium at specified dates ranging from one month to six months in advance of the scheduled maturity date .
between the closing date and june 30 , 2015 , we repaid the biomet senior notes we assumed in the merger .
the fair value of the principal amount plus interest was $ 2798.6 million .
these senior notes required us to pay a call premium in excess of the fair value of the notes when they were repaid .
as a result , we recognized $ 22.0 million in non-operating other expense related to this call premium .
the estimated fair value of our senior notes as of december 31 , 2015 , based on quoted prices for the specific securities from transactions in over-the-counter markets ( level 2 ) , was $ 8837.5 million .
the estimated fair value of the japan term loan as of december 31 , 2015 , based upon publicly available market yield curves and the terms of the debt ( level 2 ) , was $ 96.4 million .
the carrying value of the u.s .
term loan approximates fair value as it bears interest at short-term variable market rates .
we have entered into interest rate swap agreements which we designated as fair value hedges of underlying fixed- rate obligations on our senior notes due 2019 and 2021 .
see note 14 for additional information regarding the interest rate swap agreements .
we also have available uncommitted credit facilities totaling $ 35.8 million .
at december 31 , 2015 and 2014 , the weighted average interest rate for our long-term borrowings was 2.9 percent and 3.5 percent , respectively .
we paid $ 207.1 million , $ 67.5 million and $ 68.1 million in interest during 2015 , 2014 and 2013 , respectively .
13 .
accumulated other comprehensive ( loss ) income oci refers to certain gains and losses that under gaap are included in comprehensive income but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders 2019 equity .
amounts in oci may be reclassified to net earnings upon the occurrence of certain events .
our oci is comprised of foreign currency translation adjustments , unrealized gains and losses on cash flow hedges , unrealized gains and losses on available-for-sale securities , and amortization of prior service costs and unrecognized gains and losses in actuarial assumptions on our defined benefit plans .
foreign currency translation adjustments are reclassified to net earnings upon sale or upon a complete or substantially complete liquidation of an investment in a foreign entity .
unrealized gains and losses on cash flow hedges are reclassified to net earnings when the hedged item affects net earnings .
unrealized gains and losses on available-for-sale securities are reclassified to net earnings if we sell the security before maturity or if the unrealized loss is considered to be other-than-temporary .
amounts related to defined benefit plans that are in oci are reclassified over the service periods of employees in the plan .
the reclassification amounts are allocated to all employees in the plans and , therefore , the reclassified amounts may become part of inventory to the extent they are considered direct labor costs .
see note 15 for more information on our defined benefit plans .
the following table shows the changes in the components of oci , net of tax ( in millions ) : foreign currency translation hedges unrealized gains on securities defined benefit .

                             | foreign currency translation | cash flow hedges | unrealized gains on securities | defined benefit plan items
---------------------------- | ---------------------------- | ---------------- | ------------------------------ | --------------------------
balance december 31 2014     | $ 111.8                      | $ 70.1           | $ -0.4 ( 0.4 )                 | $ -143.4 ( 143.4 )
oci before reclassifications | -305.2 ( 305.2 )             | 52.7             | -0.2 ( 0.2 )                   | -30.6 ( 30.6 )
reclassifications            | 2013                         | -93.0 ( 93.0 )   | 2013                           | 9.2
balance december 31 2015     | $ -193.4 ( 193.4 )           | $ 29.8           | $ -0.6 ( 0.6 )                 | $ -164.8 ( 164.8 )


intangible assets are amortized on a straight-line basis over their estimated useful lives or on an accelerated method of amortization that is expected to reflect the estimated pattern of economic use .
the remaining amortization expense will be recognized over a weighted-average period of approximately 0.9 years .
amortization expense from continuing operations , related to intangibles was $ 7.4 million , $ 9.3 million and $ 9.2 million in fiscal 2009 , 2008 and 2007 , respectively .
the company expects annual amortization expense for these intangible assets to be: .

fiscal years | amortization expense
------------ | --------------------
2010         | $ 5425
2011         | $ 1430

g .
grant accounting certain of the company 2019s foreign subsidiaries have received various grants from governmental agencies .
these grants include capital , employment and research and development grants .
capital grants for the acquisition of property and equipment are netted against the related capital expenditures and amortized as a credit to depreciation expense over the useful life of the related asset .
employment grants , which relate to employee hiring and training , and research and development grants are recognized in earnings in the period in which the related expenditures are incurred by the company .
h .
translation of foreign currencies the functional currency for the company 2019s foreign sales and research and development operations is the applicable local currency .
gains and losses resulting from translation of these foreign currencies into u.s .
dollars are recorded in accumulated other comprehensive ( loss ) income .
transaction gains and losses and remeasurement of foreign currency denominated assets and liabilities are included in income currently , including those at the company 2019s principal foreign manufacturing operations where the functional currency is the u.s .
dollar .
foreign currency transaction gains or losses included in other expenses , net , were not material in fiscal 2009 , 2008 or 2007 .
i .
derivative instruments and hedging agreements foreign exchange exposure management 2014 the company enters into forward foreign currency exchange contracts to offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates .
such exposures result from the portion of the company 2019s operations , assets and liabilities that are denominated in currencies other than the u.s .
dollar , primarily the euro ; other exposures include the philippine peso and the british pound .
these foreign currency exchange contracts are entered into to support transactions made in the normal course of business , and accordingly , are not speculative in nature .
the contracts are for periods consistent with the terms of the underlying transactions , generally one year or less .
hedges related to anticipated transactions are designated and documented at the inception of the respective hedges as cash flow hedges and are evaluated for effectiveness monthly .
derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified .
as the terms of the contract and the underlying transaction are matched at inception , forward contract effectiveness is calculated by comparing the change in fair value of the contract to the change in the forward value of the anticipated transaction , with the effective portion of the gain or loss on the derivative instrument reported as a component of accumulated other comprehensive ( loss ) income ( oci ) in shareholders 2019 equity and reclassified into earnings in the same period during which the hedged transaction affects earnings .
any residual change in fair value of the instruments , or ineffectiveness , is recognized immediately in other income/expense .
additionally , the company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the remeasurement of certain recorded assets and liabilities in a non-functional currency .
changes in the fair value of these undesignated hedges are recognized in other income/expense immediately as an offset to the changes in the fair value of the asset or liability being hedged .
analog devices , inc .
notes to consolidated financial statements 2014 ( continued )


american tower corporation and subsidiaries notes to consolidated financial statements 2014 ( continued ) of certain of its assets and liabilities under its interest rate swap agreements held as of december 31 , 2006 and entered into during the first half of 2007 .
in addition , the company paid $ 8.0 million related to a treasury rate lock agreement entered into and settled during the year ended december 31 , 2008 .
the cost of the treasury rate lock is being recognized as additional interest expense over the 10-year term of the 7.00% ( 7.00 % ) notes .
during the year ended december 31 , 2007 , the company also received $ 3.1 million in cash upon settlement of the assets and liabilities under ten forward starting interest rate swap agreements with an aggregate notional amount of $ 1.4 billion , which were designated as cash flow hedges to manage exposure to variability in cash flows relating to forecasted interest payments in connection with the certificates issued in the securitization in may 2007 .
the settlement is being recognized as a reduction in interest expense over the five-year period for which the interest rate swaps were designated as hedges .
the company also received $ 17.0 million in cash upon settlement of the assets and liabilities under thirteen additional interest rate swap agreements with an aggregate notional amount of $ 850.0 million that managed exposure to variability of interest rates under the credit facilities but were not considered cash flow hedges for accounting purposes .
this gain is included in other income in the accompanying consolidated statement of operations for the year ended december 31 , 2007 .
as of december 31 , 2008 and 2007 , other comprehensive ( loss ) income included the following items related to derivative financial instruments ( in thousands ) : .

                                                                                | 2008             | 2007
----------------------------------------------------------------------------------------------------------------------------- | ---------------- | ----------------
deferred loss on the settlement of the treasury rate lock net of tax                                                          | $ -4332 ( 4332 ) | $ -4901 ( 4901 )
deferred gain on the settlement of interest rate swap agreements entered into in connection with the securitization net oftax | 1238             | 1636
unrealized losses related to interest rate swap agreements net of tax                                                         | -16349 ( 16349 ) | -486 ( 486 )

during the years ended december 31 , 2008 and 2007 , the company recorded an aggregate net unrealized loss of approximately $ 15.8 million and $ 3.2 million , respectively ( net of a tax provision of approximately $ 10.2 million and $ 2.0 million , respectively ) in other comprehensive loss for the change in fair value of interest rate swaps designated as cash flow hedges and reclassified an aggregate of $ 0.1 million and $ 6.2 million , respectively ( net of an income tax provision of $ 2.0 million and an income tax benefit of $ 3.3 million , respectively ) into results of operations .
9 .
fair valuemeasurements the company determines the fair market values of its financial instruments based on the fair value hierarchy established in sfas no .
157 , which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value .
the standard describes three levels of inputs that may be used to measure fair value .
level 1 quoted prices in active markets for identical assets or liabilities that the company has the ability to access at the measurement date .
the company 2019s level 1 assets consist of available-for-sale securities traded on active markets as well as certain brazilian treasury securities that are highly liquid and are actively traded in over-the-counter markets .
level 2 observable inputs other than level 1 prices , such as quoted prices for similar assets or liabilities ; quoted prices in markets that are not active ; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


jpmorgan chase & co .
/ 2008 annual report 85 of $ 1.0 billion and is also required to notify the securities and exchange commission ( 201csec 201d ) in the event that tentative net capital is less than $ 5.0 billion in accordance with the market and credit risk standards of appendix e of the net capital rule .
as of december 31 , 2008 , jpmorgan securities had tentative net capital in excess of the minimum and the notification requirements .
on october 1 , 2008 , j.p .
morgan securities inc .
merged with and into bear , stearns & co .
inc. , and the surviving entity changed its name to j.p .
morgan securities inc .
j.p .
morgan clearing corp. , a subsidiary of jpmorgan securities provides clearing and settlement services .
at december 31 , 2008 , j.p .
morgan clearing corp . 2019s net capital , as defined by the net capital rule , of $ 4.7 billion exceeded the minimum requirement by $ 3.3 billion .
dividends on february 23 , 2009 , the board of directors reduced the firm's quar- terly common stock dividend from $ 0.38 to $ 0.05 per share , effective for the dividend payable april 30 , 2009 , to shareholders of record on april 6 , 2009 .
jpmorgan chase declared quarterly cash dividends on its common stock in the amount of $ 0.38 for each quarter of 2008 and the second , third and fourth quarters of 2007 , and $ 0.34 per share for the first quarter of 2007 and for each quarter of 2006 .
the firm 2019s common stock dividend policy reflects jpmorgan chase 2019s earnings outlook , desired dividend payout ratios , need to maintain an adequate capital level and alternative investment opportunities .
the firm 2019s ability to pay dividends is subject to restrictions .
for information regarding such restrictions , see page 84 and note 24 and note 29 on pages 205 2013206 and 211 , respectively , of this annual report and for additional information regarding the reduction of the dividend , see page 44 .
the following table shows the common dividend payout ratio based upon reported net income .
common dividend payout ratio .

year ended december 31,      | 2008           | 2007         | 2006
---------------------------- | -------------- | ------------ | ------------
common dividend payout ratio | 114% ( 114 % ) | 34% ( 34 % ) | 34% ( 34 % )

issuance the firm issued $ 6.0 billion and $ 1.8 billion of noncumulative per- petual preferred stock on april 23 , 2008 , and august 21 , 2008 , respectively .
pursuant to the capital purchase program , on october 28 , 2008 , the firm issued to the u.s .
treasury $ 25.0 billion of cumu- lative preferred stock and a warrant to purchase up to 88401697 shares of the firm 2019s common stock .
for additional information regarding preferred stock , see note 24 on pages 205 2013206 of this annual report .
on september 30 , 2008 , the firm issued $ 11.5 billion , or 284 million shares , of common stock at $ 40.50 per share .
for additional infor- mation regarding common stock , see note 25 on pages 206 2013207 of this annual report .
stock repurchases during the year ended december 31 , 2008 , the firm did not repur- chase any shares of its common stock .
during 2007 , under the respective stock repurchase programs then in effect , the firm repur- chased 168 million shares for $ 8.2 billion at an average price per share of $ 48.60 .
the board of directors approved in april 2007 , a stock repurchase program that authorizes the repurchase of up to $ 10.0 billion of the firm 2019s common shares , which superseded an $ 8.0 billion stock repur- chase program approved in 2006 .
the $ 10.0 billion authorization includes shares to be repurchased to offset issuances under the firm 2019s employee stock-based plans .
the actual number of shares that may be repurchased is subject to various factors , including market conditions ; legal considerations affecting the amount and timing of repurchase activity ; the firm 2019s capital position ( taking into account goodwill and intangibles ) ; internal capital generation ; and alternative potential investment opportunities .
the repurchase program does not include specific price targets or timetables ; may be executed through open market purchases or privately negotiated transactions , or utiliz- ing rule 10b5-1 programs ; and may be suspended at any time .
a rule 10b5-1 repurchase plan allows the firm to repurchase shares during periods when it would not otherwise be repurchasing com- mon stock 2013 for example , during internal trading 201cblack-out peri- ods . 201d all purchases under a rule 10b5-1 plan must be made accord- ing to a predefined plan that is established when the firm is not aware of material nonpublic information .
as of december 31 , 2008 , $ 6.2 billion of authorized repurchase capacity remained under the current stock repurchase program .
for a discussion of restrictions on stock repurchases , see capital purchase program on page 84 and note 24 on pages 205 2013206 of this annual report .
for additional information regarding repurchases of the firm 2019s equity securities , see part ii , item 5 , market for registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities , on page 17 of jpmorgan chase 2019s 2008 form 10-k.


part ii item 5 .
market for registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities .
the company 2019s common stock is listed on the new york stock exchange .
prior to the separation of alcoa corporation from the company , the company 2019s common stock traded under the symbol 201caa . 201d in connection with the separation , on november 1 , 2016 , the company changed its stock symbol and its common stock began trading under the symbol 201carnc . 201d on october 5 , 2016 , the company 2019s common shareholders approved a 1-for-3 reverse stock split of the company 2019s outstanding and authorized shares of common stock ( the 201creverse stock split 201d ) .
as a result of the reverse stock split , every 3 shares of issued and outstanding common stock were combined into one issued and outstanding share of common stock , without any change in the par value per share .
the reverse stock split reduced the number of shares of common stock outstanding from approximately 1.3 billion shares to approximately 0.4 billion shares , and proportionately decreased the number of authorized shares of common stock from 1.8 billion to 0.6 billion shares .
the company 2019s common stock began trading on a reverse stock split-adjusted basis on october 6 , 2016 .
on november 1 , 2016 , the company completed the separation of its business into two independent , publicly traded companies : the company and alcoa corporation .
the separation was effected by means of a pro rata distribution by the company of 80.1% ( 80.1 % ) of the outstanding shares of alcoa corporation common stock to the company 2019s shareholders .
the company 2019s shareholders of record as of the close of business on october 20 , 2016 ( the 201crecord date 201d ) received one share of alcoa corporation common stock for every three shares of the company 2019s common stock held as of the record date .
the company retained 19.9% ( 19.9 % ) of the outstanding common stock of alcoa corporation immediately following the separation .
the following table sets forth , for the periods indicated , the high and low sales prices and quarterly dividend amounts per share of the company 2019s common stock as reported on the new york stock exchange , adjusted to take into account the reverse stock split effected on october 6 , 2016 .
the prices listed below for the fourth quarter of 2016 do not reflect any adjustment for the impact of the separation of alcoa corporation from the company on november 1 , 2016 , and therefore are not comparable to pre-separation prices from earlier periods. .

quarter                                           | 2016 high | 2016 low | 2016 dividend | 2016 high | 2016 low | dividend
------------------------------------------------- | --------- | -------- | ------------- | --------- | -------- | --------
first                                             | $ 30.66   | $ 18.42  | $ 0.09        | $ 51.30   | $ 37.95  | $ 0.09
second                                            | 34.50     | 26.34    | 0.09          | 42.87     | 33.45    | 0.09
third                                             | 32.91     | 27.09    | 0.09          | 33.69     | 23.91    | 0.09
fourth ( separation occurred on november 1 2016 ) | 32.10     | 16.75    | 0.09          | 33.54     | 23.43    | 0.09
year                                              | $ 34.50   | $ 16.75  | $ 0.36        | $ 51.30   | $ 23.43  | $ 0.36

the number of holders of record of common stock was approximately 12885 as of february 23 , 2017.


capital resources and liquidity capital resources overview capital is generally generated via earnings from operating businesses .
this is augmented through issuance of common stock , convertible preferred stock , preferred stock , subordinated debt , and equity issued through awards under employee benefit plans .
capital is used primarily to support assets in the company 2019s businesses and to absorb unexpected market , credit or operational losses .
the company 2019s uses of capital , particularly to pay dividends and repurchase common stock , became severely restricted during the latter half of 2008 .
see 201cthe company , 201d 201cmanagement 2019s discussion and analysis 2013 events in 2008 , 201d 201ctarp and other regulatory programs , 201d 201crisk factors 201d and 201ccommon equity 201d on pages 2 , 9 , 44 , 47 and 95 , respectively .
citigroup 2019s capital management framework is designed to ensure that citigroup and its principal subsidiaries maintain sufficient capital consistent with the company 2019s risk profile , all applicable regulatory standards and guidelines , and external rating agency considerations .
the capital management process is centrally overseen by senior management and is reviewed at the consolidated , legal entity , and country level .
senior management oversees the capital management process of citigroup and its principal subsidiaries mainly through citigroup 2019s finance and asset and liability committee ( finalco ) .
the committee is composed of the senior-most management of citigroup for the purpose of engaging management in decision-making and related discussions on capital and liquidity items .
among other things , the committee 2019s responsibilities include : determining the financial structure of citigroup and its principal subsidiaries ; ensuring that citigroup and its regulated entities are adequately capitalized ; determining appropriate asset levels and return hurdles for citigroup and individual businesses ; reviewing the funding and capital markets plan for citigroup ; and monitoring interest-rate risk , corporate and bank liquidity , the impact of currency translation on non-u.s .
earnings and capital .
the finalco has established capital targets for citigroup and for significant subsidiaries .
at december 31 , 2008 , these targets exceeded the regulatory standards .
common and preferred stock issuances as discussed under 201cevents in 2008 201d on page 9 , during 2008 , the company issued $ 45 billion in preferred stock and warrants under tarp , $ 12.5 billion of convertible preferred stock in a private offering , $ 11.7 billion of non-convertible preferred stock in public offerings , $ 3.2 billion of convertible preferred stock in public offerings , and $ 4.9 billion of common stock in public offerings .
on january 23 , 2009 , pursuant to our prior agreement with the purchasers of the $ 12.5 billion convertible preferred stock issued in the private offering , the conversion price was reset from $ 31.62 per share to $ 26.35 per share .
the reset will result in citigroup 2019s issuing approximately 79 million additional common shares if converted .
there will be no impact to net income , total stockholders 2019 equity or capital ratios due to the reset .
however , the reset will result in a reclassification from retained earnings to additional paid-in capital of $ 1.2 billion to reflect the benefit of the reset to the preferred stockholders .
capital ratios citigroup is subject to risk-based capital ratio guidelines issued by the federal reserve board ( frb ) .
capital adequacy is measured via two risk- based ratios , tier 1 and total capital ( tier 1 + tier 2 capital ) .
tier 1 capital is considered core capital while total capital also includes other items such as subordinated debt and loan loss reserves .
both measures of capital are stated as a percentage of risk-weighted assets .
risk-weighted assets are measured primarily on their perceived credit risk and include certain off-balance-sheet exposures , such as unfunded loan commitments and letters of credit , and the notional amounts of derivative and foreign- exchange contracts .
citigroup is also subject to the leverage ratio requirement , a non-risk-based asset ratio , which is defined as tier 1 capital as a percentage of adjusted average assets .
to be 201cwell capitalized 201d under federal bank regulatory agency definitions , a bank holding company must have a tier 1 capital ratio of at least 6% ( 6 % ) , a total capital ratio of at least 10% ( 10 % ) , and a leverage ratio of at least 3% ( 3 % ) , and not be subject to an frb directive to maintain higher capital levels .
as noted in the following table , citigroup maintained a 201cwell capitalized 201d position during both 2008 and 2007 .
citigroup regulatory capital ratios at year end 2008 2007 .

at year end                         | 2008               | 2007
----------------------------------- | ------------------ | ----------------
tier 1 capital                      | 11.92% ( 11.92 % ) | 7.12% ( 7.12 % )
total capital ( tier 1 and tier 2 ) | 15.70              | 10.70
leverage ( 1 )                      | 6.08               | 4.03

leverage ( 1 ) 6.08 4.03 ( 1 ) tier 1 capital divided by adjusted average assets .
events occurring during 2008 , including the transactions with the u.s .
government , affected citigroup 2019s capital ratios , and any additional u.s .
government financial involvement with the company could further impact the company 2019s capital ratios .
in addition , future operations will affect capital levels , and changes that the fasb has proposed regarding off-balance-sheet assets , consolidation and sale treatment could also have an impact on capital ratios .
see also note 23 to the consolidated financial statements on page 175 , including 201cfunding liquidity facilities and subordinate interests . 201d


direct the activities of the vies and , therefore , do not control the ongoing activities that have a significant impact on the economic performance of the vies .
additionally , we do not have the obligation to absorb losses of the vies or the right to receive benefits of the vies that could potentially be significant to the we are not considered to be the primary beneficiary and do not consolidate these vies because our actions and decisions do not have the most significant effect on the vie 2019s performance and our fixed-price purchase options are not considered to be potentially significant to the vies .
the future minimum lease payments associated with the vie leases totaled $ 3.0 billion as of december 31 , 2014 .
17 .
leases we lease certain locomotives , freight cars , and other property .
the consolidated statements of financial position as of december 31 , 2014 and 2013 included $ 2454 million , net of $ 1210 million of accumulated depreciation , and $ 2486 million , net of $ 1092 million of accumulated depreciation , respectively , for properties held under capital leases .
a charge to income resulting from the depreciation 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 , 2014 , were as follows : millions operating leases capital leases .

millions                               | operatingleases | capitalleases
-------------------------------------- | --------------- | -------------
2015                                   | $ 508           | $ 253
2016                                   | 484             | 249
2017                                   | 429             | 246
2018                                   | 356             | 224
2019                                   | 323             | 210
later years                            | 1625            | 745
total minimum leasepayments            | $ 3725          | $ 1927
amount representing interest           | n/a             | -407 ( 407 )
present value of minimum leasepayments | n/a             | $ 1520

approximately 95% ( 95 % ) of capital lease payments relate to locomotives .
rent expense for operating leases with terms exceeding one month was $ 593 million in 2014 , $ 618 million in 2013 , and $ 631 million in 2012 .
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 .
18 .
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 an actuarial analysis to measure 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 work .
our personal injury liability is not discounted to present value due to the uncertainty surrounding the timing of future payments .
approximately 93% ( 93 % ) of the recorded liability is related to asserted claims and approximately 7% ( 7 % ) is related to unasserted claims at december 31 , 2014 .
because of the uncertainty


1 2 4 n o t e s effective january 1 , 2011 , all u.s .
employees , including u.s .
legacy bgi employees , will participate in the brsp .
all plan assets in the two legacy bgi plans , including the 401k plan and retirement plan ( see below ) , were merged into the brsp on january 1 , 2011 .
under the combined brsp , employee contributions of up to 8% ( 8 % ) of eligible compensation , as defined by the plan and subject to irc limitations , will be matched by the company at 50% ( 50 % ) .
in addition , the company will continue to make an annual retirement contribution to eligible participants equal to 3-5% ( 3-5 % ) of eligible compensation .
blackrock institutional trust company 401 ( k ) savings plan ( formerly the bgi 401 ( k ) savings plan ) the company assumed a 401 ( k ) plan ( the 201cbgi plan 201d ) covering employees of former bgi as a result of the bgi transaction .
as part of the bgi plan , employee contributions for participants with at least one year of service were matched at 200% ( 200 % ) of participants 2019 pre-tax contributions up to 2% ( 2 % ) of base salary and overtime , and matched 100% ( 100 % ) of the next 2% ( 2 % ) of base salary and overtime , as defined by the plan and subject to irc limitations .
the maximum matching contribution a participant would have received is an amount equal to 6% ( 6 % ) of base salary up to the irc limitations .
the bgi plan expense was $ 12 million for the year ended december 31 , 2010 and immaterial to the company 2019s consolidated financial statements for the year ended december 31 , 2009 .
effective january 1 , 2011 , the net assets of this plan merged into the brsp .
blackrock institutional trust company retirement plan ( formerly the bgi retirement plan ) the company assumed a defined contribution money purchase pension plan ( 201cbgi retirement plan 201d ) as a result of the bgi transaction .
all salaried employees of former bgi and its participating affiliates who were u.s .
residents on the u.s .
payroll were eligible to participate .
for participants earning less than $ 100000 in base salary , the company contributed 6% ( 6 % ) of a participant 2019s total compensation ( base salary , overtime and performance bonus ) up to $ 100000 .
for participants earning $ 100000 or more in base salary , the company contributed 6% ( 6 % ) of a participant 2019s base salary and overtime up to the irc limita- tion of $ 245000 in 2010 .
these contributions were 25% ( 25 % ) vested once the participant has completed two years of service and then vested at a rate of 25% ( 25 % ) for each additional year of service completed .
employees with five or more years of service under the retirement plan were 100% ( 100 % ) vested in their entire balance .
the retirement plan expense was $ 13 million for the year ended december 31 , 2010 and immaterial to the company 2019s consolidated financial statements for the year ended december 31 , 2009 .
effective january 1 , 2011 , the net assets of this plan merged into the brsp .
blackrock group personal pension plan blackrock investment management ( uk ) limited ( 201cbim 201d ) , a wholly-owned subsidiary of the company , contributes to the blackrock group personal pension plan , a defined contribution plan for all employees of bim .
bim contributes between 6% ( 6 % ) and 15% ( 15 % ) of each employee 2019s eligible compensation .
the expense for this plan was $ 22 million , $ 13 million and $ 16 million for the years ended december 31 , 2010 , 2009 and 2008 , respectively .
defined benefit plans in 2009 , prior to the bgi transaction , the company had several defined benefit pension plans in japan , germany , luxembourg and jersey .
all accrued benefits under these defined benefit plans are currently frozen and the plans are closed to new participants .
in 2008 , the defined benefit pension values in luxembourg were transferred into a new defined contribution plan for such employees , removing future liabilities .
participant benefits under the plans will not change with salary increases or additional years of service .
through the bgi transaction , the company assumed defined benefit pension plans in japan and germany which are closed to new participants .
during 2010 , these plans merged into the legacy blackrock plans in japan ( the 201cjapan plan 201d ) and germany .
at december 31 , 2010 and 2009 , the plan assets for these plans were approximately $ 19 million and $ 10 million , respectively , and the unfunded obligations were less than $ 6 million and $ 3 million , respectively , which were recorded in accrued compensation and benefits on the consolidated statements of financial condition .
benefit payments for the next five years and in aggregate for the five years thereafter are not expected to be material .
defined benefit plan assets for the japan plan of approximately $ 16 million are invested using a total return investment approach whereby a mix of equity securities , debt securities and other investments are used to preserve asset values , diversify risk and achieve the target investment return benchmark .
investment strategies and asset allocations are based on consideration of plan liabilities and the funded status of the plan .
investment performance and asset allocation are measured and monitored on an ongoing basis .
the current target allocations for the plan assets are 45-50% ( 45-50 % ) for u.s .
and international equity securities , 50-55% ( 50-55 % ) for u.s .
and international fixed income securities and 0-5% ( 0-5 % ) for cash and cash equivalents .
the table below provides the fair value of the defined benefit japan plan assets at december 31 , 2010 by asset category .
the table also identifies the level of inputs used to determine the fair value of assets in each category .
quoted prices significant in active other markets for observable identical assets inputs december 31 , ( dollar amounts in millions ) ( level 1 ) ( level 2 ) 2010 .

( dollar amounts in millions ) | quoted prices inactive marketsfor identical assets ( level 1 ) | significant other observable inputs ( level 2 ) | december 31 2010
------------------------------ | -------------------------------------------------------------- | ----------------------------------------------- | ----------------
cash and cash equivalents      | $ 9                                                            | $ 2014                                          | $ 9
equity securities              | 4                                                              | 2014                                            | 4
fixed income securities        | 2014                                                           | 3                                               | 3
fair value of plan assets      | $ 13                                                           | $ 3                                             | $ 16

the assets and unfunded obligation for the defined benefit pension plan in germany and jersey were immaterial to the company 2019s consolidated financial statements at december 31 , 2010 .
post-retirement benefit plans prior to the bgi transaction , the company had requirements to deliver post-retirement medical benefits to a closed population based in the united kingdom and through the bgi transaction , the company assumed a post-retirement benefit plan to a closed population of former bgi employees in the united kingdom .
for the years ended december 31 , 2010 , 2009 and 2008 , expenses and unfunded obligations for these benefits were immaterial to the company 2019s consolidated financial statements .
in addition , through the bgi transaction , the company assumed a requirement to deliver post-retirement medical benefits to a


jpmorgan chase & co./2016 annual report 103 risk in the derivatives portfolio .
in addition , the firm 2019s risk management process takes into consideration the potential impact of wrong-way risk , which is broadly defined as the potential for increased correlation between the firm 2019s exposure to a counterparty ( avg ) and the counterparty 2019s credit quality .
many factors may influence the nature and magnitude of these correlations over time .
to the extent that these correlations are identified , the firm may adjust the cva associated with that counterparty 2019s avg .
the firm risk manages exposure to changes in cva by entering into credit derivative transactions , as well as interest rate , foreign exchange , equity and commodity derivative transactions .
the accompanying graph shows exposure profiles to the firm 2019s current derivatives portfolio over the next 10 years as calculated by the peak , dre and avg metrics .
the three measures generally show that exposure will decline after the first year , if no new trades are added to the portfolio .
exposure profile of derivatives measures december 31 , 2016 ( in billions ) the following table summarizes the ratings profile by derivative counterparty of the firm 2019s derivative receivables , including credit derivatives , net of all collateral , at the dates indicated .
the ratings scale is based on the firm 2019s internal ratings , which generally correspond to the ratings as defined by s&p and moody 2019s .
ratings profile of derivative receivables rating equivalent 2016 2015 ( a ) december 31 , ( in millions , except ratios ) exposure net of all collateral % (  % ) of exposure net of all collateral exposure net of all collateral % (  % ) of exposure net of all collateral .

rating equivalent december 31 ( in millions except ratios ) | rating equivalent exposure net of all collateral | rating equivalent % (  % ) of exposure netof all collateral | exposure net of all collateral | % (  % ) of exposure netof all collateral
----------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------------------- | ------------------------------ | -----------------------------------------
aaa/aaa to aa-/aa3                                          | $ 11449                                          | 28% ( 28 % )                                                | $ 10371                        | 24% ( 24 % )
a+/a1 to a-/a3                                              | 8505                                             | 20                                                          | 10595                          | 25
bbb+/baa1 to bbb-/baa3                                      | 13127                                            | 32                                                          | 13807                          | 32
bb+/ba1 to b-/b3                                            | 7308                                             | 18                                                          | 7500                           | 17
ccc+/caa1 and below                                         | 984                                              | 2                                                           | 824                            | 2
total                                                       | $ 41373                                          | 100% ( 100 % )                                              | $ 43097                        | 100% ( 100 % )

( a ) prior period amounts have been revised to conform with the current period presentation .
as previously noted , the firm uses collateral agreements to mitigate counterparty credit risk .
the percentage of the firm 2019s derivatives transactions subject to collateral agreements 2014 excluding foreign exchange spot trades , which are not typically covered by collateral agreements due to their short maturity 2014 was 90% ( 90 % ) as of december 31 , 2016 , largely unchanged compared with 87% ( 87 % ) as of december 31 , 2015 .
credit derivatives the firm uses credit derivatives for two primary purposes : first , in its capacity as a market-maker , and second , as an end-user to manage the firm 2019s own credit risk associated with various exposures .
for a detailed description of credit derivatives , see credit derivatives in note 6 .
credit portfolio management activities included in the firm 2019s end-user activities are credit derivatives used to mitigate the credit risk associated with traditional lending activities ( loans and unfunded commitments ) and derivatives counterparty exposure in the firm 2019s wholesale businesses ( collectively , 201ccredit portfolio management 201d activities ) .
information on credit portfolio management activities is provided in the table below .
for further information on derivatives used in credit portfolio management activities , see credit derivatives in note 6 .
the firm also uses credit derivatives as an end-user to manage other exposures , including credit risk arising from certain securities held in the firm 2019s market-making businesses .
these credit derivatives are not included in credit portfolio management activities ; for further information on these credit derivatives as well as credit derivatives used in the firm 2019s capacity as a market-maker in credit derivatives , see credit derivatives in note 6.


institutions .
international paper continually monitors its positions with and the credit quality of these financial institutions and does not expect non- performance by the counterparties .
note 14 capital stock the authorized capital stock at both december 31 , 2006 and 2005 , consisted of 990850000 shares of common stock , $ 1 par value ; 400000 shares of cumulative $ 4 preferred stock , without par value ( stated value $ 100 per share ) ; and 8750000 shares of serial preferred stock , $ 1 par value .
the serial preferred stock is issuable in one or more series by the board of directors without further shareholder action .
in july 2006 , in connection with the planned use of projected proceeds from the company 2019s trans- formation plan , international paper 2019s board of direc- tors authorized a share repurchase program to acquire up to $ 3.0 billion of the company 2019s stock .
in a modified 201cdutch auction 201d tender offer completed in september 2006 , international paper purchased 38465260 shares of its common stock at a price of $ 36.00 per share , plus costs to acquire the shares , for a total cost of approximately $ 1.4 billion .
in addition , in december 2006 , the company purchased an addi- tional 1220558 shares of its common stock in the open market at an average price of $ 33.84 per share , plus costs to acquire the shares , for a total cost of approximately $ 41 million .
following the completion of these share repurchases , international paper had approximately 454 million shares of common stock issued and outstanding .
note 15 retirement plans u.s .
defined benefit plans international paper maintains pension plans that provide retirement benefits to substantially all domestic employees hired prior to july 1 , 2004 .
these employees generally are eligible to participate in the plans upon completion of one year of service and attainment of age 21 .
employees hired after june 30 , 2004 , who are not eligible for these pension plans receive an additional company contribution to their savings plan ( see 201cother plans 201d on page 83 ) .
the plans provide defined benefits based on years of credited service and either final average earnings ( salaried employees ) , hourly job rates or specified benefit rates ( hourly and union employees ) .
for its qualified defined benefit pension plan , interna- tional paper makes contributions that are sufficient to fully fund its actuarially determined costs , gen- erally equal to the minimum amounts required by the employee retirement income security act ( erisa ) .
in addition , international paper made volun- tary contributions of $ 1.0 billion to the qualified defined benefit plan in 2006 , and does not expect to make any contributions in 2007 .
the company also has two unfunded nonqualified defined benefit pension plans : a pension restoration plan available to employees hired prior to july 1 , 2004 that provides retirement benefits based on eligible compensation in excess of limits set by the internal revenue service , and a supplemental retirement plan for senior managers ( serp ) , which is an alternative retirement plan for senior vice presi- dents and above who are designated by the chief executive officer as participants .
these nonqualified plans are only funded to the extent of benefits paid , which are expected to be $ 41 million in 2007 .
net periodic pension expense service cost is the actuarial present value of benefits attributed by the plans 2019 benefit formula to services rendered by employees during the year .
interest cost represents the increase in the projected benefit obli- gation , which is a discounted amount , due to the passage of time .
the expected return on plan assets reflects the computed amount of current year earn- ings from the investment of plan assets using an estimated long-term rate of return .
net periodic pension expense for qualified and nonqualified u.s .
defined benefit plans comprised the following : in millions 2006 2005 2004 .

in millions                        | 2006         | 2005         | 2004
---------------------------------- | ------------ | ------------ | ------------
service cost                       | $ 141        | $ 129        | $ 115
interest cost                      | 506          | 474          | 467
expected return on plan assets     | -540 ( 540 ) | -556 ( 556 ) | -592 ( 592 )
actuarial loss                     | 243          | 167          | 94
amortization of prior service cost | 27           | 29           | 27
net periodic pension expense ( a ) | $ 377        | $ 243        | $ 111

( a ) excludes $ 9.1 million , $ 6.5 million and $ 3.4 million in 2006 , 2005 and 2004 , respectively , in curtailment losses , and $ 8.7 million , $ 3.6 million and $ 1.4 million in 2006 , 2005 and 2004 , respectively , of termination benefits , in connection with cost reduction programs and facility rationalizations that were recorded in restructuring and other charges in the con- solidated statement of operations .
also excludes $ 77.2 million and $ 14.3 million in 2006 and 2005 , respectively , in curtailment losses , and $ 18.6 million and $ 7.6 million of termination bene- fits in 2006 and 2005 , respectively , related to certain divest- itures recorded in net losses on sales and impairments of businesses held for sale in the consolidated statement of oper- ations.


consumer loan balances , net of unearned income .

in billions of dollars                      | end of period 2008 | end of period 2007 | end of period 2006 | end of period 2008 | end of period 2007 | 2006
------------------------------------------- | ------------------ | ------------------ | ------------------ | ------------------ | ------------------ | -------
on-balance-sheet ( 1 )                      | $ 515.7            | $ 557.8            | $ 478.2            | $ 548.8            | $ 516.4            | $ 446.2
securitized receivables ( all inna cards )  | 105.9              | 108.1              | 99.6               | 106.9              | 98.9               | 96.4
credit card receivables held-for-sale ( 2 ) | 2014               | 1.0                | 2014               | 0.5                | 3.0                | 0.3
total managed ( 3 )                         | $ 621.6            | $ 666.9            | $ 577.8            | $ 656.2            | $ 618.3            | $ 542.9

in billions of dollars 2008 2007 2006 2008 2007 2006 on-balance-sheet ( 1 ) $ 515.7 $ 557.8 $ 478.2 $ 548.8 $ 516.4 $ 446.2 securitized receivables ( all in na cards ) 105.9 108.1 99.6 106.9 98.9 96.4 credit card receivables held-for-sale ( 2 ) 2014 1.0 2014 0.5 3.0 0.3 total managed ( 3 ) $ 621.6 $ 666.9 $ 577.8 $ 656.2 $ 618.3 $ 542.9 ( 1 ) total loans and total average loans exclude certain interest and fees on credit cards of approximately $ 3 billion and $ 2 billion , respectively , for 2008 , $ 3 billion and $ 2 billion , respectively , for 2007 , and $ 2 billion and $ 3 billion , respectively , for 2006 , which are included in consumer loans on the consolidated balance sheet .
( 2 ) included in other assets on the consolidated balance sheet .
( 3 ) this table presents loan information on a held basis and shows the impact of securitization to reconcile to a managed basis .
managed-basis reporting is a non-gaap measure .
held-basis reporting is the related gaap measure .
see a discussion of managed-basis reporting on page 57 .
citigroup 2019s total allowance for loans , leases and unfunded lending commitments of $ 30.503 billion is available to absorb probable credit losses inherent in the entire portfolio .
for analytical purposes only , the portion of citigroup 2019s allowance for loan losses attributed to the consumer portfolio was $ 22.366 billion at december 31 , 2008 , $ 12.393 billion at december 31 , 2007 and $ 6.006 billion at december 31 , 2006 .
the increase in the allowance for loan losses from december 31 , 2007 of $ 9.973 billion included net builds of $ 11.034 billion .
the builds consisted of $ 10.785 billion in global cards and consumer banking ( $ 8.216 billion in north america and $ 2.569 billion in regions outside north america ) , and $ 249 million in global wealth management .
the build of $ 8.216 billion in north america primarily reflected an increase in the estimate of losses across all portfolios based on weakening leading credit indicators , including increased delinquencies on first and second mortgages , unsecured personal loans , credit cards and auto loans .
the build also reflected trends in the u.s .
macroeconomic environment , including the housing market downturn , rising unemployment and portfolio growth .
the build of $ 2.569 billion in regions outside north america primarily reflected portfolio growth the impact of recent acquisitions , and credit deterioration in mexico , brazil , the u.k. , spain , greece , india and colombia .
on-balance-sheet consumer loans of $ 515.7 billion decreased $ 42.1 billion , or 8% ( 8 % ) , from december 31 , 2007 , primarily driven by a decrease in residential real estate lending in north america consumer banking as well as the impact of foreign currency translation across global cards , consumer banking and gwm .
citigroup mortgage foreclosure moratoriums on february 13 , 2009 , citigroup announced the initiation of a foreclosure moratorium on all citigroup-owned first mortgage loans that are the principal residence of the owner as well as all loans serviced by the company where the company has reached an understanding with the owner .
the moratorium was effective february 12 , 2009 , and will extend until the earlier of the u.s .
government 2019s loan modification program ( described below ) or march 12 , 2009 .
the company will not initiate or complete any new foreclosures on eligible owners during this time .
the above foreclosure moratorium expands on the company 2019s current foreclosure moratorium pursuant to which citigroup will not initiate or complete a foreclosure sale on any eligible owner where citigroup owns the mortgage and the owner is seeking to stay in the home ( which is the owner 2019s primary residence ) , is working in good faith with the company and has sufficient income for affordable mortgage payments .
since the start of the housing crisis in 2007 , citigroup has worked successfully with approximately 440000 homeowners to avoid potential foreclosure on combined mortgages totaling approximately $ 43 billion .
proposed u.s .
mortgage modification legislation in january 2009 , both the u.s .
senate and house of representatives introduced legislation ( the legislation ) that would give bankruptcy courts the authority to modify mortgage loans originated on borrowers 2019 principal residences in chapter 13 bankruptcy .
support for some version of this legislation has been endorsed by the obama administration .
the modification provisions of the legislation require that the mortgage loan to be modified be originated prior to the effective date of the legislation , and that the debtor receive a notice of foreclosure and attempt to contact the mortgage lender/servicer regarding modification of the loan .
it is difficult to project the impact the legislation may have on the company 2019s consumer secured and unsecured lending portfolio and capital market positions .
any impact will be dependent on numerous factors , including the final form of the legislation , the implementation guidelines for the administration 2019s housing plan , the number of borrowers who file for bankruptcy after enactment of the legislation and the response of the markets and credit rating agencies .
consumer credit outlook consumer credit losses in 2009 are expected to increase from prior-year levels due to the following : 2022 continued deterioration in the u.s .
housing and labor markets and higher levels of bankruptcy filings are expected to drive higher losses in both the secured and unsecured portfolios .
2022 negative economic outlook around the globe , most notably in emea , will continue to lead to higher credit costs in global cards and consumer banking.


table of contents notes to consolidated financial statements of american airlines group inc .
secured financings are collateralized by assets , primarily aircraft , engines , simulators , rotable aircraft parts , airport leasehold rights , route authorities and airport slots .
at december 31 , 2015 , the company was operating 35 aircraft under capital leases .
leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years .
at december 31 , 2015 , the maturities of long-term debt and capital lease obligations are as follows ( in millions ) : .

2016                | $ 2266
------------------- | -------
2017                | 1598
2018                | 2134
2019                | 3378
2020                | 3587
2021 and thereafter | 7844
total               | $ 20807

( a ) 2013 credit facilities on june 27 , 2013 , american and aag entered into a credit and guaranty agreement ( as amended , restated , amended and restated or otherwise modified , the 2013 credit agreement ) with deutsche bank ag new york branch , as administrative agent , and certain lenders that originally provided for a $ 1.9 billion term loan facility scheduled to mature on june 27 , 2019 ( the 2013 term loan facility ) and a $ 1.0 billion revolving credit facility scheduled to mature on june 27 , 2018 ( the 2013 revolving facility ) .
the maturity of the term loan facility was subsequently extended to june 2020 and the revolving credit facility commitments were subsequently increased to $ 1.4 billion with an extended maturity date of october 10 , 2020 , all of which is further described below .
on may 21 , 2015 , american amended and restated the 2013 credit agreement pursuant to which it refinanced the 2013 term loan facility ( the $ 1.9 billion 2015 term loan facility and , together with the 2013 revolving facility , the 2013 credit facilities ) to extend the maturity date to june 2020 and reduce the libor margin from 3.00% ( 3.00 % ) to 2.75% ( 2.75 % ) .
in addition , american entered into certain amendments to reflect the ability for american to make future modifications to the collateral pledged , subject to certain restrictions .
the $ 1.9 billion 2015 term loan facility is repayable in annual installments , with the first installment in an amount equal to 1.25% ( 1.25 % ) of the principal amount commencing on june 27 , 2016 and installments thereafter , in an amount equal to 1.0% ( 1.0 % ) of the principal amount , with any unpaid balance due on the maturity date .
as of december 31 , 2015 , $ 1.9 billion of principal was outstanding under the $ 1.9 billion 2015 term loan facility .
voluntary prepayments may be made by american at any time .
on october 10 , 2014 , american and aag amended the 2013 credit agreement to extend the maturity date of the 2013 revolving facility to october 10 , 2019 and increased the commitments thereunder to an aggregate principal amount of $ 1.4 billion while reducing the letter of credit commitments thereunder to $ 300 million .
on october 26 , 2015 , american , aag , us airways group and us airways amended the 2013 credit agreement to extend the maturity date of the 2013 revolving facility to october 10 , 2020 .
the 2013 revolving facility provides that american may from time to time borrow , repay and reborrow loans thereunder and have letters of credit issued thereunder .
as of december 31 , 2015 , there were no borrowings or letters of credit outstanding under the 2013 revolving facility .
the 2013 credit facilities bear interest at an index rate plus an applicable index margin or , at american 2019s option , libor ( subject to a floor of 0.75% ( 0.75 % ) , with respect to the $ 1.9 billion 2015 term loan facility ) plus a libor margin of 3.00% ( 3.00 % ) with respect to the 2013 revolving facility and 2.75% ( 2.75 % ) with respect to the $ 1.9 billion 2015 term loan facility ; provided that american 2019s corporate credit rating is ba3 or higher from moody 2019s and bb- or higher from s&p , the applicable libor margin would be 2.50% ( 2.50 % ) for the $ 1.9 billion 2015 term loan


liquidity monitoring and measurement stress testing liquidity stress testing is performed for each of citi 2019s major entities , operating subsidiaries and/or countries .
stress testing and scenario analyses are intended to quantify the potential impact of an adverse liquidity event on the balance sheet and liquidity position , and to identify viable funding alternatives that can be utilized .
these scenarios include assumptions about significant changes in key funding sources , market triggers ( such as credit ratings ) , potential uses of funding and geopolitical and macroeconomic conditions .
these conditions include expected and stressed market conditions as well as company-specific events .
liquidity stress tests are conducted to ascertain potential mismatches between liquidity sources and uses over a variety of time horizons and over different stressed conditions .
liquidity limits are set accordingly .
to monitor the liquidity of an entity , these stress tests and potential mismatches are calculated with varying frequencies , with several tests performed daily .
given the range of potential stresses , citi maintains contingency funding plans on a consolidated basis and for individual entities .
these plans specify a wide range of readily available actions for a variety of adverse market conditions or idiosyncratic stresses .
short-term liquidity measurement : liquidity coverage ratio ( lcr ) in addition to internal liquidity stress metrics that citi has developed for a 30-day stress scenario , citi also monitors its liquidity by reference to the lcr , as calculated pursuant to the u.s .
lcr rules .
generally , the lcr is designed to ensure that banks maintain an adequate level of hqla to meet liquidity needs under an acute 30-day stress scenario .
the lcr is calculated by dividing hqla by estimated net outflows over a stressed 30-day period , with the net outflows determined by applying prescribed outflow factors to various categories of liabilities , such as deposits , unsecured and secured wholesale borrowings , unused lending commitments and derivatives- related exposures , partially offset by inflows from assets maturing within 30 days .
banks are required to calculate an add-on to address potential maturity mismatches between contractual cash outflows and inflows within the 30-day period in determining the total amount of net outflows .
the minimum lcr requirement is 100% ( 100 % ) , effective january 2017 .
pursuant to the federal reserve board 2019s final rule regarding lcr disclosures , effective april 1 , 2017 , citi began to disclose lcr in the prescribed format .
the table below sets forth the components of citi 2019s lcr calculation and hqla in excess of net outflows for the periods indicated : in billions of dollars dec .
31 , sept .
30 , dec .
31 .

in billions of dollars         | dec . 31 2017  | sept . 30 2017 | dec . 31 2016
------------------------------ | -------------- | -------------- | --------------
hqla                           | $ 446.4        | $ 448.6        | $ 403.7
net outflows                   | 364.3          | 365.1          | 332.5
lcr                            | 123% ( 123 % ) | 123% ( 123 % ) | 121% ( 121 % )
hqla in excess of net outflows | $ 82.1         | $ 83.5         | $ 71.3

note : amounts set forth in the table above are presented on an average basis .
as set forth in the table above , citi 2019s lcr increased year- over-year , as the increase in the hqla ( as discussed above ) more than offset an increase in modeled net outflows .
the increase in modeled net outflows was primarily driven by changes in assumptions , including changes in methodology to better align citi 2019s outflow assumptions with those embedded in its resolution planning .
sequentially , citi 2019s lcr remained unchanged .
long-term liquidity measurement : net stable funding ratio ( nsfr ) in 2016 , the federal reserve board , the fdic and the occ issued a proposed rule to implement the basel iii nsfr requirement .
the u.s.-proposed nsfr is largely consistent with the basel committee 2019s final nsfr rules .
in general , the nsfr assesses the availability of a bank 2019s stable funding against a required level .
a bank 2019s available stable funding would include portions of equity , deposits and long-term debt , while its required stable funding would be based on the liquidity characteristics of its assets , derivatives and commitments .
prescribed factors would be required to be applied to the various categories of asset and liabilities classes .
the ratio of available stable funding to required stable funding would be required to be greater than 100% ( 100 % ) .
while citi believes that it is compliant with the proposed u.s .
nsfr rules as of december 31 , 2017 , it will need to evaluate a final version of the rules , which are expected to be released during 2018 .
citi expects that the nsfr final rules implementation period will be communicated along with the final version of the rules.


annual report on form 10-k 108 fifth third bancorp part ii item 5 .
market for registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities the information required by this item is included in the corporate information found on the inside of the back cover and in the discussion of dividend limitations that the subsidiaries can pay to the bancorp discussed in note 26 of the notes to the consolidated financial statements .
additionally , as of december 31 , 2008 , the bancorp had approximately 60025 shareholders of record .
issuer purchases of equity securities period shares purchased average paid per shares purchased as part of publicly announced plans or programs maximum shares that may be purchased under the plans or programs .

period        | sharespurchased ( a ) | averagepricepaid pershare | sharespurchasedas part ofpubliclyannouncedplans orprograms | maximumshares thatmay bepurchasedunder theplans orprograms
------------- | --------------------- | ------------------------- | ---------------------------------------------------------- | ----------------------------------------------------------
october 2008  | 25394                 | $ -                       | -                                                          | 19201518
november 2008 | 7526                  | -                         | -                                                          | 19201518
december 2008 | 40                    | -                         | -                                                          | 19201518
total         | 32960                 | $ -                       | -                                                          | 19201518

( a ) the bancorp repurchased 25394 , 7526 and 40 shares during october , november and december of 2008 in connection with various employee compensation plans of the bancorp .
these purchases are not included against the maximum number of shares that may yet be purchased under the board of directors authorization.


see note 8 of the notes to consolidated financial statements in item 8 .
financial statements and supplementary data for a further discussion of these transactions .
capital resources outlook for 2007 international paper expects to be able to meet pro- jected capital expenditures , service existing debt and meet working capital and dividend requirements during 2007 through current cash balances and cash from operations and divestiture proceeds , supple- mented as required by its various existing credit facilities .
international paper has approximately $ 3.0 billion of committed liquidity , which we believe is adequate to cover expected operating cash flow variability during our industry 2019s economic cycles .
in march 2006 , international paper replaced its matur- ing $ 750 million revolving bank credit agreement with a 364-day $ 500 million fully committed revolv- ing bank credit agreement that expires in march 2007 and has a facility fee of 0.08% ( 0.08 % ) payable quarterly , and replaced its $ 1.25 billion revolving bank credit agreement with a $ 1.5 billion fully committed revolv- ing bank credit agreement that expires in march 2011 and has a facility fee of 0.10% ( 0.10 % ) payable quarterly .
in addition , in october 2006 , the company amended its existing receivables securitization program that pro- vides for up to $ 1.2 billion of commercial paper- based financings with a facility fee of 0.20% ( 0.20 % ) and an expiration date in november 2007 , to provide up to $ 1.0 billion of available commercial paper-based financings with a facility fee of 0.10% ( 0.10 % ) and an expira- tion date of october 2009 .
at december 31 , 2006 , there were no borrowings under either of the bank credit agreements or the receivables securitization program .
additionally , international paper investments ( luxembourg ) s.ar.l. , a wholly-owned subsidiary of international paper , has a $ 100 million bank credit agreement maturing in december 2007 , with $ 40 million in borrowings outstanding as of december 31 , 2006 .
the company will continue to rely upon debt and capital markets for the majority of any necessary long-term funding not provided by operating cash flow or divestiture proceeds .
funding decisions will be guided by our capital structure planning and liability management practices .
the primary goals of the company 2019s capital structure planning are to maximize financial flexibility and preserve liquidity while reducing interest expense .
the majority of international paper 2019s debt is accessed through global public capital markets where we have a wide base of investors .
the company was in compliance with all its debt covenants at december 31 , 2006 .
principal financial covenants include maintenance of a minimum net worth , defined as the sum of common stock , paid-in capital and retained earnings , less treasury stock , plus any goodwill impairment charges , of $ 9 billion ; and a maximum total debt to capital ratio , defined as total debt divided by total debt plus net worth , of maintaining an investment grade credit rating is an important element of international paper 2019s financing strategy .
in the third quarter of 2006 , standard & poor 2019s reaffirmed the company 2019s long-term credit rating of bbb , revised its ratings outlook from neg- ative to stable , and upgraded its short-term credit rating from a-3 to a-2 .
at december 31 , 2006 , the company also held long-term credit ratings of baa3 ( stable outlook ) and a short-term credit rating of p-3 from moody 2019s investor services .
contractual obligations for future payments under existing debt and lease commitments and purchase obligations at december 31 , 2006 , were as follows : in millions 2007 2008 2009 2010 2011 thereafter .

in millions                 | 2007   | 2008  | 2009   | 2010   | 2011  | thereafter
--------------------------- | ------ | ----- | ------ | ------ | ----- | ----------
total debt ( a )            | $ 692  | $ 129 | $ 1143 | $ 1198 | $ 381 | $ 3680
lease obligations ( b )     | 144    | 117   | 94     | 74     | 60    | 110
purchase obligations ( cd ) | 2329   | 462   | 362    | 352    | 323   | 1794
total                       | $ 3165 | $ 708 | $ 1599 | $ 1624 | $ 764 | $ 5584

( a ) total debt includes scheduled principal payments only .
( b ) included in these amounts are $ 76 million of lease obligations related to discontinued operations and businesses held for sale that are due as follows : 2007 - $ 23 million ; 2008 - $ 19 million ; 2009 - $ 15 million ; 2010 - $ 7 million ; 2011 - $ 5 million ; and thereafter - $ 7 million .
( c ) included in these amounts are $ 1.3 billion of purchase obliga- tions related to discontinued operations and businesses held for sale that are due as follows : 2007 - $ 335 million ; 2008 - $ 199 million ; 2009 - $ 157 million ; 2010 - $ 143 million ; 2011 - $ 141 million ; and thereafter - $ 331 million .
( d ) includes $ 2.2 billion relating to fiber supply agreements entered into at the time of the transformation plan forestland sales .
transformation plan in july 2005 , the company had announced a plan to focus its business portfolio on two key global plat- form businesses : uncoated papers ( including dis- tribution ) and packaging .
the plan 2019s other elements include exploring strategic options for other busi- nesses , including possible sale or spin-off , returning value to shareholders , strengthening the balance sheet , selective reinvestment to strengthen the paper


corporate income taxes other than withholding taxes on certain investment income and premium excise taxes .
if group or its bermuda subsidiaries were to become subject to u.s .
income tax , there could be a material adverse effect on the company 2019s financial condition , results of operations and cash flows .
united kingdom .
bermuda re 2019s uk branch conducts business in the uk and is subject to taxation in the uk .
bermuda re believes that it has operated and will continue to operate its bermuda operation in a manner which will not cause them to be subject to uk taxation .
if bermuda re 2019s bermuda operations were to become subject to uk income tax , there could be a material adverse impact on the company 2019s financial condition , results of operations and cash flow .
ireland .
holdings ireland and ireland re conduct business in ireland and are subject to taxation in ireland .
available information .
the company 2019s annual reports on form 10-k , quarterly reports on form 10-q , current reports on form 8- k , proxy statements and amendments to those reports are available free of charge through the company 2019s internet website at http://www.everestregroup.com as soon as reasonably practicable after such reports are electronically filed with the securities and exchange commission ( the 201csec 201d ) .
item 1a .
risk factors in addition to the other information provided in this report , the following risk factors should be considered when evaluating an investment in our securities .
if the circumstances contemplated by the individual risk factors materialize , our business , financial condition and results of operations could be materially and adversely affected and the trading price of our common shares could decline significantly .
risks relating to our business fluctuations in the financial markets could result in investment losses .
prolonged and severe disruptions in the public debt and equity markets , such as occurred during 2008 , could result in significant realized and unrealized losses in our investment portfolio .
although financial markets have significantly improved since 2008 , they could deteriorate in the future .
such declines in the financial markets could result in significant realized and unrealized losses on investments and could have a material adverse impact on our results of operations , equity , business and insurer financial strength and debt ratings .
our results could be adversely affected by catastrophic events .
we are exposed to unpredictable catastrophic events , including weather-related and other natural catastrophes , as well as acts of terrorism .
any material reduction in our operating results caused by the occurrence of one or more catastrophes could inhibit our ability to pay dividends or to meet our interest and principal payment obligations .
subsequent to april 1 , 2010 , we define a catastrophe as an event that causes a loss on property exposures before reinsurance of at least $ 10.0 million , before corporate level reinsurance and taxes .
prior to april 1 , 2010 , we used a threshold of $ 5.0 million .
by way of illustration , during the past five calendar years , pre-tax catastrophe losses , net of contract specific reinsurance but before cessions under corporate reinsurance programs , were as follows: .

calendar year:          | pre-tax catastrophe losses
----------------------- | --------------------------
( dollars in millions ) |
2013                    | $ 195.0
2012                    | 410.0
2011                    | 1300.4
2010                    | 571.1
2009                    | 67.4