for intangible assets subject to amortization , the estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows : 2009 - $ 41.1 million , 2010 - $ 27.3 million , 2011 - $ 20.9 million , 2012 - $ 17.0 million , and 2013 - $ 12.0 million .
fees and expenses related to the merger totaled $ 102.6 million , principally consisting of investment banking fees , legal fees and stock compensation ( $ 39.4 million as further discussed in note 10 ) , and are reflected in the 2007 results of operations .
capitalized debt issuance costs as of the merger date of $ 87.4 million for merger-related financing were reflected in other long- term assets in the consolidated balance sheet .
the following represents the unaudited pro forma results of the company 2019s consolidated operations as if the merger had occurred on february 3 , 2007 and february 4 , 2006 , respectively , after giving effect to certain adjustments , including the depreciation and amortization of the assets acquired based on their estimated fair values and changes in interest expense resulting from changes in consolidated debt ( in thousands ) : ( in thousands ) year ended february 1 , year ended february 2 .

( in thousands ) | year endedfebruary 12008 | year endedfebruary 22007
---------------- | ------------------------ | ------------------------
revenue          | $ 9495246                | $ 9169822
net loss         | -57939 ( 57939 )         | ( 156188 )

the pro forma information does not purport to be indicative of what the company 2019s results of operations would have been if the acquisition had in fact occurred at the beginning of the periods presented , and is not intended to be a projection of the company 2019s future results of operations .
subsequent to the announcement of the merger agreement , the company and its directors , along with other parties , were named in seven putative class actions filed in tennessee state courts alleging claims for breach of fiduciary duty arising out of the proposed merger , all as described more fully under 201clegal proceedings 201d in note 8 below .
3 .
strategic initiatives during 2006 , the company began implementing certain strategic initiatives related to its historical inventory management and real estate strategies , as more fully described below .
inventory management in november 2006 , the company undertook an initiative to discontinue its historical inventory packaway model for virtually all merchandise by the end of fiscal 2007 .
under the packaway model , certain unsold inventory items ( primarily seasonal merchandise ) were stored on-site and returned to the sales floor until the items were eventually sold , damaged or discarded .
through end-of-season and other markdowns , this initiative resulted in the elimination of seasonal , home products and basic clothing packaway merchandise to allow for increased levels of newer , current-season merchandise .
in connection with this strategic change , in the third quarter of 2006 the company recorded a reserve for lower of cost or market inventory


american tower corporation and subsidiaries notes to consolidated financial statements 2014 ( continued ) as of december 31 , 2006 , the company held a total of ten interest rate swap agreements to manage exposure to variable rate interest obligations under its amt opco and spectrasite credit facilities and four forward starting interest rate swap agreements to manage exposure to variability in cash flows relating to forecasted interest payments in connection with the securitization which the company designated as cash flow hedges .
the eight american tower swaps had an aggregate notional amount of $ 450.0 million and fixed rates ranging between 4.63% ( 4.63 % ) and 4.88% ( 4.88 % ) and the two spectrasite swaps have an aggregate notional amount of $ 100.0 million and a fixed rate of 4.95% ( 4.95 % ) .
the four forward starting interest rate swap agreements had an aggregate notional amount of $ 900.0 million , fixed rates ranging between 4.73% ( 4.73 % ) and 5.10% ( 5.10 % ) .
as of december 31 , 2006 , the company also held three interest rate swap instruments and one interest rate cap instrument that were acquired in the spectrasite , inc .
merger in august 2005 and were not designated as cash flow hedges .
the three interest rate swaps , which had a fair value of $ 6.7 million at the date of acquisition , have an aggregate notional amount of $ 300.0 million , a fixed rate of 3.88% ( 3.88 % ) .
the interest rate cap had a notional amount of $ 175.0 million , a fixed rate of 7.0% ( 7.0 % ) , and expired in february 2006 .
as of december 31 , 2006 , other comprehensive income includes unrealized gains on short term available-for-sale securities of $ 10.4 million and unrealized gains related to the interest rate swap agreements in the table above of $ 5.7 million , net of tax .
during the year ended december 31 , 2006 , the company recorded a net unrealized gain of approximately $ 6.5 million ( net of a tax provision of approximately $ 3.5 million ) in other comprehensive loss for the change in fair value of interest rate swaps designated as cash flow hedges and reclassified $ 0.7 million ( net of an income tax benefit of $ 0.2 million ) into results of operations during the year ended december 31 , 2006 .
9 .
commitments and contingencies lease obligations 2014the company leases certain land , office and tower space under operating leases that expire over various terms .
many of the leases contain renewal options with specified increases in lease payments upon exercise of the renewal option .
escalation clauses present in operating leases , excluding those tied to cpi or other inflation-based indices , are recognized on a straight-line basis over the non-cancelable term of the lease .
( see note 1. ) future minimum rental payments under non-cancelable operating leases include payments for certain renewal periods at the company 2019s option because failure to renew could result in a loss of the applicable tower site and related revenues from tenant leases , thereby making it reasonably assured that the company will renew the lease .
such payments in effect at december 31 , 2007 are as follows ( in thousands ) : year ending december 31 .

2008       | $ 217969
---------- | ---------
2009       | 215763
2010       | 208548
2011       | 199024
2012       | 190272
thereafter | 2451496
total      | $ 3483072

aggregate rent expense ( including the effect of straight-line rent expense ) under operating leases for the years ended december 31 , 2007 , 2006 and 2005 approximated $ 246.4 million , $ 237.0 million and $ 168.7 million , respectively.


aeronautics our aeronautics business segment is engaged in the research , design , development , manufacture , integration , sustainment , support and upgrade of advanced military aircraft , including combat and air mobility aircraft , unmanned air vehicles and related technologies .
aeronautics 2019 major programs include the f-35 lightning ii joint strike fighter , c-130 hercules , f-16 fighting falcon , c-5m super galaxy and f-22 raptor .
aeronautics 2019 operating results included the following ( in millions ) : .

                    | 2015             | 2014             | 2013
------------------- | ---------------- | ---------------- | ----------------
net sales           | $ 15570          | $ 14920          | $ 14123
operating profit    | 1681             | 1649             | 1612
operating margins   | 10.8% ( 10.8 % ) | 11.1% ( 11.1 % ) | 11.4% ( 11.4 % )
backlog at year-end | $ 31800          | $ 27600          | $ 28000

2015 compared to 2014 aeronautics 2019 net sales in 2015 increased $ 650 million , or 4% ( 4 % ) , compared to 2014 .
the increase was attributable to higher net sales of approximately $ 1.4 billion for f-35 production contracts due to increased volume on aircraft production and sustainment activities ; and approximately $ 150 million for the c-5 program due to increased deliveries ( nine aircraft delivered in 2015 compared to seven delivered in 2014 ) .
the increases were partially offset by lower net sales of approximately $ 350 million for the c-130 program due to fewer aircraft deliveries ( 21 aircraft delivered in 2015 , compared to 24 delivered in 2014 ) , lower sustainment activities and aircraft contract mix ; approximately $ 200 million due to decreased volume and lower risk retirements on various programs ; approximately $ 195 million for the f-16 program due to fewer deliveries ( 11 aircraft delivered in 2015 , compared to 17 delivered in 2014 ) ; and approximately $ 190 million for the f-22 program as a result of decreased sustainment activities .
aeronautics 2019 operating profit in 2015 increased $ 32 million , or 2% ( 2 % ) , compared to 2014 .
operating profit increased by approximately $ 240 million for f-35 production contracts due to increased volume and risk retirements ; and approximately $ 40 million for the c-5 program due to increased risk retirements .
these increases were offset by lower operating profit of approximately $ 90 million for the f-22 program due to lower risk retirements ; approximately $ 70 million for the c-130 program as a result of the reasons stated above for lower net sales ; and approximately $ 80 million due to decreased volume and risk retirements on various programs .
adjustments not related to volume , including net profit booking rate adjustments and other matters , were approximately $ 100 million higher in 2015 compared to 2014 .
2014 compared to 2013 aeronautics 2019 net sales increased $ 797 million , or 6% ( 6 % ) , in 2014 as compared to 2013 .
the increase was primarily attributable to higher net sales of approximately $ 790 million for f-35 production contracts due to increased volume and sustainment activities ; about $ 55 million for the f-16 program due to increased deliveries ( 17 aircraft delivered in 2014 compared to 13 delivered in 2013 ) partially offset by contract mix ; and approximately $ 45 million for the f-22 program due to increased risk retirements .
the increases were partially offset by lower net sales of approximately $ 55 million for the f-35 development contract due to decreased volume , partially offset by the absence in 2014 of the downward revision to the profit booking rate that occurred in 2013 ; and about $ 40 million for the c-130 program due to fewer deliveries ( 24 aircraft delivered in 2014 compared to 25 delivered in 2013 ) and decreased sustainment activities , partially offset by contract mix .
aeronautics 2019 operating profit increased $ 37 million , or 2% ( 2 % ) , in 2014 as compared to 2013 .
the increase was primarily attributable to higher operating profit of approximately $ 85 million for the f-35 development contract due to the absence in 2014 of the downward revision to the profit booking rate that occurred in 2013 ; about $ 75 million for the f-22 program due to increased risk retirements ; approximately $ 50 million for the c-130 program due to increased risk retirements and contract mix , partially offset by fewer deliveries ; and about $ 25 million for the c-5 program due to the absence in 2014 of the downward revisions to the profit booking rate that occurred in 2013 .
the increases were partially offset by lower operating profit of approximately $ 130 million for the f-16 program due to decreased risk retirements , partially offset by increased deliveries ; and about $ 70 million for sustainment activities due to decreased risk retirements and volume .
operating profit was comparable for f-35 production contracts as higher volume was offset by lower risk retirements .
adjustments not related to volume , including net profit booking rate adjustments and other matters , were approximately $ 105 million lower for 2014 compared to 2013.


item 1b .
unresolved staff comments not applicable .
item 2 .
properties our global headquarters are located in chicago , illinois , at 20 south wacker drive .
the following is a description of our key locations and facilities .
location primary use owned/leased lease expiration approximate size ( in square feet ) ( 1 ) 20 south wacker drive chicago , illinois global headquarters and office space leased 2032 ( 2 ) 512000 141 west jackson chicago , illinois trading floor and office space leased 2027 ( 3 ) 150000 333 s .
lasalle chicago , illinois trading floor and office space owned n/a 300000 550 west washington chicago , illinois office space leased 2023 250000 one north end new york , new york trading floor and office space leased 2028 ( 4 ) 240000 .

location                               | primary use                          | owned/leased | lease expiration | approximate size ( in square feet ) ( 1 )
-------------------------------------- | ------------------------------------ | ------------ | ---------------- | -----------------------------------------
20 south wacker drive chicago illinois | global headquarters and office space | leased       | 2032 ( 2 )       | 512000
141 west jacksonchicago illinois       | trading floor and office space       | leased       | 2027 ( 3 )       | 150000
333 s . lasallechicago illinois        | trading floor and office space       | owned        | n/a              | 300000
550 west washingtonchicago illinois    | office space                         | leased       | 2023             | 250000
one north endnew york new york         | trading floor and office space       | leased       | 2028 ( 4 )       | 240000
one new change london                  | office space                         | leased       | 2026             | 58000
data center 3chicagoland area          | business continuity and co-location  | leased       | 2031 ( 5 )       | 83000
bagmane tech park bangalore india      | office space                         | leased       | 2020 ( 6 )       | 72000

data center 3 chicagoland area business continuity and co-location leased 2031 ( 5 ) 83000 bagmane tech park bangalore , office space leased 2020 ( 6 ) 72000 ( 1 ) size represents the amount of space leased or owned by us unless otherwise noted .
( 2 ) the initial lease expires in 2032 with two consecutive options to extend the term for five years each .
( 3 ) the initial lease expires in 2027 and contains options to extend the term and expand the premises .
( 4 ) the initial lease expires in 2028 and contains options to extend the term and expand the premises .
in 2019 , the premises will be reduced to 225000 square feet .
( 5 ) in march 2016 , the company sold its datacenter in the chicago area for $ 130.0 million .
at the time of the sale , the company leased back a portion of the property .
( 6 ) the initial lease expires in 2020 and contains an option to extend the term as well as an option to terminate early .
item 3 .
legal proceedings see 201clegal and regulatory matters 201d in note 12 .
contingencies to the consolidated financial statements beginning on page 87 for cme group 2019s legal proceedings disclosure which is incorporated herein by reference .
item 4 .
mine safety disclosures not applicable.


we hold an interest rate swap agreement to hedge the benchmark interest rate of our $ 375 million 5.0% ( 5.0 % ) senior unsecured notes due july 1 , 2014 .
the effect of the swap is to convert our 5.0% ( 5.0 % ) fixed interest rate to a variable interest rate based on the three-month libor plus 2.05% ( 2.05 % ) ( 2.42% ( 2.42 % ) as of october 29 , 2011 ) .
in addition , we have a term loan facility of $ 145 million that bears interest at a fluctuating rate for each period equal to the libor rate corresponding with the tenor of the interest period plus a spread of 1.25% ( 1.25 % ) ( 1.61% ( 1.61 % ) as of october 29 , 2011 ) .
if libor increases by 100 basis points , our annual interest expense would increase by approximately $ 5 million .
however , this hypothetical change in interest rates would not impact the interest expense on our $ 375 million of 3% ( 3 % ) fixed-rate debt , which is not hedged .
as of october 30 , 2010 , a similar 100 basis point increase in libor would have resulted in an increase of approximately $ 4 million to our annual interest expense .
foreign currency exposure as more fully described in note 2i in the notes to consolidated financial statements contained in item 8 of this annual report on form 10-k , we regularly hedge our non-u.s .
dollar-based exposures by entering into forward foreign currency exchange contracts .
the terms of these contracts are for periods matching the duration of the underlying exposure and generally range from one month to twelve months .
currently , our largest foreign currency exposure is the euro , primarily because our european operations have the highest proportion of our local currency denominated expenses .
relative to foreign currency exposures existing at october 29 , 2011 and october 30 , 2010 , a 10% ( 10 % ) unfavorable movement in foreign currency exchange rates over the course of the year would expose us to approximately $ 6 million in losses in earnings or cash flows .
the market risk associated with our derivative instruments results from currency exchange rates that are expected to offset the market risk of the underlying transactions , assets and liabilities being hedged .
the counterparties to the agreements relating to our foreign exchange instruments consist of a number of major international financial institutions with high credit ratings .
based on the credit ratings of our counterparties as of october 29 , 2011 , we do not believe that there is significant risk of nonperformance by them .
while the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions , they do not represent the amount of our exposure to credit risk .
the amounts potentially subject to credit risk ( arising from the possible inability of counterparties to meet the terms of their contracts ) are generally limited to the amounts , if any , by which the counterparties 2019 obligations under the contracts exceed our obligations to the counterparties .
the following table illustrates the effect that a 10% ( 10 % ) unfavorable or favorable movement in foreign currency exchange rates , relative to the u.s .
dollar , would have on the fair value of our forward exchange contracts as of october 29 , 2011 and october 30 , 2010: .

                                                                                | october 29 2011    | october 30 2010
----------------------------------------------------------------------------------------------------------------------------- | ------------------ | ----------------
fair value of forward exchange contracts asset                                                                                | $ 2472             | $ 7256
fair value of forward exchange contracts after a 10% ( 10 % ) unfavorable movement in foreign currency exchange rates asset   | $ 17859            | $ 22062
fair value of forward exchange contracts after a 10% ( 10 % ) favorable movement in foreign currency exchange rates liability | $ -13332 ( 13332 ) | $ -7396 ( 7396 )

fair value of forward exchange contracts after a 10% ( 10 % ) unfavorable movement in foreign currency exchange rates asset .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
$ 17859 $ 22062 fair value of forward exchange contracts after a 10% ( 10 % ) favorable movement in foreign currency exchange rates liability .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
$ ( 13332 ) $ ( 7396 ) the calculation assumes that each exchange rate would change in the same direction relative to the u.s .
dollar .
in addition to the direct effects of changes in exchange rates , such changes typically affect the volume of sales or the foreign currency sales price as competitors 2019 products become more or less attractive .
our sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency selling prices.


item 7a .
quantitative and qualitative disclosures about market risk ( amounts in millions ) in the normal course of business , we are exposed to market risks related to interest rates , foreign currency rates and certain balance sheet items .
from time to time , we use derivative instruments , pursuant to established guidelines and policies , to manage some portion of these risks .
derivative instruments utilized in our hedging activities are viewed as risk management tools and are not used for trading or speculative purposes .
interest rates our exposure to market risk for changes in interest rates relates primarily to the fair market value and cash flows of our debt obligations .
the majority of our debt ( approximately 94% ( 94 % ) and 93% ( 93 % ) as of december 31 , 2017 and 2016 , respectively ) bears interest at fixed rates .
we do have debt with variable interest rates , but a 10% ( 10 % ) increase or decrease in interest rates would not be material to our interest expense or cash flows .
the fair market value of our debt is sensitive to changes in interest rates , and the impact of a 10% ( 10 % ) change in interest rates is summarized below .
increase/ ( decrease ) in fair market value as of december 31 , 10% ( 10 % ) increase in interest rates 10% ( 10 % ) decrease in interest rates .

as of december 31, | increase/ ( decrease ) in fair market value 10% ( 10 % ) increasein interest rates | increase/ ( decrease ) in fair market value 10% ( 10 % ) decreasein interest rates
------------------ | ---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------
2017               | $ -20.2 ( 20.2 )                                                                   | $ 20.6
2016               | -26.3 ( 26.3 )                                                                     | 26.9

we have used interest rate swaps for risk management purposes to manage our exposure to changes in interest rates .
we did not have any interest rate swaps outstanding as of december 31 , 2017 .
we had $ 791.0 of cash , cash equivalents and marketable securities as of december 31 , 2017 that we generally invest in conservative , short-term bank deposits or securities .
the interest income generated from these investments is subject to both domestic and foreign interest rate movements .
during 2017 and 2016 , we had interest income of $ 19.4 and $ 20.1 , respectively .
based on our 2017 results , a 100 basis-point increase or decrease in interest rates would affect our interest income by approximately $ 7.9 , assuming that all cash , cash equivalents and marketable securities are impacted in the same manner and balances remain constant from year-end 2017 levels .
foreign currency rates we are subject to translation and transaction risks related to changes in foreign currency exchange rates .
since we report revenues and expenses in u.s .
dollars , changes in exchange rates may either positively or negatively affect our consolidated revenues and expenses ( as expressed in u.s .
dollars ) from foreign operations .
the foreign currencies that most impacted our results during 2017 included the british pound sterling and , to a lesser extent , brazilian real and south african rand .
based on 2017 exchange rates and operating results , if the u.s .
dollar were to strengthen or weaken by 10% ( 10 % ) , we currently estimate operating income would decrease or increase approximately 4% ( 4 % ) , assuming that all currencies are impacted in the same manner and our international revenue and expenses remain constant at 2017 levels .
the functional currency of our foreign operations is generally their respective local currency .
assets and liabilities are translated at the exchange rates in effect at the balance sheet date , and revenues and expenses are translated at the average exchange rates during the period presented .
the resulting translation adjustments are recorded as a component of accumulated other comprehensive loss , net of tax , in the stockholders 2019 equity section of our consolidated balance sheets .
our foreign subsidiaries generally collect revenues and pay expenses in their functional currency , mitigating transaction risk .
however , certain subsidiaries may enter into transactions in currencies other than their functional currency .
assets and liabilities denominated in currencies other than the functional currency are susceptible to movements in foreign currency until final settlement .
currency transaction gains or losses primarily arising from transactions in currencies other than the functional currency are included in office and general expenses .
we regularly review our foreign exchange exposures that may have a material impact on our business and from time to time use foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of potential adverse fluctuations in foreign currency exchange rates arising from these exposures .
we do not enter into foreign exchange contracts or other derivatives for speculative purposes.


entergy mississippi , inc .
management's financial discussion and analysis sources of capital entergy mississippi's sources to meet its capital requirements include : internally generated funds ; cash on hand ; debt or preferred stock issuances ; and bank financing under new or existing facilities .
entergy mississippi may refinance or redeem debt and preferred stock prior to maturity , to the extent market conditions and interest and dividend rates are favorable .
all debt and common and preferred stock issuances by entergy mississippi require prior regulatory approval .
preferred stock and debt issuances are also subject to issuance tests set forth in its corporate charter , bond indenture , and other agreements .
entergy mississippi has sufficient capacity under these tests to meet its foreseeable capital needs .
entergy mississippi has two separate credit facilities in the aggregate amount of $ 50 million and renewed both facilities through may 2009 .
borrowings under the credit facilities may be secured by a security interest in entergy mississippi's accounts receivable .
no borrowings were outstanding under either credit facility as of december 31 , 2008 .
entergy mississippi has obtained short-term borrowing authorization from the ferc under which it may borrow through march 31 , 2010 , up to the aggregate amount , at any one time outstanding , of $ 175 million .
see note 4 to the financial statements for further discussion of entergy mississippi's short-term borrowing limits .
entergy mississippi has also obtained an order from the ferc authorizing long-term securities issuances .
the current long-term authorization extends through june 30 , 2009 .
entergy mississippi's receivables from or ( payables to ) the money pool were as follows as of december 31 for each of the following years: .

2008             | 2007             | 2006             | 2005
---------------- | ---------------- | ---------------- | ----------------
( in thousands ) | ( in thousands ) | ( in thousands ) | ( in thousands )
( $ 66044 )      | $ 20997          | $ 39573          | ( $ 84066 )

in may 2007 , $ 6.6 million of entergy mississippi's receivable from the money pool was replaced by a note receivable from entergy new orleans .
see note 4 to the financial statements for a description of the money pool .
state and local rate regulation the rates that entergy mississippi charges for electricity significantly influence its financial position , results of operations , and liquidity .
entergy mississippi is regulated and the rates charged to its customers are determined in regulatory proceedings .
a governmental agency , the mpsc , is primarily responsible for approval of the rates charged to customers .
formula rate plan in march 2008 , entergy mississippi made its annual scheduled formula rate plan filing for the 2007 test year with the mpsc .
the filing showed that a $ 10.1 million increase in annual electric revenues is warranted .
in june 2008 , entergy mississippi reached a settlement with the mississippi public utilities staff that would result in a $ 3.8 million rate increase .
in january 2009 the mpsc rejected the settlement and left the current rates in effect .
entergy mississippi appealed the mpsc's decision to the mississippi supreme court.


year .
beginning in 2013 , the ventures pay dividends on a quarterly basis .
in 2013 , 2012 and 2011 , we received cash dividends of $ 92 million , $ 83 million and $ 78 million , respectively .
in 2012 our nantong venture completed an expansion of its acetate flake and acetate tow capacity , each by 30000 tons .
we made contributions of $ 29 million from 2009 through 2012 related to the capacity expansion in nantong .
similar expansions since the ventures were formed have led to earnings growth and increased dividends for the company .
according to the euromonitor database services , china is estimated to have had a 42% ( 42 % ) share of the world's 2012 cigarette consumption .
cigarette consumption in china is expected to grow at a rate of 1.9% ( 1.9 % ) per year from 2012 through 2017 .
combined , these ventures are a leader in chinese domestic acetate production and we believe we are well positioned to supply chinese cigarette producers .
although our ownership interest in each of our cellulose derivatives ventures exceeds 20% ( 20 % ) , we account for these investments using the cost method of accounting because we determined that we cannot exercise significant influence over these entities due to local government investment in and influence over these entities , limitations on our involvement in the day-to-day operations and the present inability of the entities to provide timely financial information prepared in accordance with generally accepted accounting principles in the united states of america ( "us gaap" ) .
2022 other equity method investments infraservs .
we hold indirect ownership interests in several german infraserv groups that own and develop industrial parks and provide on-site general and administrative support to tenants .
our ownership interest in the equity investments in infraserv affiliates are as follows : as of december 31 , 2013 ( in percentages ) .

                                  | as of december 31 2013 ( in percentages )
--------------------------------- | -----------------------------------------
infraserv gmbh & co . gendorf kg  | 39
infraserv gmbh & co . knapsack kg | 27
infraserv gmbh & co . hoechst kg  | 32

research and development our businesses are innovation-oriented and conduct research and development activities to develop new , and optimize existing , production technologies , as well as to develop commercially viable new products and applications .
we consider the amounts spent during each of the last three fiscal years on research and development activities to be sufficient to execute our current strategic initiatives .
intellectual property we attach importance to protecting our intellectual property , including through patents , trademarks , copyrights and product designs in order to preserve our investment in research and development , manufacturing and marketing .
patents may cover processes , products , intermediate products and product uses .
we also seek to register trademarks as a means of protecting the brand names of our company and products .
we protect our intellectual property against infringement and also seek to register design protection where appropriate .
patents .
in most industrial countries , patent protection exists for new substances and formulations , as well as for certain unique applications and production processes .
however , we do business in regions of the world where intellectual property protection may be limited and difficult to enforce .
we maintain strict information security policies and procedures wherever we do business .
such information security policies and procedures include data encryption , controls over the disclosure and safekeeping of confidential information , as well as employee awareness training .
moreover , we monitor competitive developments and defend against infringements on our intellectual property rights .
trademarks .
aoplus ae , aoplus ae2 , aoplus ae3 , ateva ae , avicor ae , britecoat ae , celanese ae , celanex ae , celcon ae , celfx 2122 , celstran ae , celvolit ae , clarifoil ae , compel ae , duroset ae , ecovae ae , factor ae , fortron ae , gur ae , hostaform ae , impet ae , mowilith ae , nutrinova ae , qorus 2122 , riteflex ae , sunett ae , tcx 2122 , thermx ae , tufcor ae , vandar ae , vantage ae , vantageplus 2122 , vantage ae2 , vectra ae , vinamul ae , vitaldose ae , zenite ae and certain other branded products and services named in this document are registered or reserved trademarks or service marks owned or licensed by celanese .
the foregoing is not intended to be an exhaustive or comprehensive list of all registered or reserved trademarks and service marks owned or licensed by celanese .
fortron ae is a registered trademark of fortron industries llc.


to maturity at any time in whole or in part at the option of the company at a 201cmake-whole 201d redemption price .
the 2017 notes were issued at a discount of $ 6 million , which is being amortized over their ten-year term .
the company incurred approximately $ 4 million of debt issuance costs , which are being amortized over ten years .
at december 31 , 2013 , $ 2 million of unamortized debt issuance costs was included in other assets on the consolidated statement of financial condition .
13 .
commitments and contingencies operating lease commitments the company leases its primary office spaces under agreements that expire through 2035 .
future minimum commitments under these operating leases are as follows : ( in millions ) .

year       | amount
---------- | ------
2014       | $ 135
2015       | 127
2016       | 110
2017       | 109
2018       | 106
thereafter | 699
total      | $ 1286

rent expense and certain office equipment expense under agreements amounted to $ 137 million , $ 133 million and $ 154 million in 2013 , 2012 and 2011 , respectively .
investment commitments .
at december 31 , 2013 , the company had $ 216 million of various capital commitments to fund sponsored investment funds , including funds of private equity funds , real estate funds , infrastructure funds , opportunistic funds and distressed credit funds .
this amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds .
generally , the timing of the funding of these commitments is unknown and the commitments are callable on demand at any time prior to the expiration of the commitment .
these unfunded commitments are not recorded on the consolidated statements of financial condition .
these commitments do not include potential future commitments approved by the company , but which are not yet legally binding .
the company intends to make additional capital commitments from time to time to fund additional investment products for , and with , its clients .
contingencies contingent payments .
the company acts as the portfolio manager in a series of credit default swap transactions and has a maximum potential exposure of $ 17 million under a credit default swap between the company and counterparty .
see note 7 , derivatives and hedging , for further discussion .
contingent payments related to business acquisitions .
in connection with the credit suisse etf transaction , blackrock is required to make contingent payments annually to credit suisse , subject to achieving specified thresholds during a seven-year period , subsequent to the acquisition date .
in addition , blackrock is required to make contingent payments related to the mgpa transaction during a five-year period , subject to achieving specified thresholds , subsequent to the acquisition date .
the fair value of the contingent payments at december 31 , 2013 is not significant to the consolidated statement of financial condition and is included in other liabilities .
legal proceedings .
from time to time , blackrock receives subpoenas or other requests for information from various u.s .
federal , state governmental and domestic and international regulatory authorities in connection with certain industry-wide or other investigations or proceedings .
it is blackrock 2019s policy to cooperate fully with such inquiries .
the company and certain of its subsidiaries have been named as defendants in various legal actions , including arbitrations and other litigation arising in connection with blackrock 2019s activities .
additionally , certain blackrock- sponsored investment funds that the company manages are subject to lawsuits , any of which potentially could harm the investment returns of the applicable fund or result in the company being liable to the funds for any resulting damages .
management , after consultation with legal counsel , currently does not anticipate that the aggregate liability , if any , arising out of regulatory matters or lawsuits will have a material effect on blackrock 2019s results of operations , financial position , or cash flows .
however , there is no assurance as to whether any such pending or threatened matters will have a material effect on blackrock 2019s results of operations , financial position or cash flows in any future reporting period .
due to uncertainties surrounding the outcome of these matters , management cannot reasonably estimate the possible loss or range of loss that may arise from these matters .
indemnifications .
in the ordinary course of business or in connection with certain acquisition agreements , blackrock enters into contracts pursuant to which it may agree to indemnify third parties in certain circumstances .
the terms of these indemnities vary from contract to contract and the amount of indemnification liability , if any , cannot be determined or the likelihood of any liability is considered remote .
consequently , no liability has been recorded on the consolidated statement of financial condition .
in connection with securities lending transactions , blackrock has issued certain indemnifications to certain securities lending clients against potential loss resulting from a borrower 2019s failure to fulfill its obligations under the securities lending agreement should the value of the collateral pledged by the borrower at the time of default be insufficient to cover the borrower 2019s obligation under the securities lending agreement .
at december 31 , 2013 , the company indemnified certain of its clients for their securities lending loan balances of approximately $ 118.3 billion .
the company held as agent , cash and securities totaling $ 124.6 billion as collateral for indemnified securities on loan at december 31 , 2013 .
the fair value of these indemnifications was not material at december 31 , 2013.


2011 compared to 2010 mst 2019s net sales for 2011 decreased $ 311 million , or 4% ( 4 % ) , compared to 2010 .
the decrease was attributable to decreased volume of approximately $ 390 million for certain ship and aviation system programs ( primarily maritime patrol aircraft and ptds ) and approximately $ 75 million for training and logistics solutions programs .
partially offsetting these decreases was higher sales of about $ 165 million from production on the lcs program .
mst 2019s operating profit for 2011 decreased $ 68 million , or 10% ( 10 % ) , compared to 2010 .
the decrease was attributable to decreased operating profit of approximately $ 55 million as a result of increased reserves for contract cost matters on various ship and aviation system programs ( including the terminated presidential helicopter program ) and approximately $ 40 million due to lower volume and increased reserves on training and logistics solutions .
partially offsetting these decreases was higher operating profit of approximately $ 30 million in 2011 primarily due to the recognition of reserves on certain undersea systems programs in 2010 .
adjustments not related to volume , including net profit rate adjustments described above , were approximately $ 55 million lower in 2011 compared to 2010 .
backlog backlog increased in 2012 compared to 2011 mainly due to increased orders on ship and aviation system programs ( primarily mh-60 and lcs ) , partially offset decreased orders and higher sales volume on integrated warfare systems and sensors programs ( primarily aegis ) .
backlog decreased slightly in 2011 compared to 2010 primarily due to higher sales volume on various integrated warfare systems and sensors programs .
trends we expect mst 2019s net sales to decline in 2013 in the low single digit percentage range as compared to 2012 due to the completion of ptds deliveries in 2012 and expected lower volume on training services programs .
operating profit and margin are expected to increase slightly from 2012 levels primarily due to anticipated improved contract performance .
space systems our space systems business segment is engaged in the research and development , design , engineering , and production of satellites , strategic and defensive missile systems , and space transportation systems .
space systems is also responsible for various classified systems and services in support of vital national security systems .
space systems 2019 major programs include the space-based infrared system ( sbirs ) , advanced extremely high frequency ( aehf ) system , mobile user objective system ( muos ) , global positioning satellite ( gps ) iii system , geostationary operational environmental satellite r-series ( goes-r ) , trident ii d5 fleet ballistic missile , and orion .
operating results for our space systems business segment include our equity interests in united launch alliance ( ula ) , which provides expendable launch services for the u.s .
government , united space alliance ( usa ) , which provided processing activities for the space shuttle program and is winding down following the completion of the last space shuttle mission in 2011 , and a joint venture that manages the u.k . 2019s atomic weapons establishment program .
space systems 2019 operating results included the following ( in millions ) : .

                    | 2012             | 2011             | 2010
------------------- | ---------------- | ---------------- | ----------------
net sales           | $ 8347           | $ 8161           | $ 8268
operating profit    | 1083             | 1063             | 1030
operating margins   | 13.0% ( 13.0 % ) | 13.0% ( 13.0 % ) | 12.5% ( 12.5 % )
backlog at year-end | 18100            | 16000            | 17800

2012 compared to 2011 space systems 2019 net sales for 2012 increased $ 186 million , or 2% ( 2 % ) , compared to 2011 .
the increase was attributable to higher net sales of approximately $ 150 million due to increased commercial satellite deliveries ( two commercial satellites delivered in 2012 compared to one during 2011 ) ; about $ 125 million from the orion program due to higher volume and an increase in risk retirements ; and approximately $ 70 million from increased volume on various strategic and defensive missile programs .
partially offsetting the increases were lower net sales of approximately $ 105 million from certain government satellite programs ( primarily sbirs and muos ) as a result of decreased volume and a decline in risk retirements ; and about $ 55 million from the nasa external tank program , which ended in connection with the completion of the space shuttle program in 2011.


table of contents adjustments that may result from tax examinations .
however , the outcome of tax audits cannot be predicted with certainty .
if any issues addressed in the company 2019s tax audits are resolved in a manner not consistent with management 2019s expectations , the company could be required to adjust its provision for income taxes in the period such resolution occurs .
liquidity and capital resources the following table presents selected financial information and statistics as of and for the years ended september 28 , 2013 , september 29 , 2012 and september 24 , 2011 ( in millions ) : the company believes its existing balances of cash , cash equivalents and marketable securities will be sufficient to satisfy its working capital needs , capital asset purchases , outstanding commitments , and other liquidity requirements associated with its existing operations over the next 12 months .
the company anticipates the cash used for future dividends and the share repurchase program will come from its current domestic cash , cash generated from on-going u.s .
operating activities and from borrowings .
as of september 28 , 2013 and september 29 , 2012 , $ 111.3 billion and $ 82.6 billion , respectively , of the company 2019s cash , cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in u.s .
dollar-denominated holdings .
amounts held by foreign subsidiaries are generally subject to u.s .
income taxation on repatriation to the u.s .
the company 2019s marketable securities investment portfolio is invested primarily in highly-rated securities and its investment policy generally limits the amount of credit exposure to any one issuer .
the policy requires investments generally to be investment grade with the objective of minimizing the potential risk of principal loss .
during 2013 , cash generated from operating activities of $ 53.7 billion was a result of $ 37.0 billion of net income , non-cash adjustments to net income of $ 10.2 billion and an increase in net change in operating assets and liabilities of $ 6.5 billion .
cash used in investing activities of $ 33.8 billion during 2013 consisted primarily of net purchases , sales and maturities of marketable securities of $ 24.0 billion and cash used to acquire property , plant and equipment of $ 8.2 billion .
cash used in financing activities during 2013 consisted primarily of cash used to repurchase common stock of $ 22.9 billion and cash used to pay dividends and dividend equivalent rights of $ 10.6 billion , partially offset by net proceeds from the issuance of long-term debt of $ 16.9 billion .
during 2012 , cash generated from operating activities of $ 50.9 billion was a result of $ 41.7 billion of net income and non-cash adjustments to net income of $ 9.4 billion , partially offset by a decrease in net operating assets and liabilities of $ 299 million .
cash used in investing activities during 2012 of $ 48.2 billion consisted primarily of net purchases , sales and maturities of marketable securities of $ 38.4 billion and cash used to acquire property , plant and equipment of $ 8.3 billion .
cash used in financing activities during 2012 of $ 1.7 billion consisted primarily of cash used to pay dividends and dividend equivalent rights of $ 2.5 billion .
capital assets the company 2019s capital expenditures were $ 7.0 billion during 2013 , consisting of $ 499 million for retail store facilities and $ 6.5 billion for other capital expenditures , including product tooling and manufacturing process equipment , and other corporate facilities and infrastructure .
the company 2019s actual cash payments for capital expenditures during 2013 were $ 8.2 billion. .

                                                    | 2013               | 2012               | 2011
--------------------------------------------------- | ------------------ | ------------------ | ------------------
cash cash equivalents and marketable securities     | $ 146761           | $ 121251           | $ 81570
property plant and equipment net                    | $ 16597            | $ 15452            | $ 7777
long-term debt                                      | $ 16960            | $ 0                | $ 0
working capital                                     | $ 29628            | $ 19111            | $ 17018
cash generated by operating activities              | $ 53666            | $ 50856            | $ 37529
cash used in investing activities                   | $ -33774 ( 33774 ) | $ -48227 ( 48227 ) | $ -40419 ( 40419 )
cash generated/ ( used in ) by financing activities | $ -16379 ( 16379 ) | $ -1698 ( 1698 )   | $ 1444


stock performance graph : the graph below shows the cumulative total shareholder return assuming the investment of $ 100 , on december 31 , 2013 , and the reinvestment of dividends thereafter , if any , in the company 2019s common stock versus the standard and poor 2019s s&p 500 retail index ( 201cs&p 500 retail index 201d ) and the standard and poor 2019s s&p 500 index ( 201cs&p 500 201d ) . .

company/index                 | december 31 , 2013 | december 31 , 2014 | december 31 , 2015 | december 31 , 2016 | december 31 , 2017 | december 31 , 2018
----------------------------- | ------------------ | ------------------ | ------------------ | ------------------ | ------------------ | ------------------
o 2019reilly automotive inc . | $ 100              | $ 150              | $ 197              | $ 216              | $ 187              | $ 268
s&p 500 retail index          | 100                | 110                | 137                | 143                | 184                | 208
s&p 500                       | $ 100              | $ 111              | $ 111              | $ 121              | $ 145              | $ 136


item 2 .
properties a summary of our significant locations at december 31 , 2011 is shown in the following table .
all facilities are leased , except for 165000 square feet of our office in alpharetta , georgia .
square footage amounts are net of space that has been sublet or part of a facility restructuring. .

location               | approximate square footage
---------------------- | --------------------------
alpharetta georgia     | 260000
arlington virginia     | 119000
jersey city new jersey | 107000
menlo park california  | 91000
sandy utah             | 66000
new york new york      | 39000
chicago illinois       | 25000

all of our facilities are used by either our trading and investing or balance sheet management segments , in addition to the corporate/other category .
all other leased facilities with space of less than 25000 square feet are not listed by location .
in addition to the significant facilities above , we also lease all 28 e*trade branches , ranging in space from approximately 2500 to 7000 square feet .
we believe our facilities space is adequate to meet our needs in 2012 .
item 3 .
legal proceedings on october 27 , 2000 , ajaxo , inc .
( 201cajaxo 201d ) filed a complaint in the superior court for the state of california , county of santa clara .
ajaxo sought damages and certain non-monetary relief for the company 2019s alleged breach of a non-disclosure agreement with ajaxo pertaining to certain wireless technology that ajaxo offered the company as well as damages and other relief against the company for their alleged misappropriation of ajaxo 2019s trade secrets .
following a jury trial , a judgment was entered in 2003 in favor of ajaxo against the company for $ 1.3 million for breach of the ajaxo non-disclosure agreement .
although the jury found in favor of ajaxo on its claim against the company for misappropriation of trade secrets , the trial court subsequently denied ajaxo 2019s requests for additional damages and relief .
on december 21 , 2005 , the california court of appeal affirmed the above-described award against the company for breach of the nondisclosure agreement but remanded the case to the trial court for the limited purpose of determining what , if any , additional damages ajaxo may be entitled to as a result of the jury 2019s previous finding in favor of ajaxo on its claim against the company for misappropriation of trade secrets .
although the company paid ajaxo the full amount due on the above-described judgment , the case was remanded back to the trial court , and on may 30 , 2008 , a jury returned a verdict in favor of the company denying all claims raised and demands for damages against the company .
following the trial court 2019s filing of entry of judgment in favor of the company on september 5 , 2008 , ajaxo filed post-trial motions for vacating this entry of judgment and requesting a new trial .
by order dated november 4 , 2008 , the trial court denied these motions .
on december 2 , 2008 , ajaxo filed a notice of appeal with the court of appeal of the state of california for the sixth district .
oral argument on the appeal was heard on july 15 , 2010 .
on august 30 , 2010 , the court of appeal affirmed the trial court 2019s verdict in part and reversed the verdict in part , remanding the case .
e*trade petitioned the supreme court of california for review of the court of appeal decision .
on december 16 , 2010 , the california supreme court denied the company 2019s petition for review and remanded for further proceedings to the trial court .
on september 20 , 2011 , the trial court granted limited discovery at a conference on november 4 , 2011 , and set a motion schedule and trial date .
the trial will continue on may 14 , 2012 .
the company will continue to defend itself vigorously .
on october 2 , 2007 , a class action complaint alleging violations of the federal securities laws was filed in the united states district court for the southern district of new york against the company and its then


vertex pharmaceuticals incorporated notes to consolidated financial statements ( continued ) o .
significant revenue arrangements ( continued ) $ 7 million of development and commercialization milestone payments .
additionally , kissei agreed to reimburse the company for certain development costs , including a portion of costs for phase 2 trials of vx-702 .
research funding ended under this program in june 2000 , and the company has received the full amount of research funding specified under the agreement .
kissei has exclusive rights to develop and commercialize vx-702 in japan and certain far east countries and co-exclusive rights in china , taiwan and south korea .
the company retains exclusive marketing rights outside the far east and co-exclusive rights in china , taiwan and south korea .
in addition , the company will have the right to supply bulk drug material to kissei for sale in its territory and will receive royalties or drug supply payments on future product sales , if any .
in 2006 , 2005 and 2004 , approximately $ 6.4 million , $ 7.3 million and $ 3.5 million , respectively , was recognized as revenue under this agreement .
the $ 7.3 million of revenue recognized in 2005 includes a $ 2.5 million milestone paid upon kissei 2019s completion of regulatory filings in preparation for phase 1 clinical development of vx-702 in japan .
p .
employee benefits the company has a 401 ( k ) retirement plan ( the 201cvertex 401 ( k ) plan 201d ) in which substantially all of its permanent employees are eligible to participate .
participants may contribute up to 60% ( 60 % ) of their annual compensation to the vertex 401 ( k ) plan , subject to statutory limitations .
the company may declare discretionary matching contributions to the vertex 401 ( k ) plan that are payable in the form of vertex common stock .
the match is paid in the form of fully vested interests in a vertex common stock fund .
employees have the ability to transfer funds from the company stock fund as they choose .
the company declared matching contributions to the vertex 401 ( k ) plan as follows ( in thousands ) : q .
related party transactions as of december 31 , 2006 , 2005 and 2004 , the company had a loan outstanding to a former officer of the company in the amount of $ 36000 , $ 36000 , $ 97000 , respectively , which was initially advanced in april 2002 .
the loan balance is included in other assets on the consolidated balance sheets .
in 2001 , the company entered into a four year consulting agreement with a director of the company for the provision of part-time consulting services over a period of four years , at the rate of $ 80000 per year commencing in january 2002 .
the consulting agreement terminated in january 2006 .
r .
contingencies the company has certain contingent liabilities that arise in the ordinary course of its business activities .
the company accrues a reserve for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. .

                                                                        | 2006   | 2005   | 2004
----------------------------------------------------------------------- | ------ | ------ | ------
discretionary matching contributions during the year ended december 31, | $ 3341 | $ 2894 | $ 2492
shares issued during the year ended december 31,                        | 91     | 215    | 239
shares issuable as of the year ended december 31,                       | 28     | 19     | 57

discretionary matching contributions during the year ended december 31 , $ 3341 $ 2894 $ 2492 shares issued during the year ended december 31 , 91 215 239 shares issuable as of the year ended december 31 , 28 19 57


do so , cme invests such contributions in assets that mirror the assumed investment choices .
the balances in these plans are subject to the claims of general creditors of the exchange and totaled $ 38.7 million and $ 31.8 million at december 31 , 2012 and 2011 respectively .
although the value of the plans is recorded as an asset in marketable securities in the consolidated balance sheets , there is an equal and offsetting liability .
the investment results of these plans have no impact on net income as the investment results are recorded in equal amounts to both investment income and compensation and benefits expense .
supplemental savings plan .
cme maintains a supplemental plan to provide benefits for employees who have been impacted by statutory limits under the provisions of the qualified pension and savings plan .
employees in this plan are subject to the vesting requirements of the underlying qualified plans .
deferred compensation plan .
a deferred compensation plan is maintained by cme , under which eligible officers and members of the board of directors may contribute a percentage of their compensation and defer income taxes thereon until the time of distribution .
comex members 2019 retirement plan and benefits .
comex maintains a retirement and benefit plan under the comex members 2019 recognition and retention plan ( mrrp ) .
this plan provides benefits to certain members of the comex division based on long-term membership , and participation is limited to individuals who were comex division members prior to nymex 2019s acquisition of comex in 1994 .
no new participants were permitted into the plan after the date of this acquisition .
under the terms of the mrrp , the company is required to fund the plan with a minimum annual contribution of $ 0.8 million until it is fully funded .
all benefits to be paid under the mrrp are based on reasonable actuarial assumptions which are based upon the amounts that are available and are expected to be available to pay benefits .
total contributions to the plan were $ 0.8 million for each of 2010 through 2012 .
at december 31 , 2012 and 2011 , the obligation for the mrrp totaled $ 22.7 million and $ 21.6 million , respectively .
assets with a fair value of $ 18.4 million and $ 17.7 million have been allocated to this plan at december 31 , 2012 and 2011 , respectively , and are included in marketable securities and cash and cash equivalents in the consolidated balance sheets .
the balances in these plans are subject to the claims of general creditors of comex .
13 .
commitments operating leases .
cme group has entered into various non-cancellable operating lease agreements , with the most significant being as follows : 2022 in april 2012 , the company sold two buildings in chicago at 141 w .
jackson and leased back a portion of the property .
the operating lease , which has an initial lease term ending on april 30 , 2027 , contains four consecutive renewal options for five years .
2022 in january 2011 , the company entered into an operating lease for office space in london .
the initial lease term , which became effective on january 20 , 2011 , terminates on march 24 , 2026 , with an option to terminate without penalty in january 2021 .
2022 in july 2008 , the company renegotiated the operating lease for its headquarters at 20 south wacker drive in chicago .
the lease , which has an initial term ending on november 30 , 2022 , contains two consecutive renewal options for seven and ten years and a contraction option which allows the company to reduce its occupied space after november 30 , 2018 .
in addition , the company may exercise a lease expansion option in december 2017 .
2022 in august 2006 , the company entered into an operating lease for additional office space in chicago .
the initial lease term , which became effective on august 10 , 2006 , terminates on november 30 , 2023 .
the lease contains two 5-year renewal options beginning in 2023 .
at december 31 , 2012 , future minimum payments under non-cancellable operating leases were payable as follows ( in millions ) : .

2013       | $ 28.7
---------- | -------
2014       | 29.1
2015       | 28.9
2016       | 28.9
2017       | 29.3
thereafter | 152.9
total      | $ 297.8


included in other non-current liabilities , because the company believes that the ultimate payment or settlement of these liabilities will not occur within the next twelve months .
prior to the adoption of these provisions , these amounts were included in current income tax payable .
the company includes interest and penalties related to unrecognized tax benefits within the provision for taxes in the condensed consolidated statements of income , and as a result , no change in classification was made upon adopting these provisions .
the condensed consolidated statements of income for fiscal year 2009 and fiscal year 2008 include $ 1.7 million and $ 1.3 million , respectively , of interest and penalties related to these uncertain tax positions .
due to the complexity associated with its tax uncertainties , the company cannot make a reasonably reliable estimate as to the period in which it expects to settle the liabilities associated with these uncertain tax positions .
the following table summarizes the changes in the total amounts of uncertain tax positions for fiscal 2008 and fiscal 2009. .

balance november 3 2007                     | $ 9889
------------------------------------------- | -------
additions for tax positions of current year | 3861
balance november 1 2008                     | 13750
additions for tax positions of current year | 4411
balance october 31 2009                     | $ 18161

fiscal year 2004 and 2005 irs examination during the fourth quarter of fiscal 2007 , the irs completed its field examination of the company 2019s fiscal years 2004 and 2005 .
on january 2 , 2008 , the irs issued its report for fiscal 2004 and 2005 , which included proposed adjustments related to these two fiscal years .
the company has recorded taxes and penalties related to certain of these proposed adjustments .
there are four items with an additional potential total tax liability of $ 46 million .
the company has concluded , based on discussions with its tax advisors , that these four items are not likely to result in any additional tax liability .
therefore , the company has not recorded any additional tax liability for these items and is appealing these proposed adjustments through the normal processes for the resolution of differences between the irs and taxpayers .
the company 2019s initial meetings with the appellate division of the irs were held during fiscal year 2009 .
two of the unresolved matters are one-time issues and pertain to section 965 of the internal revenue code related to the beneficial tax treatment of dividends from foreign owned companies under the american jobs creation act .
the other matters pertain to the computation of research and development ( r&d ) tax credits and the profits earned from manufacturing activities carried on outside the united states .
these latter two matters could impact taxes payable for fiscal 2004 and 2005 as well as for subsequent years .
fiscal year 2006 and 2007 irs examination during the third quarter of fiscal 2009 , the irs completed its field examination of the company 2019s fiscal years 2006 and 2007 .
the irs and the company have agreed on the treatment of a number of issues that have been included in an issue resolutions agreement related to the 2006 and 2007 tax returns .
however , no agreement was reached on the tax treatment of a number of issues , including the same r&d credit and foreign manufacturing issues mentioned above related to fiscal 2004 and 2005 , the pricing of intercompany sales ( transfer pricing ) , and the deductibility of certain stock option compensation expenses .
during the third quarter of fiscal 2009 , the irs issued its report for fiscal 2006 and fiscal 2007 , which included proposed adjustments related to these two fiscal years .
the company has recorded taxes and penalties related to certain of these proposed adjustments .
there are four items with an additional potential total tax liability of $ 195 million .
the company concluded , based on discussions with its tax advisors , that these four items are not likely to result in any additional tax liability .
therefore , the company has not recorded any additional tax liability for these items and is appealing these proposed adjustments through the normal processes for the resolution of differences between the irs and taxpayers .
with the exception of the analog devices , inc .
notes to consolidated financial statements 2014 ( continued )


during 2015 , 2014 and 2013 , netherland , sewell & associates , inc .
( "nsai" ) prepared a certification of the prior year's reserves for the alba field in e.g .
the nsai summary reports are filed as an exhibit to this annual report on form 10-k .
members of the nsai team have multiple years of industry experience , having worked for large , international oil and gas companies before joining nsai .
the senior technical advisor has over 35 years of practical experience in petroleum geosciences , with over 15 years experience in the estimation and evaluation of reserves .
the second team member has over 10 years of practical experience in petroleum engineering , with over five years experience in the estimation and evaluation of reserves .
both are registered professional engineers in the state of texas .
ryder scott company ( "ryder scott" ) also performed audits of the prior years' reserves of several of our fields in 2015 , 2014 and 2013 .
their summary reports are filed as exhibits to this annual report on form 10-k .
the team lead for ryder scott has over 20 years of industry experience , having worked for a major international oil and gas company before joining ryder scott .
he is a member of spe , where he served on the oil and gas reserves committee , and is a registered professional engineer in the state of texas .
changes in proved undeveloped reserves as of december 31 , 2015 , 603 mmboe of proved undeveloped reserves were reported , a decrease of 125 mmboe from december 31 , 2014 .
the following table shows changes in total proved undeveloped reserves for 2015 : ( mmboe ) .

beginning of year                          | 728
------------------------------------------ | ------------
revisions of previous estimates            | -223 ( 223 )
improved recovery                          | 1
purchases of reserves in place             | 1
extensions discoveries and other additions | 175
dispositions                               | 2014
transfers to proved developed              | -79 ( 79 )
end of year                                | 603

the revisions to previous estimates were largely due to a result of reductions to our capital development program which deferred proved undeveloped reserves beyond the 5-year plan .
a total of 139 mmboe was booked as extensions , discoveries or other additions and revisions due to the application of reliable technology .
technologies included statistical analysis of production performance , decline curve analysis , pressure and rate transient analysis , reservoir simulation and volumetric analysis .
the observed statistical nature of production performance coupled with highly certain reservoir continuity or quality within the reliable technology areas and sufficient proved developed locations establish the reasonable certainty criteria required for booking proved reserves .
transfers from proved undeveloped to proved developed reserves included 47 mmboe in the eagle ford , 14 mmboe in the bakken and 5 mmboe in the oklahoma resource basins due to development drilling and completions .
costs incurred in 2015 , 2014 and 2013 relating to the development of proved undeveloped reserves were $ 1415 million , $ 3149 million and $ 2536 million .
projects can remain in proved undeveloped reserves for extended periods in certain situations such as large development projects which take more than five years to complete , or the timing of when additional gas compression is needed .
of the 603 mmboe of proved undeveloped reserves at december 31 , 2015 , 26% ( 26 % ) of the volume is associated with projects that have been included in proved reserves for more than five years .
the majority of this volume is related to a compression project in e.g .
that was sanctioned by our board of directors in 2004 .
during 2012 , the compression project received the approval of the e.g .
government , fabrication of the new platform began in 2013 and installation of the platform at the alba field occurred in january 2016 .
commissioning is currently underway , with first production expected by mid-2016 .
proved undeveloped reserves for the north gialo development , located in the libyan sahara desert , were booked for the first time in 2010 .
this development is being executed by the operator and encompasses a multi-year drilling program including the design , fabrication and installation of extensive liquid handling and gas recycling facilities .
anecdotal evidence from similar development projects in the region leads to an expected project execution time frame of more than five years from the time the reserves were initially booked .
interruptions associated with the civil and political unrest have also extended the project duration .
operations were interrupted in mid-2013 as a result of the shutdown of the es sider crude oil terminal , and although temporarily re-opened during the second half of 2014 , production remains shut-in through early 2016 .
the operator is committed to the project 2019s completion and continues to assign resources in order to execute the project .
our conversion rate for proved undeveloped reserves to proved developed reserves for 2015 was 11% ( 11 % ) .
however , excluding the aforementioned long-term projects in e.g .
and libya , our 2015 conversion rate would be 15% ( 15 % ) .
furthermore , our


synopsys , inc .
notes to consolidated financial statements 2014continued purchase price allocation .
the company allocated the total purchase consideration of $ 316.6 million ( including $ 4.6 million related to stock awards assumed ) to the assets acquired and liabilities assumed based on their respective fair values at the acquisition dates , including acquired identifiable intangible assets of $ 96.7 million and ipr&d of $ 13.2 million , resulting in total goodwill of $ 210.1 million .
acquisition-related costs , consisting of professional services , severance costs , contract terminations and facilities closure costs , totaling $ 13.0 million were expensed as incurred in the consolidated statements of operations .
goodwill primarily resulted from the company 2019s expectation of sales growth and cost synergies from the integration of virage 2019s technology with the company 2019s technology and operations to provide an expansion of products and market reach .
identifiable intangible assets consisted of technology , customer relationships , contract rights and trademarks , were valued using the income method , and are being amortized over two to ten years .
fair value of stock awards assumed .
the company assumed unvested restricted stock units ( rsus ) and stock appreciation rights ( sars ) with a fair value of $ 21.7 million .
of the total consideration , $ 4.6 million was allocated to the purchase consideration and $ 17.1 million was allocated to future services and expensed over their remaining service periods on a straight-line basis .
other fiscal 2010 acquisitions during fiscal 2010 , the company completed seven other acquisitions for cash .
the company allocated the total purchase consideration of $ 221.7 million to the assets acquired and liabilities assumed based on their respective fair values at the acquisition dates , resulting in total goodwill of $ 110.8 million .
acquired identifiable intangible assets totaling $ 92.8 million are being amortized over their respective useful lives ranging from one to ten years .
acquisition-related costs totaling $ 10.6 million were expensed as incurred in the consolidated statements of operations .
the purchase consideration for one of the acquisitions included contingent consideration up to $ 10.0 million payable upon the achievement of certain technology milestones over three years .
the contingent consideration was recorded as a liability at its estimated fair value determined based on the net present value of estimated payments of $ 7.8 million on the acquisition date and is being remeasured at fair value quarterly during the three-year contingency period with changes in its fair value recorded in the company 2019s statements of operations .
there is no contingent consideration liability as of the end of fiscal 2012 relating to this acquisition .
note 4 .
goodwill and intangible assets goodwill consists of the following: .

                           | ( in thousands )
-------------------------- | ----------------
balance at october 31 2010 | $ 1265843
additions                  | 30717
other adjustments ( 1 )    | -7274 ( 7274 )
balance at october 31 2011 | $ 1289286
additions                  | 687195
other adjustments ( 1 )    | 506
balance at october 31 2012 | $ 1976987

( 1 ) adjustments primarily relate to changes in estimates for acquisitions that closed in the prior fiscal year for which the purchase price allocation was still preliminary , and achievement of certain milestones for an acquisition that closed prior to fiscal 2010.


investment advisory revenues earned on the other investment portfolios that we manage decreased $ 3.6 million to $ 522.2 million .
average assets in these portfolios were $ 142.1 billion during 2008 , up slightly from $ 141.4 billion in 2007 .
these minor changes , each less than 1% ( 1 % ) , are attributable to the timing of declining equity market valuations and cash flows among our separate account and sub-advised portfolios .
net inflows , primarily from institutional investors , were $ 13.2 billion during 2008 , including the $ 1.3 billion transferred from the retirement funds to target-date trusts .
decreases in market valuations , net of income , lowered our assets under management in these portfolios by $ 55.3 billion during 2008 .
administrative fees increased $ 5.8 million to $ 353.9 million , primarily from increased costs of servicing activities for the mutual funds and their investors .
changes in administrative fees are generally offset by similar changes in related operating expenses that are incurred to provide services to the funds and their investors .
our largest expense , compensation and related costs , increased $ 18.4 million or 2.3% ( 2.3 % ) from 2007 .
this increase includes $ 37.2 million in salaries resulting from an 8.4% ( 8.4 % ) increase in our average staff count and an increase of our associates 2019 base salaries at the beginning of the year .
at december 31 , 2008 , we employed 5385 associates , up 6.0% ( 6.0 % ) from the end of 2007 , primarily to add capabilities and support increased volume-related activities and other growth over the past few years .
over the course of 2008 , we slowed the growth of our associate base from earlier plans and the prior year .
we do not expect the number of our associates to increase in 2009 .
we also reduced our annual bonuses $ 27.6 million versus the 2007 year in response to recent and ongoing unfavorable financial market conditions that negatively impacted our operating results .
the balance of the increase is attributable to higher employee benefits and employment- related expenses , including an increase of $ 5.7 million in stock-based compensation .
entering 2009 , we did not increase the salaries of our highest paid associates .
after higher spending during the first quarter of 2008 versus 2007 , investor sentiment in the uncertain and volatile market environment caused us to reduce advertising and promotion spending , which for the year was down $ 3.8 million from 2007 .
we expect to reduce these expenditures for 2009 versus 2008 , and estimate that spending in the first quarter of 2009 will be down about $ 5 million from the fourth quarter of 2008 .
we vary our level of spending based on market conditions and investor demand as well as our efforts to expand our investor base in the united states and abroad .
occupancy and facility costs together with depreciation expense increased $ 18 million , or 12% ( 12 % ) compared to 2007 .
we have been expanding and renovating our facilities to accommodate the growth in our associates to meet business demands .
other operating expenses were up $ 3.3 million from 2007 .
we increased our spending $ 9.8 million , primarily for professional fees and information and other third-party services .
reductions in travel and charitable contributions partially offset these increases .
our non-operating investment activity resulted in a net loss of $ 52.3 million in 2008 as compared to a net gain of $ 80.4 million in 2007 .
this change of $ 132.7 million is primarily attributable to losses recognized in 2008 on our investments in sponsored mutual funds , which resulted from declines in financial market values during the year. .

                                                  | 2007       | 2008             | change
------------------------------------------------- | ---------- | ---------------- | ------------------
capital gain distributions received               | $ 22.1     | $ 5.6            | $ -16.5 ( 16.5 )
other than temporary impairments recognized       | -.3 ( .3 ) | -91.3 ( 91.3 )   | -91.0 ( 91.0 )
net gains ( losses ) realized on funddispositions | 5.5        | -4.5 ( 4.5 )     | -10.0 ( 10.0 )
net gain ( loss ) recognized on fund holdings     | $ 27.3     | $ -90.2 ( 90.2 ) | $ -117.5 ( 117.5 )

we recognized other than temporary impairments of our investments in sponsored mutual funds because of declines in fair value below cost for an extended period .
the significant declines in fair value below cost that occurred in 2008 were generally attributable to the adverse and ongoing market conditions discussed in the background section on page 18 of this report .
see also the discussion on page 24 of critical accounting policies for other than temporary impairments of available-for-sale securities .
in addition , income from money market and bond fund holdings was $ 19.3 million lower than in 2007 due to the significantly lower interest rate environment of 2008 .
lower interest rates also led to substantial capital appreciation on our $ 40 million holding of u.s .
treasury notes that we sold in december 2008 at a $ 2.6 million gain .
management 2019s discussion & analysis 21


banking ) .
the results of the first step of the impairment test showed no indication of impairment in any of the reporting units at any of the periods except december 31 , 2008 and , accordingly , the company did not perform the second step of the impairment test , except for the test performed as of december 31 , 2008 .
as of december 31 , 2008 , there was an indication of impairment in the north america consumer banking , latin america consumer banking and emea consumer banking reporting units and , accordingly , the second step of testing was performed on these reporting units .
based on the results of the second step of testing , the company recorded a $ 9.6 billion pretax ( $ 8.7 billion after tax ) goodwill impairment charge in the fourth quarter of 2008 , representing the entire amount of goodwill allocated to these reporting units .
the primary cause for the goodwill impairment in the above reporting units was the rapid deterioration in the financial markets , as well as in the global economic outlook particularly during the period beginning mid-november through year end 2008 .
this deterioration further weakened the near-term prospects for the financial services industry .
these and other factors , including the increased possibility of further government intervention , also resulted in the decline in the company 2019s market capitalization from approximately $ 90 billion at july 1 , 2008 and approximately $ 74 billion at october 31 , 2008 to approximately $ 36 billion at december 31 , 2008 .
the more significant fair-value adjustments in the pro forma purchase price allocation in the second step of testing were to fair-value loans and debt and were made to identify and value identifiable intangibles .
the adjustments to measure the assets , liabilities and intangibles were for the purpose of measuring the implied fair value of goodwill and such adjustments are not reflected in the consolidated balance sheet .
the following table shows reporting units with goodwill balances and the excess of fair value of allocated book value as of december 31 , 2008 .
reporting unit ( $ in millions ) fair value as a % (  % ) of allocated book value goodwill ( post-impairment ) .

reporting unit ( $ inmillions ) | fair value as a % (  % ) of allocated book value | goodwill ( post-impairment )
------------------------------- | ------------------------------------------------ | ----------------------------
north america cards             | 139% ( 139 % )                                   | 6765
international cards             | 218% ( 218 % )                                   | 4066
asia consumer banking           | 293% ( 293 % )                                   | 3106
securities & banking            | 109% ( 109 % )                                   | 9774
global transaction services     | 994% ( 994 % )                                   | 1570
north america gwm               | 386% ( 386 % )                                   | 1259
international gwm               | 171% ( 171 % )                                   | 592

while no impairment was noted in step one of our securities and banking reporting unit impairment test at october 31 , 2008 and december 31 , 2008 , goodwill present in that reporting unit may be particularly sensitive to further deterioration in economic conditions .
under the market approach for valuing this reporting unit , the earnings multiples and transaction multiples were selected from multiples obtained using data from guideline companies and acquisitions .
the selection of the actual multiple considers operating performance and financial condition such as return on equity and net income growth of securities and banking as compared to the guideline companies and acquisitions .
for the valuation under the income approach , the company utilized a discount rate which it believes reflects the risk and uncertainty related to the projected cash flows , and selected 2013 as the terminal year .
in 2013 , the value was derived assuming a return to historical levels of core-business profitability for the reporting unit , despite the significant losses experienced in 2008 .
this assumption is based on management 2019s view that this recovery will occur based upon various macro- economic factors such as the recent u.s .
government stimulus actions , restoring marketplace confidence and improved risk-management practices on an industry-wide basis .
furthermore , company-specific actions such as its recently announced realignment of its businesses to optimize its global businesses for future profitable growth , will also be a factor in returning the company 2019s core securities and banking business to historical levels .
small deterioration in the assumptions used in the valuations , in particular the discount rate and growth rate assumptions used in the net income projections , could significantly affect the company 2019s impairment evaluation and , hence , results .
if the future were to differ adversely from management 2019s best estimate of key economic assumptions and associated cash flows were to decrease by a small margin , the company could potentially experience future material impairment charges with respect to the goodwill remaining in our securities and banking reporting unit .
any such charges by themselves would not negatively affect the company 2019s tier 1 and total regulatory capital ratios , tangible capital or the company 2019s liquidity position.


table of contents valero energy corporation and subsidiaries notes to consolidated financial statements ( continued ) commodity price risk we are exposed to market risks related to the volatility in the price of crude oil , refined products ( primarily gasoline and distillate ) , grain ( primarily corn ) , and natural gas used in our operations .
to reduce the impact of price volatility on our results of operations and cash flows , we use commodity derivative instruments , including futures , swaps , and options .
we use the futures markets for the available liquidity , which provides greater flexibility in transacting our hedging and trading operations .
we use swaps primarily to manage our price exposure .
our positions in commodity derivative instruments are monitored and managed on a daily basis by a risk control group to ensure compliance with our stated risk management policy that has been approved by our board of directors .
for risk management purposes , we use fair value hedges , cash flow hedges , and economic hedges .
in addition to the use of derivative instruments to manage commodity price risk , we also enter into certain commodity derivative instruments for trading purposes .
our objective for entering into each type of hedge or trading derivative is described below .
fair value hedges fair value hedges are used to hedge price volatility in certain refining inventories and firm commitments to purchase inventories .
the level of activity for our fair value hedges is based on the level of our operating inventories , and generally represents the amount by which our inventories differ from our previous year-end lifo inventory levels .
as of december 31 , 2011 , we had the following outstanding commodity derivative instruments that were entered into to hedge crude oil and refined product inventories and commodity derivative instruments related to the physical purchase of crude oil and refined products at a fixed price .
the information presents the notional volume of outstanding contracts by type of instrument and year of maturity ( volumes in thousands of barrels ) .
notional contract volumes by year of maturity derivative instrument 2012 .

derivative instrument           | notional contract volumes by year of maturity 2012
------------------------------- | --------------------------------------------------
crude oil and refined products: |
futures 2013 long               | 15398
futures 2013 short              | 35708
physical contracts 2013 long    | 20310


item 1b .
unresolved staff comments not applicable .
item 2 .
properties as of december 26 , 2015 , our major facilities consisted of : ( square feet in millions ) united states countries total owned facilities1 .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
30.7 17.2 47.9 leased facilities2 .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2.1 6.0 8.1 .

( square feet in millions ) | unitedstates | othercountries | total
--------------------------- | ------------ | -------------- | -----
owned facilities1           | 30.7         | 17.2           | 47.9
leased facilities2          | 2.1          | 6.0            | 8.1
total facilities            | 32.8         | 23.2           | 56.0

1 leases on portions of the land used for these facilities expire on varying dates through 2062 .
2 leases expire on varying dates through 2030 and generally include renewals at our option .
our principal executive offices are located in the u.s .
and a majority of our wafer fabrication activities are also located in the u.s .
we completed construction of development fabrication facilities in oregon during 2014 that we expect will enable us to maintain our process technology lead .
we also completed construction of a large-scale fabrication building in arizona in 2013 .
a portion of the new oregon and arizona facilities are currently not in use and we are reserving the new buildings for additional capacity and future technologies .
incremental construction and equipment installation are required to ready the facilities for their intended use .
our massachusetts fabrication facility was our last manufacturing facility on 200mm wafers and ceased production in q1 2015 .
outside the u.s. , we have wafer fabrication facilities in ireland , israel , and china .
our fabrication facility in ireland has transitioned to our 14nm process technology , with manufacturing continuing to ramp in 2016 .
additionally , in the second half of 2016 , we will start using our facility in dalian , china to help expand our manufacturing capacity in next-generation memory .
our assembly and test facilities are located in malaysia , china , and vietnam .
in addition , we have sales and marketing offices worldwide that are generally located near major concentrations of customers .
we believe that the facilities described above are suitable and adequate for our present purposes and that the productive capacity in our facilities is substantially being utilized or we have plans to utilize it .
we do not identify or allocate assets by operating segment .
for information on net property , plant and equipment by country , see 201cnote 26 : operating segments and geographic information 201d in part ii , item 8 of this form 10-k .
item 3 .
legal proceedings for a discussion of legal proceedings , see 201cnote 25 : contingencies 201d in part ii , item 8 of this form 10-k .
item 4 .
mine safety disclosures not applicable.


properties , plants , and equipment .
properties , plants , and equipment are recorded at cost .
depreciation is recorded principally on the straight-line method at rates based on the estimated useful lives of the assets .
the following table details the weighted-average useful lives of structures and machinery and equipment by reporting segment ( numbers in years ) : .

segment                                   | structures | machinery and equipment
----------------------------------------- | ---------- | -----------------------
global rolled products                    | 31         | 21
engineered products and solutions         | 29         | 17
transportation and construction solutions | 27         | 19

gains or losses from the sale of assets are generally recorded in other income , net ( see policy below for assets classified as held for sale and discontinued operations ) .
repairs and maintenance are charged to expense as incurred .
interest related to the construction of qualifying assets is capitalized as part of the construction costs .
properties , plants , and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets ( asset group ) may not be recoverable .
recoverability of assets is determined by comparing the estimated undiscounted net cash flows of the operations related to the assets ( asset group ) to their carrying amount .
an impairment loss would be recognized when the carrying amount of the assets ( asset group ) exceeds the estimated undiscounted net cash flows .
the amount of the impairment loss to be recorded is calculated as the excess of the carrying value of the assets ( asset group ) over their fair value , with fair value determined using the best information available , which generally is a discounted cash flow ( dcf ) model .
the determination of what constitutes an asset group , the associated estimated undiscounted net cash flows , and the estimated useful lives of assets also require significant judgments .
goodwill and other intangible assets .
goodwill is not amortized ; instead , it is reviewed for impairment annually ( in the fourth quarter ) or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business .
a significant amount of judgment is involved in determining if an indicator of impairment has occurred .
such indicators may include deterioration in general economic conditions , negative developments in equity and credit markets , adverse changes in the markets in which an entity operates , increases in input costs that have a negative effect on earnings and cash flows , or a trend of negative or declining cash flows over multiple periods , among others .
the fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill .
goodwill is allocated among and evaluated for impairment at the reporting unit level , which is defined as an operating segment or one level below an operating segment .
arconic has eight reporting units , of which four are included in the engineered products and solutions segment , three are included in the transportation and construction solutions segment , and the remaining reporting unit is the global rolled products segment .
more than 70% ( 70 % ) of arconic 2019s total goodwill is allocated to two reporting units as follows : arconic fastening systems and rings ( afsr ) ( $ 2200 ) and arconic power and propulsion ( app ) ( $ 1647 ) businesses , both of which are included in the engineered products and solutions segment .
these amounts include an allocation of corporate 2019s goodwill .
in november 2014 , arconic acquired firth rixson ( see note f ) , and , as a result recognized $ 1801 in goodwill .
this amount was allocated between the afsr and arconic forgings and extrusions ( afe ) reporting units , which is part of the engineered products and solutions segment .
in march and july 2015 , arconic acquired tital and rti , respectively , ( see note f ) and recognized $ 117 and $ 298 , respectively , in goodwill .
the goodwill amount related to tital was allocated to the app reporting unit and the amount related to rti was allocated to arconic titanium and engineered products ( atep ) , a new arconic reporting unit that consists solely of the acquired rti business and is part of the engineered products and solutions segment .
in reviewing goodwill for impairment , an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not ( greater than 50% ( 50 % ) ) that the estimated fair value of a reporting unit is less than its carrying amount .
if an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not , the entity is then required to perform the