the goldman sachs group , inc .
and subsidiaries notes to consolidated financial statements commercial lending .
the firm 2019s commercial lending commitments are extended to investment-grade and non-investment-grade corporate borrowers .
commitments to investment-grade corporate borrowers are principally used for operating liquidity and general corporate purposes .
the firm also extends lending commitments in connection with contingent acquisition financing and other types of corporate lending , as well as commercial real estate financing .
commitments that are extended for contingent acquisition financing are often intended to be short-term in nature , as borrowers often seek to replace them with other funding sources .
sumitomo mitsui financial group , inc .
( smfg ) provides the firm with credit loss protection on certain approved loan commitments ( primarily investment-grade commercial lending commitments ) .
the notional amount of such loan commitments was $ 25.70 billion and $ 26.88 billion as of december 2017 and december 2016 , respectively .
the credit loss protection on loan commitments provided by smfg is generally limited to 95% ( 95 % ) of the first loss the firm realizes on such commitments , up to a maximum of approximately $ 950 million .
in addition , subject to the satisfaction of certain conditions , upon the firm 2019s request , smfg will provide protection for 70% ( 70 % ) of additional losses on such commitments , up to a maximum of $ 1.13 billion , of which $ 550 million and $ 768 million of protection had been provided as of december 2017 and december 2016 , respectively .
the firm also uses other financial instruments to mitigate credit risks related to certain commitments not covered by smfg .
these instruments primarily include credit default swaps that reference the same or similar underlying instrument or entity , or credit default swaps that reference a market index .
warehouse financing .
the firm provides financing to clients who warehouse financial assets .
these arrangements are secured by the warehoused assets , primarily consisting of retail and corporate loans .
contingent and forward starting collateralized agreements / forward starting collateralized financings contingent and forward starting collateralized agreements includes resale and securities borrowing agreements , and forward starting collateralized financings includes repurchase and secured lending agreements that settle at a future date , generally within three business days .
the firm also enters into commitments to provide contingent financing to its clients and counterparties through resale agreements .
the firm 2019s funding of these commitments depends on the satisfaction of all contractual conditions to the resale agreement and these commitments can expire unused .
letters of credit the firm has commitments under letters of credit issued by various banks which the firm provides to counterparties in lieu of securities or cash to satisfy various collateral and margin deposit requirements .
investment commitments investment commitments includes commitments to invest in private equity , real estate and other assets directly and through funds that the firm raises and manages .
investment commitments included $ 2.09 billion and $ 2.10 billion as of december 2017 and december 2016 , respectively , related to commitments to invest in funds managed by the firm .
if these commitments are called , they would be funded at market value on the date of investment .
leases the firm has contractual obligations under long-term noncancelable lease agreements for office space expiring on various dates through 2069 .
certain agreements are subject to periodic escalation provisions for increases in real estate taxes and other charges .
the table below presents future minimum rental payments , net of minimum sublease rentals .
$ in millions december 2017 .

$ in millions     | as of december 2017
----------------- | -------------------
2018              | $ 299
2019              | 282
2020              | 262
2021              | 205
2022              | 145
2023 - thereafter | 771
total             | $ 1964

rent charged to operating expenses was $ 273 million for 2017 , $ 244 million for 2016 and $ 249 million for 2015 .
goldman sachs 2017 form 10-k 163


notes to the consolidated financial statements non-financial assets and liabilities measured at fair value on a non-recurring basis during 2009 , we classified the atlantic star as held for sale and recognized a charge of $ 7.1 million to reduce the carrying value of the ship to its fair value less cost to sell based on a firm offer received during 2009 .
this amount was recorded within other operating expenses in our consolidated statement of operations .
we determined the fair market value of the atlantic star as of december 31 , 2010 based on comparable ship sales adjusted for the condition , age and size of the ship .
we have categorized these inputs as level 3 because they are largely based on our own assump- tions .
as of december 31 , 2010 , the carrying amount of the atlantic star which we still believe represents its fair value was $ 46.4 million .
the following table presents a reconciliation of the company 2019s fuel call options 2019 beginning and ending balances as follows ( in thousands ) : fair value fair value measurements measurements using significant using significant unobservable unobservable year ended december 31 , 2010 inputs ( level 3 ) year ended december 31 , 2009 inputs ( level 3 ) fuel call options fuel call options balance at january 1 , 2010 $ 9998 balance at january 1 , 2009 $ 2007 2007 2007 2007 2014 total gains or losses ( realized/ unrealized ) total gains or losses ( realized/ unrealized ) .

year ended december 31 2010 balance at january 1 2010                                                                                | fairvalue measurements using significant unobservable inputs ( level 3 ) fuel call options $ 9998 | year ended december 31 2009 balance at january 1 2009                                                                                | fairvalue measurements using significant unobservable inputs ( level 3 ) fuel call options $ 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------
total gains or losses ( realized /unrealized )                                                                                |                                                                                | total gains or losses ( realized /unrealized )                                                                                |
included in other income ( expense )                                                                                | -2824 ( 2824 )                                                                                | included in other income ( expense )                                                                                | -2538 ( 2538 )
purchases issuances and settlements                                                                                | 24539                                                                                | purchases issuances and settlements                                                                                | 12536
transfers in and/or ( out ) of level 3                                                                                | -31713 ( 31713 )                                                                                | transfers in and/or ( out ) of level 3                                                                                | 2014
balance at december 31 2010                                                                                | $ 2014                                                                                | balance at december 31 2009                                                                                | $ 9998
the amount of total gains or losses for the period included in other income ( expense ) attributable to the change in unrealized gains or losses relating to assets still held at thereporting date | $ -2824 ( 2824 )                                                                                | the amount of total gains or losses for the period included in other income ( expense ) attributable to the change in unrealized gains or losses relating to assets still held atthe reporting date | $ -2538 ( 2538 )

the amount of total gains or losses for the period included in other income ( expense ) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date $ ( 2824 ) the amount of total gains or losses for the period included in other income ( expense ) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date $ ( 2538 ) during the fourth quarter of 2010 , we changed our valuation technique for fuel call options to a market approach method which employs inputs that are observable .
the fair value for fuel call options is determined by using the prevailing market price for the instruments consisting of published price quotes for similar assets based on recent transactions in an active market .
we believe that level 2 categorization is appropriate due to an increase in the observability and transparency of significant inputs .
previously , we derived the fair value of our fuel call options using standard option pricing models with inputs based on the options 2019 contract terms and data either readily available or formulated from public market informa- tion .
the fuel call options were categorized as level 3 because certain inputs , principally volatility , were unobservable .
net transfers in and/or out of level 3 are reported as having occurred at the end of the quarter in which the transfer occurred ; therefore , gains or losses reflected in the table above for 2010 include fourth quarter fuel call option gains or losses .
the reported fair values are based on a variety of factors and assumptions .
accordingly , the fair values may not represent actual values of the financial instru- ments and long-lived assets that could have been realized as of december 31 , 2010 or december 31 , 2009 , or that will be realized in the future and do not include expenses that could be incurred in an actual sale or settlement .
derivative instruments we are exposed to market risk attributable to changes in interest rates , foreign currency exchange rates and fuel prices .
we manage these risks through a combi- nation of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies .
the financial impact of these hedging instruments is pri- marily offset by corresponding changes in the under- lying exposures being hedged .
we achieve this by closely matching the amount , term and conditions of the derivative instrument with the underlying risk being hedged .
we do not hold or issue derivative financial instruments for trading or other speculative purposes .
we monitor our derivative positions using techniques including market valuations and sensitivity analyses.


24 | 2018 emerson annual report 2017 vs .
2016 2013 commercial & residential solutions sales were $ 5.9 billion in 2017 , an increase of $ 302 million , or 5 percent , reflecting favorable conditions in hvac and refrigeration markets in the u.s. , asia and europe , as well as u.s .
and asian construction markets .
underlying sales increased 5 percent ( $ 297 million ) on 6 percent higher volume , partially offset by 1 percent lower price .
foreign currency translation deducted $ 20 million and acquisitions added $ 25 million .
climate technologies sales were $ 4.2 billion in 2017 , an increase of $ 268 million , or 7 percent .
global air conditioning sales were solid , led by strength in the u.s .
and asia and robust growth in china partially due to easier comparisons , while sales were up modestly in europe and declined moderately in middle east/africa .
global refrigeration sales were strong , reflecting robust growth in china on increased adoption of energy- efficient solutions and slight growth in the u.s .
sensors and solutions had strong growth , while temperature controls was up modestly .
tools & home products sales were $ 1.6 billion in 2017 , up $ 34 million compared to the prior year .
professional tools had strong growth on favorable demand from oil and gas customers and in other construction-related markets .
wet/dry vacuums sales were up moderately as favorable conditions continued in u.s .
construction markets .
food waste disposers increased slightly , while the storage business declined moderately .
overall , underlying sales increased 3 percent in the u.s. , 4 percent in europe and 17 percent in asia ( china up 27 percent ) .
sales increased 3 percent in latin america and 4 percent in canada , while sales decreased 5 percent in middle east/africa .
earnings were $ 1.4 billion , an increase of $ 72 million driven by climate technologies , while margin was flat .
increased volume and resulting leverage , savings from cost reduction actions , and lower customer accommodation costs of $ 16 million were largely offset by higher materials costs , lower price and unfavorable product mix .
financial position , capital resources and liquidity the company continues to generate substantial cash from operations and has the resources available to reinvest for growth in existing businesses , pursue strategic acquisitions and manage its capital structure on a short- and long-term basis .
cash flow from continuing operations ( dollars in millions ) 2016 2017 2018 .

( dollars in millions )                                          | 2016             | 2017             | 2018
---------------------------------------------------------------- | ---------------- | ---------------- | ----------------
operating cash flow                                              | $ 2499           | 2690             | 2892
percent of sales                                                 | 17.2% ( 17.2 % ) | 17.6% ( 17.6 % ) | 16.6% ( 16.6 % )
capital expenditures                                             | $ 447            | 476              | 617
percent of sales                                                 | 3.1% ( 3.1 % )   | 3.1% ( 3.1 % )   | 3.5% ( 3.5 % )
free cash flow ( operating cash flow less capital expenditures ) | $ 2052           | 2214             | 2275
percent of sales                                                 | 14.1% ( 14.1 % ) | 14.5% ( 14.5 % ) | 13.1% ( 13.1 % )
operating working capital                                        | $ 755            | 1007             | 985
percent of sales                                                 | 5.2% ( 5.2 % )   | 6.6% ( 6.6 % )   | 5.7% ( 5.7 % )

operating cash flow from continuing operations for 2018 was $ 2.9 billion , a $ 202 million , or 8 percent increase compared with 2017 , primarily due to higher earnings , partially offset by an increase in working capital investment to support higher levels of sales activity and income taxes paid on the residential storage divestiture .
operating cash flow from continuing operations of $ 2.7 billion in 2017 increased 8 percent compared to $ 2.5 billion in 2016 , reflecting higher earnings and favorable changes in working capital .
at september 30 , 2018 , operating working capital as a percent of sales was 5.7 percent compared with 6.6 percent in 2017 and 5.2 percent in 2016 .
the increase in 2017 was due to higher levels of working capital in the acquired valves & controls business .
operating cash flow from continuing operations funded capital expenditures of $ 617 million , dividends of $ 1.2 billion , and common stock purchases of $ 1.0 billion .
in 2018 , the company repatriated $ 1.4 billion of cash held by non-u.s .
subsidiaries , which was part of the company 2019s previously announced plans .
these funds along with increased short-term borrowings and divestiture proceeds supported acquisitions of $ 2.2 billion .
contributions to pension plans were $ 61 million in 2018 , $ 45 million in 2017 and $ 66 million in 2016 .
capital expenditures related to continuing operations were $ 617 million , $ 476 million and $ 447 million in 2018 , 2017 and 2016 , respectively .
free cash flow from continuing operations ( operating cash flow less capital expenditures ) was $ 2.3 billion in 2018 , up 3 percent .
free cash flow was $ 2.2 billion in 2017 , compared with $ 2.1 billion in 2016 .
the company is targeting capital spending of approximately $ 650 million in 2019 .
net cash paid in connection with acquisitions was $ 2.2 billion , $ 3.0 billion and $ 132 million in 2018 , 2017 and 2016 , respectively .
proceeds from divestitures not classified as discontinued operations were $ 201 million and $ 39 million in 2018 and 2017 , respectively .
dividends were $ 1.2 billion ( $ 1.94 per share ) in 2018 , compared with $ 1.2 billion ( $ 1.92 per share ) in 2017 and $ 1.2 billion ( $ 1.90 per share ) in 2016 .
in november 2018 , the board of directors voted to increase the quarterly cash dividend 1 percent , to an annualized rate of $ 1.96 per share .
purchases of emerson common stock totaled $ 1.0 billion , $ 400 million and $ 601 million in 2018 , 2017 and 2016 , respectively , at average per share prices of $ 66.25 , $ 60.51 and $ 48.11 .
the board of directors authorized the purchase of up to 70 million common shares in november 2015 , and 41.8 million shares remain available for purchase under this authorization .
the company purchased 15.1 million shares in 2018 , 6.6 million shares in 2017 , and 12.5 million shares in 2016 under this authorization and the remainder of the may 2013 authorization.


mastercard incorporated notes to consolidated financial statements 2014 ( continued ) ( in thousands , except percent and per share data ) the company does not make any contributions to its postretirement plan other than funding benefits payments .
the following table summarizes expected net benefit payments from the company 2019s general assets through 2018 : benefit payments expected subsidy receipts benefit payments .

               | benefit payments | expected subsidy receipts | net benefit payments
-------------- | ---------------- | ------------------------- | --------------------
2009           | $ 2641           | $ 77                      | $ 2564
2010           | 3139             | 91                        | 3048
2011           | 3561             | 115                       | 3446
2012           | 3994             | 140                       | 3854
2013           | 4357             | 169                       | 4188
2014 2013 2018 | 25807            | 1269                      | 24538

the company provides limited postemployment benefits to eligible former u.s .
employees , primarily severance under a formal severance plan ( the 201cseverance plan 201d ) .
the company accounts for severance expense in accordance with sfas no .
112 , 201cemployers 2019 accounting for postemployment benefits 201d by accruing the expected cost of the severance benefits expected to be provided to former employees after employment over their relevant service periods .
the company updates the assumptions in determining the severance accrual by evaluating the actual severance activity and long-term trends underlying the assumptions .
as a result of updating the assumptions , the company recorded severance expense ( benefit ) related to the severance plan of $ 2643 , $ ( 3418 ) and $ 8400 , respectively , during the years 2008 , 2007 and 2006 .
the company has an accrued liability related to the severance plan and other severance obligations in the amount of $ 63863 and $ 56172 at december 31 , 2008 and 2007 , respectively .
note 13 .
debt on april 28 , 2008 , the company extended its committed unsecured revolving credit facility , dated as of april 28 , 2006 ( the 201ccredit facility 201d ) , for an additional year .
the new expiration date of the credit facility is april 26 , 2011 .
the available funding under the credit facility will remain at $ 2500000 through april 27 , 2010 and then decrease to $ 2000000 during the final year of the credit facility agreement .
other terms and conditions in the credit facility remain unchanged .
the company 2019s option to request that each lender under the credit facility extend its commitment was provided pursuant to the original terms of the credit facility agreement .
borrowings under the facility are available to provide liquidity in the event of one or more settlement failures by mastercard international customers and , subject to a limit of $ 500000 , for general corporate purposes .
a facility fee of 8 basis points on the total commitment , or approximately $ 2030 , is paid annually .
interest on borrowings under the credit facility would be charged at the london interbank offered rate ( libor ) plus an applicable margin of 37 basis points or an alternative base rate , and a utilization fee of 10 basis points would be charged if outstanding borrowings under the facility exceed 50% ( 50 % ) of commitments .
the facility fee and borrowing cost are contingent upon the company 2019s credit rating .
the company also agreed to pay upfront fees of $ 1250 and administrative fees of $ 325 for the credit facility which are being amortized straight- line over three years .
facility and other fees associated with the credit facility or prior facilities totaled $ 2353 , $ 2477 and $ 2717 for each of the years ended december 31 , 2008 , 2007 and 2006 , respectively .
mastercard was in compliance with the covenants of the credit facility and had no borrowings under the credit facility at december 31 , 2008 or december 31 , 2007 .
the majority of credit facility lenders are customers or affiliates of customers of mastercard international .
in june 1998 , mastercard international issued ten-year unsecured , subordinated notes ( the 201cnotes 201d ) paying a fixed interest rate of 6.67% ( 6.67 % ) per annum .
mastercard repaid the entire principal amount of $ 80000 on june 30


                         | 2009  | 2010  | 2011  | 2012  | 2013  | 2014
------------------------ | ----- | ----- | ----- | ----- | ----- | -----
state street corporation | $ 100 | $ 107 | $ 114 | $ 101 | $ 120 | $ 190
s&p 500 index            | 100   | 115   | 132   | 135   | 157   | 208
s&p financial index      | 100   | 112   | 126   | 104   | 135   | 183
kbw bank index           | 100   | 123   | 152   | 117   | 153   | 211


analog devices , inc .
notes to consolidated financial statements 2014 ( continued ) the following is a schedule of future minimum rental payments required under long-term operating leases at october 31 , operating fiscal years leases .

fiscal years | operating leases
------------ | ----------------
2016         | $ 21780
2017         | 16305
2018         | 8670
2019         | 4172
2020         | 3298
later years  | 5263
total        | $ 59488

12 .
commitments and contingencies from time to time , in the ordinary course of the company 2019s business , various claims , charges and litigation are asserted or commenced against the company arising from , or related to , contractual matters , patents , trademarks , personal injury , environmental matters , product liability , insurance coverage and personnel and employment disputes .
as to such claims and litigation , the company can give no assurance that it will prevail .
the company does not believe that any current legal matters will have a material adverse effect on the company 2019s financial position , results of operations or cash flows .
13 .
retirement plans the company and its subsidiaries have various savings and retirement plans covering substantially all employees .
the company maintains a defined contribution plan for the benefit of its eligible u.s .
employees .
this plan provides for company contributions of up to 5% ( 5 % ) of each participant 2019s total eligible compensation .
in addition , the company contributes an amount equal to each participant 2019s pre-tax contribution , if any , up to a maximum of 3% ( 3 % ) of each participant 2019s total eligible compensation .
the total expense related to the defined contribution plan for u.s .
employees was $ 26.3 million in fiscal 2015 , $ 24.1 million in fiscal 2014 and $ 23.1 million in fiscal 2013 .
the company also has various defined benefit pension and other retirement plans for certain non-u.s .
employees that are consistent with local statutory requirements and practices .
the total expense related to the various defined benefit pension and other retirement plans for certain non-u.s .
employees , excluding settlement charges related to the company's irish defined benefit plan , was $ 33.3 million in fiscal 2015 , $ 29.8 million in fiscal 2014 and $ 26.5 million in fiscal 2013 .
non-u.s .
plan disclosures during fiscal 2015 , the company converted the benefits provided to participants in the company 2019s irish defined benefits pension plan ( the db plan ) to benefits provided under the company 2019s irish defined contribution plan .
as a result , in fiscal 2015 the company recorded expenses of $ 223.7 million , including settlement charges , legal , accounting and other professional fees to settle the pension obligation .
the assets related to the db plan were liquidated and used to purchase annuities for retirees and distributed to active and deferred members' accounts in the company's irish defined contribution plan in connection with the plan conversion .
accordingly , plan assets for the db plan were zero as of the end of fiscal 2015 .
the company 2019s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of each country .
the plans 2019 assets consist primarily of u.s .
and non-u.s .
equity securities , bonds , property and cash .
the benefit obligations and related assets under these plans have been measured at october 31 , 2015 and november 1 , 2014 .
components of net periodic benefit cost net annual periodic pension cost of non-u.s .
plans is presented in the following table:


mastercard incorporated notes to consolidated financial statements 2014 ( continued ) ( in thousands , except percent and per share data ) upon termination of employment , excluding retirement , all of a participant 2019s unvested awards are forfeited .
however , when a participant terminates employment due to retirement , the participant generally retains all of their awards without providing additional service to the company .
eligible retirement is dependent upon age and years of service , as follows : age 55 with ten years of service , age 60 with five years of service and age 65 with two years of service .
compensation expense is recognized over the shorter of the vesting periods stated in the ltip , or the date the individual becomes eligible to retire .
there are 11550 shares of class a common stock reserved for equity awards under the ltip .
although the ltip permits the issuance of shares of class b common stock , no such shares have been reserved for issuance .
shares issued as a result of option exercises and the conversions of rsus are expected to be funded with the issuance of new shares of class a common stock .
stock options the fair value of each option is estimated on the date of grant using a black-scholes option pricing model .
the following table presents the weighted-average assumptions used in the valuation and the resulting weighted- average fair value per option granted for the years ended december 31: .

                                               | 2009             | 2008             | 2007
---------------------------------------------- | ---------------- | ---------------- | ----------------
risk-free rate of return                       | 2.5% ( 2.5 % )   | 3.2% ( 3.2 % )   | 4.4% ( 4.4 % )
expected term ( in years )                     | 6.17             | 6.25             | 6.25
expected volatility                            | 41.7% ( 41.7 % ) | 37.9% ( 37.9 % ) | 30.9% ( 30.9 % )
expected dividend yield                        | 0.4% ( 0.4 % )   | 0.3% ( 0.3 % )   | 0.6% ( 0.6 % )
weighted-average fair value per option granted | $ 71.03          | $ 78.54          | $ 41.03

the risk-free rate of return was based on the u.s .
treasury yield curve in effect on the date of grant .
the company utilizes the simplified method for calculating the expected term of the option based on the vesting terms and the contractual life of the option .
the expected volatility for options granted during 2009 was based on the average of the implied volatility of mastercard and a blend of the historical volatility of mastercard and the historical volatility of a group of companies that management believes is generally comparable to mastercard .
the expected volatility for options granted during 2008 was based on the average of the implied volatility of mastercard and the historical volatility of a group of companies that management believes is generally comparable to mastercard .
as the company did not have sufficient publicly traded stock data historically , the expected volatility for options granted during 2007 was primarily based on the average of the historical and implied volatility of a group of companies that management believed was generally comparable to mastercard .
the expected dividend yields were based on the company 2019s expected annual dividend rate on the date of grant.


the following table details the effect on net income and earnings per share had compensation expense for all of our stock-based awards , including stock options , been recorded in the year ended december 31 , 2005 based on the fair value method under fasb statement no .
123 , accounting for stock-based compensation .
pro forma stock-based compensation expense millions of dollars , except per share amounts 2005 .

pro forma stock-based compensation expensemillions of dollars except per share amounts                                    | 2005
------------------------------------------------------------------------------------------------------------------------- | ----------
net income as reported                                                                                | $ 1026
stock-based employee compensation expense reported in net income net of tax                                               | 13
total stock-based employee compensation expense determined under fair value 2013based method for allawards net of tax [a] | -50 ( 50 )
pro forma net income                                                                                | $ 989
earnings per share 2013 basic as reported                                                                                | $ 3.89
earnings per share 2013 basic pro forma                                                                                | $ 3.75
earnings per share 2013 diluted as reported                                                                               | $ 3.85
earnings per share 2013 diluted pro forma                                                                                | $ 3.71

[a] stock options for executives granted in 2003 and 2002 included a reload feature .
this reload feature allowed executives to exercise their options using shares of union pacific corporation common stock that they already owned and obtain a new grant of options in the amount of the shares used for exercise plus any shares withheld for tax purposes .
the reload feature of these option grants could only be exercised if the price of our common stock increased at least 20% ( 20 % ) from the price at the time of the reload grant .
during the year ended december 31 , 2005 , reload option grants represented $ 19 million of the pro forma expense noted above .
there were no reload option grants during 2007 and 2006 as stock options exercised after january 1 , 2006 are not eligible for the reload feature .
earnings per share 2013 basic earnings per share are calculated on the weighted-average number of common shares outstanding during each period .
diluted earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive .
use of estimates 2013 our consolidated financial statements include estimates and assumptions regarding certain assets , liabilities , revenue , and expenses and the disclosure of certain contingent assets and liabilities .
actual future results may differ from such estimates .
income taxes 2013 as required under fasb statement no .
109 , accounting for income taxes , we account for income taxes by recording taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns .
these expected future tax consequences are measured based on provisions of tax law as currently enacted ; the effects of future changes in tax laws are not anticipated .
future tax law changes , such as a change in the corporate tax rate , could have a material impact on our financial condition or results of operations .
when appropriate , we record a valuation allowance against deferred tax assets to offset future tax benefits that may not be realized .
in determining whether a valuation allowance is appropriate , we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized , based on management 2019s judgments regarding the best available evidence about future events .
when we have claimed tax benefits that may be challenged by a tax authority , these uncertain tax positions are accounted for under fasb interpretation no .
48 , accounting for uncertainty in income taxes , an interpretation of fasb statement no .
109 ( fin 48 ) .
we adopted fin 48 beginning january 1 , 2007 .
prior to 2007 , income tax contingencies were accounted for under fasb statement no .
5 , accounting for contingencies .
under fin 48 , we recognize tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities .
the amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement .
a liability for 201cunrecognized tax benefits 201d is


portion of the death benefits directly from the insurance company and the company receives the remainder of the death benefits .
it is currently expected that minimal cash payments will be required to fund these policies .
the net periodic pension cost for these split-dollar life insurance arrangements was $ 5 million for the years ended december 31 , 2013 , 2012 and 2011 .
the company has recorded a liability representing the actuarial present value of the future death benefits as of the employees 2019 expected retirement date of $ 51 million and $ 58 million as of december 31 , 2013 and december 31 , 2012 , respectively .
deferred compensation plan the company amended and reinstated its deferred compensation plan ( 201cthe plan 201d ) effective june 1 , 2013 to reopen the plan to certain participants .
under the plan , participating executives may elect to defer base salary and cash incentive compensation in excess of 401 ( k ) plan limitations .
participants under the plan may choose to invest their deferred amounts in the same investment alternatives available under the company's 401 ( k ) plan .
the plan also allows for company matching contributions for the following : ( i ) the first 4% ( 4 % ) of compensation deferred under the plan , subject to a maximum of $ 50000 for board officers , ( ii ) lost matching amounts that would have been made under the 401 ( k ) plan if participants had not participated in the plan , and ( iii ) discretionary amounts as approved by the compensation and leadership committee of the board of directors .
defined contribution plan the company and certain subsidiaries have various defined contribution plans , in which all eligible employees may participate .
in the u.s. , the 401 ( k ) plan is a contributory plan .
matching contributions are based upon the amount of the employees 2019 contributions .
the company 2019s expenses for material defined contribution plans for the years ended december 31 , 2013 , 2012 and 2011 were $ 44 million , $ 42 million and $ 48 million , respectively .
beginning january 1 , 2012 , the company may make an additional discretionary 401 ( k ) plan matching contribution to eligible employees .
for the years ended december 31 , 2013 and 2012 , the company made no discretionary matching contributions .
8 .
share-based compensation plans and other incentive plans stock options , stock appreciation rights and employee stock purchase plan the company grants options to acquire shares of common stock to certain employees and to existing option holders of acquired companies in connection with the merging of option plans following an acquisition .
each option granted and stock appreciation right has an exercise price of no less than 100% ( 100 % ) of the fair market value of the common stock on the date of the grant .
the awards have a contractual life of five to fifteen years and vest over two to four years .
stock options and stock appreciation rights assumed or replaced with comparable stock options or stock appreciation rights in conjunction with a change in control of the company only become exercisable if the holder is also involuntarily terminated ( for a reason other than cause ) or quits for good reason within 24 months of a change in control .
the employee stock purchase plan allows eligible participants to purchase shares of the company 2019s common stock through payroll deductions of up to 20% ( 20 % ) of eligible compensation on an after-tax basis .
plan participants cannot purchase more than $ 25000 of stock in any calendar year .
the price an employee pays per share is 85% ( 85 % ) of the lower of the fair market value of the company 2019s stock on the close of the first trading day or last trading day of the purchase period .
the plan has two purchase periods , the first from october 1 through march 31 and the second from april 1 through september 30 .
for the years ended december 31 , 2013 , 2012 and 2011 , employees purchased 1.5 million , 1.4 million and 2.2 million shares , respectively , at purchase prices of $ 43.02 and $ 50.47 , $ 34.52 and $ 42.96 , and $ 30.56 and $ 35.61 , respectively .
the company calculates the value of each employee stock option , estimated on the date of grant , using the black-scholes option pricing model .
the weighted-average estimated fair value of employee stock options granted during 2013 , 2012 and 2011 was $ 9.52 , $ 9.60 and $ 13.25 , respectively , using the following weighted-average assumptions: .

                        | 2013             | 2012             | 2011
----------------------- | ---------------- | ---------------- | ----------------
expected volatility     | 22.1% ( 22.1 % ) | 24.0% ( 24.0 % ) | 28.8% ( 28.8 % )
risk-free interest rate | 0.9% ( 0.9 % )   | 0.8% ( 0.8 % )   | 2.1% ( 2.1 % )
dividend yield          | 2.4% ( 2.4 % )   | 2.2% ( 2.2 % )   | 0.0% ( 0.0 % )
expected life ( years ) | 5.9              | 6.1              | 6.0

the company uses the implied volatility for traded options on the company 2019s stock as the expected volatility assumption required in the black-scholes model .
the selection of the implied volatility approach was based upon the availability of


stock performance graph comcast the graph below compares the yearly percentage change in the cumulative total shareholder return on comcast 2019s class a common stock during the five years ended december 31 , 2015 with the cumulative total returns on the standard & poor 2019s 500 stock index and with a select peer group consisting of us and other companies engaged in the cable , communications and media industries .
this peer group consists of us , as well as cablevision systems corporation ( class a ) , dish network corporation ( class a ) , directv inc .
( included through july 24 , 2015 , the date of acquisition by at&t corp. ) and time warner cable inc .
( the 201ccable subgroup 201d ) , and time warner inc. , walt disney company , viacom inc .
( class b ) , twenty-first century fox , inc .
( class a ) , and cbs corporation ( class b ) ( the 201cmedia subgroup 201d ) .
the peer group was constructed as a composite peer group in which the cable subgroup is weighted 63% ( 63 % ) and the media subgroup is weighted 37% ( 37 % ) based on the respective revenue of our cable communications and nbcuniversal segments .
the graph assumes $ 100 was invested on december 31 , 2010 in our class a common stock and in each of the following indices and assumes the reinvestment of dividends .
comparison of 5 year cumulative total return 12/1412/1312/1212/10 12/15 comcast class a s&p 500 peer group index .

                    | 2011  | 2012  | 2013  | 2014  | 2015
------------------- | ----- | ----- | ----- | ----- | -----
comcast class a     | $ 110 | $ 177 | $ 250 | $ 282 | $ 279
s&p 500 stock index | $ 102 | $ 118 | $ 156 | $ 177 | $ 180
peer group index    | $ 110 | $ 157 | $ 231 | $ 267 | $ 265

nbcuniversal nbcuniversal is a wholly owned subsidiary of nbcuniversal holdings and there is no market for its equity securities .
39 comcast 2015 annual report on form 10-k


the goldman sachs group , inc .
and subsidiaries management 2019s discussion and analysis sensitivity measures certain portfolios and individual positions are not included in var because var is not the most appropriate risk measure .
other sensitivity measures we use to analyze market risk are described below .
10% ( 10 % ) sensitivity measures .
the table below presents market risk for positions , accounted for at fair value , that are not included in var by asset category. .

$ in millions | as of december 2017 | as of december 2016 | as of december 2015
------------- | ------------------- | ------------------- | -------------------
equity        | $ 2096              | $ 2085              | $ 2157
debt          | 1606                | 1702                | 1479
total         | $ 3702              | $ 3787              | $ 3636

in the table above : 2030 the market risk of these positions is determined by estimating the potential reduction in net revenues of a 10% ( 10 % ) decline in the value of these positions .
2030 equity positions relate to private and restricted public equity securities , including interests in funds that invest in corporate equities and real estate and interests in hedge funds .
2030 debt positions include interests in funds that invest in corporate mezzanine and senior debt instruments , loans backed by commercial and residential real estate , corporate bank loans and other corporate debt , including acquired portfolios of distressed loans .
2030 equity and debt funded positions are included in our consolidated statements of financial condition in financial instruments owned .
see note 6 to the consolidated financial statements for further information about cash instruments .
2030 these measures do not reflect the diversification effect across asset categories or across other market risk measures .
credit spread sensitivity on derivatives and financial liabilities .
var excludes the impact of changes in counterparty and our own credit spreads on derivatives , as well as changes in our own credit spreads ( debt valuation adjustment ) on financial liabilities for which the fair value option was elected .
the estimated sensitivity to a one basis point increase in credit spreads ( counterparty and our own ) on derivatives was a gain of $ 3 million and $ 2 million ( including hedges ) as of december 2017 and december 2016 , respectively .
in addition , the estimated sensitivity to a one basis point increase in our own credit spreads on financial liabilities for which the fair value option was elected was a gain of $ 35 million and $ 25 million as of december 2017 and december 2016 , respectively .
however , the actual net impact of a change in our own credit spreads is also affected by the liquidity , duration and convexity ( as the sensitivity is not linear to changes in yields ) of those financial liabilities for which the fair value option was elected , as well as the relative performance of any hedges undertaken .
interest rate sensitivity .
loans receivable as of december 2017 and december 2016 were $ 65.93 billion and $ 49.67 billion , respectively , substantially all of which had floating interest rates .
as of december 2017 and december 2016 , the estimated sensitivity to a 100 basis point increase in interest rates on such loans was $ 527 million and $ 405 million , respectively , of additional interest income over a twelve-month period , which does not take into account the potential impact of an increase in costs to fund such loans .
see note 9 to the consolidated financial statements for further information about loans receivable .
other market risk considerations as of december 2017 and december 2016 , we had commitments and held loans for which we have obtained credit loss protection from sumitomo mitsui financial group , inc .
see note 18 to the consolidated financial statements for further information about such lending commitments .
in addition , we make investments in securities that are accounted for as available-for-sale and included in financial instruments owned in the consolidated statements of financial condition .
see note 6 to the consolidated financial statements for further information .
we also make investments accounted for under the equity method and we also make direct investments in real estate , both of which are included in other assets .
direct investments in real estate are accounted for at cost less accumulated depreciation .
see note 13 to the consolidated financial statements for further information about other assets .
goldman sachs 2017 form 10-k 93


reinsurance commissions , fees and other revenue decreased 2% ( 2 % ) in 2014 reflecting a 1% ( 1 % ) unfavorable impact from foreign currency exchange rates and 1% ( 1 % ) decline in organic revenue growth due primarily to a significant unfavorable market impact in treaty , partially offset by net new business growth in treaty placements globally and growth in capital markets transactions and advisory business , as well as facultative placements .
operating income operating income increased $ 108 million , or 7% ( 7 % ) , from 2013 to $ 1.6 billion in 2014 .
in 2014 , operating income margins in this segment were 21.0% ( 21.0 % ) , an increase of 120 basis points from 19.8% ( 19.8 % ) in 2013 .
operating margin improvement was driven by solid organic revenue growth , return on investments , expense discipline and savings related to the restructuring programs , partially offset by a $ 61 million unfavorable impact from foreign currency exchange rates .
hr solutions .

years ended december 31 | 2014             | 2013           | 2012
----------------------- | ---------------- | -------------- | --------------
revenue                 | $ 4264           | $ 4057         | $ 3925
operating income        | 485              | 318            | 289
operating margin        | 11.4% ( 11.4 % ) | 7.8% ( 7.8 % ) | 7.4% ( 7.4 % )

our hr solutions segment generated approximately 35% ( 35 % ) of our consolidated total revenues in 2014 and provides a broad range of human capital services , as follows : 2022 retirement specializes in global actuarial services , defined contribution consulting , tax and erisa consulting , and pension administration .
2022 compensation focuses on compensatory advisory/counsel including : compensation planning design , executive reward strategies , salary survey and benchmarking , market share studies and sales force effectiveness , with special expertise in the financial services and technology industries .
2022 strategic human capital delivers advice to complex global organizations on talent , change and organizational effectiveness issues , including talent strategy and acquisition , executive on-boarding , performance management , leadership assessment and development , communication strategy , workforce training and change management .
2022 investment consulting advises public and private companies , other institutions and trustees on developing and maintaining investment programs across a broad range of plan types , including defined benefit plans , defined contribution plans , endowments and foundations .
2022 benefits administration applies our human resource expertise primarily through defined benefit ( pension ) , defined contribution ( 401 ( k ) ) , and health and welfare administrative services .
our model replaces the resource-intensive processes once required to administer benefit plans with more efficient , effective , and less costly solutions .
2022 exchanges is building and operating healthcare exchanges that provide employers with a cost effective alternative to traditional employee and retiree healthcare , while helping individuals select the insurance that best meets their needs .
2022 human resource business processing outsourcing provides market-leading solutions to manage employee data ; administer benefits , payroll and other human resources processes ; and record and manage talent , workforce and other core human resource process transactions as well as other complementary services such as flexible spending , dependent audit and participant advocacy .
disruption in the global credit markets and the deterioration of the financial markets created significant uncertainty in the marketplace .
weak economic conditions in many markets around the globe continued throughout 2014 and have adversely impacted our clients' financial condition and therefore the levels of business activities in the industries and geographies where we operate .
while we believe that the majority of our practices are well positioned to manage through this time , these challenges are reducing demand for some of our services and putting continued pressure on the pricing of those services , which is having an adverse effect on our new business and results of operations.


during the third quarter ended 30 june 2017 , we recognized a goodwill impairment charge of $ 145.3 and an intangible asset impairment charge of $ 16.8 associated with our lasa reporting unit .
refer to note 11 , goodwill , and note 12 , intangible assets , for more information related to these charges and the associated fair value measurement methods and significant inputs/assumptions , which were classified as level 3 since unobservable inputs were utilized in the fair value measurements .
16 .
debt the tables below summarize our outstanding debt at 30 september 2019 and 2018 : total debt .

30 september                                  | 2019     | 2018
--------------------------------------------- | -------- | --------
short-term borrowings                         | $ 58.2   | $ 54.3
current portion of long-term debt ( a ) ( b ) | 40.4     | 406.6
long-term debt                                | 2907.3   | 2967.4
long-term debt 2013 related party ( b )       | 320.1    | 384.3
total debt                                    | $ 3326.0 | $ 3812.6

( a ) fiscal year 2019 includes the current portion of long-term debt owed to a related party of $ 37.8 .
( b ) refer to note 7 , acquisitions , for additional information regarding related party debt .
short-term borrowings short-term borrowings consisted of bank obligations of $ 58.2 and $ 54.3 at 30 september 2019 and 2018 , respectively .
the weighted average interest rate of short-term borrowings outstanding at 30 september 2019 and 2018 was 3.7% ( 3.7 % ) and 5.0% ( 5.0 % ) , respectively.


notes to the consolidated financial statements union pacific corporation and subsidiary companies for purposes of this report , unless the context otherwise requires , all references herein to the 201ccorporation 201d , 201cupc 201d , 201cwe 201d , 201cus 201d , and 201cour 201d mean union pacific corporation and its subsidiaries , including union pacific railroad company , which will be separately referred to herein as 201cuprr 201d or the 201crailroad 201d .
1 .
nature of operations operations and segmentation 2013 we are a class i railroad that operates in the u.s .
we have 31953 route miles , linking pacific coast and gulf coast ports with the midwest and eastern u.s .
gateways and providing several corridors to key mexican gateways .
we serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers for the handling of freight to and from the atlantic coast , the pacific coast , the southeast , the southwest , canada , and mexico .
export and import traffic is moved through gulf coast and pacific coast ports and across the mexican and canadian borders .
the railroad , along with its subsidiaries and rail affiliates , is our one reportable operating segment .
although revenues are analyzed by commodity group , we analyze the net financial results of the railroad as one segment due to the integrated nature of our rail network .
the following table provides revenue by commodity group : millions 2010 2009 2008 .

millions                 | 2010    | 2009    | 2008
------------------------ | ------- | ------- | -------
agricultural             | $ 3018  | $ 2666  | $ 3174
automotive               | 1271    | 854     | 1344
chemicals                | 2425    | 2102    | 2494
energy                   | 3489    | 3118    | 3810
industrial products      | 2639    | 2147    | 3273
intermodal               | 3227    | 2486    | 3023
total freight revenues   | $ 16069 | $ 13373 | $ 17118
other revenues           | 896     | 770     | 852
total operating revenues | $ 16965 | $ 14143 | $ 17970

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


korea engineering plastics co. , ltd .
founded in 1987 , kepco is the leading producer of pom in south korea .
kepco is a venture between celanese's ticona business ( 50% ( 50 % ) ) , mitsubishi gas chemical company , inc .
( 40% ( 40 % ) ) and mitsubishi corporation ( 10% ( 10 % ) ) .
kepco has polyacetal production facilities in ulsan , south korea , compounding facilities for pbt and nylon in pyongtaek , south korea , and participates with polyplastics and mitsubishi gas chemical company , inc .
in a world-scale pom facility in nantong , china .
polyplastics co. , ltd .
polyplastics is a leading supplier of engineered plastics in the asia-pacific region and is a venture between daicel chemical industries ltd. , japan ( 55% ( 55 % ) ) , and celanese's ticona business ( 45% ( 45 % ) ) .
established in 1964 , polyplastics is a producer and marketer of pom and lcp in the asia-pacific region , with principal production facilities located in japan , taiwan , malaysia and china .
fortron industries llc .
fortron is a leading global producer of polyphenylene sulfide ( 201cpps 201d ) , sold under the fortron ae brand , which is used in a wide variety of automotive and other applications , especially those requiring heat and/or chemical resistance .
established in 1992 , fortron is a limited liability company whose members are ticona fortron inc .
( 50% ( 50 % ) ownership and a wholly-owned subsidiary of cna holdings , llc ) and kureha corporation ( 50% ( 50 % ) ownership and a wholly-owned subsidiary of kureha chemical industry co. , ltd .
of japan ) .
fortron's facility is located in wilmington , north carolina .
this venture combines the sales , marketing , distribution , compounding and manufacturing expertise of celanese with the pps polymer technology expertise of kureha .
china acetate strategic ventures .
we hold an approximate 30% ( 30 % ) ownership interest in three separate acetate production ventures in china .
these include the nantong cellulose fibers co .
ltd. , kunming cellulose fibers co .
ltd .
and zhuhai cellulose fibers co .
ltd .
the china national tobacco corporation , the chinese state-owned tobacco entity , controls the remaining ownership interest in each of these ventures .
with an estimated 30% ( 30 % ) share of the world's cigarette production and consumption , china is the world's largest and fastest growing area for acetate tow products according to the 2009 stanford research institute international chemical economics handbook .
combined , these ventures are a leader in chinese domestic acetate production and are well positioned to supply chinese cigarette producers .
in december 2009 , we announced plans with china national tobacco to expand our acetate flake and tow capacity at our venture's nantong facility and we received formal approval for the expansions , each by 30000 tons , during 2010 .
since their inception in 1986 , the china acetate ventures have completed 12 expansions , leading to earnings growth and increased dividends .
our chinese acetate ventures fund their operations using operating cash flow .
during 2011 , we made contributions of $ 8 million related to the capacity expansions in nantong and have committed contributions of $ 9 million in 2012 .
in 2010 , we made contributions of $ 12 million .
our chinese acetate ventures pay a dividend in the second quarter of each fiscal year , based on the ventures' performance for the preceding year .
in 2011 , 2010 and 2009 , we received cash dividends of $ 78 million , $ 71 million and $ 56 million , respectively .
although our ownership interest in each of our china acetate ventures exceeds 20% ( 20 % ) , we account for these investments using the cost method of accounting because we determined that we cannot exercise significant influence over these entities due to local government investment in and influence over these entities , limitations on our involvement in the day-to-day operations and the present inability of the entities to provide timely financial information prepared in accordance with generally accepted accounting principles in the united states ( 201cus gaap 201d ) .
2022 other equity method investments infraservs .
we hold indirect ownership interests in several infraserv groups in germany that own and develop industrial parks and provide on-site general and administrative support to tenants .
the table below represents our equity investments in infraserv ventures as of december 31 , 2011: .

                                  | ownership % (  % )
--------------------------------- | ------------------
infraserv gmbh & co . gendorf kg  | 39
infraserv gmbh & co . knapsack kg | 27
infraserv gmbh & co . hoechst kg  | 32


common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements , and subject to stock price , business and market conditions and other factors .
we have been funding and expect to continue to fund stock repurchases through a combination of cash on hand and cash generated by operations .
in the future , we may also choose to fund our stock repurchase program under our revolving credit facility or future financing transactions .
there were no repurchases of our series a and b common stock during the three months ended december 31 , 2013 .
the company first announced its stock repurchase program on august 3 , 2010 .
stock performance graph the following graph sets forth the cumulative total shareholder return on our series a common stock , series b common stock and series c common stock as compared with the cumulative total return of the companies listed in the standard and poor 2019s 500 stock index ( 201cs&p 500 index 201d ) and a peer group of companies comprised of cbs corporation class b common stock , scripps network interactive , inc. , time warner , inc. , twenty-first century fox , inc .
class a common stock ( news corporation class a common stock prior to june 2013 ) , viacom , inc .
class b common stock and the walt disney company .
the graph assumes $ 100 originally invested on december 31 , 2008 in each of our series a common stock , series b common stock and series c common stock , the s&p 500 index , and the stock of our peer group companies , including reinvestment of dividends , for the years ended december 31 , 2009 , 2010 , 2011 , 2012 and 2013 .
december 31 , december 31 , december 31 , december 31 , december 31 , december 31 .

           | december 312008 | december 312009 | december 312010 | december 312011 | december 312012 | december 312013
---------- | --------------- | --------------- | --------------- | --------------- | --------------- | ---------------
disca      | $ 100.00        | $ 216.60        | $ 294.49        | $ 289.34        | $ 448.31        | $ 638.56
discb      | $ 100.00        | $ 207.32        | $ 287.71        | $ 277.03        | $ 416.52        | $ 602.08
disck      | $ 100.00        | $ 198.06        | $ 274.01        | $ 281.55        | $ 436.89        | $ 626.29
s&p 500    | $ 100.00        | $ 123.45        | $ 139.23        | $ 139.23        | $ 157.90        | $ 204.63
peer group | $ 100.00        | $ 151.63        | $ 181.00        | $ 208.91        | $ 286.74        | $ 454.87

equity compensation plan information information regarding securities authorized for issuance under equity compensation plans will be set forth in our definitive proxy statement for our 2014 annual meeting of stockholders under the caption 201csecurities authorized for issuance under equity compensation plans , 201d which is incorporated herein by reference.


z i m m e r h o l d i n g s , i n c .
a n d s u b s i d i a r i e s 2 0 0 4 f o r m 1 0 - k notes to consolidated financial statements ( continued ) the company and implex had been operating since 2000 , the following table summarizes the estimated fair values relating to the development and distribution of reconstructive of the assets acquired and liabilities assumed at the date of implant and trauma products incorporating trabecular metal the implex acquisition : ( in millions ) technology .
as ofthe merger agreement contains provisions for additional april 23 , 2004annual cash earn-out payments that are based on year-over- current assets $ 23.1year sales growth through 2006 of certain products that .

                                             | as of april 23 2004
-------------------------------------------- | -------------------
current assets                               | $ 23.1
property plant and equipment                 | 4.5
intangible assets subject to amortization:   |
core technology ( 30 year useful life )      | 3.6
developed technology ( 30 year useful life ) | 103.9
other assets                                 | 14.4
goodwill                                     | 61.0
total assets acquired                        | 210.5
current liabilities                          | 14.1
deferred taxes                               | 43.3
total liabilities assumed                    | 57.4
net assets acquired                          | $ 153.1

estimates total earn-out payments , including payments core technology ( 30 year useful life ) 3.6 already made , to be in a range from $ 120 to $ 160 million .
developed technology ( 30 year useful life ) 103.9 other assets 14.4these earn-out payments represent contingent consideration goodwill 61.0and , in accordance with sfas no .
141 and eitf 95-8 2018 2018accounting for contingent consideration paid to the total assets acquired 210.5 shareholders of an acquired enterprise in a purchase current liabilities 14.1 deferred taxes 43.3business combination 2019 2019 , are recorded as an additional cost of the transaction upon resolution of the contingency and total liabilities assumed 57.4 therefore increase goodwill .
net assets acquired $ 153.1the implex acquisition was accounted for under the purchase method of accounting pursuant to sfas no .
141 .
4 .
change in accounting principle accordingly , implex results of operations have been included in the company 2019s consolidated results of operations instruments are hand held devices used by orthopaedic subsequent to april 23 , 2004 , and its respective assets and surgeons during total joint replacement and other surgical liabilities have been recorded at their estimated fair values in procedures .
effective january 1 , 2003 , instruments are the company 2019s consolidated statement of financial position as recognized as long-lived assets and are included in property , of april 23 , 2004 , with the excess purchase price being plant and equipment .
undeployed instruments are carried at allocated to goodwill .
pro forma financial information has not cost , net of allowances for obsolescence .
instruments in the been included as the acquisition did not have a material field are carried at cost less accumulated depreciation .
impact upon the company 2019s financial position , results of depreciation is computed using the straight-line method operations or cash flows .
based on average estimated useful lives , determined the company completed the preliminary purchase price principally in reference to associated product life cycles , allocation in accordance with u.s .
generally accepted primarily five years .
in accordance with sfas no .
144 , the accounting principles .
the process included interviews with company reviews instruments for impairment whenever management , review of the economic and competitive events or changes in circumstances indicate that the carrying environment and examination of assets including historical value of an asset may not be recoverable .
an impairment loss performance and future prospects .
the preliminary purchase would be recognized when estimated future cash flows price allocation was based on information currently available relating to the asset are less than its carrying amount .
to the company , and expectations and assumptions deemed depreciation of instruments is recognized as selling , general reasonable by the company 2019s management .
no assurance can and administrative expense , consistent with the classification be given , however , that the underlying assumptions used to of instrument cost in periods prior to january 1 , 2003 .
estimate expected technology based product revenues , prior to january 1 , 2003 , undeployed instruments were development costs or profitability , or the events associated carried as a prepaid expense at cost , net of allowances for with such technology , will occur as projected .
the final obsolescence ( $ 54.8 million , net , at december 31 , 2002 ) , and purchase price allocation may vary from the preliminary recognized in selling , general and administrative expense in purchase price allocation .
the final valuation and associated the year in which the instruments were placed into service .
purchase price allocation is expected to be completed as the new method of accounting for instruments was adopted soon as possible , but no later than one year from the date of to recognize the cost of these important assets of the acquisition .
to the extent that the estimates need to be company 2019s business within the consolidated balance sheet adjusted , the company will do so .
and meaningfully allocate the cost of these assets over the periods benefited , typically five years .
the effect of the change during the year ended december 31 , 2003 was to increase earnings before cumulative effect of change in accounting principle by $ 26.8 million ( $ 17.8 million net of tax ) , or $ 0.08 per diluted share .
the cumulative effect adjustment of $ 55.1 million ( net of income taxes of $ 34.0 million ) to retroactively apply the


table of contents in march 2008 , the fasb issued sfas no .
161 , disclosures about derivative instruments and hedging activities 2014an amendment of fasb statement no .
133 , which requires companies to provide additional disclosures about its objectives and strategies for using derivative instruments , how the derivative instruments and related hedged items are accounted for under sfas no .
133 , accounting for derivative instruments and hedging activities , and related interpretations , and how the derivative instruments and related hedged items affect the company 2019s financial statements .
sfas no .
161 also requires companies to disclose information about credit risk-related contingent features in their hedged positions .
sfas no .
161 is effective for fiscal years and interim periods beginning after november 15 , 2008 and is required to be adopted by the company beginning in the second quarter of fiscal 2009 .
although the company will continue to evaluate the application of sfas no .
161 , management does not currently believe adoption will have a material impact on the company 2019s financial condition or operating results .
liquidity and capital resources the following table presents selected financial information and statistics as of and for the three fiscal years ended september 27 , 2008 ( in millions ) : as of september 27 , 2008 , the company had $ 24.5 billion in cash , cash equivalents , and short-term investments , an increase of $ 9.1 billion from september 29 , 2007 .
the principal components of this net increase were cash generated by operating activities of $ 9.6 billion , proceeds from the issuance of common stock under stock plans of $ 483 million and excess tax benefits from stock-based compensation of $ 757 million .
these increases were partially offset by payments for acquisitions of property , plant , and equipment of $ 1.1 billion , payments made in connection with business acquisitions , net of cash acquired , of $ 220 million and payments for acquisitions of intangible assets of $ 108 million .
the company 2019s cash generated by operating activities significantly exceeded its net income due primarily to the large increase in deferred revenue , net of deferred costs , associated with subscription accounting for iphone .
the company 2019s short-term investment portfolio is invested primarily in highly rated securities with a minimum rating of single-a .
as of september 27 , 2008 and september 29 , 2007 , $ 11.3 billion and $ 6.5 billion , respectively , of the company 2019s cash , cash equivalents , and short- term investments were held by foreign subsidiaries and are generally based in u.s .
dollar-denominated holdings .
the company had $ 117 million in net unrealized losses on its investment portfolio , primarily related to investments with stated maturities ranging from one to five years , as of september 27 , 2008 , and net unrealized losses of approximately $ 11 million on its investment portfolio , primarily related to investments with stated maturities from one to five years , as of september 29 , 2007 .
the company has the intent and ability to hold such investments for a sufficient period of time to allow for recovery of the principal amounts invested .
accordingly , none of these declines in fair value were recognized in the company 2019s statement of operations .
the company believes its existing balances of cash , cash equivalents , and short-term investments will be sufficient to satisfy its working capital needs , capital expenditures , outstanding commitments , and other liquidity requirements associated with its existing operations over the next 12 months .
capital assets the company 2019s cash payments for capital asset purchases were $ 1.1 billion during 2008 , consisting of $ 389 million for retail store facilities and $ 702 million for real estate acquisitions and corporate infrastructure including information systems enhancements .
the company anticipates utilizing approximately $ 1.5 billion for capital asset purchases during 2009 , including approximately $ 400 million for retail facilities and approximately $ 1.1 billion for corporate facilities and infrastructure. .

                                                 | 2008    | 2007    | 2006
------------------------------------------------ | ------- | ------- | -------
cash cash equivalents and short-term investments | $ 24490 | $ 15386 | $ 10110
accounts receivable net                          | $ 2422  | $ 1637  | $ 1252
inventory                                        | $ 509   | $ 346   | $ 270
working capital                                  | $ 20598 | $ 12676 | $ 8066
annual operating cash flow                       | $ 9596  | $ 5470  | $ 2220


subscription cost of subscription revenue consists of third-party royalties and expenses related to operating our network infrastructure , including depreciation expenses and operating lease payments associated with computer equipment , data center costs , salaries and related expenses of network operations , implementation , account management and technical support personnel , amortization of intangible assets and allocated overhead .
we enter into contracts with third-parties for the use of their data center facilities and our data center costs largely consist of the amounts we pay to these third parties for rack space , power and similar items .
cost of subscription revenue increased due to the following : % (  % ) change 2014-2013 % (  % ) change 2013-2012 .

                                                                 | % (  % ) change2014-2013 | % (  % ) change2013-2012
---------------------------------------------------------------- | ------------------------ | ------------------------
data center cost                                                 | 10% ( 10 % )             | 11% ( 11 % )
compensation cost and related benefits associated with headcount | 4                        | 5
depreciation expense                                             | 3                        | 3
royalty cost                                                     | 3                        | 4
amortization of purchased intangibles                            | 2014                     | 4
various individually insignificant items                         | 1                        | 2014
total change                                                     | 21% ( 21 % )             | 27% ( 27 % )

cost of subscription revenue increased during fiscal 2014 as compared to fiscal 2013 primarily due to data center costs , compensation cost and related benefits , deprecation expense , and royalty cost .
data center costs increased as compared with the year-ago period primarily due to higher transaction volumes in our adobe marketing cloud and creative cloud services .
compensation cost and related benefits increased as compared to the year-ago period primarily due to additional headcount in fiscal 2014 , including from our acquisition of neolane in the third quarter of fiscal 2013 .
depreciation expense increased as compared to the year-ago period primarily due to higher capital expenditures in recent periods as we continue to invest in our network and data center infrastructure to support the growth of our business .
royalty cost increased primarily due to increases in subscriptions and downloads of our saas offerings .
cost of subscription revenue increased during fiscal 2013 as compared to fiscal 2012 primarily due to increased hosted server costs and amortization of purchased intangibles .
hosted server costs increased primarily due to increases in data center costs related to higher transaction volumes in our adobe marketing cloud and creative cloud services , depreciation expense from higher capital expenditures in prior years and compensation and related benefits driven by additional headcount .
amortization of purchased intangibles increased primarily due to increased amortization of intangible assets purchased associated with our acquisitions of behance and neolane in fiscal 2013 .
services and support cost of services and support revenue is primarily comprised of employee-related costs and associated costs incurred to provide consulting services , training and product support .
cost of services and support revenue increased during fiscal 2014 as compared to fiscal 2013 primarily due to increases in compensation and related benefits driven by additional headcount and third-party fees related to training and consulting services provided to our customers .
cost of services and support revenue increased during fiscal 2013 as compared to fiscal 2012 primarily due to increases in third-party fees related to training and consulting services provided to our customers and compensation and related benefits driven by additional headcount , including headcount from our acquisition of neolane in fiscal 2013.


stock performance graph this performance graph shall not be deemed 201cfiled 201d for purposes of section 18 of the securities exchange act of 1934 , as amended ( the 201cexchange act 201d ) or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing of tractor supply company under the securities act of 1933 , as amended , or the exchange act .
the following graph compares the cumulative total stockholder return on our common stock from december 28 , 2013 to december 29 , 2018 ( the company 2019s fiscal year-end ) , with the cumulative total returns of the s&p 500 index and the s&p retail index over the same period .
the comparison assumes that $ 100 was invested on december 28 , 2013 , in our common stock and in each of the foregoing indices and in each case assumes reinvestment of dividends .
the historical stock price performance shown on this graph is not indicative of future performance. .

                       | 12/28/2013 | 12/27/2014 | 12/26/2015 | 12/31/2016 | 12/30/2017 | 12/29/2018
---------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
tractor supply company | $ 100.00   | $ 104.11   | $ 115.45   | $ 103.33   | $ 103.67   | $ 117.18
s&p 500                | $ 100.00   | $ 115.76   | $ 116.64   | $ 129.55   | $ 157.84   | $ 149.63
s&p retail index       | $ 100.00   | $ 111.18   | $ 140.22   | $ 148.53   | $ 193.68   | $ 217.01


blackrock information related to our equity investment in blackrock follows: .

                                                                          | 2009         | 2008
------------------------------------------------------------------------- | ------------ | ------------
business segment earnings ( in millions ) ( a )                           | $ 207        | $ 207
pnc 2019s share of blackrock earnings ( b )                               | 23% ( 23 % ) | 33% ( 33 % )
carrying value of pnc 2019s investment in blackrock ( in billions ) ( b ) | $ 5.8        | $ 4.2

carrying value of pnc 2019s investment in blackrock ( in billions ) ( b ) $ 5.8 $ 4.2 ( a ) includes pnc 2019s share of blackrock 2019s reported gaap earnings and additional income taxes on those earnings incurred by pnc .
( b ) at december 31 .
blackrock/barclays global investors transaction on december 1 , 2009 , blackrock acquired bgi from barclays bank plc in exchange for approximately $ 6.65 billion in cash and 37566771 shares of blackrock common and participating preferred stock .
in connection with the bgi transaction , blackrock entered into amendments to stockholder agreements with pnc and its other major shareholder .
these amendments , which changed certain shareholder rights , including composition of the blackrock board of directors and share transfer restrictions , became effective upon closing of the bgi transaction .
also in connection with the bgi transaction , blackrock entered into a stock purchase agreement with pnc in which we purchased 3556188 shares of blackrock 2019s series d preferred stock at a price of $ 140.60 per share , or $ 500 million , to partially finance the transaction .
on january 31 , 2010 , the series d preferred stock was converted to series b preferred stock .
upon closing of the bgi transaction , the carrying value of our investment in blackrock increased significantly , reflecting our portion of the increase in blackrock 2019s equity resulting from the value of blackrock shares issued in connection with their acquisition of bgi .
pnc recognized this increase in value as a $ 1.076 billion pretax gain in the fourth quarter of 2009 .
at december 31 , 2009 , our percentage ownership of blackrock common stock was approximately 35% ( 35 % ) .
blackrock ltip programs and exchange agreements pnc 2019s noninterest income included pretax gains of $ 98 million in 2009 and $ 243 million in 2008 related to our blackrock ltip shares obligation .
these gains represented the mark-to-market adjustment related to our remaining blackrock ltip common shares obligation and resulted from the decrease in the market value of blackrock common shares in those periods .
as previously reported , pnc entered into an exchange agreement with blackrock on december 26 , 2008 .
the transactions that resulted from this agreement restructured pnc 2019s ownership of blackrock equity without altering , to any meaningful extent , pnc 2019s economic interest in blackrock .
pnc continues to be subject to the limitations on its voting rights in its existing agreements with blackrock .
also on december 26 , 2008 , blackrock entered into an exchange agreement with merrill lynch in anticipation of the consummation of the merger of bank of america corporation and merrill lynch that occurred on january 1 , 2009 .
the pnc and merrill lynch exchange agreements restructured pnc 2019s and merrill lynch 2019s respective ownership of blackrock common and preferred equity .
the exchange contemplated by these agreements was completed on february 27 , 2009 .
on that date , pnc 2019s obligation to deliver blackrock common shares was replaced with an obligation to deliver shares of blackrock 2019s new series c preferred stock .
pnc acquired 2.9 million shares of series c preferred stock from blackrock in exchange for common shares on that same date .
pnc accounts for these preferred shares at fair value , which offsets the impact of marking-to-market the obligation to deliver these shares to blackrock as we aligned the fair value marks on this asset and liability .
the fair value of the blackrock series c preferred stock is included on our consolidated balance sheet in other assets .
additional information regarding the valuation of the blackrock series c preferred stock is included in note 8 fair value in the notes to consolidated financial statements included in item 8 of this report .
pnc accounts for its remaining investment in blackrock under the equity method of accounting , with its share of blackrock 2019s earnings reduced primarily due to the exchange of blackrock common stock for blackrock series c preferred stock .
the series c preferred stock is not taken into consideration in determining pnc 2019s share of blackrock earnings under the equity method .
pnc 2019s percentage ownership of blackrock common stock increased as a result of the substantial exchange of merrill lynch 2019s blackrock common stock for blackrock preferred stock .
as a result of the blackrock preferred stock held by merrill lynch and the new blackrock preferred stock issued to merrill lynch and pnc under the exchange agreements , pnc 2019s share of blackrock common stock is higher than its overall share of blackrock 2019s equity and earnings .
the transactions related to the exchange agreements do not affect our right to receive dividends declared by blackrock.


supplementary information on oil and gas producing activities ( unaudited ) c o n t i n u e d summary of changes in standardized measure of discounted future net cash flows relating to proved oil and gas reserves ( in millions ) 2007 2006 2005 sales and transfers of oil and gas produced , net of production , transportation and administrative costs $ ( 4887 ) $ ( 5312 ) $ ( 3754 ) net changes in prices and production , transportation and administrative costs related to future production 12845 ( 1342 ) 6648 .

( in millions )                                                                                | 2007             | 2006             | 2005
--------------------------------------------------------------------------------------------------------- | ---------------- | ---------------- | ----------------
sales and transfers of oil and gas produced net of production transportation and administrative costs     | $ -4887 ( 4887 ) | $ -5312 ( 5312 ) | $ -3754 ( 3754 )
net changes in prices and production transportation and administrative costs related to future production | 12845            | -1342 ( 1342 )   | 6648
extensions discoveries and improved recovery less related costs                                           | 1816             | 1290             | 700
development costs incurred during the period                                                              | 1654             | 1251             | 1030
changes in estimated future development costs                                                             | -1727 ( 1727 )   | -527 ( 527 )     | -552 ( 552 )
revisions of previous quantity estimates                                                                  | 290              | 1319             | 820
net changes in purchases and sales of minerals in place                                                   | 23               | 30               | 4557
accretion of discount                                                                                | 1726             | 1882             | 1124
net change in income taxes                                                                                | -6751 ( 6751 )   | -660 ( 660 )     | -6694 ( 6694 )
timing and other                                                                                | -12 ( 12 )       | -14 ( 14 )       | 307
net change for the year                                                                                | 4977             | -2083 ( 2083 )   | 4186
beginning of year                                                                                | 8518             | 10601            | 6415
end of year                                                                                | $ 13495          | $ 8518           | $ 10601
net change for the year from discontinued operations                                                      | $ 2013           | $ -216 ( 216 )   | $ 162


derivative instruments see quantitative and qualitative disclosures about market risk for a discussion of derivative instruments and associated market risk .
dividends to stockholders dividends of $ 0.92 per common share or $ 637 million were paid during 2007 .
on january 27 , 2008 , our board of directors declared a dividend of $ 0.24 cents per share on our common stock , payable march 10 , 2008 , to stockholders of record at the close of business on february 20 , 2008 .
liquidity and capital resources our main sources of liquidity and capital resources are internally generated cash flow from operations , committed credit facilities and access to both the debt and equity capital markets .
our ability to access the debt capital market is supported by our investment grade credit ratings .
our senior unsecured debt is currently rated investment grade by standard and poor 2019s corporation , moody 2019s investor services , inc .
and fitch ratings with ratings of bbb+ , baa1 , and bbb+ .
these ratings were reaffirmed in july 2007 after the western acquisition was announced .
because of the alternatives available to us , including internally generated cash flow and potential asset sales , we believe that our short-term and long-term liquidity is adequate to fund operations , including our capital spending programs , stock repurchase program , repayment of debt maturities and any amounts that ultimately may be paid in connection with contingencies .
we have a committed $ 3.0 billion revolving credit facility with third-party financial institutions terminating in may 2012 .
at december 31 , 2007 , there were no borrowings against this facility and we had no commercial paper outstanding under our u.s .
commercial paper program that is backed by this revolving credit facility .
on july 26 , 2007 , we filed a universal shelf registration statement with the securities and exchange commission , under which we , as a well-known seasoned issuer , have the ability to issue and sell an indeterminate amount of various types of debt and equity securities .
our cash-adjusted debt-to-capital ratio ( total debt-minus-cash to total debt-plus-equity-minus-cash ) was 22 percent at december 31 , 2007 , compared to six percent at year-end 2006 as shown below .
this includes $ 498 million of debt that is serviced by united states steel .
( dollars in millions ) 2007 2006 .

( dollars in millions )                 | 2007         | 2006
--------------------------------------- | ------------ | ----------
long-term debt due within one year      | $ 1131       | $ 471
long-term debt                          | 6084         | 3061
total debt                              | $ 7215       | $ 3532
cash                                    | $ 1199       | $ 2585
trusteed funds from revenue bonds ( a ) | $ 744        | $ 2013
equity                                  | $ 19223      | $ 14607
calculation:                            |              |
total debt                              | $ 7215       | $ 3532
minus cash                              | 1199         | 2585
minus trusteed funds from revenue bonds | 744          | 2013
total debt minus cash                   | 5272         | 947
total debt                              | 7215         | 3532
plus equity                             | 19223        | 14607
minus cash                              | 1199         | 2585
minus trusteed funds from revenue bonds | 744          | 2013
total debt plus equity minus cash       | $ 24495      | $ 15554
cash-adjusted debt-to-capital ratio     | 22% ( 22 % ) | 6% ( 6 % )

( a ) following the issuance of the $ 1.0 billion of revenue bonds by the parish of st .
john the baptist , the proceeds were trusteed and will be disbursed to us upon our request for reimbursement of expenditures related to the garyville refinery expansion .
the trusteed funds are reflected as other noncurrent assets in the accompanying consolidated balance sheet as of december 31 , 2007.


backlog applied manufactures systems to meet demand represented by order backlog and customer commitments .
backlog consists of : ( 1 ) orders for which written authorizations have been accepted and assigned shipment dates are within the next 12 months , or shipment has occurred but revenue has not been recognized ; and ( 2 ) contractual service revenue and maintenance fees to be earned within the next 12 months .
backlog by reportable segment as of october 26 , 2014 and october 27 , 2013 was as follows : 2014 2013 ( in millions , except percentages ) .

                                   | 2014   | 2013           |        | ( in millions except percentages )
---------------------------------- | ------ | -------------- | ------ | ----------------------------------
silicon systems group              | $ 1400 | 48% ( 48 % )   | $ 1295 | 55% ( 55 % )
applied global services            | 775    | 27% ( 27 % )   | 591    | 25% ( 25 % )
display                            | 593    | 20% ( 20 % )   | 361    | 15% ( 15 % )
energy and environmental solutions | 149    | 5% ( 5 % )     | 125    | 5% ( 5 % )
total                              | $ 2917 | 100% ( 100 % ) | $ 2372 | 100% ( 100 % )

applied 2019s backlog on any particular date is not necessarily indicative of actual sales for any future periods , due to the potential for customer changes in delivery schedules or cancellation of orders .
customers may delay delivery of products or cancel orders prior to shipment , subject to possible cancellation penalties .
delays in delivery schedules and/or a reduction of backlog during any particular period could have a material adverse effect on applied 2019s business and results of operations .
manufacturing , raw materials and supplies applied 2019s manufacturing activities consist primarily of assembly , test and integration of various proprietary and commercial parts , components and subassemblies ( collectively , parts ) that are used to manufacture systems .
applied has implemented a distributed manufacturing model under which manufacturing and supply chain activities are conducted in various countries , including the united states , europe , israel , singapore , taiwan , and other countries in asia , and assembly of some systems is completed at customer sites .
applied uses numerous vendors , including contract manufacturers , to supply parts and assembly services for the manufacture and support of its products .
although applied makes reasonable efforts to assure that parts are available from multiple qualified suppliers , this is not always possible .
accordingly , some key parts may be obtained from only a single supplier or a limited group of suppliers .
applied seeks to reduce costs and to lower the risks of manufacturing and service interruptions by : ( 1 ) selecting and qualifying alternate suppliers for key parts ; ( 2 ) monitoring the financial condition of key suppliers ; ( 3 ) maintaining appropriate inventories of key parts ; ( 4 ) qualifying new parts on a timely basis ; and ( 5 ) locating certain manufacturing operations in close proximity to suppliers and customers .
research , development and engineering applied 2019s long-term growth strategy requires continued development of new products , including products that enable expansion into new markets .
the company 2019s significant investment in research , development and engineering ( rd&e ) has generally enabled it to deliver new products and technologies before the emergence of strong demand , thus allowing customers to incorporate these products into their manufacturing plans at an early stage in the technology selection cycle .
applied works closely with its global customers to design systems and processes that meet their planned technical and production requirements .
product development and engineering organizations are located primarily in the united states , as well as in europe , israel , taiwan , and china .
in addition , applied outsources certain rd&e activities , some of which are performed outside the united states , primarily in india and singapore .
process support and customer demonstration laboratories are located in the united states , china , taiwan , europe , and israel .
applied 2019s investments in rd&e for product development and engineering programs to create or improve products and technologies over the last three years were as follows : $ 1.4 billion ( 16 percent of net sales ) in fiscal 2014 , $ 1.3 billion ( 18 percent of net sales ) in fiscal 2013 , and $ 1.2 billion ( 14 percent of net sales ) in fiscal 2012 .
applied has spent an average of 13 percent of net sales in rd&e over the last five years .
in addition to rd&e for specific product technologies , applied maintains ongoing programs for automation control systems , materials research , and environmental control that are applicable to its products.