aeronautics 2019 operating profit for 2011 increased $ 132 million , or 9% ( 9 % ) , compared to 2010 .
the increase primarily was attributable to approximately $ 115 million of higher operating profit on c-130 programs due to increased volume and the retirement of risks ; increased volume and risk retirements on f-16 programs of about $ 50 million and c-5 programs of approximately $ 20 million ; and about $ 70 million due to risk retirements on other aeronautics sustainment activities in 2011 .
these increases partially were offset by a decline in operating profit of approximately $ 75 million on the f-22 program and f-35 development contract primarily due to lower volume and about $ 55 million on other programs , including f-35 lrip , primarily due to lower profit rate adjustments in 2011 compared to 2010 .
adjustments not related to volume , including net profit rate adjustments described above , were approximately $ 90 million higher in 2011 compared to 2010 .
backlog backlog decreased in 2012 compared to 2011 mainly due to lower orders on f-35 contracts and c-130 programs , partially offset by higher orders on f-16 programs .
backlog increased in 2011 compared to 2010 mainly due to higher orders on f-35 contracts , which partially were offset by higher sales volume on the c-130 programs .
trends we expect aeronautics will experience a mid single digit percentage range decline in net sales for 2013 as compared to 2012 .
a decrease in net sales from a decline in f-16 and c-130j aircraft deliveries is expected to be partially offset by an increase in net sales volume on f-35 lrip contracts .
operating profit is projected to decrease at a high single digit percentage range from 2012 levels due to the expected decline in net sales as well as changes in aircraft mix , resulting in a slight decline in operating margins between the years .
information systems & global solutions our is&gs business segment provides management services , integrated information technology solutions , and advanced technology systems and expertise across a broad spectrum of applications for civil , defense , intelligence , and other government customers .
is&gs has a portfolio of many smaller contracts as compared to our other business segments .
is&gs has been impacted by the continuing downturn in the federal information technology budgets and the impact of the continuing resolution that was effective on october 1 , 2012 , the start of the u.s .
government 2019s fiscal year .
is&gs 2019 operating results included the following ( in millions ) : .

                    | 2012           | 2011           | 2010
------------------- | -------------- | -------------- | --------------
net sales           | $ 8846         | $ 9381         | $ 9921
operating profit    | 808            | 874            | 814
operating margins   | 9.1% ( 9.1 % ) | 9.3% ( 9.3 % ) | 8.2% ( 8.2 % )
backlog at year-end | 8700           | 9300           | 9700

2012 compared to 2011 is&gs 2019 net sales for 2012 decreased $ 535 million , or 6% ( 6 % ) , compared to 2011 .
the decrease was attributable to lower net sales of approximately $ 485 million due to the substantial completion of various programs during 2011 ( primarily jtrs ; odin ; and u.k .
census ) ; and about $ 255 million due to lower volume on numerous other programs ( primarily hanford ; warfighter information network-tactical ( win-t ) ; command , control , battle management and communications ( c2bmc ) ; and transportation worker identification credential ( twic ) ) .
partially offsetting the decreases were higher net sales of approximately $ 140 million from qtc , which was acquired early in the fourth quarter of 2011 ; and about $ 65 million from increased activity on numerous other programs , primarily federal cyber security programs and persistent threat detection system ( ptds ) operational support .
is&gs 2019 operating profit for 2012 decreased $ 66 million , or 8% ( 8 % ) , compared to 2011 .
the decrease was attributable to lower operating profit of approximately $ 50 million due to the favorable impact of the odin contract completion in 2011 ; about $ 25 million due to an increase in reserves for performance issues related to an international airborne surveillance system in 2012 ; and approximately $ 20 million due to lower volume on certain programs ( primarily c2bmc and win-t ) .
partially offsetting the decreases was an increase in operating profit due to higher risk retirements of approximately $ 15 million from the twic program ; and about $ 10 million due to increased activity on numerous other programs , primarily federal cyber security programs and ptds operational support .
operating profit for the jtrs program was comparable as a decrease in volume was offset by a decrease in reserves .
adjustments not related to volume , including net profit booking rate adjustments and other matters described above , were approximately $ 20 million higher for 2012 compared to 2011.


the following table sets forth information concerning increases in the total number of our aap stores during the past five years : beginning stores new stores ( 1 ) stores closed ending stores ( 1 ) does not include stores that opened as relocations of previously existing stores within the same general market area or substantial renovations of stores .
our store-based information systems , which are designed to improve the efficiency of our operations and enhance customer service , are comprised of a proprietary pos system and electronic parts catalog , or epc , system .
information maintained by our pos system is used to formulate pricing , marketing and merchandising strategies and to replenish inventory accurately and rapidly .
our pos system is fully integrated with our epc system and enables our store team members to assist our customers in their parts selection and ordering based on the year , make , model and engine type of their vehicles .
our centrally-based epc data management system enables us to reduce the time needed to ( i ) exchange data with our vendors and ( ii ) catalog and deliver updated , accurate parts information .
our epc system also contains enhanced search engines and user-friendly navigation tools that enhance our team members' ability to look up any needed parts as well as additional products the customer needs to complete an automotive repair project .
if a hard-to-find part or accessory is not available at one of our stores , the epc system can determine whether the part is carried and in-stock through our hub or pdq ae networks or can be ordered directly from one of our vendors .
available parts and accessories are then ordered electronically from another store , hub , pdq ae or directly from the vendor with immediate confirmation of price , availability and estimated delivery time .
we also support our store operations with additional proprietary systems and customer driven labor scheduling capabilities .
our store-level inventory management system provides real-time inventory tracking at the store level .
with the store-level system , store team members can check the quantity of on-hand inventory for any sku , adjust stock levels for select items for store specific events , automatically process returns and defective merchandise , designate skus for cycle counts and track merchandise transfers .
our stores use radio frequency hand-held devices to help ensure the accuracy of our inventory .
our standard operating procedure , or sop , system is a web-based , electronic data management system that provides our team members with instant access to any of our standard operating procedures through a comprehensive on-line search function .
all of these systems are tightly integrated and provide real-time , comprehensive information to store personnel , resulting in improved customer service levels , team member productivity and in-stock availability .
purchasing for virtually all of the merchandise for our stores is handled by our merchandise teams located in three primary locations : 2022 store support center in roanoke , virginia ; 2022 regional office in minneapolis , minnesota ; and 2022 global sourcing office in taipei , taiwan .
our roanoke team is primarily responsible for the parts categories and our minnesota team is primarily responsible for accessories , oil and chemicals .
our global sourcing team works closely with both teams .
in fiscal 2011 , we purchased merchandise from approximately 500 vendors , with no single vendor accounting for more than 9% ( 9 % ) of purchases .
our purchasing strategy involves negotiating agreements with most of our vendors to purchase merchandise over a specified period of time along with other terms , including pricing , payment terms and volume .
the merchandising team has developed strong vendor relationships in the industry and , in a collaborative effort with our vendor partners , utilizes a category management process where we manage the mix of our product offerings to meet customer demand .
we believe this process , which develops a customer-focused business plan for each merchandise category , and our global sourcing operation are critical to improving comparable store sales , gross margin and inventory productivity. .

                 | 2011     | 2010     | 2009       | 2008       | 2007
---------------- | -------- | -------- | ---------- | ---------- | ----------
beginning stores | 3369     | 3264     | 3243       | 3153       | 2995
new stores ( 1 ) | 95       | 110      | 75         | 109        | 175
stores closed    | -4 ( 4 ) | -5 ( 5 ) | -54 ( 54 ) | -19 ( 19 ) | -17 ( 17 )
ending stores    | 3460     | 3369     | 3264       | 3243       | 3153

the following table sets forth information concerning increases in the total number of our aap stores during the past five years : beginning stores new stores ( 1 ) stores closed ending stores ( 1 ) does not include stores that opened as relocations of previously existing stores within the same general market area or substantial renovations of stores .
our store-based information systems , which are designed to improve the efficiency of our operations and enhance customer service , are comprised of a proprietary pos system and electronic parts catalog , or epc , system .
information maintained by our pos system is used to formulate pricing , marketing and merchandising strategies and to replenish inventory accurately and rapidly .
our pos system is fully integrated with our epc system and enables our store team members to assist our customers in their parts selection and ordering based on the year , make , model and engine type of their vehicles .
our centrally-based epc data management system enables us to reduce the time needed to ( i ) exchange data with our vendors and ( ii ) catalog and deliver updated , accurate parts information .
our epc system also contains enhanced search engines and user-friendly navigation tools that enhance our team members' ability to look up any needed parts as well as additional products the customer needs to complete an automotive repair project .
if a hard-to-find part or accessory is not available at one of our stores , the epc system can determine whether the part is carried and in-stock through our hub or pdq ae networks or can be ordered directly from one of our vendors .
available parts and accessories are then ordered electronically from another store , hub , pdq ae or directly from the vendor with immediate confirmation of price , availability and estimated delivery time .
we also support our store operations with additional proprietary systems and customer driven labor scheduling capabilities .
our store-level inventory management system provides real-time inventory tracking at the store level .
with the store-level system , store team members can check the quantity of on-hand inventory for any sku , adjust stock levels for select items for store specific events , automatically process returns and defective merchandise , designate skus for cycle counts and track merchandise transfers .
our stores use radio frequency hand-held devices to help ensure the accuracy of our inventory .
our standard operating procedure , or sop , system is a web-based , electronic data management system that provides our team members with instant access to any of our standard operating procedures through a comprehensive on-line search function .
all of these systems are tightly integrated and provide real-time , comprehensive information to store personnel , resulting in improved customer service levels , team member productivity and in-stock availability .
purchasing for virtually all of the merchandise for our stores is handled by our merchandise teams located in three primary locations : 2022 store support center in roanoke , virginia ; 2022 regional office in minneapolis , minnesota ; and 2022 global sourcing office in taipei , taiwan .
our roanoke team is primarily responsible for the parts categories and our minnesota team is primarily responsible for accessories , oil and chemicals .
our global sourcing team works closely with both teams .
in fiscal 2011 , we purchased merchandise from approximately 500 vendors , with no single vendor accounting for more than 9% ( 9 % ) of purchases .
our purchasing strategy involves negotiating agreements with most of our vendors to purchase merchandise over a specified period of time along with other terms , including pricing , payment terms and volume .
the merchandising team has developed strong vendor relationships in the industry and , in a collaborative effort with our vendor partners , utilizes a category management process where we manage the mix of our product offerings to meet customer demand .
we believe this process , which develops a customer-focused business plan for each merchandise category , and our global sourcing operation are critical to improving comparable store sales , gross margin and inventory productivity.


proved reserves can be added as expansions are permitted , funding is approved and certain stipulations of the joint venture agreement are satisfied .
the following table sets forth changes in estimated quantities of net proved bitumen reserves for the year 2008 .
estimated quantities of proved bitumen reserves ( millions of barrels ) 2008 .

( millions of barrels )              | 2008
------------------------------------ | ----------
beginning of year                    | 421
revisions ( a )                      | -30 ( 30 )
extensions discoveries and additions | 6
production                           | -9 ( 9 )
end of year                          | 388

( a ) revisions were driven primarily by price and the impact of the new royalty regime discussed below .
the above estimated quantity of net proved bitumen reserves is a forward-looking statement and is based on a number of assumptions , including ( among others ) commodity prices , volumes in-place , presently known physical data , recoverability of bitumen , industry economic conditions , levels of cash flow from operations , and other operating considerations .
to the extent these assumptions prove inaccurate , actual recoveries could be different than current estimates .
for a discussion of the proved bitumen reserves estimation process , see item 7 .
management 2019s discussion and analysis of financial condition and results of operations 2013 critical accounting estimates 2013 estimated net recoverable reserve quantities 2013 proved bitumen reserves .
operations at the aosp are not within the scope of statement of financial accounting standards ( 201csfas 201d ) no .
25 , 201csuspension of certain accounting requirements for oil and gas producing companies ( an amendment of financial accounting standards board ( 201cfasb 201d ) statement no .
19 ) , 201d sfas no .
69 , 201cdisclosures about oil and gas producing activities ( an amendment of fasb statements 19 , 25 , 33 and 39 ) , 201d and securities and exchange commission ( 201csec 201d ) rule 4-10 of regulation s-x ; therefore , bitumen production and reserves are not included in our supplementary information on oil and gas producing activities .
the sec has recently issued a release amending these disclosure requirements effective for annual reports on form 10-k for fiscal years ending on or after december 31 , 2009 , see item 7 .
management 2019s discussion and analysis of financial condition and results of operations 2013 accounting standards not yet adopted for additional information .
prior to our acquisition of western , the first fully-integrated expansion of the existing aosp facilities was approved in 2006 .
expansion 1 , which includes construction of mining and extraction facilities at the jackpine mine , expansion of treatment facilities at the existing muskeg river mine , expansion of the scotford upgrader and development of related infrastructure , is anticipated to begin operations in late 2010 or 2011 .
when expansion 1 is complete , we will have more than 50000 bpd of net production and upgrading capacity in the canadian oil sands .
the timing and scope of future expansions and debottlenecking opportunities on existing operations remain under review .
during 2008 , the alberta government accepted the project 2019s application to have a portion of the expansion 1 capital costs form part of the muskeg river mine 2019s allowable cost recovery pool .
due to commodity price declines in the year , royalties for 2008 were one percent of the gross mine revenue .
commencing january 1 , 2009 , the alberta royalty regime has been amended such that royalty rates will be based on the canadian dollar ( 201ccad 201d ) equivalent monthly average west texas intermediate ( 201cwti 201d ) price .
royalty rates will rise from a minimum of one percent to a maximum of nine percent under the gross revenue method and from a minimum of 25 percent to a maximum of 40 percent under the net revenue method .
under both methods , the minimum royalty is based on a wti price of $ 55.00 cad per barrel and below while the maximum royalty is reached at a wti price of $ 120.00 cad per barrel and above , with a linear increase in royalty between the aforementioned prices .
the above discussion of the oil sands mining segment includes forward-looking statements concerning the anticipated completion of aosp expansion 1 .
factors which could affect the expansion project include transportation logistics , availability of materials and labor , unforeseen hazards such as weather conditions , delays in obtaining or conditions imposed by necessary government and third-party approvals and other risks customarily associated with construction projects .
refining , marketing and transportation refining we own and operate seven refineries in the gulf coast , midwest and upper great plains regions of the united states with an aggregate refining capacity of 1.016 million barrels per day ( 201cmmbpd 201d ) of crude oil .
during 2008


management 2019s discussion and analysis of financial condition and results of operations ( continued ) liquidity and capital resources snap-on 2019s growth has historically been funded by a combination of cash provided by operating activities and debt financing .
snap-on believes that its cash from operations and collections of finance receivables , coupled with its sources of borrowings and available cash on hand , are sufficient to fund its currently anticipated requirements for scheduled debt payments ( including the march 2014 repayment of $ 100.0 million of 5.85% ( 5.85 % ) unsecured notes upon maturity ) , payments of interest and dividends , new receivables originated by our financial services businesses , capital expenditures , working capital , restructuring activities , the funding of pension plans , and funding for additional share repurchases and acquisitions , if any .
due to snap-on 2019s credit rating over the years , external funds have been available at an acceptable cost .
as of the close of business on february 7 , 2014 , snap-on 2019s long-term debt and commercial paper were rated , respectively , a3 and p-2 by moody 2019s investors service ; a- and a-2 by standard & poor 2019s ; and a- and f2 by fitch ratings .
snap-on believes that its current credit arrangements are sound and that the strength of its balance sheet affords the company the financial flexibility to respond to both internal growth opportunities and those available through acquisitions .
however , snap-on cannot provide any assurances of the availability of future financing or the terms on which it might be available , or that its debt ratings may not decrease .
the following discussion focuses on information included in the accompanying consolidated balance sheets .
as of 2013 year end , working capital ( current assets less current liabilities ) of $ 1080.8 million increased $ 1.0 million from $ 1079.8 million as of 2012 year end .
the following represents the company 2019s working capital position as of 2013 and 2012 year end : ( amounts in millions ) 2013 2012 .

( amounts in millions )                                | 2013             | 2012
------------------------------------------------------ | ---------------- | ----------------
cash and cash equivalents                              | $ 217.6          | $ 214.5
trade and other accounts receivable 2013 net           | 531.6            | 497.9
finance receivables 2013 net                           | 374.6            | 323.1
contract receivables 2013 net                          | 68.4             | 62.7
inventories 2013 net                                   | 434.4            | 404.2
other current assets                                   | 169.6            | 166.6
total current assets                                   | 1796.2           | 1669.0
notes payable and current maturities of long-term debt | -113.1 ( 113.1 ) | -5.2 ( 5.2 )
accounts payable                                       | -155.6 ( 155.6 ) | -142.5 ( 142.5 )
other current liabilities                              | -446.7 ( 446.7 ) | -441.5 ( 441.5 )
total current liabilities                              | -715.4 ( 715.4 ) | -589.2 ( 589.2 )
working capital                                        | $ 1080.8         | $ 1079.8

cash and cash equivalents of $ 217.6 million as of 2013 year end compared to cash and cash equivalents of $ 214.5 million at 2012 year end .
the $ 3.1 million net increase in cash and cash equivalents includes the impacts of ( i ) $ 508.8 million of cash from collections of finance receivables ; ( ii ) $ 392.6 million of cash generated from operations , net of $ 24.3 million of discretionary cash contributions to the company 2019s pension plans ; ( iii ) $ 29.2 million of cash proceeds from stock purchase and option plan exercises ; and ( iv ) $ 8.4 million of cash proceeds from the sale of property and equipment .
these increases in cash and cash equivalents were largely offset by ( i ) the funding of $ 651.3 million of new finance receivables ; ( ii ) dividend payments to shareholders of $ 92.0 million ; ( iii ) the repurchase of 926000 shares of the company 2019s common stock for $ 82.6 million ; ( iv ) the funding of $ 70.6 million of capital expenditures ; and ( v ) the may 2013 acquisition of challenger for a cash purchase price of $ 38.2 million .
of the $ 217.6 million of cash and cash equivalents as of 2013 year end , $ 124.3 million was held outside of the united states .
snap-on considers these non-u.s .
funds as permanently invested in its foreign operations to ( i ) provide adequate working capital ; ( ii ) satisfy various regulatory requirements ; and/or ( iii ) take advantage of business expansion opportunities as they arise ; as such , the company does not presently expect to repatriate these funds to fund its u.s .
operations or obligations .
the repatriation of cash from certain foreign subsidiaries could have adverse net tax consequences on the company should snap-on be required to pay and record u.s .
income taxes and foreign withholding taxes on funds that were previously considered permanently invested .
alternatively , the repatriation of such cash from certain other foreign subsidiaries could result in favorable net tax consequences for the company .
snap-on periodically evaluates opportunities to repatriate certain foreign cash amounts to the extent that it does not incur additional unfavorable net tax consequences .
46 snap-on incorporated


future minimum lease payments for all non-cancelable operating leases at may 31 , 2013 were as follows : fiscal years ending may 31: .

2014                                | $ 11057
----------------------------------- | -------
2015                                | 8985
2016                                | 7378
2017                                | 6700
2018                                | 6164
thereafter                          | 16812
total future minimum lease payments | $ 57096

we are party to a number of claims and lawsuits incidental to our business .
in our opinion , the liabilities , if any , which may ultimately result from the outcome of such matters , individually or in the aggregate , are not expected to have a material adverse impact on our financial position , liquidity or results of operations .
operating taxes we define operating taxes as taxes that are unrelated to income taxes , such as sales , property , value-add and other business taxes .
during the course of operations , we must interpret the meaning of various operating tax matters in the united states and in the foreign jurisdictions in which we do business .
taxing authorities in those various jurisdictions may arrive at different interpretations of applicable tax laws and regulations as they relate to such operating tax matters , which could result in the payment of additional taxes in those jurisdictions .
as of may 31 , 2013 and 2012 , we did not have liabilities for contingencies related to operating tax items based on management 2019s best estimate given our history with similar matters and interpretations of current laws and regulations .
bin/ica agreements we have entered into sponsorship or depository and processing agreements with certain banks .
these agreements allow us to use the banks 2019 identification numbers , referred to as bank identification number ( 201cbin 201d ) for visa transactions and interbank card association ( 201cica 201d ) number for mastercard transactions , to clear credit card transactions through visa and mastercard .
certain of such agreements contain financial covenants , and we were in compliance with all such covenants as of may 31 , 2013 .
our canadian visa sponsorship , which was originally obtained through a canadian financial institution , expired in march 2011 .
we have filed an application with the office of the superintendent of financial institutions canada ( 201cosfi 201d ) for the formation of a wholly owned loan company in canada which would serve as our financial institution sponsor .
on december 12 , 2012 , the loan company received a restricted order to commence and carry on business from osfi which will enable the loan company to become a direct visa member at such time that global payments concludes the appropriate bin transfer process with visa .
in march 2011 , we obtained temporary direct participation in the visa canada system , while the loan company application was pending .
we anticipate that the bin transfer process with visa will be completed by september 30 , 2013.


interest expense .

                            | 2019    | 2018
--------------------------- | ------- | -------
interest incurred           | $ 150.5 | $ 150.0
less : capitalized interest | 13.5    | 19.5
interest expense            | $ 137.0 | $ 130.5

interest incurred increased $ .5 as interest expense associated with financing the lu'an joint venture was mostly offset by favorable impacts from currency , a lower average interest rate on the debt portfolio , and a lower average debt balance .
capitalized interest decreased 31% ( 31 % ) , or $ 6.0 , due to a decrease in the carrying value of projects under construction , primarily driven by the lu'an project in asia .
other non-operating income ( expense ) , net other non-operating income ( expense ) , net of $ 66.7 increased $ 61.6 , primarily due to lower pension settlement losses , higher non-service pension income , and higher interest income on cash and cash items .
the prior year included pension settlement losses of $ 43.7 ( $ 33.2 after-tax , or $ .15 per share ) primarily in connection with the transfer of certain pension assets and payment obligations to an insurer for our u.s .
salaried and hourly plans .
in fiscal year 2019 , we recognized a pension settlement loss of $ 5.0 ( $ 3.8 after-tax , or $ .02 per share ) associated with the u.s .
supplementary pension plan during the second quarter .
net income and net income margin net income of $ 1809.4 increased 18% ( 18 % ) , or $ 276.5 , primarily due to impacts from the u.s .
tax cuts and jobs act , positive pricing , and favorable volumes .
net income margin of 20.3% ( 20.3 % ) increased 310 bp .
adjusted ebitda and adjusted ebitda margin adjusted ebitda of $ 3468.0 increased 11% ( 11 % ) , or $ 352.5 , primarily due to positive pricing and higher volumes , partially offset by unfavorable currency .
adjusted ebitda margin of 38.9% ( 38.9 % ) increased 400 bp , primarily due to higher volumes , positive pricing , and the india contract modification .
the india contract modification contributed 80 bp .
effective tax rate the effective tax rate equals the income tax provision divided by income from continuing operations before taxes .
the effective tax rate was 21.0% ( 21.0 % ) and 26.0% ( 26.0 % ) in fiscal years 2019 and 2018 , respectively .
the current year rate was lower primarily due to impacts related to the enactment of the u.s .
tax cuts and jobs act ( the 201ctax act" ) in 2018 , which significantly changed existing u.s .
tax laws , including a reduction in the federal corporate income tax rate from 35% ( 35 % ) to 21% ( 21 % ) , a deemed repatriation tax on unremitted foreign earnings , as well as other changes .
as a result of the tax act , our income tax provision reflects discrete net income tax costs of $ 43.8 and $ 180.6 in fiscal years 2019 and 2018 , respectively .
the current year included a cost of $ 56.2 ( $ .26 per share ) for the reversal of a benefit recorded in 2018 related to the u.s .
taxation of deemed foreign dividends .
we recorded this reversal based on regulations issued in 2019 .
the 2019 reversal was partially offset by a favorable adjustment of $ 12.4 ( $ .06 per share ) that was recorded as we completed our estimates of the impacts of the tax act .
this adjustment is primarily related to foreign tax items , including the deemed repatriation tax for foreign tax redeterminations .
in addition , the current year rate included a net gain on the exchange of two equity affiliates of $ 29.1 , which was not a taxable transaction .
the higher 2018 expense resulting from the tax act was partially offset by a $ 35.7 tax benefit from the restructuring of foreign subsidiaries , a $ 9.1 benefit from a foreign audit settlement agreement , and higher excess tax benefits on share-based compensation .
the adjusted effective tax rate was 19.4% ( 19.4 % ) and 18.6% ( 18.6 % ) in fiscal years 2019 and 2018 , respectively .
the lower prior year rate was primarily due to the $ 9.1 benefit from a foreign audit settlement agreement and higher excess tax benefits on share-based compensation.


( b ) as of december 31 , 2014 , the total amount authorized under the stock repurchase program was $ 5.5 billion and we had remaining authorization of $ 738 million for future repurchases under our common stock repurchase program , which will expire on february 3 , 2016 .
under the stock repurchase program , management is authorized to purchase shares of the company's common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements , and subject to stock price , business and market conditions and other factors .
we have been funding and expect to continue to fund stock repurchases through a combination of cash on hand and cash generated by operations .
in the future , we may also choose to fund our stock repurchase program under our revolving credit facility or future financing transactions .
there were no repurchases of our series a and b common stock during the three months ended december 31 , 2014 .
the company first announced its stock repurchase program on august 3 , 2010 .
stock performance graph the following graph sets forth the cumulative total shareholder return on our series a common stock , series b common stock and series c common stock as compared with the cumulative total return of the companies listed in the standard and poor 2019s 500 stock index ( 201cs&p 500 index 201d ) and a peer group of companies comprised of cbs corporation class b common stock , scripps network interactive , inc. , time warner , inc. , twenty-first century fox , inc .
class a common stock ( news corporation class a common stock prior to june 2013 ) , viacom , inc .
class b common stock and the walt disney company .
the graph assumes $ 100 originally invested on december 31 , 2009 in each of our series a common stock , series b common stock and series c common stock , the s&p 500 index , and the stock of our peer group companies , including reinvestment of dividends , for the years ended december 31 , 2010 , 2011 , 2012 , 2013 and 2014 .
december 31 , december 31 , december 31 , december 31 , december 31 , december 31 .

           | december 312009 | december 312010 | december 312011 | december 312012 | december 312013 | december 312014
---------- | --------------- | --------------- | --------------- | --------------- | --------------- | ---------------
disca      | $ 100.00        | $ 135.96        | $ 133.58        | $ 206.98        | $ 294.82        | $ 224.65
discb      | $ 100.00        | $ 138.79        | $ 133.61        | $ 200.95        | $ 290.40        | $ 233.86
disck      | $ 100.00        | $ 138.35        | $ 142.16        | $ 220.59        | $ 316.21        | $ 254.30
s&p 500    | $ 100.00        | $ 112.78        | $ 112.78        | $ 127.90        | $ 165.76        | $ 184.64
peer group | $ 100.00        | $ 118.40        | $ 135.18        | $ 182.38        | $ 291.88        | $ 319.28

equity compensation plan information information regarding securities authorized for issuance under equity compensation plans will be set forth in our definitive proxy statement for our 2015 annual meeting of stockholders under the caption 201csecurities authorized for issuance under equity compensation plans , 201d which is incorporated herein by reference.


2015 and 2014 was $ 1.5 billion and $ 1.3 billion .
the aggregate notional amount of our outstanding foreign currency hedges at december 31 , 2015 and 2014 was $ 4.1 billion and $ 804 million .
derivative instruments did not have a material impact on net earnings and comprehensive income during 2015 , 2014 and 2013 .
substantially all of our derivatives are designated for hedge accounting .
see note 16 for more information on the fair value measurements related to our derivative instruments .
recent accounting pronouncements 2013 in may 2014 , the fasb issued a new standard that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements .
on july 9 , 2015 , the fasb approved a one-year deferral of the effective date of the standard to 2018 for public companies , with an option that would permit companies to adopt the standard in 2017 .
early adoption prior to 2017 is not permitted .
the new standard may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date , with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations .
in addition , the fasb is contemplating making additional changes to certain elements of the new standard .
we are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures .
as the new standard will supersede substantially all existing revenue guidance affecting us under gaap , it could impact revenue and cost recognition on thousands of contracts across all our business segments , in addition to our business processes and our information technology systems .
as a result , our evaluation of the effect of the new standard will extend over future periods .
in september 2015 , the fasb issued a new standard that simplifies the accounting for adjustments made to preliminary amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments .
instead , adjustments will be recognized in the period in which the adjustments are determined , including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date .
we adopted the standard on january 1 , 2016 and will prospectively apply the standard to business combination adjustments identified after the date of adoption .
in november 2015 , the fasb issued a new standard that simplifies the presentation of deferred income taxes and requires that deferred tax assets and liabilities , as well as any related valuation allowance , be classified as noncurrent in our consolidated balance sheets .
the standard is effective january 1 , 2017 , with early adoption permitted .
the standard may be applied either prospectively from the date of adoption or retrospectively to all prior periods presented .
we are currently evaluating when we will adopt the standard and the method of adoption .
note 2 2013 earnings per share the weighted average number of shares outstanding used to compute earnings per common share were as follows ( in millions ) : .

                                                                    | 2015  | 2014  | 2013
------------------------------------------------------------------- | ----- | ----- | -----
weighted average common shares outstanding for basic computations   | 310.3 | 316.8 | 320.9
weighted average dilutive effect of equity awards                   | 4.4   | 5.6   | 5.6
weighted average common shares outstanding for diluted computations | 314.7 | 322.4 | 326.5

we compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented .
our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units and exercise of outstanding stock options based on the treasury stock method .
the computation of diluted earnings per common share excluded 2.4 million stock options for the year ended december 31 , 2013 because their inclusion would have been anti-dilutive , primarily due to their exercise prices exceeding the average market prices of our common stock during the respective periods .
there were no anti-dilutive equity awards for the years ended december 31 , 2015 and 2014.


executive deferred compensation plan for the company 2019s executives and members of the board of directors , the company adopted the illumina , inc .
deferred compensation plan ( the plan ) that became effective january 1 , 2008 .
eligible participants can contribute up to 80% ( 80 % ) of their base salary and 100% ( 100 % ) of all other forms of compensation into the plan , including bonus , commission and director fees .
the company has agreed to credit the participants 2019 contributions with earnings that reflect the performance of certain independent investment funds .
on a discretionary basis , the company may also make employer contributions to participant accounts in any amount determined by the company .
the vesting schedules of employer contributions are at the sole discretion of the compensation committee .
however , all employer contributions shall become 100% ( 100 % ) vested upon the occurrence of the participant 2019s disability , death or retirement or a change in control of the company .
the benefits under this plan are unsecured .
participants are generally eligible to receive payment of their vested benefit at the end of their elected deferral period or after termination of their employment with the company for any reason or at a later date to comply with the restrictions of section 409a .
as of december 28 , 2008 , no employer contributions were made to the plan .
in january 2008 , the company also established a rabbi trust for the benefit of its directors and executives under the plan .
in accordance with fasb interpretation ( fin ) no .
46 , consolidation of variable interest entities , an interpretation of arb no .
51 , and eitf 97-14 , accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested , the company has included the assets of the rabbi trust in its consolidated balance sheet since the trust 2019s inception .
as of december 28 , 2008 , the assets of the trust and liabilities of the company were $ 1.3 million .
the assets and liabilities are classified as other assets and accrued liabilities , respectively , on the company 2019s balance sheet as of december 28 , 2008 .
changes in the values of the assets held by the rabbi trust accrue to the company .
14 .
segment information , geographic data and significant customers during the first quarter of 2008 , the company reorganized its operating structure into a newly created life sciences business unit , which includes all products and services related to the research market , namely the beadarray , beadxpress and sequencing product lines .
the company also created a diagnostics business unit to focus on the emerging opportunity in molecular diagnostics .
for the year ended december 28 , 2008 , the company had limited activity related to the diagnostics business unit , and operating results were reported on an aggregate basis to the chief operating decision maker of the company , the chief executive officer .
in accordance with sfas no .
131 , disclosures about segments of an enterprise and related information , the company operated in one reportable segment for the year ended december 28 , 2008 .
the company had revenue in the following regions for the years ended december 28 , 2008 , december 30 , 2007 and december 31 , 2006 ( in thousands ) : year ended december 28 , year ended december 30 , year ended december 31 .

                         | year ended december 28 2008 | year ended december 30 2007 | year ended december 31 2006
------------------------ | --------------------------- | --------------------------- | ---------------------------
united states            | $ 280064                    | $ 207692                    | $ 103043
united kingdom           | 67973                       | 34196                       | 22840
other european countries | 127397                      | 75360                       | 32600
asia-pacific             | 72740                       | 35155                       | 15070
other markets            | 25051                       | 14396                       | 11033
total                    | $ 573225                    | $ 366799                    | $ 184586

net revenues are attributable to geographic areas based on the region of destination .
illumina , inc .
notes to consolidated financial statements 2014 ( continued )


the goldman sachs group , inc .
and subsidiaries item 9 .
changes in and disagreements with accountants on accounting and financial disclosure there were no changes in or disagreements with accountants on accounting and financial disclosure during the last two years .
item 9a .
controls and procedures as of the end of the period covered by this report , an evaluation was carried out by goldman sachs 2019 management , with the participation of our chief executive officer and chief financial officer , of the effectiveness of our disclosure controls and procedures ( as defined in rule 13a-15 ( e ) under the exchange act ) .
based upon that evaluation , our chief executive officer and chief financial officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report .
in addition , no change in our internal control over financial reporting ( as defined in rule 13a-15 ( f ) under the exchange act ) occurred during the fourth quarter of our year ended december 31 , 2018 that has materially affected , or is reasonably likely to materially affect , our internal control over financial reporting .
management 2019s report on internal control over financial reporting and the report of independent registered public accounting firm are set forth in part ii , item 8 of this form 10-k .
item 9b .
other information not applicable .
part iii item 10 .
directors , executive officers and corporate governance information relating to our executive officers is included on page 20 of this form 10-k .
information relating to our directors , including our audit committee and audit committee financial experts and the procedures by which shareholders can recommend director nominees , and our executive officers will be in our definitive proxy statement for our 2019 annual meeting of shareholders , which will be filed within 120 days of the end of 2018 ( 2019 proxy statement ) and is incorporated in this form 10-k by reference .
information relating to our code of business conduct and ethics , which applies to our senior financial officers , is included in 201cbusiness 2014 available information 201d in part i , item 1 of this form 10-k .
item 11 .
executive compensation information relating to our executive officer and director compensation and the compensation committee of the board will be in the 2019 proxy statement and is incorporated in this form 10-k by reference .
item 12 .
security ownership of certain beneficial owners and management and related stockholder matters information relating to security ownership of certain beneficial owners of our common stock and information relating to the security ownership of our management will be in the 2019 proxy statement and is incorporated in this form 10-k by reference .
the table below presents information as of december 31 , 2018 regarding securities to be issued pursuant to outstanding restricted stock units ( rsus ) and securities remaining available for issuance under our equity compensation plans that were in effect during 2018 .
plan category securities to be issued exercise of outstanding options and rights ( a ) weighted average exercise price of outstanding options ( b ) securities available for future issuance under equity compensation plans ( c ) equity compensation plans approved by security holders 17176475 n/a 68211649 equity compensation plans not approved by security holders 2013 2013 2013 .

plan category                                             | securities to be issued upon exercise of outstanding options and rights ( a ) | weighted average exercise price of outstanding options ( b ) | securities available for future issuance under equity compensation plans ( c )
--------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------------------------------------------
equity compensation plans approved by security holders    | 17176475                                                                      | n/a                                                          | 68211649
equity compensation plans not approved by securityholders | 2013                                                                          | 2013                                                         | 2013
total                                                     | 17176475                                                                      |                                                              | 68211649

in the table above : 2030 securities to be issued upon exercise of outstanding options and rights includes 17176475 shares that may be issued pursuant to outstanding rsus .
these awards are subject to vesting and other conditions to the extent set forth in the respective award agreements , and the underlying shares will be delivered net of any required tax withholding .
as of december 31 , 2018 , there were no outstanding options .
2030 shares underlying rsus are deliverable without the payment of any consideration , and therefore these awards have not been taken into account in calculating the weighted average exercise price .
196 goldman sachs 2018 form 10-k


item 7 .
management 2019s discussion and analysis of financial condition and results of operations results of operations 2013 highmount 2013 ( continued ) highmount 2019s revenues , profitability and future growth depend substantially on natural gas and ngl prices and highmount 2019s ability to increase its natural gas and ngl production .
in recent years , there has been significant price volatility in natural gas and ngl prices due to a variety of factors highmount cannot control or predict .
these factors , which include weather conditions , political and economic events , and competition from other energy sources , impact supply and demand for natural gas , which determines the pricing .
in recent months , natural gas prices decreased significantly due largely to increased onshore natural gas production , plentiful levels of working gas in storage and reduced commercial demand .
the increase in the onshore natural gas production was due largely to increased production from 201cunconventional 201d sources of natural gas such as shale gas , coalbed methane , tight sandstones and methane hydrates , made possible in recent years by modern technology in creating extensive artificial fractures around well bores and advances in horizontal drilling technology .
other key factors contributing to the softness of natural gas prices likely included a lower level of industrial demand for natural gas , as a result of the ongoing economic downturn , and relatively low crude oil prices .
due to industry conditions , in february of 2009 highmount elected to terminate contracts for five drilling rigs at its permian basin property in the sonora , texas area .
the estimated fee payable to the rig contractor for exercising this early termination right will be approximately $ 23 million .
in light of these developments , highmount will reduce 2009 production volumes through decreased drilling activity .
in addition , the price highmount realizes for its gas production is affected by highmount 2019s hedging activities as well as locational differences in market prices .
highmount 2019s decision to increase its natural gas production is dependent upon highmount 2019s ability to realize attractive returns on its capital investment program .
returns are affected by commodity prices , capital and operating costs .
highmount 2019s operating income , which represents revenues less operating expenses , is primarily affected by revenue factors , but is also a function of varying levels of production expenses , production and ad valorem taxes , as well as depreciation , depletion and amortization ( 201cdd&a 201d ) expenses .
highmount 2019s production expenses represent all costs incurred to operate and maintain wells and related equipment and facilities .
the principal components of highmount 2019s production expenses are , among other things , direct and indirect costs of labor and benefits , repairs and maintenance , materials , supplies and fuel .
in general , during 2008 highmount 2019s labor costs increased primarily due to higher salary levels and continued upward pressure on salaries and wages as a result of the increased competition for skilled workers .
in response to these market conditions , in 2008 highmount implemented retention programs , including increases in compensation .
production expenses during 2008 were also affected by increases in the cost of fuel , materials and supplies .
the higher cost environment discussed above continued during all of 2008 .
during the fourth quarter of 2008 the price of natural gas declined significantly while operating expenses remained high .
this environment of low commodity prices and high operating expenses continued until december of 2008 when highmount began to see evidence of decreasing operating expenses and drilling costs .
highmount 2019s production and ad valorem taxes increase primarily when prices of natural gas and ngls increase , but they are also affected by changes in production , as well as appreciated property values .
highmount calculates depletion using the units-of-production method , which depletes the capitalized costs and future development costs associated with evaluated properties based on the ratio of production volumes for the current period to total remaining reserve volumes for the evaluated properties .
highmount 2019s depletion expense is affected by its capital spending program and projected future development costs , as well as reserve changes resulting from drilling programs , well performance , and revisions due to changing commodity prices .
presented below are production and sales statistics related to highmount 2019s operations: .

year ended december 31                           | 2008   | 2007 ( a )
------------------------------------------------ | ------ | ----------
gas production ( bcf )                           | 78.9   | 34.0
gas sales ( bcf )                                | 72.5   | 31.4
oil production/sales ( mbbls )                   | 351.3  | 114.0
ngl production/sales ( mbbls )                   | 3507.4 | 1512.9
equivalent production ( bcfe )                   | 102.0  | 43.8
equivalent sales ( bcfe )                        | 95.7   | 41.2
average realized prices without hedging results: |        |
gas ( per mcf )                                  | $ 8.25 | $ 5.95
ngl ( per bbl )                                  | 51.26  | 51.02
oil ( per bbl )                                  | 95.26  | 83.37
equivalent ( per mcfe )                          | 8.48   | 6.65


entergy arkansas , inc .
management's financial discussion and analysis gross operating revenues and fuel and purchased power expenses gross operating revenues increased primarily due to : an increase of $ 114 million in gross wholesale revenue due to an increase in the average price of energy available for resale sales and an increase in sales to affiliated customers ; an increase of $ 106.1 million in production cost allocation rider revenues which became effective in july 2007 as a result of the system agreement proceedings .
as a result of the system agreement proceedings , entergy arkansas also has a corresponding increase in deferred fuel expense for payments to other entergy system companies such that there is no effect on net income .
entergy arkansas makes payments over a seven-month period but collections from customers occur over a twelve-month period .
the production cost allocation rider is discussed in note 2 to the financial statements and the system agreement proceedings are referenced below under "federal regulation" ; and an increase of $ 58.9 million in fuel cost recovery revenues due to changes in the energy cost recovery rider effective april 2008 and september 2008 , partially offset by decreased usage .
the energy cost recovery rider filings are discussed in note 2 to the financial statements .
the increase was partially offset by a decrease of $ 14.6 million related to volume/weather , as discussed above .
fuel and purchased power expenses increased primarily due to an increase of $ 106.1 million in deferred system agreement payments , as discussed above and an increase in the average market price of purchased power .
2007 compared to 2006 net revenue consists of operating revenues net of : 1 ) fuel , fuel-related expenses , and gas purchased for resale , 2 ) purchased power expenses , and 3 ) other regulatory credits .
following is an analysis of the change in net revenue comparing 2007 to 2006 .
amount ( in millions ) .

                              | amount ( in millions )
----------------------------- | ----------------------
2006 net revenue              | $ 1074.5
net wholesale revenue         | 13.2
transmission revenue          | 11.8
deferred fuel costs revisions | 8.6
other                         | 2.5
2007 net revenue              | $ 1110.6

the net wholesale revenue variance is primarily due to lower wholesale revenues in the third quarter 2006 due to an october 2006 ferc order requiring entergy arkansas to make a refund to a coal plant co-owner resulting from a contract dispute , in addition to re-pricing revisions , retroactive to 2003 , of $ 5.9 million of purchased power agreements among entergy system companies as directed by the ferc .
the transmission revenue variance is primarily due to higher rates and the addition of new transmission customers in late 2006 .
the deferred fuel cost revisions variance is primarily due to the 2006 energy cost recovery true-up , made in the first quarter 2007 , which increased net revenue by $ 6.6 million .
gross operating revenue and fuel and purchased power expenses gross operating revenues decreased primarily due to a decrease of $ 173.1 million in fuel cost recovery revenues due to a decrease in the energy cost recovery rider effective april 2007 .
the energy cost recovery rider is discussed in note 2 to the financial statements .
the decrease was partially offset by production cost allocation rider revenues of $ 124.1 million that became effective in july 2007 as a result of the system agreement proceedings .
as


the relative percentages of operating companies income ( loss ) attributable to each reportable segment and the all other category were as follows: .

                   | 2016               | 2015               | 2014
------------------ | ------------------ | ------------------ | ------------------
smokeable products | 86.2% ( 86.2 % )   | 87.4% ( 87.4 % )   | 87.2% ( 87.2 % )
smokeless products | 13.1               | 12.8               | 13.4
wine               | 1.8                | 1.8                | 1.7
all other          | -1.1 ( 1.1 )       | -2.0 ( 2.0 )       | -2.3 ( 2.3 )
total              | 100.0% ( 100.0 % ) | 100.0% ( 100.0 % ) | 100.0% ( 100.0 % )

for items affecting the comparability of the relative percentages of operating companies income ( loss ) attributable to each reportable segment , see note 16 .
narrative description of business portions of the information called for by this item are included in operating results by business segment in item 7 .
management 2019s discussion and analysis of financial condition and results of operations of this annual report on form 10-k ( 201citem 7 201d ) .
tobacco space altria group , inc . 2019s tobacco operating companies include pm usa , usstc and other subsidiaries of ust , middleton , nu mark and nat sherman .
altria group distribution company provides sales , distribution and consumer engagement services to altria group , inc . 2019s tobacco operating companies .
the products of altria group , inc . 2019s tobacco subsidiaries include smokeable tobacco products , consisting of cigarettes manufactured and sold by pm usa and nat sherman , machine- made large cigars and pipe tobacco manufactured and sold by middleton and premium cigars sold by nat sherman ; smokeless tobacco products manufactured and sold by usstc ; and innovative tobacco products , including e-vapor products manufactured and sold by nu mark .
cigarettes : pm usa is the largest cigarette company in the united states , with total cigarette shipment volume in the united states of approximately 122.9 billion units in 2016 , a decrease of 2.5% ( 2.5 % ) from 2015 .
marlboro , the principal cigarette brand of pm usa , has been the largest-selling cigarette brand in the united states for over 40 years .
nat sherman sells substantially all of its super-premium cigarettes in the united states .
cigars : middleton is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco to customers , substantially all of which are located in the united states .
middleton sources a portion of its cigars from an importer through a third-party contract manufacturing arrangement .
total shipment volume for cigars was approximately 1.4 billion units in 2016 , an increase of 5.9% ( 5.9 % ) from 2015 .
black & mild is the principal cigar brand of middleton .
nat sherman sources its premium cigars from importers through third-party contract manufacturing arrangements and sells substantially all of its cigars in the united states .
smokeless tobacco products : usstc is the leading producer and marketer of moist smokeless tobacco ( 201cmst 201d ) products .
the smokeless products segment includes the premium brands , copenhagen and skoal , and value brands , red seal and husky .
substantially all of the smokeless tobacco products are manufactured and sold to customers in the united states .
total smokeless products shipment volume was 853.5 million units in 2016 , an increase of 4.9% ( 4.9 % ) from 2015 .
innovative tobacco products : nu mark participates in the e-vapor category and has developed and commercialized other innovative tobacco products .
in addition , nu mark sources the production of its e-vapor products through overseas contract manufacturing arrangements .
in 2013 , nu mark introduced markten e-vapor products .
in april 2014 , nu mark acquired the e-vapor business of green smoke , inc .
and its affiliates ( 201cgreen smoke 201d ) , which began selling e-vapor products in 2009 .
for a further discussion of the acquisition of green smoke , see note 3 .
acquisition of green smoke to the consolidated financial statements in item 8 ( 201cnote 3 201d ) .
in december 2013 , altria group , inc . 2019s subsidiaries entered into a series of agreements with philip morris international inc .
( 201cpmi 201d ) pursuant to which altria group , inc . 2019s subsidiaries provide an exclusive license to pmi to sell nu mark 2019s e-vapor products outside the united states , and pmi 2019s subsidiaries provide an exclusive license to altria group , inc . 2019s subsidiaries to sell two of pmi 2019s heated tobacco product platforms in the united states .
further , in july 2015 , altria group , inc .
announced the expansion of its strategic framework with pmi to include a joint research , development and technology-sharing agreement .
under this agreement , altria group , inc . 2019s subsidiaries and pmi will collaborate to develop e-vapor products for commercialization in the united states by altria group , inc . 2019s subsidiaries and in markets outside the united states by pmi .
this agreement also provides for exclusive technology cross licenses , technical information sharing and cooperation on scientific assessment , regulatory engagement and approval related to e-vapor products .
in the fourth quarter of 2016 , pmi submitted a modified risk tobacco product ( 201cmrtp 201d ) application for an electronically heated tobacco product with the united states food and drug administration 2019s ( 201cfda 201d ) center for tobacco products and announced that it plans to file its corresponding pre-market tobacco product application during the first quarter of 2017 .
the fda must determine whether to accept the applications for substantive review .
upon regulatory authorization by the fda , altria group , inc . 2019s subsidiaries will have an exclusive license to sell this heated tobacco product in the united states .
distribution , competition and raw materials : altria group , inc . 2019s tobacco subsidiaries sell their tobacco products principally to wholesalers ( including distributors ) , large retail organizations , including chain stores , and the armed services .
the market for tobacco products is highly competitive , characterized by brand recognition and loyalty , with product quality , taste , price , product innovation , marketing , packaging and distribution constituting the significant methods of competition .
promotional activities include , in certain instances and where


the pnc financial services group , inc .
2013 form 10-k 29 part ii item 5 2013 market for registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities ( a ) ( 1 ) our common stock is listed on the new york stock exchange and is traded under the symbol 201cpnc . 201d at the close of business on february 15 , 2019 , there were 53986 common shareholders of record .
holders of pnc common stock are entitled to receive dividends when declared by our board of directors out of funds legally available for this purpose .
our board of directors may not pay or set apart dividends on the common stock until dividends for all past dividend periods on any series of outstanding preferred stock and certain outstanding capital securities issued by the parent company have been paid or declared and set apart for payment .
the board of directors presently intends to continue the policy of paying quarterly cash dividends .
the amount of any future dividends will depend on economic and market conditions , our financial condition and operating results , and other factors , including contractual restrictions and applicable government regulations and policies ( such as those relating to the ability of bank and non-bank subsidiaries to pay dividends to the parent company and regulatory capital limitations ) .
the amount of our dividend is also currently subject to the results of the supervisory assessment of capital adequacy and capital planning processes undertaken by the federal reserve and our primary bank regulators as part of the comprehensive capital analysis and review ( ccar ) process as described in the supervision and regulation section in item 1 of this report .
the federal reserve has the power to prohibit us from paying dividends without its approval .
for further information concerning dividend restrictions and other factors that could limit our ability to pay dividends , as well as restrictions on loans , dividends or advances from bank subsidiaries to the parent company , see the supervision and regulation section in item 1 , item 1a risk factors , the liquidity and capital management portion of the risk management section in item 7 , and note 10 borrowed funds , note 15 equity and note 18 regulatory matters in the notes to consolidated financial statements in item 8 of this report , which we include here by reference .
we include here by reference the information regarding our compensation plans under which pnc equity securities are authorized for issuance as of december 31 , 2018 in the table ( with introductory paragraph and notes ) in item 12 of this report .
our stock transfer agent and registrar is : computershare trust company , n.a .
250 royall street canton , ma 02021 800-982-7652 www.computershare.com/pnc registered shareholders may contact computershare regarding dividends and other shareholder services .
we include here by reference the information that appears under the common stock performance graph caption at the end of this item 5 .
( a ) ( 2 ) none .
( b ) not applicable .
( c ) details of our repurchases of pnc common stock during the fourth quarter of 2018 are included in the following table : in thousands , except per share data 2018 period total shares purchased ( a ) average price paid per share total shares purchased as part of publicly announced programs ( b ) maximum number of shares that may yet be purchased under the programs ( b ) .

2018 period        | total shares purchased ( a ) | average price paid per share | total shares purchased as part of publicly announced programs ( b ) | maximum number of shares that may yet be purchased under the programs ( b )
------------------ | ---------------------------- | ---------------------------- | ------------------------------------------------------------------- | ---------------------------------------------------------------------------
october 1 2013 31  | 1204                         | $ 128.43                     | 1189                                                                | 25663
november 1 2013 30 | 1491                         | $ 133.79                     | 1491                                                                | 24172
december 1 2013 31 | 3458                         | $ 119.43                     | 3458                                                                | 20714
total              | 6153                         | $ 124.67                     |                                                                     |

( a ) includes pnc common stock purchased in connection with our various employee benefit plans generally related to forfeitures of unvested restricted stock awards and shares used to cover employee payroll tax withholding requirements .
note 11 employee benefit plans and note 12 stock based compensation plans in the notes to consolidated financial statements in item 8 of this report include additional information regarding our employee benefit and equity compensation plans that use pnc common stock .
( b ) on march 11 , 2015 , we announced that our board of directors approved a stock repurchase program authorization in the amount of 100 million shares of pnc common stock , effective april 1 , 2015 .
repurchases are made in open market or privately negotiated transactions and the timing and exact amount of common stock repurchases will depend on a number of factors including , among others , market and general economic conditions , regulatory capital considerations , alternative uses of capital , the potential impact on our credit ratings , and contractual and regulatory limitations , including the results of the supervisory assessment of capital adequacy and capital planning processes undertaken by the federal reserve as part of the ccar process .
in june 2018 , we announced share repurchase programs of up to $ 2.0 billion for the four quarter period beginning with the third quarter of 2018 , including repurchases of up to $ 300 million related to stock issuances under employee benefit plans , in accordance with pnc's 2018 capital plan .
in november 2018 , we announced an increase to these previously announced programs in the amount of up to $ 900 million in additional common share repurchases .
the aggregate repurchase price of shares repurchased during the fourth quarter of 2018 was $ .8 billion .
see the liquidity and capital management portion of the risk management section in item 7 of this report for more information on the authorized share repurchase programs for the period july 1 , 2018 through june 30 , 2019 .
http://www.computershare.com/pnc


gain on business divestitures and impairments , net we strive to have a number one or number two market position in each of the markets we serve , or have a clear path on how we will achieve a leading market position over time .
where we cannot establish a leading market position , or where operations are not generating acceptable returns , we may decide to divest certain assets and reallocate resources to other markets .
asset or business divestitures could result in gains , losses or asset impairment charges that may be material to our results of operations in a given period .
during 2018 , we recorded a net gain on business divestitures , net of asset impairments of $ 44.9 million .
during 2017 , we recorded a net gain on business divestitures , net of asset impairments of $ 27.1 million .
we also recorded a gain on business divestitures of $ 6.8 million due to the transfer of ownership of the landfill gas collection and control system and the remaining post-closure and environmental liabilities associated with one of our divested landfills .
during 2016 , we recorded a charge to earnings of $ 4.6 million primarily related to environmental costs associated with one of our divested landfills .
during 2016 , we also recorded a net gain related to a business divestiture of $ 4.7 million .
restructuring charges in january 2018 , we eliminated certain positions following the consolidation of select back-office functions , including but not limited to the integration of our national accounts support functions into our existing corporate support functions .
these changes include a reduction in administrative staffing and the closure of certain office locations .
during 2018 , we incurred restructuring charges of $ 26.4 million that primarily consisted of severance and other employee termination benefits , the closure of offices with non-cancelable lease agreements , and the redesign of our back-office functions and upgrades to certain of our software systems .
we paid $ 24.7 million during 2018 related to these restructuring efforts .
in january 2016 , we realigned our field support functions by combining our three regions into two field groups , consolidating our areas and streamlining select operational support roles at our phoenix headquarters .
additionally , in the second quarter of 2016 , we began the redesign of our back-office functions as well as the consolidation of over 100 customer service locations into three customer resource centers .
the redesign of our back-office functions and upgrades to certain of our software systems continued into 2018 .
during the years ended december 31 , 2017 and 2016 , we incurred $ 17.6 million and $ 40.7 million of restructuring charges , respectively , that primarily consisted of severance and other employee termination benefits , transition costs , relocation benefits , and the closure of offices with lease agreements with non-cancelable terms .
the savings realized from these restructuring efforts have been reinvested in our customer-focused programs and initiatives .
interest expense the following table provides the components of interest expense , including accretion of debt discounts and accretion of discounts primarily associated with environmental and risk insurance liabilities assumed in acquisitions ( in millions of dollars ) : .

                                                       | 2018         | 2017         | 2016
------------------------------------------------------ | ------------ | ------------ | ------------
interest expense on debt and capital lease obligations | $ 349.4      | $ 324.8      | $ 324.1
non-cash interest                                      | 41.2         | 43.6         | 53.4
less : capitalized interest                            | -6.8 ( 6.8 ) | -6.5 ( 6.5 ) | -6.2 ( 6.2 )
total interest expense                                 | $ 383.8      | $ 361.9      | $ 371.3

total interest expense for 2018 increased compared to 2017 primarily due to the increase in debt outstanding during the period and higher interest rates on floating rate debt .
total interest expense for 2017 decreased


consume significant amounts of energy , and we may in the future incur additional or increased capital , operating and other expenditures from changes due to new or increased climate-related and other environmental regulations .
we could also incur substantial liabilities , including fines or sanctions , enforcement actions , natural resource damages claims , cleanup and closure costs , and third-party claims for property damage and personal injury under environmental and common laws .
the foreign corrupt practices act of 1977 and local anti-bribery laws , including those in brazil , china , mexico , india and the united kingdom ( where we maintain operations directly or through a joint venture ) , prohibit companies and their intermediaries from making improper payments to government officials for the purpose of influencing official decisions .
our internal control policies and procedures , or those of our vendors , may not adequately protect us from reckless or criminal acts committed or alleged to have been committed by our employees , agents or vendors .
any such violations could lead to civil or criminal monetary and non-monetary penalties and/or could damage our reputation .
we are subject to a number of labor and employment laws and regulations that could significantly increase our operating costs and reduce our operational flexibility .
additionally , changing privacy laws in the united states ( including the california consumer privacy act , which will become effective in january 2020 ) , europe ( where the general data protection regulation became effective in 2018 ) and elsewhere have created new individual privacy rights , imposed increased obligations on companies handling personal data and increased potential exposure to fines and penalties .
item 1b .
unresolved staff comments there are no unresolved sec staff comments .
item 2 .
properties we operate locations in north america , including the majority of u.s .
states , south america , europe , asia and australia .
we lease our principal offices in atlanta , ga .
we believe that our existing production capacity is adequate to serve existing demand for our products and consider our plants and equipment to be in good condition .
our corporate and operating facilities as of september 30 , 2019 are summarized below: .

segment                                    | number of facilities owned | number of facilities leased | number of facilities total
------------------------------------------ | -------------------------- | --------------------------- | --------------------------
corrugated packaging                       | 112                        | 61                          | 173
consumer packaging                         | 84                         | 55                          | 139
corporate and significant regional offices | 2014                       | 10                          | 10
total                                      | 196                        | 126                         | 322

the tables that follow show our annual production capacity by mill at september 30 , 2019 in thousands of tons , except for the north charleston , sc mill which reflects our capacity after the previously announced machine closure expected to occur in fiscal 2020 .
our mill system production levels and operating rates may vary from year to year due to changes in market and other factors , including the impact of hurricanes and other weather-related events .
our simple average mill system operating rates for the last three years averaged 94% ( 94 % ) .
we own all of our mills.


american tower corporation and subsidiaries notes to consolidated financial statements 2014 ( continued ) atc mexico stock option plan 2014as of december 31 , 2006 , the company maintained a stock option plan for its atc mexico subsidiary ( atc mexico plan ) which was terminated in february 2007 .
the atc mexico plan provided for the issuance of options to officers , employees , directors and consultants of atc mexico , however there was no option activity and no outstanding options as of and for the years ended december 31 , 2006 and 2005 .
atc south america stock option plan 2014as of december 31 , 2006 , the company maintained a stock option plan for its atc south america subsidiary ( atc south america plan ) which was terminated in february 2007 .
the atc south america plan provided for the issuance of options to officers , employees , directors and consultants of atc south america .
during the year ended december 31 , 2004 , atc south america granted options to purchase 6024 shares of atc south america common stock to officers and employees , including messrs .
gearon and hess , who received options to purchase an approximate 6.7% ( 6.7 % ) and 1.6% ( 1.6 % ) interest , respectively .
such options were issued at one time with an exercise price of $ 1349 per share .
the exercise price per share was at fair market value on the date of issuance as determined by the board of directors with the assistance of an independent financial advisor performed at the company 2019s request .
the fair value of atc south america plan options granted during 2004 were $ 79 per share as determined by using the black-scholes option pricing model .
options granted vested upon the earlier to occur of ( a ) the exercise by or on behalf of mr .
gearon of his right to sell his interest in atc south america to the company , ( b ) the exercise by the company of its right to acquire mr .
gearon 2019s interest in atc south america , or ( c ) july 1 , 2006 .
these options expired ten years from the date of grant .
in october 2005 , in connection with the exercise by mr .
gearon 2019s of his right to require the company to purchase his interest in atc south america , all options granted pursuant to the atc south america stock option plan vested in full and were exercised .
upon exercise of these options , the holders received 4428 shares of atc south america ( representing a 7.8% ( 7.8 % ) interest ) , net of 1596 shares retained by the company to satisfy employee tax withholding obligations .
( see note 11. ) employee stock purchase plan 2014the company also maintains an employee stock purchase plan ( espp ) for all eligible employees .
under the espp , shares of the company 2019s class a common stock may be purchased during bi-annual offering periods at 85% ( 85 % ) of the lower of the fair market value on the first or the last day of each offering period .
employees may purchase shares having a value not exceeding 15% ( 15 % ) of their gross compensation during an offering period and may not purchase more than $ 25000 worth of stock in a calendar year ( based on market values at the beginning of each offering period ) .
the offering periods run from june 1 through november 30 and from december 1 through may 31 of each year .
during the 2007 , 2006 and 2005 , offering periods , employees purchased 48886 , 53210 and 50119 shares , respectively , at weighted average prices per share of $ 33.93 , $ 24.98 and $ 15.32 , respectively .
the fair value of the espp offerings is estimated on the offering period commencement date using a black-scholes pricing model with the expense recognized over the expected life , which is the six month offering period over which employees accumulate payroll deductions to purchase the company 2019s class a common stock .
the weighted average fair value for the espp shares purchased during 2007 , 2006 and 2005 were $ 9.09 , $ 6.79 and $ 5.15 , respectively .
at december 31 , 2007 , 3895402 shares remain reserved for future issuance under the plan .
key assumptions used to apply this pricing model for the years ended december 31 , are as follows: .

                                                               | 2007                                      | 2006                                      | 2005
-------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | -----------------------------------------
range of risk free interest rates                              | 4.98% ( 4.98 % ) 20145.05% ( 20145.05 % ) | 5.01% ( 5.01 % ) 20145.17% ( 20145.17 % ) | 3.17% ( 3.17 % ) 20144.30% ( 20144.30 % )
weighted average risk-free interest rate                       | 5.02% ( 5.02 % )                          | 5.08% ( 5.08 % )                          | 3.72% ( 3.72 % )
expected life of the shares                                    | 6 months                                  | 6 months                                  | 6 months
range of expected volatility of underlying stock price         | 27.5% ( 27.5 % ) 201428.7% ( 201428.7 % ) | 29.6% ( 29.6 % )                          | 29.6% ( 29.6 % ) 201477.8% ( 201477.8 % )
weighted average expected volatility of underlying stock price | 28.2% ( 28.2 % )                          | 29.6% ( 29.6 % )                          | 54.30% ( 54.30 % )
expected annual dividends                                      | n/a                                       | n/a                                       | n/a


in addition , included in the loan table are purchased distressed loans , which are loans that have evidenced significant credit deterioration subsequent to origination but prior to acquisition by citigroup .
in accordance with sop 03-3 , the difference between the total expected cash flows for these loans and the initial recorded investments is recognized in income over the life of the loans using a level yield .
accordingly , these loans have been excluded from the impaired loan information presented above .
in addition , per sop 03-3 , subsequent decreases to the expected cash flows for a purchased distressed loan require a build of an allowance so the loan retains its level yield .
however , increases in the expected cash flows are first recognized as a reduction of any previously established allowance and then recognized as income prospectively over the remaining life of the loan by increasing the loan 2019s level yield .
where the expected cash flows cannot be reliably estimated , the purchased distressed loan is accounted for under the cost recovery method .
the carrying amount of the purchased distressed loan portfolio at december 31 , 2009 was $ 825 million net of an allowance of $ 95 million .
the changes in the accretable yield , related allowance and carrying amount net of accretable yield for 2009 are as follows : in millions of dollars accretable carrying amount of loan receivable allowance .

in millions of dollars                 | accretable yield | carrying amount of loan receivable | allowance
-------------------------------------- | ---------------- | ---------------------------------- | ----------
beginning balance                      | $ 92             | $ 1510                             | $ 122
purchases ( 1 )                        | 14               | 329                                | 2014
disposals/payments received            | -5 ( 5 )         | -967 ( 967 )                       | 2014
accretion                              | -52 ( 52 )       | 52                                 | 2014
builds ( reductions ) to the allowance | -21 ( 21 )       | 1                                  | -27 ( 27 )
increase to expected cash flows        | 10               | 2                                  | 2014
fx/other                               | -11 ( 11 )       | -7 ( 7 )                           | 2014
balance december 31 2009 ( 2 )         | $ 27             | $ 920                              | $ 95

( 1 ) the balance reported in the column 201ccarrying amount of loan receivable 201d consists of $ 87 million of purchased loans accounted for under the level-yield method and $ 242 million under the cost-recovery method .
these balances represent the fair value of these loans at their acquisition date .
the related total expected cash flows for the level-yield loans were $ 101 million at their acquisition dates .
( 2 ) the balance reported in the column 201ccarrying amount of loan receivable 201d consists of $ 561 million of loans accounted for under the level-yield method and $ 359 million accounted for under the cost-recovery method.


shareowner return performance graph the following performance graph and related information shall not be deemed 201csoliciting material 201d or to be 201cfiled 201d with the sec , nor shall such information be incorporated by reference into any future filing under the securities act of 1933 or securities exchange act of 1934 , each as amended , except to the extent that the company specifically incorporates such information by reference into such filing .
the following graph shows a five year comparison of cumulative total shareowners 2019 returns for our class b common stock , the standard & poor 2019s 500 index , and the dow jones transportation average .
the comparison of the total cumulative return on investment , which is the change in the quarterly stock price plus reinvested dividends for each of the quarterly periods , assumes that $ 100 was invested on december 31 , 2010 in the standard & poor 2019s 500 index , the dow jones transportation average , and our class b common stock. .

                                 | 12/31/2010 | 12/31/2011 | 12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015
-------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
united parcel service inc .      | $ 100.00   | $ 103.88   | $ 107.87   | $ 158.07   | $ 171.77   | $ 160.61
standard & poor 2019s 500 index  | $ 100.00   | $ 102.11   | $ 118.43   | $ 156.77   | $ 178.22   | $ 180.67
dow jones transportation average | $ 100.00   | $ 100.01   | $ 107.49   | $ 151.97   | $ 190.08   | $ 158.23


table of contents marketaxess holdings inc .
notes to consolidated financial statements 2014 ( continued ) ( in thousands , except share and per share amounts ) the combined aggregate amount of redemption requirements for the senior preferred shares was as follows : shares of series b convertible preferred stock were convertible into common stock on a 3.33-for-one basis and only in connection with an initial public offering of the company 2019s stock .
dividends on the series b convertible preferred stock accrued at the rate of 8% ( 8 % ) per annum and were subordinate to dividend payments on the senior preferred shares .
shares of series b convertible preferred stock had a liquidation preference equal to the original issue price plus all cumulative accrued but unpaid dividends .
the liquidation preference was subordinate to that of the senior preferred shares .
cumulative accrued but unpaid dividends were forfeited upon conversion of shares of series b convertible preferred stock into common stock .
as such , the company did not accrue dividends , as liquidation of the shares of series b convertible preferred stock was not anticipated .
as of december 31 , 2004 , the company had 110000000 authorized shares of common stock and 10000000 authorized shares of non-voting common stock .
as of december 31 , 2003 , the company had 120000000 authorized shares of common stock and 450060 authorized shares of non-voting common stock .
common stock entitles the holder to one vote per share of common stock held .
non-voting common stock is convertible on a one-for-one basis into shares of common stock at any time subject to a limitation on conversion to the extent such conversion would result in a stockholder , together with its affiliates , owning more than 9.99% ( 9.99 % ) of the outstanding shares of common stock .
on march 30 , 2004 , the company 2019s board of directors authorized , and on november 1 , 2004 the company effectuated , a one-for-three reverse stock split of shares of common stock and non-voting common stock to be effective prior to the closing of the company 2019s initial public offering .
all references in these financial statements to the number of shares of common stock and non-voting common stock of the company , securities convertible or exercisable therefor and per share amounts have been restated for all periods presented to reflect the effect of the common stock reverse stock split .
in 2004 and 2003 , the company had 1939734 shares and 1937141 shares , respectively , of common stock that were issued to employees .
included in these amounts , in 2001 , the company awarded 64001 shares and 289581 shares to employees at $ .003 and $ 3.60 , respectively , per share .
the common stock subscribed was issued in 2001 in exchange for three-year promissory notes ( 64001 shares ) and eleven-year promissory notes ( 289581 shares ) , which bear interest at the applicable federal rate and are collateralized by the subscribed shares .
the promissory note due in 2004 was repaid on january 15 , 2005 .
compensation expense in relation to the excess of the fair value of such awards over the amount paid will be recorded over the vesting period .
the awards vest over a period of either one and one-half or three years and are restricted as to transferability based on the vesting schedule set forth in the award agreement .
the eleven-year promissory notes ( 289581 shares ) were entered into in connection with the loans of approximately $ 1042 made to the company 2019s chief executive officer in 2001 .
these loans were made prior to the passage of the sarbanes-oxley act of 2002. .

year ended december 31, | as of december 31 , 2004 | as of december 31 , 2003
----------------------- | ------------------------ | ------------------------
2005                    | $ 2014                   | $ 177973

convertible preferred stock 9 .
stockholders 2019 equity ( deficit ) common stock restricted common stock and common stock subscribed


the aes corporation notes to consolidated financial statements 2014 ( continued ) december 31 , 2011 , 2010 , and 2009 company for an aggregate proceeds of approximately $ 234 million .
the company recognized a gain on disposal of $ 6 million , net of tax , during the year ended december 31 , 2010 .
ras laffan was previously reported in the asia generation segment .
23 .
acquisitions and dispositions acquisitions dpl 2014on november 28 , 2011 , aes completed its acquisition of 100% ( 100 % ) of the common stock of dpl for approximately $ 3.5 billion , pursuant to the terms and conditions of a definitive agreement ( the 201cmerger agreement 201d ) dated april 19 , 2011 .
dpl serves over 500000 customers , primarily west central ohio , through its operating subsidiaries dp&l and dpl energy resources ( 201cdpler 201d ) .
additionally , dpl operates over 3800 mw of power generation facilities and provides competitive retail energy services to residential , commercial , industrial and governmental customers .
the acquisition strengthens the company 2019s u.s .
utility operations by expanding in the midwest and pjm , a regional transmission organization serving several eastern states as part of the eastern interconnection .
the company expects to benefit from the regional scale provided by indianapolis power & light company , its nearby integrated utility business in indiana .
aes funded the aggregate purchase consideration through a combination of the following : 2022 the proceeds from a $ 1.05 billion term loan obtained in may 2011 ; 2022 the proceeds from a private offering of $ 1.0 billion notes in june 2011 ; 2022 temporary borrowings of $ 251 million under its revolving credit facility ; and 2022 the proceeds from private offerings of $ 450 million aggregate principal amount of 6.50% ( 6.50 % ) senior notes due 2016 and $ 800 million aggregate principal amount of 7.25% ( 7.25 % ) senior notes due 2021 ( collectively , the 201cnotes 201d ) in october 2011 by dolphin subsidiary ii , inc .
( 201cdolphin ii 201d ) , a wholly-owned special purpose indirect subsidiary of aes , which was merged into dpl upon the completion of acquisition .
the fair value of the consideration paid for dpl was as follows ( in millions ) : .

agreed enterprise value                                     | $ 4719
----------------------------------------------------------- | --------------
less : fair value of assumed long-term debt outstanding net | -1255 ( 1255 )
cash consideration paid to dpl 2019s common stockholders    | 3464
add : cash paid for outstanding stock-based awards          | 19
total cash consideration paid                               | $ 3483