appropriate statistical bases .
total expense for repairs and maintenance incurred was $ 2.5 billion for 2015 , $ 2.4 billion for 2014 , and $ 2.3 billion for 2013 .
assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease .
amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease .
13 .
accounts payable and other current liabilities dec .
31 , dec .
31 , millions 2015 2014 .

millions                                             | dec . 31 2015 | dec . 31 2014
---------------------------------------------------- | ------------- | -------------
accounts payable                                     | $ 743         | $ 877
income and other taxes payable                       | 434           | 412
accrued wages and vacation                           | 391           | 409
interest payable                                     | 208           | 178
accrued casualty costs                               | 181           | 249
equipment rents payable                              | 105           | 100
dividends payable [a]                                | -             | 438
other                                                | 550           | 640
total accounts payable and other current liabilities | $ 2612        | $ 3303

[a] beginning in 2015 , the timing of the dividend declaration and payable dates was aligned to occur within the same quarter .
the 2015 dividends paid amount includes the fourth quarter 2014 dividend of $ 438 million , which was paid on january 2 , 2015 , the first quarter 2015 dividend of $ 484 million , which was paid on march 30 , 2015 , the second quarter 2015 dividend of $ 479 million , which was paid on june 30 , 2015 , the third quarter 2015 dividend of $ 476 million , which was paid on september 30 , 2015 , as well as the fourth quarter 2015 dividend of $ 467 million , which was paid on december 30 , 2015 .
14 .
financial instruments strategy and risk 2013 we may use derivative financial instruments in limited instances for other than trading purposes to assist in managing our overall exposure to fluctuations in interest rates and fuel prices .
we are not a party to leveraged derivatives and , by policy , do not use derivative financial instruments for speculative purposes .
derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged , both at inception and throughout the hedged period .
we formally document the nature and relationships between the hedging instruments and hedged items at inception , as well as our risk- management objectives , strategies for undertaking the various hedge transactions , and method of assessing hedge effectiveness .
changes in the fair market value of derivative financial instruments that do not qualify for hedge accounting are charged to earnings .
we may use swaps , collars , futures , and/or forward contracts to mitigate the risk of adverse movements in interest rates and fuel prices ; however , the use of these derivative financial instruments may limit future benefits from favorable interest rate and fuel price movements .
market and credit risk 2013 we address market risk related to derivative financial instruments by selecting instruments with value fluctuations that highly correlate with the underlying hedged item .
we manage credit risk related to derivative financial instruments , which is minimal , by requiring high credit standards for counterparties and periodic settlements .
at december 31 , 2015 , and 2014 , we were not required to provide collateral , nor had we received collateral , relating to our hedging activities .
interest rate fair value hedges 2013 we manage our overall exposure to fluctuations in interest rates by adjusting the proportion of fixed and floating rate debt instruments within our debt portfolio over a given period .
we generally manage the mix of fixed and floating rate debt through the issuance of targeted amounts of each as debt matures or as we require incremental borrowings .
we employ derivatives , primarily swaps , as one of the tools to obtain the targeted mix .
in addition , we also obtain flexibility in managing interest costs and the interest rate mix within our debt portfolio by evaluating the issuance of and managing outstanding callable fixed-rate debt securities .
swaps allow us to convert debt from fixed rates to variable rates and thereby hedge the risk of changes in the debt 2019s fair value attributable to the changes in interest rates .
we account for swaps as fair value hedges using the short-cut method ; therefore , we do not record any ineffectiveness within our


compared with $ 6.2 billion in 2013 .
operating profits in 2015 were significantly higher than in both 2014 and 2013 .
excluding facility closure costs , impairment costs and other special items , operating profits in 2015 were 3% ( 3 % ) lower than in 2014 and 4% ( 4 % ) higher than in 2013 .
benefits from lower input costs ( $ 18 million ) , lower costs associated with the closure of our courtland , alabama mill ( $ 44 million ) and favorable foreign exchange ( $ 33 million ) were offset by lower average sales price realizations and mix ( $ 52 million ) , lower sales volumes ( $ 16 million ) , higher operating costs ( $ 18 million ) and higher planned maintenance downtime costs ( $ 26 million ) .
in addition , operating profits in 2014 include special items costs of $ 554 million associated with the closure of our courtland , alabama mill .
during 2013 , the company accelerated depreciation for certain courtland assets , and evaluated certain other assets for possible alternative uses by one of our other businesses .
the net book value of these assets at december 31 , 2013 was approximately $ 470 million .
in the first quarter of 2014 , we completed our evaluation and concluded that there were no alternative uses for these assets .
we recognized approximately $ 464 million of accelerated depreciation related to these assets in 2014 .
operating profits in 2014 also include a charge of $ 32 million associated with a foreign tax amnesty program , and a gain of $ 20 million for the resolution of a legal contingency in india , while operating profits in 2013 included costs of $ 118 million associated with the announced closure of our courtland , alabama mill and a $ 123 million impairment charge associated with goodwill and a trade name intangible asset in our india papers business .
printing papers .

in millions               | 2015   | 2014       | 2013
------------------------- | ------ | ---------- | ------
sales                     | $ 5031 | $ 5720     | $ 6205
operating profit ( loss ) | 533    | -16 ( 16 ) | 271

north american printing papers net sales were $ 1.9 billion in 2015 , $ 2.1 billion in 2014 and $ 2.6 billion in 2013 .
operating profits in 2015 were $ 179 million compared with a loss of $ 398 million ( a gain of $ 156 million excluding costs associated with the shutdown of our courtland , alabama mill ) in 2014 and a gain of $ 36 million ( $ 154 million excluding costs associated with the courtland mill shutdown ) in 2013 .
sales volumes in 2015 decreased compared with 2014 primarily due to the closure of our courtland mill in 2014 .
shipments to the domestic market increased , but export shipments declined .
average sales price realizations decreased , primarily in the domestic market .
input costs were lower , mainly for energy .
planned maintenance downtime costs were $ 12 million higher in 2015 .
operating profits in 2014 were negatively impacted by costs associated with the shutdown of our courtland , alabama mill .
entering the first quarter of 2016 , sales volumes are expected to be up slightly compared with the fourth quarter of 2015 .
average sales margins should be about flat reflecting lower average sales price realizations offset by a more favorable product mix .
input costs are expected to be stable .
planned maintenance downtime costs are expected to be about $ 14 million lower with an outage scheduled in the 2016 first quarter at our georgetown mill compared with outages at our eastover and riverdale mills in the 2015 fourth quarter .
in january 2015 , the united steelworkers , domtar corporation , packaging corporation of america , finch paper llc and p .
h .
glatfelter company ( the petitioners ) filed an anti-dumping petition before the united states international trade commission ( itc ) and the united states department of commerce ( doc ) alleging that paper producers in china , indonesia , australia , brazil , and portugal are selling uncoated free sheet paper in sheet form ( the products ) in violation of international trade rules .
the petitioners also filed a countervailing-duties petition with these agencies regarding imports of the products from china and indonesia .
in january 2016 , the doc announced its final countervailing duty rates on imports of the products to the united states from certain producers from china and indonesia .
also , in january 2016 , the doc announced its final anti-dumping duty rates on imports of the products to the united states from certain producers from australia , brazil , china , indonesia and portugal .
in february 2016 , the itc concluded its anti- dumping and countervailing duties investigations and made a final determination that the u.s .
market had been injured by imports of the products .
accordingly , the doc 2019s previously announced countervailing duty rates and anti-dumping duty rates will be in effect for a minimum of five years .
we do not believe the impact of these rates will have a material , adverse effect on our consolidated financial statements .
brazilian papers net sales for 2015 were $ 878 million compared with $ 1.1 billion in 2014 and $ 1.1 billion in 2013 .
operating profits for 2015 were $ 186 million compared with $ 177 million ( $ 209 million excluding costs associated with a tax amnesty program ) in 2014 and $ 210 million in 2013 .
sales volumes in 2015 were lower compared with 2014 reflecting weak economic conditions and the absence of 2014 one-time events .
average sales price realizations improved for domestic uncoated freesheet paper due to the realization of price increases implemented in the second half of 2015 .
margins were unfavorably affected by an increased proportion of sales to the lower-margin export markets .
raw material costs increased for energy and wood .
operating costs were higher than in 2014 , while planned maintenance downtime costs were $ 4 million lower.


customary conditions .
we will retain a 20% ( 20 % ) equity interest in the joint venture .
as of december 31 , 2008 , the joint venture has acquired seven properties from us and we received year-to-date net sale proceeds and financing distributions of approximately $ 251.6 million .
in january 2008 , we sold a tract of land to an unconsolidated joint venture in which we hold a 50% ( 50 % ) equity interest and received a distribution , commensurate to our partner 2019s 50% ( 50 % ) ownership interest , of approximately $ 38.3 million .
in november 2008 , that unconsolidated joint venture entered a loan agreement with a consortium of banks and distributed a portion of the loan proceeds to us and our partner , with our share of the distribution totaling $ 20.4 million .
uses of liquidity our principal uses of liquidity include the following : 2022 property investment ; 2022 recurring leasing/capital costs ; 2022 dividends and distributions to shareholders and unitholders ; 2022 long-term debt maturities ; 2022 opportunistic repurchases of outstanding debt ; and 2022 other contractual obligations .
property investment we evaluate development and acquisition opportunities based upon market outlook , supply and long-term growth potential .
our ability to make future property investments is dependent upon our continued access to our longer-term sources of liquidity including the issuances of debt or equity securities as well as disposing of selected properties .
in light of current economic conditions , management continues to evaluate our investment priorities and we are limiting new development expenditures .
recurring expenditures one of our principal uses of our liquidity is to fund the recurring leasing/capital expenditures of our real estate investments .
the following is a summary of our recurring capital expenditures for the years ended december 31 , 2008 , 2007 and 2006 , respectively ( in thousands ) : .

                              | 2008    | 2007    | 2006
----------------------------- | ------- | ------- | -------
recurring tenant improvements | $ 36885 | $ 45296 | $ 41895
recurring leasing costs       | 28205   | 32238   | 32983
building improvements         | 9724    | 8402    | 8122
totals                        | $ 74814 | $ 85936 | $ 83000

dividends and distributions in order to qualify as a reit for federal income tax purposes , we must currently distribute at least 90% ( 90 % ) of our taxable income to shareholders .
because depreciation is a non-cash expense , cash flow will typically be greater than operating income .
we paid dividends per share of $ 1.93 , $ 1.91 and $ 1.89 for the years ended december 31 , 2008 , 2007 and 2006 , respectively .
we expect to continue to distribute taxable earnings to meet the requirements to maintain our reit status .
however , distributions are declared at the discretion of our board of directors and are subject to actual cash available for distribution , our financial condition , capital requirements and such other factors as our board of directors deems relevant . in january 2009 , our board of directors resolved to decrease our annual dividend from $ 1.94 per share to $ 1.00 per share in order to retain additional cash to help meet our capital needs .
we anticipate retaining additional cash of approximately $ 145.2 million per year , when compared to an annual dividend of $ 1.94 per share , as the result of this action .
at december 31 , 2008 we had six series of preferred shares outstanding .
the annual dividend rates on our preferred shares range between 6.5% ( 6.5 % ) and 8.375% ( 8.375 % ) and are paid in arrears quarterly.


market street commitments by credit rating ( a ) december 31 , december 31 .

        | december 31 2009 | december 312008
------- | ---------------- | ---------------
aaa/aaa | 14% ( 14 % )     | 19% ( 19 % )
aa/aa   | 50               | 6
a/a     | 34               | 72
bbb/baa | 2                | 3
total   | 100% ( 100 % )   | 100% ( 100 % )

( a ) the majority of our facilities are not explicitly rated by the rating agencies .
all facilities are structured to meet rating agency standards for applicable rating levels .
we evaluated the design of market street , its capital structure , the note , and relationships among the variable interest holders .
based on this analysis and under accounting guidance effective during 2009 and 2008 , we are not the primary beneficiary and therefore the assets and liabilities of market street are not included on our consolidated balance sheet .
we considered changes to the variable interest holders ( such as new expected loss note investors and changes to program- level credit enhancement providers ) , terms of expected loss notes , and new types of risks related to market street as reconsideration events .
we reviewed the activities of market street on at least a quarterly basis to determine if a reconsideration event has occurred .
tax credit investments we make certain equity investments in various limited partnerships or limited liability companies ( llcs ) that sponsor affordable housing projects utilizing the low income housing tax credit ( lihtc ) pursuant to sections 42 and 47 of the internal revenue code .
the purpose of these investments is to achieve a satisfactory return on capital , to facilitate the sale of additional affordable housing product offerings and to assist us in achieving goals associated with the community reinvestment act .
the primary activities of the investments include the identification , development and operation of multi-family housing that is leased to qualifying residential tenants .
generally , these types of investments are funded through a combination of debt and equity .
we typically invest in these partnerships as a limited partner or non-managing member .
also , we are a national syndicator of affordable housing equity ( together with the investments described above , the 201clihtc investments 201d ) .
in these syndication transactions , we create funds in which our subsidiaries are the general partner or managing member and sell limited partnership or non-managing member interests to third parties , and in some cases may also purchase a limited partnership or non-managing member interest in the fund .
the purpose of this business is to generate income from the syndication of these funds , generate servicing fees by managing the funds , and earn tax credits to reduce our tax liability .
general partner or managing member activities include selecting , evaluating , structuring , negotiating , and closing the fund investments in operating limited partnerships , as well as oversight of the ongoing operations of the fund portfolio .
we evaluate our interests and third party interests in the limited partnerships/llcs in determining whether we are the primary beneficiary .
the primary beneficiary determination is based on which party absorbs a majority of the variability .
the primary sources of variability in lihtc investments are the tax credits , tax benefits due to passive losses on the investments and development and operating cash flows .
we have consolidated lihtc investments in which we absorb a majority of the variability and thus are considered the primary beneficiary .
the assets are primarily included in equity investments and other assets on our consolidated balance sheet with the liabilities classified in other liabilities and third party investors 2019 interests included in the equity section as noncontrolling interests .
neither creditors nor equity investors in the lihtc investments have any recourse to our general credit .
the consolidated aggregate assets and liabilities of these lihtc investments are provided in the consolidated vies 2013 pnc is primary beneficiary table and reflected in the 201cother 201d business segment .
we also have lihtc investments in which we are not the primary beneficiary , but are considered to have a significant variable interest based on our interests in the partnership/llc .
these investments are disclosed in the non-consolidated vies 2013 significant variable interests table .
the table also reflects our maximum exposure to loss .
our maximum exposure to loss is equal to our legally binding equity commitments adjusted for recorded impairment and partnership results .
we use the equity and cost methods to account for our investment in these entities with the investments reflected in equity investments on our consolidated balance sheet .
in addition , we increase our recognized investments and recognize a liability for all legally binding unfunded equity commitments .
these liabilities are reflected in other liabilities on our consolidated balance sheet .
credit risk transfer transaction national city bank , ( a former pnc subsidiary which merged into pnc bank , n.a .
in november 2009 ) sponsored a special purpose entity ( spe ) and concurrently entered into a credit risk transfer agreement with an independent third party to mitigate credit losses on a pool of nonconforming mortgage loans originated by its former first franklin business unit .
the spe was formed with a small equity contribution and was structured as a bankruptcy-remote entity so that its creditors have no recourse to us .
in exchange for a perfected security interest in the cash flows of the nonconforming mortgage loans , the spe issued to us asset-backed securities in the form of senior , mezzanine , and subordinated equity notes .
the spe was deemed to be a vie as its equity was not sufficient to finance its activities .
we were determined to be the primary beneficiary of the spe as we would absorb the majority of the expected losses of the spe through our holding of the asset-backed securities .
accordingly , this spe was consolidated and all of the entity 2019s assets , liabilities , and


five-year performance comparison 2013 the following graph provides an indicator of cumulative total shareholder returns for the corporation as compared to the peer group index ( described above ) , the dow jones , and the s&p 500 .
the graph assumes that the value of the investment in the common stock of union pacific corporation and each index was $ 100 on december 31 , 2002 , and that all dividends were reinvested .
comparison of five-year cumulative return 2002 2003 2004 2005 2006 2007 upc s&p 500 peer group dj trans purchases of equity securities 2013 during 2007 , we repurchased 13266070 shares of our common stock at an average price of $ 115.66 .
during the first nine months of 2007 , we repurchased 10639916 shares of our common stock at an average price per share of $ 112.68 .
the following table presents common stock repurchases during each month for the fourth quarter of 2007 : period number of shares purchased average paid per total number of shares purchased as part of a publicly announced plan or program maximum number of shares that may yet be purchased under the plan or program .

period                   | totalnumber ofsharespurchased[a] | averagepricepaid pershare | total number of sharespurchased as part of apublicly announcedplan orprogram | maximum number ofshares that may yetbe purchased underthe plan orprogram[b]
------------------------ | -------------------------------- | ------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------
oct . 1 through oct . 31 | 99782                            | $ 128.78                  | -                                                                            | 9774279
nov . 1 through nov . 30 | 540294                           | 124.70                    | 528000                                                                       | 9246279
dec . 1 through dec . 31 | 1986078                          | 128.53                    | 1869800                                                                      | 7376479
total                    | 2626154                          | $ 127.75                  | 2397800                                                                      | n/a

[a] total number of shares purchased during the quarter includes 228354 shares delivered or attested to upc by employees to pay stock option exercise prices , satisfy excess tax withholding obligations for stock option exercises or vesting of retention units , and pay withholding obligations for vesting of retention shares .
[b] on january 30 , 2007 , our board of directors authorized us to repurchase up to 20 million shares of our common stock through december 31 , 2009 .
we may make these repurchases on the open market or through other transactions .
our management has sole discretion with respect to determining the timing and amount of these transactions.


cash flows from operations .

in millions                                                                                | fiscal year 2018 | fiscal year 2017 | fiscal year 2016
----------------------------------------------------------------------------------------------- | ---------------- | ---------------- | ----------------
net earnings including earnings attributable to redeemable and noncontrollinginterests          | $ 2163.0         | $ 1701.1         | $ 1736.8
depreciation and amortization                                                                   | 618.8            | 603.6            | 608.1
after-taxearnings from joint ventures                                                           | -84.7 ( 84.7 )   | -85.0 ( 85.0 )   | -88.4 ( 88.4 )
distributions of earnings from joint ventures                                                   | 113.2            | 75.6             | 75.1
stock-based compensation                                                                        | 77.0             | 95.7             | 89.8
deferred income taxes                                                                           | -504.3 ( 504.3 ) | 183.9            | 120.6
pension and other postretirement benefit plan contributions                                     | -31.8 ( 31.8 )   | -45.4 ( 45.4 )   | -47.8 ( 47.8 )
pension and other postretirement benefit plan costs                                             | 4.6              | 35.7             | 118.1
divestitures loss ( gain )                                                                      | -                | 13.5             | -148.2 ( 148.2 )
restructuring impairment and other exit costs                                                   | 126.0            | 117.0            | 107.2
changes in current assets and liabilities excluding the effects of acquisitions anddivestitures | 542.1            | -194.2 ( 194.2 ) | 298.5
other net                                                                                | -182.9 ( 182.9 ) | -86.3 ( 86.3 )   | -105.6 ( 105.6 )
net cash provided by operating activities                                                       | $ 2841.0         | $ 2415.2         | $ 2764.2

in fiscal 2018 , cash provided by operations was $ 2.8 billion compared to $ 2.4 billion in fiscal 2017 .
the $ 426 million increase was primarily driven by the $ 462 million increase in net earnings and the $ 736 million change in current assets and liabilities , partially offset by a $ 688 million change in deferred income taxes .
the change in deferred income taxes was primarily related to the $ 638 million provisional benefit from revaluing our net u.s .
deferred tax liabilities to reflect the new u.s .
corporate tax rate as a result of the tcja .
the $ 736 million change in current assets and liabilities was primarily due to changes in accounts payable of $ 476 million related to the extension of payment terms and timing of payments , and $ 264 million of changes in other current liabilities primarily driven by changes in income taxes payable , trade and advertising accruals , and incentive accruals .
we strive to grow core working capital at or below the rate of growth in our net sales .
for fiscal 2018 , core working capital decreased 27 percent , compared to a net sales increase of 1 percent .
in fiscal 2017 , core working capital increased 9 percent , compared to a net sales decline of 6 percent , and in fiscal 2016 , core working capital decreased 41 percent , compared to net sales decline of 6 percent .
in fiscal 2017 , our operations generated $ 2.4 billion of cash , compared to $ 2.8 billion in fiscal 2016 .
the $ 349 million decrease was primarily driven by a $ 493 million change in current assets and liabilities .
the $ 493 million change in current assets and liabilities was primarily due to changes in other current liabilities driven by changes in income taxes payable , a decrease in incentive accruals , and changes in trade and advertising accruals due to reduced spending .
the change in current assets and liabilities was also impacted by the timing of accounts payable .
additionally , we recorded a $ 14 million loss on a divestiture during fiscal 2017 , compared to a $ 148 million net gain on divestitures during fiscal 2016 , and classified the related cash flows as investing activities.


the fair value of the psu award at the date of grant is amortized to expense over the performance period , which is typically three years after the date of the award , or upon death , disability or reaching the age of 58 .
as of december 31 , 2017 , pmi had $ 34 million of total unrecognized compensation cost related to non-vested psu awards .
this cost is recognized over a weighted-average performance cycle period of two years , or upon death , disability or reaching the age of 58 .
during the years ended december 31 , 2017 , and 2016 , there were no psu awards that vested .
pmi did not grant any psu awards during note 10 .
earnings per share : unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and therefore are included in pmi 2019s earnings per share calculation pursuant to the two-class method .
basic and diluted earnings per share ( 201ceps 201d ) were calculated using the following: .

( in millions )                                                                        | for the years ended december 31 , 2017 | for the years ended december 31 , 2016 | for the years ended december 31 , 2015
-------------------------------------------------------------------------------------- | -------------------------------------- | -------------------------------------- | --------------------------------------
net earnings attributable to pmi                                                       | $ 6035                                 | $ 6967                                 | $ 6873
less distributed and undistributed earnings attributable to share-based payment awards | 14                                     | 19                                     | 24
net earnings for basic and diluted eps                                                 | $ 6021                                 | $ 6948                                 | $ 6849
weighted-average shares for basic eps                                                  | 1552                                   | 1551                                   | 1549
plus contingently issuable performance stock units ( psus )                            | 1                                      | 2014                                   | 2014
weighted-average shares for diluted eps                                                | 1553                                   | 1551                                   | 1549

for the 2017 , 2016 and 2015 computations , there were no antidilutive stock options.


entergy corporation notes to consolidated financial statements ( d ) the bonds are subject to mandatory tender for purchase from the holders at 100% ( 100 % ) of the principal amount outstanding on october 1 , 2003 and will then be remarketed .
( e ) on june 1 , 2002 , entergy louisiana remarketed $ 55 million st .
charles parish pollution control revenue refunding bonds due 2030 , resetting the interest rate to 4.9% ( 4.9 % ) through may 2005 .
( f ) the bonds are subject to mandatory tender for purchase from the holders at 100% ( 100 % ) of the principal amount outstanding on june 1 , 2005 and will then be remarketed .
( g ) the fair value excludes lease obligations , long-term doe obligations , and other long-term debt and includes debt due within one year .
it is determined using bid prices reported by dealer markets and by nationally recognized investment banking firms .
the annual long-term debt maturities ( excluding lease obligations ) and annual cash sinking fund requirements for debt outstanding as of december 31 , 2002 , for the next five years are as follows ( in thousands ) : .

2003 | $ 1150786
---- | ---------
2004 | $ 925005
2005 | $ 540372
2006 | $ 139952
2007 | $ 475288

not included are other sinking fund requirements of approximately $ 30.2 million annually , which may be satisfied by cash or by certification of property additions at the rate of 167% ( 167 % ) of such requirements .
in december 2002 , when the damhead creek project was sold , the buyer of the project assumed all obligations under the damhead creek credit facilities and the damhead creek interest rate swap agreements .
in november 2000 , entergy's non-utility nuclear business purchased the fitzpatrick and indian point 3 power plants in a seller-financed transaction .
entergy issued notes to nypa with seven annual installments of approximately $ 108 million commencing one year from the date of the closing , and eight annual installments of $ 20 million commencing eight years from the date of the closing .
these notes do not have a stated interest rate , but have an implicit interest rate of 4.8% ( 4.8 % ) .
in accordance with the purchase agreement with nypa , the purchase of indian point 2 resulted in entergy's non-utility nuclear business becoming liable to nypa for an additional $ 10 million per year for 10 years , beginning in september 2003 .
this liability was recorded upon the purchase of indian point 2 in september 2001 .
covenants in the entergy corporation 7.75% ( 7.75 % ) notes require it to maintain a consolidated debt ratio of 65% ( 65 % ) or less of its total capitalization .
if entergy's debt ratio exceeds this limit , or if entergy or certain of the domestic utility companies default on other credit facilities or are in bankruptcy or insolvency proceedings , an acceleration of the facility's maturity may occur .
in january 2003 , entergy paid in full , at maturity , the outstanding debt relating to the top of iowa wind project .
capital funds agreement pursuant to an agreement with certain creditors , entergy corporation has agreed to supply system energy with sufficient capital to : fffd maintain system energy's equity capital at a minimum of 35% ( 35 % ) of its total capitalization ( excluding short-term debt ) ; fffd permit the continued commercial operation of grand gulf 1 ; fffd pay in full all system energy indebtedness for borrowed money when due ; and fffd enable system energy to make payments on specific system energy debt , under supplements to the agreement assigning system energy's rights in the agreement as security for the specific debt.


item 5 .
market for the registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities the following graph compares annual total return of our common stock , the standard & poor 2019s 500 composite stock index ( 201cs&p 500 index 201d ) and our peer group ( 201cloews peer group 201d ) for the five years ended december 31 , 2016 .
the graph assumes that the value of the investment in our common stock , the s&p 500 index and the loews peer group was $ 100 on december 31 , 2011 and that all dividends were reinvested. .

                       | 2011  | 2012   | 2013   | 2014   | 2015   | 2016
---------------------- | ----- | ------ | ------ | ------ | ------ | ------
loews common stock     | 100.0 | 108.91 | 129.64 | 113.59 | 104.47 | 128.19
s&p 500 index          | 100.0 | 116.00 | 153.57 | 174.60 | 177.01 | 198.18
loews peer group ( a ) | 100.0 | 113.39 | 142.85 | 150.44 | 142.44 | 165.34

( a ) the loews peer group consists of the following companies that are industry competitors of our principal operating subsidiaries : chubb limited ( name change from ace limited after it acquired the chubb corporation on january 15 , 2016 ) , w.r .
berkley corporation , the chubb corporation ( included through january 15 , 2016 when it was acquired by ace limited ) , energy transfer partners l.p. , ensco plc , the hartford financial services group , inc. , kinder morgan energy partners , l.p .
( included through november 26 , 2014 when it was acquired by kinder morgan inc. ) , noble corporation , spectra energy corp , transocean ltd .
and the travelers companies , inc .
dividend information we have paid quarterly cash dividends in each year since 1967 .
regular dividends of $ 0.0625 per share of loews common stock were paid in each calendar quarter of 2016 and 2015.


the aes corporation notes to consolidated financial statements 2014 ( continued ) december 31 , 2017 , 2016 , and 2015 the total amount of unrecognized tax benefits anticipated to result in a net decrease to unrecognized tax benefits within 12 months of december 31 , 2017 is estimated to be between $ 5 million and $ 15 million , primarily relating to statute of limitation lapses and tax exam settlements .
the following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for the periods indicated ( in millions ) : .

december 31,                                | 2017     | 2016       | 2015
------------------------------------------- | -------- | ---------- | ----------
balance at january 1                        | $ 352    | $ 364      | $ 384
additions for current year tax positions    | 2014     | 2          | 2
additions for tax positions of prior years  | 2        | 1          | 12
reductions for tax positions of prior years | -5 ( 5 ) | -1 ( 1 )   | -7 ( 7 )
effects of foreign currency translation     | 2014     | 2014       | -3 ( 3 )
settlements                                 | 2014     | -13 ( 13 ) | -17 ( 17 )
lapse of statute of limitations             | -1 ( 1 ) | -1 ( 1 )   | -7 ( 7 )
balance at december 31                      | $ 348    | $ 352      | $ 364

the company and certain of its subsidiaries are currently under examination by the relevant taxing authorities for various tax years .
the company regularly assesses the potential outcome of these examinations in each of the taxing jurisdictions when determining the adequacy of the amount of unrecognized tax benefit recorded .
while it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position , we believe we have appropriately accrued for our uncertain tax benefits .
however , audit outcomes and the timing of audit settlements and future events that would impact our previously recorded unrecognized tax benefits and the range of anticipated increases or decreases in unrecognized tax benefits are subject to significant uncertainty .
it is possible that the ultimate outcome of current or future examinations may exceed our provision for current unrecognized tax benefits in amounts that could be material , but cannot be estimated as of december 31 , 2017 .
our effective tax rate and net income in any given future period could therefore be materially impacted .
21 .
discontinued operations due to a portfolio evaluation in the first half of 2016 , management decided to pursue a strategic shift of its distribution companies in brazil , sul and eletropaulo , to reduce the company's exposure to the brazilian distribution market .
eletropaulo 2014 in november 2017 , eletropaulo converted its preferred shares into ordinary shares and transitioned the listing of those shares into the novo mercado , which is a listing segment of the brazilian stock exchange with the highest standards of corporate governance .
upon conversion of the preferred shares into ordinary shares , aes no longer controlled eletropaulo , but maintained significant influence over the business .
as a result , the company deconsolidated eletropaulo .
after deconsolidation , the company's 17% ( 17 % ) ownership interest is reflected as an equity method investment .
the company recorded an after-tax loss on deconsolidation of $ 611 million , which primarily consisted of $ 455 million related to cumulative translation losses and $ 243 million related to pension losses reclassified from aocl .
in december 2017 , all the remaining criteria were met for eletropaulo to qualify as a discontinued operation .
therefore , its results of operations and financial position were reported as such in the consolidated financial statements for all periods presented .
eletropaulo's pre-tax loss attributable to aes , including the loss on deconsolidation , for the years ended december 31 , 2017 and 2016 was $ 633 million and $ 192 million , respectively .
eletropaulo's pre-tax income attributable to aes for the year ended december 31 , 2015 was $ 73 million .
prior to its classification as discontinued operations , eletropaulo was reported in the brazil sbu reportable segment .
sul 2014 the company executed an agreement for the sale of sul , a wholly-owned subsidiary , in june 2016 .
the results of operations and financial position of sul are reported as discontinued operations in the consolidated financial statements for all periods presented .
upon meeting the held-for-sale criteria , the company recognized an after-tax loss of $ 382 million comprised of a pre-tax impairment charge of $ 783 million , offset by a tax benefit of $ 266 million related to the impairment of the sul long lived assets and a tax benefit of $ 135 million for deferred taxes related to the investment in sul .
prior to the impairment charge , the carrying value of the sul asset group of $ 1.6 billion was greater than its approximate fair value less costs to sell .
however , the impairment charge was limited to the carrying value of the long lived assets of the sul disposal group .
on october 31 , 2016 , the company completed the sale of sul and received final proceeds less costs to sell of $ 484 million , excluding contingent consideration .
upon disposal of sul , the company incurred an additional after-tax


risks related to our common stock our stock price is extremely volatile .
the trading price of our common stock has been extremely volatile and may continue to be volatile in the future .
many factors could have an impact on our stock price , including fluctuations in our or our competitors 2019 operating results , clinical trial results or adverse events associated with our products , product development by us or our competitors , changes in laws , including healthcare , tax or intellectual property laws , intellectual property developments , changes in reimbursement or drug pricing , the existence or outcome of litigation or government proceedings , including the sec/doj investigation , failure to resolve , delays in resolving or other developments with respect to the issues raised in the warning letter , acquisitions or other strategic transactions , and the perceptions of our investors that we are not performing or meeting expectations .
the trading price of the common stock of many biopharmaceutical companies , including ours , has experienced extreme price and volume fluctuations , which have at times been unrelated to the operating performance of the companies whose stocks were affected .
anti-takeover provisions in our charter and bylaws and under delaware law could make a third-party acquisition of us difficult and may frustrate any attempt to remove or replace our current management .
our corporate charter and by-law provisions may discourage certain types of transactions involving an actual or potential change of control that might be beneficial to us or our stockholders .
our bylaws provide that special meetings of our stockholders may be called only by the chairman of the board , the president , the secretary , or a majority of the board of directors , or upon the written request of stockholders who together own of record 25% ( 25 % ) of the outstanding stock of all classes entitled to vote at such meeting .
our bylaws also specify that the authorized number of directors may be changed only by resolution of the board of directors .
our charter does not include a provision for cumulative voting for directors , which may have enabled a minority stockholder holding a sufficient percentage of a class of shares to elect one or more directors .
under our charter , our board of directors has the authority , without further action by stockholders , to designate up to 5 shares of preferred stock in one or more series .
the rights of the holders of common stock will be subject to , and may be adversely affected by , the rights of the holders of any class or series of preferred stock that may be issued in the future .
because we are a delaware corporation , the anti-takeover provisions of delaware law could make it more difficult for a third party to acquire control of us , even if the change in control would be beneficial to stockholders .
we are subject to the provisions of section 203 of the delaware general laws , which prohibits a person who owns in excess of 15% ( 15 % ) of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% ( 15 % ) of our outstanding voting stock , unless the merger or combination is approved in a prescribed manner .
item 1b .
unresolved staff comments .
item 2 .
properties .
we conduct our primary operations at the owned and leased facilities described below .
location operations conducted approximate square feet expiration new haven , connecticut corporate headquarters and executive , sales , research and development offices 514000 2030 dublin , ireland global supply chain , distribution , and administration offices 160000 owned .

location                | operations conducted                                                        | approximatesquare feet | leaseexpirationdates
----------------------- | --------------------------------------------------------------------------- | ---------------------- | --------------------
new haven connecticut   | corporate headquarters and executive sales research and development offices | 514000                 | 2030
dublin ireland          | global supply chain distribution and administration offices                 | 160000                 | owned
athlone ireland         | commercial research and development manufacturing                           | 80000                  | owned
lexington massachusetts | research and development offices                                            | 81000                  | 2019
bogart georgia          | commercial research and development manufacturing                           | 70000                  | owned
smithfield rhode island | commercial research and development manufacturing                           | 67000                  | owned
zurich switzerland      | regional executive and sales offices                                        | 69000                  | 2025

we believe that our administrative office space is adequate to meet our needs for the foreseeable future .
we also believe that our research and development facilities and our manufacturing facilities , together with third party manufacturing facilities , will be adequate for our on-going activities .
in addition to the locations above , we also lease space in other u.s .
locations and in foreign countries to support our operations as a global organization.


as of december 31 , 2015 , the future minimum payments due under the lease financing obligation were as follows ( in thousands ) : years ending december 31 .

2016                                                | $ 5754
--------------------------------------------------- | ----------------
2017                                                | 5933
2018                                                | 6113
2019                                                | 6293
2020                                                | 6477
thereafter                                          | 18810
total payments                                      | 49380
less : interest and land lease expense              | -30463 ( 30463 )
total payments under facility financing obligations | 18917
property reverting to landlord                      | 23629
present value of obligation                         | 42546
less current portion                                | -1336 ( 1336 )
long-term portion of obligation                     | $ 41210

upon completion of construction in 2013 , we evaluated the de-recognition of the asset and liability under the sale-leaseback accounting guidance .
we concluded that we had forms of continued economic involvement in the facility , and therefore did not meet with the provisions for sale-leaseback accounting .
therefore , the lease is accounted for as a financing obligation and lease payments will be attributed to ( 1 ) a reduction of the principal financing obligation ; ( 2 ) imputed interest expense ; and ( 3 ) land lease expense ( which is considered an operating lease and a component of cost of goods sold and operating expenses ) representing an imputed cost to lease the underlying land of the building .
in addition , the underlying building asset is depreciated over the building 2019s estimated useful life of 30 years .
at the conclusion of the initial lease term , we will de-recognize both the net book values of the asset and the remaining financing obligation .
purchase commitments we outsource most of our manufacturing and supply chain management operations to third-party contract manufacturers , who procure components and assemble products on our behalf based on our forecasts in order to reduce manufacturing lead times and ensure adequate component supply .
we issue purchase orders to our contract manufacturers for finished product and a significant portion of these orders consist of firm non- cancelable commitments .
in addition , we purchase strategic component inventory from certain suppliers under purchase commitments that in some cases are non-cancelable , including integrated circuits , which are consigned to our contract manufacturers .
as of december 31 , 2015 , we had non-cancelable purchase commitments of $ 43.9 million to our contract manufacturers and suppliers .
we have provided restricted deposits to our third-party contract manufacturers and vendors to secure our obligations to purchase inventory .
we had $ 2.3 million in restricted deposits as of december 31 , 2015 and december 31 , 2014 .
restricted deposits are classified in other assets in our accompanying consolidated balance sheets .
guarantees we have entered into agreements with some of our direct customers and channel partners that contain indemnification provisions relating to potential situations where claims could be alleged that our products infringe the intellectual property rights of a third party .
we have at our option and expense the ability to repair any infringement , replace product with a non-infringing equivalent-in-function product or refund our customers


our international networks segment owns and operates the following television networks , which reached the following number of subscribers via pay television services as of december 31 , 2013 : global networks international subscribers ( millions ) regional networks international subscribers ( millions ) .

global networks discovery channel | internationalsubscribers ( millions ) 271 | regional networks discovery kids | internationalsubscribers ( millions ) 76
--------------------------------- | ----------------------------------------- | -------------------------------- | ----------------------------------------
animal planet                     | 200                                       | sbs nordic ( a )                 | 28
tlc real time and travel & living | 162                                       | dmax ( b )                       | 16
discovery science                 | 81                                        | discovery history                | 14
investigation discovery           | 74                                        | shed                             | 12
discovery home & health           | 64                                        | discovery en espanol ( u.s. )    | 5
turbo                             | 52                                        | discovery familia ( u.s. )       | 4
discovery world                   | 23                                        | gxt                              | 4

( a ) number of subscribers corresponds to the collective sum of the total number of subscribers to each of the sbs nordic broadcast networks in sweden , norway , and denmark subject to retransmission agreements with pay television providers .
( b ) number of subscribers corresponds to dmax pay television networks in the u.k. , austria , switzerland and ireland .
our international networks segment also owns and operates free-to-air television networks which reached 285 million cumulative viewers in europe and the middle east as of december 31 , 2013 .
our free-to-air networks include dmax , fatafeat , quest , real time , giallo , frisbee , focus and k2 .
similar to u.s .
networks , the primary sources of revenue for international networks are fees charged to operators who distribute our networks , which primarily include cable and dth satellite service providers , and advertising sold on our television networks .
international television markets vary in their stages of development .
some markets , such as the u.k. , are more advanced digital television markets , while others remain in the analog environment with varying degrees of investment from operators to expand channel capacity or convert to digital technologies .
common practice in some markets results in long-term contractual distribution relationships , while customers in other markets renew contracts annually .
distribution revenue for our international networks segment is largely dependent on the number of subscribers that receive our networks or content , the rates negotiated in the agreements , and the market demand for the content that we provide .
advertising revenue is dependent upon a number of factors including the development of pay and free-to-air television markets , the number of subscribers to and viewers of our channels , viewership demographics , the popularity of our programming , and our ability to sell commercial time over a group of channels .
in certain markets , our advertising sales business operates with in-house sales teams , while we rely on external sales representation services in other markets .
in developing television markets , we expect that advertising revenue growth will result from continued subscriber and viewership growth , our localization strategy , and the shift of advertising spending from traditional analog networks to channels in the multi-channel environment .
in relatively mature markets , such as western europe , growth in advertising revenue will come from increasing viewership and pricing of advertising on our existing television networks and the launching of new services , both organic and through acquisitions .
during 2013 , distribution , advertising and other revenues were 50% ( 50 % ) , 47% ( 47 % ) and 3% ( 3 % ) , respectively , of total net revenues for this segment .
on january 21 , 2014 , we entered into an agreement with tf1 to acquire a controlling interest in eurosport international ( "eurosport" ) , a leading pan-european sports media platform , by increasing our ownership stake from 20% ( 20 % ) to 51% ( 51 % ) for cash of approximately 20ac253 million ( $ 343 million ) subject to working capital adjustments .
due to regulatory constraints the acquisition initially excludes eurosport france , a subsidiary of eurosport .
we will retain a 20% ( 20 % ) equity interest in eurosport france and a commitment to acquire another 31% ( 31 % ) ownership interest beginning 2015 , contingent upon resolution of all regulatory matters .
the flagship eurosport network focuses on regionally popular sports such as tennis , skiing , cycling and motor sports and reaches 133 million homes across 54 countries in 20 languages .
eurosport 2019s brands and platforms also include eurosport hd ( high definition simulcast ) , eurosport 2 , eurosport 2 hd ( high definition simulcast ) , eurosport asia-pacific , and eurosportnews .
the acquisition is intended to increase the growth of eurosport and enhance our pay television offerings in europe .
tf1 will have the right to put the entirety of its remaining 49% ( 49 % ) non-controlling interest to us for approximately two and a half years after completion of this acquisition .
the put has a floor value equal to the fair value at the acquisition date if exercised in the 90 day period beginning on july 1 , 2015 and is subsequently priced at fair value if exercised in the 90 day period beginning on july 1 , 2016 .
we expect the acquisition to close in the second quarter of 2014 subject to obtaining necessary regulatory approvals.


gain on previously held equity interest on 30 december 2014 , we acquired our partner 2019s equity ownership interest in a liquefied atmospheric industrial gases production joint venture in north america for $ 22.6 , which increased our ownership from 50% ( 50 % ) to 100% ( 100 % ) .
the transaction was accounted for as a business combination , and subsequent to the acquisition , the results were consolidated within our industrial gases 2013 americas segment .
we recorded a gain of $ 17.9 ( $ 11.2 after-tax , or $ .05 per share ) as a result of revaluing our previously held equity interest to fair value as of the acquisition date .
refer to note 6 , business combination , to the consolidated financial statements for additional details .
other income ( expense ) , net items recorded to other income ( expense ) , net arise from transactions and events not directly related to our principal income earning activities .
the detail of other income ( expense ) , net is presented in note 23 , supplemental information , to the consolidated financial statements .
2017 vs .
2016 other income ( expense ) , net of $ 121.0 increased $ 71.6 , primarily due to income from transition services agreements with versum and evonik , income from the sale of assets and investments , including a gain of $ 12.2 ( $ 7.6 after-tax , or $ .03 per share ) resulting from the sale of a parcel of land , and a favorable foreign exchange impact .
2016 vs .
2015 other income ( expense ) , net of $ 49.4 increased $ 3.9 , primarily due to lower foreign exchange losses , favorable contract settlements , and receipt of a government subsidy .
fiscal year 2015 included a gain of $ 33.6 ( $ 28.3 after tax , or $ .13 per share ) resulting from the sale of two parcels of land .
no other individual items were significant in comparison to fiscal year 2015 .
interest expense .

                            | 2017    | 2016    | 2015
--------------------------- | ------- | ------- | -------
interest incurred           | $ 139.6 | $ 147.9 | $ 151.9
less : capitalized interest | 19.0    | 32.7    | 49.1
interest expense            | $ 120.6 | $ 115.2 | $ 102.8

2017 vs .
2016 interest incurred decreased $ 8.3 as the impact from a lower average debt balance of $ 26 was partially offset by the impact from a higher average interest rate on the debt portfolio of $ 19 .
the change in capitalized interest was driven by a decrease in the carrying value of projects under construction , primarily as a result of our decision to exit from the energy-from-waste business .
2016 vs .
2015 interest incurred decreased $ 4.0 .
the decrease primarily resulted from a stronger u.s .
dollar on the translation of foreign currency interest of $ 6 , partially offset by a higher average debt balance of $ 2 .
the change in capitalized interest was driven by a decrease in the carrying value of projects under construction , primarily as a result of our exit from the energy-from-waste business .
other non-operating income ( expense ) , net other non-operating income ( expense ) , net of $ 29.0 in fiscal year 2017 primarily resulted from interest income on cash and time deposits , which are comprised primarily of proceeds from the sale of pmd .
interest income was included in "other income ( expense ) , net" in 2016 and 2015 .
interest income in previous periods was not material .
loss on extinguishment of debt on 30 september 2016 , in anticipation of the spin-off of emd , versum issued $ 425.0 of notes to air products , who then exchanged these notes with certain financial institutions for $ 418.3 of air products 2019 outstanding commercial paper .
this noncash exchange , which was excluded from the consolidated statements of cash flows , resulted in a loss of $ 6.9 ( $ 4.3 after-tax , or $ .02 per share ) .
in september 2015 , we made a payment of $ 146.6 to redeem 3000000 unidades de fomento ( 201cuf 201d ) series e 6.30% ( 6.30 % ) bonds due 22 january 2030 that had a carrying value of $ 130.0 and resulted in a net loss of $ 16.6 ( $ 14.2 after-tax , or $ .07 per share ) .


entergy new orleans , inc .
management's financial discussion and analysis net revenue 2008 compared to 2007 net revenue consists of operating revenues net of : 1 ) fuel , fuel-related expenses , and gas purchased for resale , 2 ) purchased power expenses , and 3 ) other regulatory charges .
following is an analysis of the change in net revenue comparing 2008 to 2007 .
amount ( in millions ) .

                 | amount ( in millions )
---------------- | ----------------------
2007 net revenue | $ 231.0
volume/weather   | 15.5
net gas revenue  | 6.6
rider revenue    | 3.9
base revenue     | -11.3 ( 11.3 )
other            | 7.0
2008 net revenue | $ 252.7

the volume/weather variance is due to an increase in electricity usage in the service territory in 2008 compared to the same period in 2007 .
entergy new orleans estimates that approximately 141000 electric customers and 93000 gas customers have returned since hurricane katrina and are taking service as of december 31 , 2008 , compared to approximately 132000 electric customers and 86000 gas customers as of december 31 , 2007 .
billed retail electricity usage increased a total of 184 gwh compared to the same period in 2007 , an increase of 4% ( 4 % ) .
the net gas revenue variance is primarily due to an increase in base rates in march and november 2007 .
refer to note 2 to the financial statements for a discussion of the base rate increase .
the rider revenue variance is due primarily to higher total revenue and a storm reserve rider effective march 2007 as a result of the city council's approval of a settlement agreement in october 2006 .
the approved storm reserve has been set to collect $ 75 million over a ten-year period through the rider and the funds will be held in a restricted escrow account .
the settlement agreement is discussed in note 2 to the financial statements .
the base revenue variance is primarily due to a base rate recovery credit , effective january 2008 .
the base rate credit is discussed in note 2 to the financial statements .
gross operating revenues and fuel and purchased power expenses gross operating revenues increased primarily due to : an increase of $ 58.9 million in gross wholesale revenue due to increased sales to affiliated customers and an increase in the average price of energy available for resale sales ; an increase of $ 47.7 million in electric fuel cost recovery revenues due to higher fuel rates and increased electricity usage ; and an increase of $ 22 million in gross gas revenues due to higher fuel recovery revenues and increases in gas base rates in march 2007 and november 2007 .
fuel and purchased power increased primarily due to increases in the average market prices of natural gas and purchased power in addition to an increase in demand.


at december 31 , 2015 and 2014 , we had a modest working capital surplus .
this reflects a strong cash position that provides enhanced liquidity in an uncertain economic environment .
in addition , we believe we have adequate access to capital markets to meet any foreseeable cash requirements , and we have sufficient financial capacity to satisfy our current liabilities .
cash flows .

millions                                | 2015           | 2014           | 2013
--------------------------------------- | -------------- | -------------- | --------------
cash provided by operating activities   | $ 7344         | $ 7385         | $ 6823
cash used in investing activities       | -4476 ( 4476 ) | -4249 ( 4249 ) | -3405 ( 3405 )
cash used in financing activities       | -3063 ( 3063 ) | -2982 ( 2982 ) | -3049 ( 3049 )
net change in cash and cash equivalents | $ -195 ( 195 ) | $ 154          | $ 369

operating activities cash provided by operating activities decreased in 2015 compared to 2014 due to lower net income and changes in working capital , partially offset by the timing of tax payments .
federal tax law provided for 100% ( 100 % ) bonus depreciation for qualified investments made during 2011 and 50% ( 50 % ) bonus depreciation for qualified investments made during 2012-2013 .
as a result , the company deferred a substantial portion of its 2011-2013 income tax expense , contributing to the positive operating cash flow in those years .
congress extended 50% ( 50 % ) bonus depreciation for 2014 , but this extension occurred in december , and the related benefit was realized in 2015 , rather than 2014 .
similarly , in december of 2015 , congress extended bonus depreciation through 2019 , which delayed the benefit of 2015 bonus depreciation into 2016 .
bonus depreciation will be at a rate of 50% ( 50 % ) for 2015 , 2016 and 2017 , 40% ( 40 % ) for 2018 and 30% ( 30 % ) for 2019 .
higher net income in 2014 increased cash provided by operating activities compared to 2013 , despite higher income tax payments .
2014 income tax payments were higher than 2013 primarily due to higher income , but also because we paid taxes previously deferred by bonus depreciation .
investing activities higher capital investments in locomotives and freight cars , including $ 327 million in early lease buyouts , which we exercised due to favorable economic terms and market conditions , drove the increase in cash used in investing activities in 2015 compared to 2014 .
higher capital investments , including the early buyout of the long-term operating lease of our headquarters building for approximately $ 261 million , drove the increase in cash used in investing activities in 2014 compared to 2013 .
significant investments also were made for new locomotives , freight cars and containers , and capacity and commercial facility projects .
capital investments in 2014 also included $ 99 million for the early buyout of locomotives and freight cars under long-term operating leases , which we exercised due to favorable economic terms and market conditions.


the railroad collected approximately $ 18.8 billion and $ 16.3 billion of receivables during the years ended december 31 , 2011 and 2010 , respectively .
upri used certain of these proceeds to purchase new receivables under the facility .
the costs of the receivables securitization facility include interest , which will vary based on prevailing commercial paper rates , program fees paid to banks , commercial paper issuing costs , and fees for unused commitment availability .
the costs of the receivables securitization facility are included in interest expense and were $ 4 million and $ 6 million for 2011 and 2010 , respectively .
prior to adoption of the new accounting standard , the costs of the receivables securitization facility were included in other income and were $ 9 million for 2009 .
the investors have no recourse to the railroad 2019s other assets , except for customary warranty and indemnity claims .
creditors of the railroad do not have recourse to the assets of upri .
in august 2011 , the receivables securitization facility was renewed for an additional 364-day period at comparable terms and conditions .
contractual obligations and commercial commitments as described in the notes to the consolidated financial statements and as referenced in the tables below , we have contractual obligations and commercial commitments that may affect our financial condition .
based on our assessment of the underlying provisions and circumstances of our contractual obligations and commercial commitments , including material sources of off-balance sheet and structured finance arrangements , other than the risks that we and other similarly situated companies face with respect to the condition of the capital markets ( as described in item 1a of part ii of this report ) , there is no known trend , demand , commitment , event , or uncertainty that is reasonably likely to occur that would have a material adverse effect on our consolidated results of operations , financial condition , or liquidity .
in addition , our commercial obligations , financings , and commitments are customary transactions that are similar to those of other comparable corporations , particularly within the transportation industry .
the following tables identify material obligations and commitments as of december 31 , 2011 : payments due by december 31 , contractual obligations after millions total 2012 2013 2014 2015 2016 2016 other .

contractual obligationsmillions    | total   | payments due by december 31 2012 | payments due by december 31 2013 | payments due by december 31 2014 | payments due by december 31 2015 | payments due by december 31 2016 | payments due by december 31 after 2016 | payments due by december 31 other
---------------------------------- | ------- | -------------------------------- | -------------------------------- | -------------------------------- | -------------------------------- | -------------------------------- | -------------------------------------- | ---------------------------------
debt [a]                           | $ 12516 | $ 538                            | $ 852                            | $ 887                            | $ 615                            | $ 652                            | $ 8972                                 | $ -
operating leases [b]               | 4528    | 525                              | 489                              | 415                              | 372                              | 347                              | 2380                                   | -
capital lease obligations [c]      | 2559    | 297                              | 269                              | 276                              | 276                              | 262                              | 1179                                   | -
purchase obligations [d]           | 5137    | 2598                             | 568                              | 560                              | 276                              | 245                              | 858                                    | 32
other post retirement benefits [e] | 249     | 26                               | 26                               | 26                               | 26                               | 26                               | 119                                    | -
income tax contingencies [f]       | 107     | 31                               | -                                | -                                | -                                | -                                | -                                      | 76
total contractualobligations       | $ 25096 | $ 4015                           | $ 2204                           | $ 2164                           | $ 1565                           | $ 1532                           | $ 13508                                | $ 108

[a] excludes capital lease obligations of $ 1874 million and unamortized discount of $ 364 million .
includes an interest component of $ 5120 million .
[b] includes leases for locomotives , freight cars , other equipment , and real estate .
[c] represents total obligations , including interest component of $ 685 million .
[d] purchase obligations include locomotive maintenance contracts ; purchase commitments for fuel purchases , locomotives , ties , ballast , and rail ; and agreements to purchase other goods and services .
for amounts where we cannot reasonably estimate the year of settlement , they are reflected in the other column .
[e] includes estimated other post retirement , medical , and life insurance payments and payments made under the unfunded pension plan for the next ten years .
no amounts are included for funded pension obligations as no contributions are currently required .
[f] future cash flows for income tax contingencies reflect the recorded liability for unrecognized tax benefits , including interest and penalties , as of december 31 , 2011 .
where we can reasonably estimate the years in which these liabilities may be settled , this is shown in the table .
for amounts where we cannot reasonably estimate the year of settlement , they are reflected in the other column.


( 1 ) the cumulative total return assumes reinvestment of dividends .
( 2 ) the total return is weighted according to market capitalization of each company at the beginning of each year .
( f ) purchases of equity securities by the issuer and affiliated purchasers we have not repurchased any of our common stock since the company filed its initial registration statement on march 16 , ( g ) securities authorized for issuance under equity compensation plans a description of securities authorized for issuance under our equity compensation plans will be incorporated herein by reference to the proxy statement for the 2012 annual meeting of stockholders to be filed within 120 days after the end of the company 2019s fiscal year .
item 6 .
selected financial data .

( $ in millions except per share amounts ) | year ended december 31 2011 | year ended december 31 2010 | year ended december 31 2009 | year ended december 31 2008 | year ended december 31 2007
------------------------------------------ | --------------------------- | --------------------------- | --------------------------- | --------------------------- | ---------------------------
sales and service revenues                 | $ 6575                      | $ 6723                      | $ 6292                      | $ 6189                      | $ 5692
goodwill impairment                        | 290                         | 0                           | 0                           | 2490                        | 0
operating income ( loss )                  | 110                         | 248                         | 211                         | -2354 ( 2354 )              | 447
net earnings ( loss )                      | -94 ( 94 )                  | 135                         | 124                         | -2420 ( 2420 )              | 276
total assets                               | 6001                        | 5203                        | 5036                        | 4760                        | 7658
long-term debt ( 1 )                       | 1830                        | 105                         | 283                         | 283                         | 283
total long-term obligations                | 3757                        | 1559                        | 1645                        | 1761                        | 1790
free cash flow ( 2 )                       | 331                         | 168                         | -269 ( 269 )                | 121                         | 364
basic earnings ( loss ) per share          | $ -1.93 ( 1.93 )            | $ 2.77                      | $ 2.54                      | $ -49.61 ( 49.61 )          | $ 5.65
diluted earnings ( loss ) per share        | $ -1.93 ( 1.93 )            | $ 2.77                      | $ 2.54                      | $ -49.61 ( 49.61 )          | $ 5.65

( 1 ) long-term debt does not include amounts payable to our former parent as of and before december 31 , 2010 , as these amounts were due upon demand and included in current liabilities .
( 2 ) free cash flow is a non-gaap financial measure and represents cash from operating activities less capital expenditures .
see liquidity and capital resources in item 7 for more information on this measure.


visa indemnification our payment services business issues and acquires credit and debit card transactions through visa u.s.a .
inc .
card association or its affiliates ( visa ) .
in october 2007 , visa completed a restructuring and issued shares of visa inc .
common stock to its financial institution members ( visa reorganization ) in contemplation of its initial public offering ( ipo ) .
as part of the visa reorganization , we received our proportionate share of class b visa inc .
common stock allocated to the u.s .
members .
prior to the ipo , the u.s .
members , which included pnc , were obligated to indemnify visa for judgments and settlements related to certain specified litigation .
as a result of the acquisition of national city , we became party to judgment and loss sharing agreements with visa and certain other banks .
the judgment and loss sharing agreements were designed to apportion financial responsibilities arising from any potential adverse judgment or negotiated settlements related to the specified litigation .
in september 2014 , visa funded $ 450 million into its litigation escrow account and reduced the conversion rate of visa b to a shares .
we continue to have an obligation to indemnify visa for judgments and settlements for the remaining specified litigation .
recourse and repurchase obligations as discussed in note 2 loan sale and servicing activities and variable interest entities , pnc has sold commercial mortgage , residential mortgage and home equity loans/ lines of credit directly or indirectly through securitization and loan sale transactions in which we have continuing involvement .
one form of continuing involvement includes certain recourse and loan repurchase obligations associated with the transferred assets .
commercial mortgage loan recourse obligations we originate and service certain multi-family commercial mortgage loans which are sold to fnma under fnma 2019s delegated underwriting and servicing ( dus ) program .
we participated in a similar program with the fhlmc .
under these programs , we generally assume up to a one-third pari passu risk of loss on unpaid principal balances through a loss share arrangement .
at december 31 , 2014 and december 31 , 2013 , the unpaid principal balance outstanding of loans sold as a participant in these programs was $ 12.3 billion and $ 11.7 billion , respectively .
the potential maximum exposure under the loss share arrangements was $ 3.7 billion at december 31 , 2014 and $ 3.6 billion at december 31 , 2013 .
we maintain a reserve for estimated losses based upon our exposure .
the reserve for losses under these programs totaled $ 35 million and $ 33 million as of december 31 , 2014 and december 31 , 2013 , respectively , and is included in other liabilities on our consolidated balance sheet .
if payment is required under these programs , we would not have a contractual interest in the collateral underlying the mortgage loans on which losses occurred , although the value of the collateral is taken into account in determining our share of such losses .
our exposure and activity associated with these recourse obligations are reported in the corporate & institutional banking segment .
table 150 : analysis of commercial mortgage recourse obligations .

in millions                                  | 2014 | 2013
-------------------------------------------- | ---- | --------
january 1                                    | $ 33 | $ 43
reserve adjustments net                      | 2    | -9 ( 9 )
losses 2013 loan repurchases and settlements |      | -1 ( 1 )
december 31                                  | $ 35 | $ 33

residential mortgage loan and home equity loan/ line of credit repurchase obligations while residential mortgage loans are sold on a non-recourse basis , we assume certain loan repurchase obligations associated with mortgage loans we have sold to investors .
these loan repurchase obligations primarily relate to situations where pnc is alleged to have breached certain origination covenants and representations and warranties made to purchasers of the loans in the respective purchase and sale agreements .
repurchase obligation activity associated with residential mortgages is reported in the residential mortgage banking segment .
in the fourth quarter of 2013 , pnc reached agreements with both fnma and fhlmc to resolve their repurchase claims with respect to loans sold between 2000 and 2008 .
pnc paid a total of $ 191 million related to these settlements .
pnc 2019s repurchase obligations also include certain brokered home equity loans/lines of credit that were sold to a limited number of private investors in the financial services industry by national city prior to our acquisition of national city .
pnc is no longer engaged in the brokered home equity lending business , and our exposure under these loan repurchase obligations is limited to repurchases of loans sold in these transactions .
repurchase activity associated with brokered home equity loans/lines of credit is reported in the non-strategic assets portfolio segment .
214 the pnc financial services group , inc .
2013 form 10-k


amount of commitment expiration per period other commercial commitments after millions of dollars total 2010 2011 2012 2013 2014 2014 .

other commercial commitmentsmillions of dollars | total  | amount of commitment expiration per period 2010 | amount of commitment expiration per period 2011 | amount of commitment expiration per period 2012 | amount of commitment expiration per period 2013 | amount of commitment expiration per period 2014 | amount of commitment expiration per period after 2014
----------------------------------------------- | ------ | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | ----------------------------------------------- | -----------------------------------------------------
credit facilities [a]                           | $ 1900 | $ -                                             | $ -                                             | $ 1900                                          | $ -                                             | $ -                                             | $ -
sale of receivables [b]                         | 600    | 600                                             | -                                               | -                                               | -                                               | -                                               | -
guarantees [c]                                  | 416    | 29                                              | 76                                              | 24                                              | 8                                               | 214                                             | 65
standby letters of credit [d]                   | 22     | 22                                              | -                                               | -                                               | -                                               | -                                               | -
total commercial commitments                    | $ 2938 | $ 651                                           | $ 76                                            | $ 1924                                          | $ 8                                             | $ 214                                           | $ 65

[a] none of the credit facility was used as of december 31 , 2009 .
[b] $ 400 million of the sale of receivables program was utilized at december 31 , 2009 .
[c] includes guaranteed obligations related to our headquarters building , equipment financings , and affiliated operations .
[d] none of the letters of credit were drawn upon as of december 31 , 2009 .
off-balance sheet arrangements sale of receivables 2013 the railroad transfers most of its accounts receivable to union pacific receivables , inc .
( upri ) , a bankruptcy-remote subsidiary , as part of a sale of receivables facility .
upri sells , without recourse on a 364-day revolving basis , an undivided interest in such accounts receivable to investors .
the total capacity to sell undivided interests to investors under the facility was $ 600 million and $ 700 million at december 31 , 2009 and 2008 , respectively .
the value of the outstanding undivided interest held by investors under the facility was $ 400 million and $ 584 million at december 31 , 2009 and 2008 , respectively .
during 2009 , upri reduced the outstanding undivided interest held by investors due to a decrease in available receivables .
the value of the undivided interest held by investors is not included in our consolidated financial statements .
the value of the undivided interest held by investors was supported by $ 817 million and $ 1015 million of accounts receivable held by upri at december 31 , 2009 and 2008 , respectively .
at december 31 , 2009 and 2008 , the value of the interest retained by upri was $ 417 million and $ 431 million , respectively .
this retained interest is included in accounts receivable in our consolidated financial statements .
the interest sold to investors is sold at carrying value , which approximates fair value , and there is no gain or loss recognized from the transaction .
the value of the outstanding undivided interest held by investors could fluctuate based upon the availability of eligible receivables and is directly affected by changing business volumes and credit risks , including default and dilution .
if default or dilution ratios increase one percent , the value of the outstanding undivided interest held by investors would not change as of december 31 , 2009 .
should our credit rating fall below investment grade , the value of the outstanding undivided interest held by investors would be reduced , and , in certain cases , the investors would have the right to discontinue the facility .
the railroad services the sold receivables ; however , the railroad does not recognize any servicing asset or liability , as the servicing fees adequately compensate us for these responsibilities .
the railroad collected approximately $ 13.8 billion and $ 17.8 billion during the years ended december 31 , 2009 and 2008 , respectively .
upri used certain of these proceeds to purchase new receivables under the facility .
the costs of the sale of receivables program are included in other income and were $ 9 million , $ 23 million , and $ 35 million for 2009 , 2008 , and 2007 , respectively .
the costs include interest , which will vary based on prevailing commercial paper rates , program fees paid to banks , commercial paper issuing costs , and fees for unused commitment availability .
the decrease in the 2009 costs was primarily attributable to lower commercial paper rates and a decrease in the outstanding interest held by investors.


the environmental liability includes costs for remediation and restoration of sites , as well as for ongoing monitoring costs , but excludes any anticipated recoveries from third parties .
cost estimates are based on information available for each site , financial viability of other potentially responsible parties , and existing technology , laws , and regulations .
we believe that we have adequately accrued for our ultimate share of costs at sites subject to joint and several liability .
however , the ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties involved , site-specific cost sharing arrangements with other potentially responsible parties , the degree of contamination by various wastes , the scarcity and quality of volumetric data related to many of the sites , and the speculative nature of remediation costs .
estimates may also vary due to changes in federal , state , and local laws governing environmental remediation .
we do not expect current obligations to have a material adverse effect on our results of operations or financial condition .
guarantees 2013 at december 31 , 2006 , we were contingently liable for $ 464 million in guarantees .
we have recorded a liability of $ 6 million for the fair value of these obligations as of december 31 , 2006 .
we entered into these contingent guarantees in the normal course of business , and they include guaranteed obligations related to our headquarters building , equipment financings , and affiliated operations .
the final guarantee expires in 2022 .
we are not aware of any existing event of default that would require us to satisfy these guarantees .
we do not expect that these guarantees will have a material adverse effect on our consolidated financial condition , results of operations , or liquidity .
indemnities 2013 our maximum potential exposure under indemnification arrangements , including certain tax indemnifications , can range from a specified dollar amount to an unlimited amount , depending on the nature of the transactions and the agreements .
due to uncertainty as to whether claims will be made or how they will be resolved , we cannot reasonably determine the probability of an adverse claim or reasonably estimate any adverse liability or the total maximum exposure under these indemnification arrangements .
we do not have any reason to believe that we will be required to make any material payments under these indemnity provisions .
income taxes 2013 as previously reported in our form 10-q for the quarter ended september 30 , 2005 , the irs has completed its examinations and issued notices of deficiency for tax years 1995 through 2002 .
among their proposed adjustments is the disallowance of tax deductions claimed in connection with certain donations of property .
in the fourth quarter of 2005 , the irs national office issued a technical advice memorandum which left unresolved whether the deductions were proper , pending further factual development .
we continue to dispute the donation issue , as well as many of the other proposed adjustments , and will contest the associated tax deficiencies through the irs appeals process , and , if necessary , litigation .
in addition , the irs is examining the corporation 2019s federal income tax returns for tax years 2003 and 2004 and should complete their exam in 2007 .
we do not expect that the ultimate resolution of these examinations will have a material adverse effect on our consolidated financial statements .
11 .
other income other income included the following for the years ended december 31 : millions of dollars 2006 2005 2004 .

millions of dollars                          | 2006       | 2005       | 2004
-------------------------------------------- | ---------- | ---------- | ----------
rental income                                | $ 83       | $ 59       | $ 55
net gain on non-operating asset dispositions | 72         | 135        | 69
interest income                              | 29         | 17         | 10
sale of receivables fees                     | -33 ( 33 ) | -23 ( 23 ) | -11 ( 11 )
non-operating environmental costs and other  | -33 ( 33 ) | -43 ( 43 ) | -35 ( 35 )
total                                        | $ 118      | $ 145      | $ 88


goodwill is reviewed annually during the fourth quarter for impairment .
in addition , the company performs an impairment analysis of other intangible assets based on the occurrence of other factors .
such factors include , but are not limited to , significant changes in membership , state funding , medical contracts and provider networks and contracts .
an impairment loss is recognized if the carrying value of intangible assets exceeds the implied fair value .
medical claims liabilities medical services costs include claims paid , claims reported but not yet paid , or inventory , estimates for claims incurred but not yet received , or ibnr , and estimates for the costs necessary to process unpaid claims .
the estimates of medical claims liabilities are developed using standard actuarial methods based upon historical data for payment patterns , cost trends , product mix , sea- sonality , utilization of healthcare services and other rele- vant factors including product changes .
these estimates are continually reviewed and adjustments , if necessary , are reflected in the period known .
management did not change actuarial methods during the years presented .
management believes the amount of medical claims payable is reasonable and adequate to cover the company 2019s liability for unpaid claims as of december 31 , 2006 ; however , actual claim payments may differ from established estimates .
revenue recognition the company 2019s medicaid managed care segment gener- ates revenues primarily from premiums received from the states in which it operates health plans .
the company receives a fixed premium per member per month pursuant to our state contracts .
the company generally receives premium payments during the month it provides services and recognizes premium revenue during the period in which it is obligated to provide services to its members .
some states enact premium taxes or similar assessments , collectively premium taxes , and these taxes are recorded as general and administrative expenses .
some contracts allow for additional premium related to certain supplemen- tal services provided such as maternity deliveries .
revenues are recorded based on membership and eligibility data provided by the states , which may be adjusted by the states for updates to this data .
these adjustments have been immaterial in relation to total revenue recorded and are reflected in the period known .
the company 2019s specialty services segment generates revenues under contracts with state programs , healthcare organizations and other commercial organizations , as well as from our own subsidiaries on market-based terms .
revenues are recognized when the related services are provided or as ratably earned over the covered period of service .
premium and services revenues collected in advance are recorded as unearned revenue .
for performance-based contracts the company does not recognize revenue subject to refund until data is sufficient to measure performance .
premiums and service revenues due to the company are recorded as premium and related receivables and are recorded net of an allowance based on historical trends and management 2019s judgment on the collectibility of these accounts .
as the company generally receives payments during the month in which services are provided , the allowance is typically not significant in comparison to total revenues and does not have a material impact on the pres- entation of the financial condition or results of operations .
activity in the allowance for uncollectible accounts for the years ended december 31 is summarized below: .

                                        | 2006         | 2005         | 2004
--------------------------------------- | ------------ | ------------ | ------------
allowances beginning of year            | $ 343        | $ 462        | $ 607
amounts charged to expense              | 512          | 80           | 407
write-offs of uncollectible receivables | -700 ( 700 ) | -199 ( 199 ) | -552 ( 552 )
allowances end of year                  | $ 155        | $ 343        | $ 462

significant customers centene receives the majority of its revenues under con- tracts or subcontracts with state medicaid managed care programs .
the contracts , which expire on various dates between june 30 , 2007 and december 31 , 2011 , are expected to be renewed .
contracts with the states of georgia , indiana , kansas , texas and wisconsin each accounted for 15% ( 15 % ) , 15% ( 15 % ) , 10% ( 10 % ) , 17% ( 17 % ) and 16% ( 16 % ) , respectively , of the company 2019s revenues for the year ended december 31 , 2006 .
reinsurance centene has purchased reinsurance from third parties to cover eligible healthcare services .
the current reinsurance program covers 90% ( 90 % ) of inpatient healthcare expenses in excess of annual deductibles of $ 300 to $ 500 per member , up to an annual maximum of $ 2000 .
centene 2019s medicaid managed care subsidiaries are responsible for inpatient charges in excess of an average daily per diem .
in addition , bridgeway participates in a risk-sharing program as part of its contract with the state of arizona for the reimbursement of certain contract service costs beyond a monetary threshold .
reinsurance recoveries were $ 3674 , $ 4014 , and $ 3730 , in 2006 , 2005 , and 2004 , respectively .
reinsurance expenses were approximately $ 4842 , $ 4105 , and $ 6724 in 2006 , 2005 , and 2004 , respectively .
reinsurance recoveries , net of expenses , are included in medical costs .
other income ( expense ) other income ( expense ) consists principally of investment income and interest expense .
investment income is derived from the company 2019s cash , cash equivalents , restricted deposits and investments.