entergy louisiana , llc and subsidiaries management 2019s financial discussion and analysis in industrial usage is primarily due to increased demand from new customers and expansion projects , primarily in the chemicals industry .
the louisiana act 55 financing savings obligation variance results from a regulatory charge for tax savings to be shared with customers per an agreement approved by the lpsc .
the tax savings resulted from the 2010-2011 irs audit settlement on the treatment of the louisiana act 55 financing of storm costs for hurricane gustav and hurricane ike .
see note 3 to the financial statements for additional discussion of the settlement and benefit sharing .
included in other is a provision of $ 23 million recorded in 2016 related to the settlement of the waterford 3 replacement steam generator prudence review proceeding , offset by a provision of $ 32 million recorded in 2015 related to the uncertainty at that time associated with the resolution of the waterford 3 replacement steam generator prudence review proceeding .
see note 2 to the financial statements for a discussion of the waterford 3 replacement steam generator prudence review proceeding .
2015 compared to 2014 net revenue consists of operating revenues net of : 1 ) fuel , fuel-related expenses , and gas purchased for resale , 2 ) purchased power expenses , and 3 ) other regulatory charges ( credits ) .
following is an analysis of the change in net revenue comparing 2015 to 2014 .
amount ( in millions ) .

                                                  | amount ( in millions )
------------------------------------------------- | ----------------------
2014 net revenue                                  | $ 2246.1
retail electric price                             | 180.0
volume/weather                                    | 39.5
waterford 3 replacement steam generator provision | -32.0 ( 32.0 )
miso deferral                                     | -32.0 ( 32.0 )
other                                             | 7.2
2015 net revenue                                  | $ 2408.8

the retail electric price variance is primarily due to formula rate plan increases , as approved by the lpsc , effective december 2014 and january 2015 .
entergy louisiana 2019s formula rate plan increases are discussed in note 2 to the financial statements .
the volume/weather variance is primarily due to an increase of 841 gwh , or 2% ( 2 % ) , in billed electricity usage , as a result of increased industrial usage primarily due to increased demand for existing large refinery customers , new customers , and expansion projects primarily in the chemicals industry , partially offset by a decrease in demand in the chemicals industry as a result of a seasonal outage for an existing customer .
the waterford 3 replacement steam generator provision is due to a regulatory charge of approximately $ 32 million recorded in 2015 related to the uncertainty associated with the resolution of the waterford 3 replacement steam generator project .
see note 2 to the financial statements for a discussion of the waterford 3 replacement steam generator prudence review proceeding .
the miso deferral variance is due to the deferral in 2014 of non-fuel miso-related charges , as approved by the lpsc .
the deferral of non-fuel miso-related charges is partially offset in other operation and maintenance expenses .
see note 2 to the financial statements for further discussion of the recovery of non-fuel miso-related charges.


( 3 ) refer to note 2 201csummary of significant accounting principles and practices 201d for further information .
13 .
employee benefitsp y defined contribution savings plans aon maintains defined contribution savings plans for the benefit of its employees .
the expense recognized for these plans is included in compensation and benefits in the consolidated statements of income .
the expense for the significant plans in the u.s. , u.k. , netherlands and canada is as follows ( in millions ) : .

years ended december 31 | 2018  | 2017  | 2016
----------------------- | ----- | ----- | -----
u.s .                   | $ 98  | $ 105 | $ 121
u.k .                   | 45    | 43    | 43
netherlands and canada  | 25    | 25    | 27
total                   | $ 168 | $ 173 | $ 191

pension and other postretirement benefits the company sponsors defined benefit pension and postretirement health and welfare plans that provide retirement , medical , and life insurance benefits .
the postretirement health care plans are contributory , with retiree contributions adjusted annually , and the aa life insurance and pension plans are generally noncontributory .
the significant u.s. , u.k. , netherlands and canadian pension plans are closed to new entrants.


bhge 2017 form 10-k | 103 part iii item 10 .
directors , executive officers and corporate governance information regarding our code of conduct , the spirit and the letter , and code of ethical conduct certificates for our principal executive officer , principal financial officer and principal accounting officer are described in item 1 .
business of this annual report .
information concerning our directors is set forth in the sections entitled "proposal no .
1 , election of directors - board nominees for directors" and "corporate governance - committees of the board" in our definitive proxy statement for the 2018 annual meeting of stockholders to be filed with the sec pursuant to the exchange act within 120 days of the end of our fiscal year on december 31 , 2017 ( "proxy statement" ) , which sections are incorporated herein by reference .
for information regarding our executive officers , see "item 1 .
business - executive officers of baker hughes" in this annual report on form 10-k .
additional information regarding compliance by directors and executive officers with section 16 ( a ) of the exchange act is set forth under the section entitled "section 16 ( a ) beneficial ownership reporting compliance" in our proxy statement , which section is incorporated herein by reference .
item 11 .
executive compensation information for this item is set forth in the following sections of our proxy statement , which sections are incorporated herein by reference : "compensation discussion and analysis" "director compensation" "compensation committee interlocks and insider participation" and "compensation committee report." item 12 .
security ownership of certain beneficial owners and management and related stockholder matters information concerning security ownership of certain beneficial owners and our management is set forth in the sections entitled "stock ownership of certain beneficial owners" and 201cstock ownership of section 16 ( a ) director and executive officers 201d ) in our proxy statement , which sections are incorporated herein by reference .
we permit our employees , officers and directors to enter into written trading plans complying with rule 10b5-1 under the exchange act .
rule 10b5-1 provides criteria under which such an individual may establish a prearranged plan to buy or sell a specified number of shares of a company's stock over a set period of time .
any such plan must be entered into in good faith at a time when the individual is not in possession of material , nonpublic information .
if an individual establishes a plan satisfying the requirements of rule 10b5-1 , such individual's subsequent receipt of material , nonpublic information will not prevent transactions under the plan from being executed .
certain of our officers have advised us that they have and may enter into stock sales plans for the sale of shares of our class a common stock which are intended to comply with the requirements of rule 10b5-1 of the exchange act .
in addition , the company has and may in the future enter into repurchases of our class a common stock under a plan that complies with rule 10b5-1 or rule 10b-18 of the exchange act .
equity compensation plan information the information in the following table is presented as of december 31 , 2017 with respect to shares of our class a common stock that may be issued under our lti plan which has been approved by our stockholders ( in millions , except per share prices ) .
equity compensation plan category number of securities to be issued upon exercise of outstanding options , warrants and rights weighted average exercise price of outstanding options , warrants and rights number of securities remaining available for future issuance under equity compensation plans ( excluding securities reflected in the first column ) .

equity compensation plancategory | number ofsecurities to beissued uponexercise ofoutstandingoptions warrantsand rights | weighted averageexercise price ofoutstandingoptions warrantsand rights | number of securitiesremaining availablefor future issuanceunder equitycompensation plans ( excluding securitiesreflected in the firstcolumn )
-------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------
stockholder-approved plans       | 1.6                                                                                | $ 36.61                                                                | 53.7
nonstockholder-approved plans    | 2014                                                                                | 2014                                                                   | 2014
total                            | 1.6                                                                                | $ 36.61                                                                | 53.7


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 ) 2006 2005 2004 sales and transfers of oil and gas produced , net of production , transportation and administrative costs $ ( 5312 ) $ ( 3754 ) $ ( 2689 ) net changes in prices and production , transportation and administrative costs related to future production ( 1342 ) 6648 771 .

( in millions )                                                                                | 2006             | 2005             | 2004
--------------------------------------------------------------------------------------------------------- | ---------------- | ---------------- | ----------------
sales and transfers of oil and gas produced net of production transportation and administrative costs     | $ -5312 ( 5312 ) | $ -3754 ( 3754 ) | $ -2689 ( 2689 )
net changes in prices and production transportation and administrative costs related to future production | -1342 ( 1342 )   | 6648             | 771
extensions discoveries and improved recovery less related costs                                           | 1290             | 700              | 1349
development costs incurred during the period                                                              | 1251             | 1030             | 609
changes in estimated future development costs                                                             | -527 ( 527 )     | -552 ( 552 )     | -628 ( 628 )
revisions of previous quantity estimates                                                                  | 1319             | 820              | 948
net changes in purchases and sales of minerals in place                                                   | 30               | 4557             | 33
accretion of discount                                                                                | 1882             | 1124             | 757
net change in income taxes                                                                                | -660 ( 660 )     | -6694 ( 6694 )   | -627 ( 627 )
timing and other                                                                                | -14 ( 14 )       | 307              | 97
net change for the year                                                                                | -2083 ( 2083 )   | 4186             | 620
beginning of year                                                                                | 10601            | 6415             | 5795
end of year                                                                                | $ 8518           | $ 10601          | $ 6415
net change for the year from discontinued operations                                                      | $ -216 ( 216 )   | $ 162            | $ -152 ( 152 )


advance auto parts , inc .
schedule ii - valuation and qualifying accounts ( in thousands ) allowance for doubtful accounts receivable : balance at beginning of period charges to expenses deductions balance at end of period january 3 , 2015 $ 13295 $ 17182 $ ( 14325 ) ( 1 ) $ 16152 january 2 , 2016 16152 22067 ( 12461 ) ( 1 ) 25758 december 31 , 2016 25758 24597 ( 21191 ) ( 1 ) 29164 ( 1 ) accounts written off during the period .
these amounts did not impact the company 2019s statement of operations for any year presented .
note : other valuation and qualifying accounts have not been reported in this schedule because they are either not applicable or because the information has been included elsewhere in this report. .

allowance for doubtful accounts receivable: | balance atbeginningof period | charges toexpenses | deductions         |          | balance atend ofperiod
------------------------------------------- | ---------------------------- | ------------------ | ------------------ | -------- | ----------------------
january 3 2015                              | $ 13295                      | $ 17182            | $ -14325 ( 14325 ) | -1 ( 1 ) | $ 16152
january 2 2016                              | 16152                        | 22067              | -12461 ( 12461 )   | -1 ( 1 ) | 25758
december 31 2016                            | 25758                        | 24597              | -21191 ( 21191 )   | -1 ( 1 ) | 29164

advance auto parts , inc .
schedule ii - valuation and qualifying accounts ( in thousands ) allowance for doubtful accounts receivable : balance at beginning of period charges to expenses deductions balance at end of period january 3 , 2015 $ 13295 $ 17182 $ ( 14325 ) ( 1 ) $ 16152 january 2 , 2016 16152 22067 ( 12461 ) ( 1 ) 25758 december 31 , 2016 25758 24597 ( 21191 ) ( 1 ) 29164 ( 1 ) accounts written off during the period .
these amounts did not impact the company 2019s statement of operations for any year presented .
note : other valuation and qualifying accounts have not been reported in this schedule because they are either not applicable or because the information has been included elsewhere in this report.


notes to consolidated financial statements derivatives with credit-related contingent features certain of the firm 2019s derivatives have been transacted under bilateral agreements with counterparties who may require the firm to post collateral or terminate the transactions based on changes in the firm 2019s credit ratings .
the firm assesses the impact of these bilateral agreements by determining the collateral or termination payments that would occur assuming a downgrade by all rating agencies .
a downgrade by any one rating agency , depending on the agency 2019s relative ratings of the firm at the time of the downgrade , may have an impact which is comparable to the impact of a downgrade by all rating agencies .
the table below presents the aggregate fair value of net derivative liabilities under such agreements ( excluding application of collateral posted to reduce these liabilities ) , the related aggregate fair value of the assets posted as collateral , and the additional collateral or termination payments that could have been called at the reporting date by counterparties in the event of a one-notch and two-notch downgrade in the firm 2019s credit ratings. .

in millions                                                             | as of december 2013 | as of december 2012
----------------------------------------------------------------------- | ------------------- | -------------------
net derivative liabilities under bilateral agreements                   | $ 22176             | $ 27885
collateral posted                                                       | 18178               | 24296
additional collateral or termination payments for a one-notch downgrade | 911                 | 1534
additional collateral or termination payments for a two-notch downgrade | 2989                | 2500

additional collateral or termination payments for a one-notch downgrade 911 1534 additional collateral or termination payments for a two-notch downgrade 2989 2500 credit derivatives the firm enters into a broad array of credit derivatives in locations around the world to facilitate client transactions and to manage the credit risk associated with market- making and investing and lending activities .
credit derivatives are actively managed based on the firm 2019s net risk position .
credit derivatives are individually negotiated contracts and can have various settlement and payment conventions .
credit events include failure to pay , bankruptcy , acceleration of indebtedness , restructuring , repudiation and dissolution of the reference entity .
credit default swaps .
single-name credit default swaps protect the buyer against the loss of principal on one or more bonds , loans or mortgages ( reference obligations ) in the event the issuer ( reference entity ) of the reference obligations suffers a credit event .
the buyer of protection pays an initial or periodic premium to the seller and receives protection for the period of the contract .
if there is no credit event , as defined in the contract , the seller of protection makes no payments to the buyer of protection .
however , if a credit event occurs , the seller of protection is required to make a payment to the buyer of protection , which is calculated in accordance with the terms of the contract .
credit indices , baskets and tranches .
credit derivatives may reference a basket of single-name credit default swaps or a broad-based index .
if a credit event occurs in one of the underlying reference obligations , the protection seller pays the protection buyer .
the payment is typically a pro-rata portion of the transaction 2019s total notional amount based on the underlying defaulted reference obligation .
in certain transactions , the credit risk of a basket or index is separated into various portions ( tranches ) , each having different levels of subordination .
the most junior tranches cover initial defaults and once losses exceed the notional amount of these junior tranches , any excess loss is covered by the next most senior tranche in the capital structure .
total return swaps .
a total return swap transfers the risks relating to economic performance of a reference obligation from the protection buyer to the protection seller .
typically , the protection buyer receives from the protection seller a floating rate of interest and protection against any reduction in fair value of the reference obligation , and in return the protection seller receives the cash flows associated with the reference obligation , plus any increase in the fair value of the reference obligation .
credit options .
in a credit option , the option writer assumes the obligation to purchase or sell a reference obligation at a specified price or credit spread .
the option purchaser buys the right , but does not assume the obligation , to sell the reference obligation to , or purchase it from , the option writer .
the payments on credit options depend either on a particular credit spread or the price of the reference obligation .
goldman sachs 2013 annual report 147


the company expects annual amortization expense for these intangible assets to be: .

fiscal year | amortization expense
----------- | --------------------
2011        | $ 1343

g .
grant accounting certain of the company 2019s foreign subsidiaries have received various grants from governmental agencies .
these grants include capital , employment and research and development grants .
capital grants for the acquisition of property and equipment are netted against the related capital expenditures and amortized as a credit to depreciation expense over the useful life of the related asset .
employment grants , which relate to employee hiring and training , and research and development grants are recognized in earnings in the period in which the related expenditures are incurred by the company .
h .
translation of foreign currencies the functional currency for the company 2019s foreign sales and research and development operations is the applicable local currency .
gains and losses resulting from translation of these foreign currencies into u.s .
dollars are recorded in accumulated other comprehensive ( loss ) income .
transaction gains and losses and remeasurement of foreign currency denominated assets and liabilities are included in income currently , including those at the company 2019s principal foreign manufacturing operations where the functional currency is the u.s .
dollar .
foreign currency transaction gains or losses included in other expenses , net , were not material in fiscal 2010 , 2009 or 2008 .
i .
derivative instruments and hedging agreements foreign exchange exposure management 2014 the company enters into forward foreign currency exchange contracts to offset certain operational and balance sheet exposures from the impact of changes in foreign currency exchange rates .
such exposures result from the portion of the company 2019s operations , assets and liabilities that are denominated in currencies other than the u.s .
dollar , primarily the euro ; other exposures include the philippine peso and the british pound .
these foreign currency exchange contracts are entered into to support transactions made in the normal course of business , and accordingly , are not speculative in nature .
the contracts are for periods consistent with the terms of the underlying transactions , generally one year or less .
hedges related to anticipated transactions are designated and documented at the inception of the respective hedges as cash flow hedges and are evaluated for effectiveness monthly .
derivative instruments are employed to eliminate or minimize certain foreign currency exposures that can be confidently identified and quantified .
as the terms of the contract and the underlying transaction are matched at inception , forward contract effectiveness is calculated by comparing the change in fair value of the contract to the change in the forward value of the anticipated transaction , with the effective portion of the gain or loss on the derivative instrument reported as a component of accumulated other comprehensive ( loss ) income ( oci ) in shareholders 2019 equity and reclassified into earnings in the same period during which the hedged transaction affects earnings .
any residual change in fair value of the instruments , or ineffectiveness , is recognized immediately in other ( income ) expense .
additionally , the company enters into forward foreign currency contracts that economically hedge the gains and losses generated by the remeasurement of certain recorded assets and liabilities in a non-functional currency .
changes in the fair value of these undesignated hedges are recognized in other ( income ) expense immediately as an offset to the changes in the fair value of the asset or liability being hedged .
as of october 30 , 2010 and october 31 , 2009 , the total notional amount of these undesignated hedges was $ 42.1 million and $ 38 million , respectively .
the fair value of these hedging instruments in the company 2019s condensed consolidated balance sheets as of october 30 , 2010 and october 31 , 2009 was immaterial .
interest rate exposure management 2014 on june 30 , 2009 , the company entered into interest rate swap transactions related to its outstanding 5% ( 5 % ) senior unsecured notes where the company swapped the notional amount of its $ 375 million of fixed rate debt at 5.0% ( 5.0 % ) into floating interest rate debt through july 1 , 2014 .
under the terms of the swaps , the company will ( i ) receive on the $ 375 million notional amount a 5.0% ( 5.0 % ) annual interest payment that is analog devices , inc .
notes to consolidated financial statements 2014 ( continued )


regions .
principal cost drivers include manufacturing efficiency , raw material and energy costs and freight costs .
printing papers net sales for 2014 decreased 8% ( 8 % ) to $ 5.7 billion compared with $ 6.2 billion in 2013 and 8% ( 8 % ) compared with $ 6.2 billion in 2012 .
operating profits in 2014 were 106% ( 106 % ) lower than in 2013 and 103% ( 103 % ) lower than in 2012 .
excluding facility closure costs , impairment costs and other special items , operating profits in 2014 were 7% ( 7 % ) higher than in 2013 and 8% ( 8 % ) lower than in 2012 .
benefits from higher average sales price realizations and a favorable mix ( $ 178 million ) , lower planned maintenance downtime costs ( $ 26 million ) , the absence of a provision for bad debt related to a large envelope customer that was booked in 2013 ( $ 28 million ) , and lower foreign exchange and other costs ( $ 25 million ) were offset by lower sales volumes ( $ 82 million ) , higher operating costs ( $ 49 million ) , higher input costs ( $ 47 million ) , and costs associated with the closure of our courtland , alabama mill ( $ 41 million ) .
in addition , operating profits in 2014 include special items costs of $ 554 million associated with the closure of our courtland , alabama mill .
during 2013 , the company accelerated depreciation for certain courtland assets , and evaluated certain other assets for possible alternative uses by one of our other businesses .
the net book value of these assets at december 31 , 2013 was approximately $ 470 million .
in the first quarter of 2014 , we completed our evaluation and concluded that there were no alternative uses for these assets .
we recognized approximately $ 464 million of accelerated depreciation related to these assets in 2014 .
operating profits in 2014 also include a charge of $ 32 million associated with a foreign tax amnesty program , and a gain of $ 20 million for the resolution of a legal contingency in india , while operating profits in 2013 included costs of $ 118 million associated with the announced closure of our courtland , alabama mill and a $ 123 million impairment charge associated with goodwill and a trade name intangible asset in our india papers business .
printing papers .

in millions               | 2014       | 2013   | 2012
------------------------- | ---------- | ------ | ------
sales                     | $ 5720     | $ 6205 | $ 6230
operating profit ( loss ) | -16 ( 16 ) | 271    | 599

north american printing papers net sales were $ 2.1 billion in 2014 , $ 2.6 billion in 2013 and $ 2.7 billion in 2012 .
operating profits in 2014 were a loss of $ 398 million ( a gain of $ 156 million excluding costs associated with the shutdown of our courtland , alabama mill ) compared with gains of $ 36 million ( $ 154 million excluding costs associated with the courtland mill shutdown ) in 2013 and $ 331 million in 2012 .
sales volumes in 2014 decreased compared with 2013 due to lower market demand for uncoated freesheet paper and the closure our courtland mill .
average sales price realizations were higher , reflecting sales price increases in both domestic and export markets .
higher input costs for wood were offset by lower costs for chemicals , however freight costs were higher .
planned maintenance downtime costs were $ 14 million lower in 2014 .
operating profits in 2014 were negatively impacted by costs associated with the shutdown of our courtland , alabama mill but benefited from the absence of a provision for bad debt related to a large envelope customer that was recorded in 2013 .
entering the first quarter of 2015 , sales volumes are expected to be stable compared with the fourth quarter of 2014 .
average sales margins should improve reflecting a more favorable mix although average sales price realizations are expected to be flat .
input costs are expected to be stable .
planned maintenance downtime costs are expected to be about $ 16 million lower with an outage scheduled in the 2015 first quarter at our georgetown mill compared with outages at our eastover and riverdale mills in the 2014 fourth quarter .
brazilian papers net sales for 2014 were $ 1.1 billion compared with $ 1.1 billion in 2013 and $ 1.1 billion in 2012 .
operating profits for 2014 were $ 177 million ( $ 209 million excluding costs associated with a tax amnesty program ) compared with $ 210 million in 2013 and $ 163 million in 2012 .
sales volumes in 2014 were about flat compared with 2013 .
average sales price realizations improved for domestic uncoated freesheet paper due to the realization of price increases implemented in the second half of 2013 and in 2014 .
margins were favorably affected by an increased proportion of sales to the higher-margin domestic market .
raw material costs increased for wood and chemicals .
operating costs were higher than in 2013 and planned maintenance downtime costs were flat .
looking ahead to 2015 , sales volumes in the first quarter are expected to decrease due to seasonally weaker customer demand for uncoated freesheet paper .
average sales price improvements are expected to reflect the partial realization of announced sales price increases in the brazilian domestic market for uncoated freesheet paper .
input costs are expected to be flat .
planned maintenance outage costs should be $ 5 million lower with an outage scheduled at the luiz antonio mill in the first quarter .
european papers net sales in 2014 were $ 1.5 billion compared with $ 1.5 billion in 2013 and $ 1.4 billion in 2012 .
operating profits in 2014 were $ 140 million compared with $ 167 million in 2013 and $ 179 million in compared with 2013 , sales volumes for uncoated freesheet paper in 2014 were slightly higher in both


foreign currency exchange rate risk many of our non-u.s .
companies maintain both assets and liabilities in local currencies .
therefore , foreign exchange rate risk is generally limited to net assets denominated in those foreign currencies .
foreign exchange rate risk is reviewed as part of our risk management process .
locally required capital levels are invested in home currencies in order to satisfy regulatory require- ments and to support local insurance operations regardless of currency fluctuations .
the principal currencies creating foreign exchange risk for us are the british pound sterling , the euro , and the canadian dollar .
the following table provides more information on our exposure to foreign exchange rate risk at december 31 , 2008 and 2007. .

( in millions of u.s . dollars )                                                      | 2008           | 2007
------------------------------------------------------------------------------------- | -------------- | --------------
fair value of net assets denominated in foreign currencies                            | $ 1127         | $ 1651
percentage of fair value of total net assets                                          | 7.8% ( 7.8 % ) | 9.9% ( 9.9 % )
pre-tax impact on equity of hypothetical 10 percent strengthening of the u.s . dollar | $ 84           | $ 150

reinsurance of gmdb and gmib guarantees our net income is directly impacted by changes in the reserves calculated in connection with the reinsurance of variable annuity guarantees , primarily gmdb and gmib .
these reserves are calculated in accordance with sop 03-1 ( sop reserves ) and changes in these reserves are reflected as life and annuity benefit expense , which is included in life underwriting income .
in addition , our net income is directly impacted by the change in the fair value of the gmib liability ( fvl ) , which is classified as a derivative according to fas 133 .
the fair value liability established for a gmib reinsurance contract represents the differ- ence between the fair value of the contract and the sop 03-1 reserves .
changes in the fair value of the gmib liability , net of associated changes in the calculated sop 03-1 reserve , are reflected as realized gains or losses .
ace views our variable annuity reinsurance business as having a similar risk profile to that of catastrophe reinsurance , with the probability of long-term economic loss relatively small at the time of pricing .
adverse changes in market factors and policyholder behavior will have an impact on both life underwriting income and net income .
when evaluating these risks , we expect to be compensated for taking both the risk of a cumulative long-term economic net loss , as well as the short-term accounting variations caused by these market movements .
therefore , we evaluate this business in terms of its long-term eco- nomic risk and reward .
the ultimate risk to the variable annuity guaranty reinsurance business is a long-term underperformance of investment returns , which can be exacerbated by a long-term reduction in interest rates .
following a market downturn , continued market underperformance over a period of five to seven years would eventually result in a higher level of paid claims as policyholders accessed their guarantees through death or annuitization .
however , if market conditions improved following a downturn , sop 03-1 reserves and fair value liability would fall reflecting a decreased likelihood of future claims , which would result in an increase in both life underwriting income and net income .
as of december 31 , 2008 , management established the sop 03-1 reserve based on the benefit ratio calculated using actual market values at december 31 , 2008 .
management exercises judgment in determining the extent to which short-term market movements impact the sop 03-1 reserve .
the sop 03-1 reserve is based on the calculation of a long-term benefit ratio ( or loss ratio ) for the variable annuity guarantee reinsurance .
despite the long-term nature of the risk the benefit ratio calculation is impacted by short-term market movements that may be judged by management to be temporary or transient .
management will , in keeping with the language in sop 03-1 , regularly examine both quantitative and qualitative analysis and management will determine if , in its judgment , the change in the calculated benefit ratio is of sufficient magnitude and has persisted for a sufficient duration to warrant a change in the benefit ratio used to establish the sop 03-1 reserve .
this has no impact on either premium received or claims paid nor does it impact the long-term profit or loss of the variable annuity guaran- tee reinsurance .
the sop 03-1 reserve and fair value liability calculations are directly affected by market factors , including equity levels , interest rate levels , credit risk and implied volatilities , as well as policyholder behaviors , such as annuitization and lapse rates .
the table below shows the sensitivity , as of december 31 , 2008 , of the sop 03-1 reserves and fair value liability associated with the variable annuity guarantee reinsurance portfolio .
in addition , the tables below show the sensitivity of the fair value of specific derivative instruments held ( hedge value ) , which includes instruments purchased in january 2009 , to partially offset the risk in the variable annuity guarantee reinsurance portfolio .
although these derivatives do not receive hedge accounting treatment , some portion of the change in value may be used to offset changes in the sop 03-1 reserve.


table of contents cdw corporation and subsidiaries method or straight-line method , as applicable .
the company classifies deferred financing costs as a direct deduction from the carrying value of the long-term debt liability on the consolidated balance sheets , except for deferred financing costs associated with revolving credit facilities which are presented as an asset , within other assets on the consolidated balance sheets .
derivative instruments the company has interest rate cap agreements for the purpose of hedging its exposure to fluctuations in interest rates .
the interest rate cap agreements are designated as cash flow hedges of interest rate risk and recorded at fair value in other assets on the consolidated balance sheets .
the gain or loss on the derivative instruments is reported as a component of accumulated other comprehensive loss until reclassified to interest expense in the same period the hedge transaction affects earnings .
fair value measurements fair value is defined under gaap as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date .
a fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market .
each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety .
these levels are : level 1 2013 observable inputs such as quoted prices for identical instruments traded in active markets .
level 2 2013 inputs are based on quoted prices for similar instruments in active markets , quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities .
level 3 2013 inputs are generally unobservable and typically reflect management 2019s estimates of assumptions that market participants would use in pricing the asset or liability .
the fair values are therefore determined using model-based techniques that include option pricing models , discounted cash flow models and similar techniques .
accumulated other comprehensive loss the components of accumulated other comprehensive loss included in stockholders 2019 equity are as follows: .

( in millions )                       | years ended december 31 , 2017 | years ended december 31 , 2016 | years ended december 31 , 2015
------------------------------------- | ------------------------------ | ------------------------------ | ------------------------------
foreign currency translation          | $ -96.1 ( 96.1 )               | $ -139.6 ( 139.6 )             | $ -61.1 ( 61.1 )
unrealized gain from hedge accounting | 0.2                            | 2014                           | 2014
accumulated other comprehensive loss  | $ -95.9 ( 95.9 )               | $ -139.6 ( 139.6 )             | $ -61.1 ( 61.1 )

revenue recognition the company is a primary distribution channel for a large group of vendors and suppliers , including original equipment manufacturers ( 201coems 201d ) , software publishers , wholesale distributors and cloud providers .
the company records revenue from sales transactions when title and risk of loss are passed to the customer , there is persuasive evidence of an arrangement for sale , delivery has occurred and/or services have been rendered , the sales price is fixed or determinable , and collectability is reasonably assured .
the company 2019s shipping terms typically specify f.o.b .
destination , at which time title and risk of loss have passed to the customer .
revenues from the sales of hardware products and software licenses are generally recognized on a gross basis with the selling price to the customer recorded as sales and the acquisition cost of the product recorded as cost of sales .
these items can be delivered to customers in a variety of ways , including ( i ) as physical product shipped from the company 2019s warehouse , ( ii ) via drop-shipment by the vendor or supplier , or ( iii ) via electronic delivery for software licenses .
at the time of sale , the company records an estimate for sales returns and allowances based on historical experience .
the company 2019s vendor partners warrant most of the products the company sells .
the company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouses , thereby increasing efficiency and reducing


capital resources and liquidity capital resources overview capital has historically been generated by earnings from citi 2019s operating businesses .
citi may also augment its capital through issuances of common stock , convertible preferred stock , preferred stock , equity issued through awards under employee benefit plans , and , in the case of regulatory capital , through the issuance of subordinated debt underlying trust preferred securities .
in addition , the impact of future events on citi 2019s business results , such as corporate and asset dispositions , as well as changes in accounting standards , also affect citi 2019s capital levels .
generally , capital is used primarily to support assets in citi 2019s businesses and to absorb market , credit , or operational losses .
while capital may be used for other purposes , such as to pay dividends or repurchase common stock , citi 2019s ability to utilize its capital for these purposes is currently restricted due to its agreements with the u.s .
government , generally for so long as the u.s .
government continues to hold citi 2019s common stock or trust preferred securities .
see also 201csupervision and regulation 201d below .
citigroup 2019s capital management framework is designed to ensure that citigroup and its principal subsidiaries maintain sufficient capital consistent with citi 2019s risk profile and all applicable regulatory standards and guidelines , as well as external rating agency considerations .
the capital management process is centrally overseen by senior management and is reviewed at the consolidated , legal entity , and country level .
senior management is responsible for the capital management process mainly through citigroup 2019s finance and asset and liability committee ( finalco ) , with oversight from the risk management and finance committee of citigroup 2019s board of directors .
the finalco is composed of the senior-most management of citigroup for the purpose of engaging management in decision-making and related discussions on capital and liquidity matters .
among other things , finalco 2019s responsibilities include : determining the financial structure of citigroup and its principal subsidiaries ; ensuring that citigroup and its regulated entities are adequately capitalized in consultation with its regulators ; determining appropriate asset levels and return hurdles for citigroup and individual businesses ; reviewing the funding and capital markets plan for citigroup ; and monitoring interest rate risk , corporate and bank liquidity , and the impact of currency translation on non-u.s .
earnings and capital .
capital ratios citigroup is subject to the risk-based capital guidelines issued by the federal reserve board .
historically , capital adequacy has been measured , in part , based on two risk-based capital ratios , the tier 1 capital and total capital ( tier 1 capital + tier 2 capital ) ratios .
tier 1 capital consists of the sum of 201ccore capital elements , 201d such as qualifying common stockholders 2019 equity , as adjusted , qualifying noncontrolling interests , and qualifying mandatorily redeemable securities of subsidiary trusts , principally reduced by goodwill , other disallowed intangible assets , and disallowed deferred tax assets .
total capital also includes 201csupplementary 201d tier 2 capital elements , such as qualifying subordinated debt and a limited portion of the allowance for credit losses .
both measures of capital adequacy are stated as a percentage of risk-weighted assets .
further , in conjunction with the conduct of the 2009 supervisory capital assessment program ( scap ) , u.s .
banking regulators developed a new measure of capital termed 201ctier 1 common , 201d which has been defined as tier 1 capital less non-common elements , including qualifying perpetual preferred stock , qualifying noncontrolling interests , and qualifying mandatorily redeemable securities of subsidiary trusts .
citigroup 2019s risk-weighted assets are principally derived from application of the risk-based capital guidelines related to the measurement of credit risk .
pursuant to these guidelines , on-balance-sheet assets and the credit equivalent amount of certain off-balance-sheet exposures ( such as financial guarantees , unfunded lending commitments , letters of credit , and derivatives ) are assigned to one of several prescribed risk-weight categories based upon the perceived credit risk associated with the obligor , or if relevant , the guarantor , the nature of the collateral , or external credit ratings .
risk-weighted assets also incorporate a measure for market risk on covered trading account positions and all foreign exchange and commodity positions whether or not carried in the trading account .
excluded from risk-weighted assets are any assets , such as goodwill and deferred tax assets , to the extent required to be deducted from regulatory capital .
see 201ccomponents of capital under regulatory guidelines 201d below .
citigroup is also subject to a leverage ratio requirement , a non-risk-based measure of capital adequacy , which is defined as tier 1 capital as a percentage of quarterly adjusted average total assets .
to be 201cwell capitalized 201d under federal bank regulatory agency definitions , a bank holding company must have a tier 1 capital ratio of at least 6% ( 6 % ) , a total capital ratio of at least 10% ( 10 % ) , and a leverage ratio of at least 3% ( 3 % ) , and not be subject to a federal reserve board directive to maintain higher capital levels .
the following table sets forth citigroup 2019s regulatory capital ratios as of december 31 , 2009 and december 31 , 2008 .
citigroup regulatory capital ratios .

at year end                                         | 2009             | 2008
--------------------------------------------------- | ---------------- | ----------------
tier 1 common                                       | 9.60% ( 9.60 % ) | 2.30% ( 2.30 % )
tier 1 capital                                      | 11.67            | 11.92
total capital ( tier 1 capital and tier 2 capital ) | 15.25            | 15.70
leverage                                            | 6.89             | 6.08

as noted in the table above , citigroup was 201cwell capitalized 201d under the federal bank regulatory agency definitions at year end for both 2009 and 2008.


jpmorgan chase & co./2018 form 10-k 117 lending-related commitments the firm uses lending-related financial instruments , such as commitments ( including revolving credit facilities ) and guarantees , to address the financing needs of its clients .
the contractual amounts of these financial instruments represent the maximum possible credit risk should the clients draw down on these commitments or the firm fulfill its obligations under these guarantees , and the clients subsequently fail to perform according to the terms of these contracts .
most of these commitments and guarantees are refinanced , extended , cancelled , or expire without being drawn upon or a default occurring .
in the firm 2019s view , the total contractual amount of these wholesale lending-related commitments is not representative of the firm 2019s expected future credit exposure or funding requirements .
for further information on wholesale lending-related commitments , refer to note 27 .
clearing services the firm provides clearing services for clients entering into certain securities and derivative contracts .
through the provision of these services the firm is exposed to the risk of non-performance by its clients and may be required to share in losses incurred by ccps .
where possible , the firm seeks to mitigate its credit risk to its clients through the collection of adequate margin at inception and throughout the life of the transactions and can also cease provision of clearing services if clients do not adhere to their obligations under the clearing agreement .
for further discussion of clearing services , refer to note 27 .
derivative contracts derivatives enable clients and counterparties to manage risks including credit risk and risks arising from fluctuations in interest rates , foreign exchange , equities , and commodities .
the firm makes markets in derivatives in order to meet these needs and uses derivatives to manage certain risks associated with net open risk positions from its market-making activities , including the counterparty credit risk arising from derivative receivables .
the firm also uses derivative instruments to manage its own credit and other market risk exposure .
the nature of the counterparty and the settlement mechanism of the derivative affect the credit risk to which the firm is exposed .
for otc derivatives the firm is exposed to the credit risk of the derivative counterparty .
for exchange-traded derivatives ( 201cetd 201d ) , such as futures and options , and 201ccleared 201d over-the-counter ( 201cotc-cleared 201d ) derivatives , the firm is generally exposed to the credit risk of the relevant ccp .
where possible , the firm seeks to mitigate its credit risk exposures arising from derivative contracts through the use of legally enforceable master netting arrangements and collateral agreements .
for a further discussion of derivative contracts , counterparties and settlement types , refer to note 5 .
the following table summarizes the net derivative receivables for the periods presented .
derivative receivables .

december 31 ( in millions )                                                           | 2018             | 2017
------------------------------------------------------------------------------------- | ---------------- | ----------------
total net of cash collateral                                                          | $ 54213          | $ 56523
liquid securities and other cash collateral held against derivative receivables ( a ) | -15322 ( 15322 ) | -16108 ( 16108 )
total net of all collateral                                                           | $ 38891          | $ 40415

( a ) includes collateral related to derivative instruments where appropriate legal opinions have not been either sought or obtained with respect to master netting agreements .
the fair value of derivative receivables reported on the consolidated balance sheets were $ 54.2 billion and $ 56.5 billion at december 31 , 2018 and 2017 , respectively .
derivative receivables represent the fair value of the derivative contracts after giving effect to legally enforceable master netting agreements and cash collateral held by the firm .
however , in management 2019s view , the appropriate measure of current credit risk should also take into consideration additional liquid securities ( primarily u.s .
government and agency securities and other group of seven nations ( 201cg7 201d ) government securities ) and other cash collateral held by the firm aggregating $ 15.3 billion and $ 16.1 billion at december 31 , 2018 and 2017 , respectively , that may be used as security when the fair value of the client 2019s exposure is in the firm 2019s favor .
in addition to the collateral described in the preceding paragraph , the firm also holds additional collateral ( primarily cash , g7 government securities , other liquid government-agency and guaranteed securities , and corporate debt and equity securities ) delivered by clients at the initiation of transactions , as well as collateral related to contracts that have a non-daily call frequency and collateral that the firm has agreed to return but has not yet settled as of the reporting date .
although this collateral does not reduce the balances and is not included in the table above , it is available as security against potential exposure that could arise should the fair value of the client 2019s derivative contracts move in the firm 2019s favor .
the derivative receivables fair value , net of all collateral , also does not include other credit enhancements , such as letters of credit .
for additional information on the firm 2019s use of collateral agreements , refer to note 5 .
while useful as a current view of credit exposure , the net fair value of the derivative receivables does not capture the potential future variability of that credit exposure .
to capture the potential future variability of credit exposure , the firm calculates , on a client-by-client basis , three measures of potential derivatives-related credit loss : peak , derivative risk equivalent ( 201cdre 201d ) , and average exposure ( 201cavg 201d ) .
these measures all incorporate netting and collateral benefits , where applicable .
peak represents a conservative measure of potential exposure to a counterparty calculated in a manner that is broadly equivalent to a 97.5% ( 97.5 % ) confidence level over the life of the transaction .
peak is the primary measure used by the firm for setting of credit limits for derivative contracts , senior management reporting and derivatives exposure management .
dre exposure is a measure that expresses the risk of derivative exposure on a basis intended to be


inventory on hand , as well as our future purchase commitments with our suppliers , considering multiple factors , including demand forecasts , product life cycle , current sales levels , pricing strategy and cost trends .
if our review indicates that inventories of raw materials , components or finished products have become obsolete or are in excess of anticipated demand or that inventory cost exceeds net realizable value , we may be required to make adjustments that will impact the results of operations .
goodwill and non-amortizable intangible assets valuation - we test goodwill and non-amortizable intangible assets for impairment annually or more frequently if events occur that would warrant such review .
while the company has the option to perform a qualitative assessment for both goodwill and non-amortizable intangible assets to determine if it is more likely than not that an impairment exists , the company elects to perform the quantitative assessment for our annual impairment analysis .
the impairment analysis involves comparing the fair value of each reporting unit or non-amortizable intangible asset to the carrying value .
if the carrying value exceeds the fair value , goodwill or a non-amortizable intangible asset is considered impaired .
to determine the fair value of goodwill , we primarily use a discounted cash flow model , supported by the market approach using earnings multiples of comparable global and local companies within the tobacco industry .
at december 31 , 2018 , the carrying value of our goodwill was $ 7.2 billion , which is related to ten reporting units , each of which consists of a group of markets with similar economic characteristics .
the estimated fair value of each of our ten reporting units exceeded the carrying value as of december 31 , 2018 .
to determine the fair value of non-amortizable intangible assets , we primarily use a discounted cash flow model applying the relief-from-royalty method .
we concluded that the fair value of our non- amortizable intangible assets exceeded the carrying value .
these discounted cash flow models include management assumptions relevant for forecasting operating cash flows , which are subject to changes in business conditions , such as volumes and prices , costs to produce , discount rates and estimated capital needs .
management considers historical experience and all available information at the time the fair values are estimated , and we believe these assumptions are consistent with the assumptions a hypothetical marketplace participant would use .
since the march 28 , 2008 , spin-off from altria group , inc. , we have not recorded a charge to earnings for an impairment of goodwill or non-amortizable intangible assets .
marketing costs - we incur certain costs to support our products through programs that include advertising , marketing , consumer engagement and trade promotions .
the costs of our advertising and marketing programs are expensed in accordance with u.s .
gaap .
recognition of the cost related to our consumer engagement and trade promotion programs contain uncertainties due to the judgment required in estimating the potential performance and compliance for each program .
for volume-based incentives provided to customers , management continually assesses and estimates , by customer , the likelihood of the customer's achieving the specified targets , and records the reduction of revenue as the sales are made .
for other trade promotions , management relies on estimated utilization rates that have been developed from historical experience .
changes in the assumptions used in estimating the cost of any individual marketing program would not result in a material change in our financial position , results of operations or operating cash flows .
employee benefit plans - as discussed in item 8 , note 13 .
benefit plans to our consolidated financial statements , we provide a range of benefits to our employees and retired employees , including pensions , postretirement health care and postemployment benefits ( primarily severance ) .
we record annual amounts relating to these plans based on calculations specified by u.s .
gaap .
these calculations include various actuarial assumptions , such as discount rates , assumed rates of return on plan assets , compensation increases , mortality , turnover rates and health care cost trend rates .
we review actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so .
as permitted by u.s .
gaap , any effect of the modifications is generally amortized over future periods .
we believe that the assumptions utilized in calculating our obligations under these plans are reasonable based upon our historical experience and advice from our actuaries .
weighted-average discount rate assumptions for pension and postretirement plan obligations at december 31 , 2018 and 2017 are as follows: .

                     | 2018             | 2017
-------------------- | ---------------- | ----------------
pension plans        | 1.61% ( 1.61 % ) | 1.51% ( 1.51 % )
postretirement plans | 3.97% ( 3.97 % ) | 3.79% ( 3.79 % )

we anticipate that assumption changes will increase 2019 pre-tax pension and postretirement expense to approximately $ 205 million as compared with approximately $ 160 million in 2018 , excluding amounts related to employee severance and early retirement programs .
the anticipated increase is primarily due to higher amortization out of other comprehensive earnings for unrecognized actuarial gains/ losses of $ 14 million , coupled with lower return on assets of $ 16 million , higher interest and service cost of $ 12 million and $ 4 million respectively , partially offset by other movements of $ 1 million .
weighted-average expected rate of return and discount rate assumptions have a significant effect on the amount of expense reported for the employee benefit plans .
a fifty-basis-point decrease in our discount rate would increase our 2019 pension and postretirement expense by approximately $ 50 million , and a fifty-basis-point increase in our discount rate would decrease our 2019 pension and postretirement


item 1b .
unresolved staff comments .
item 2 .
properties .
our corporate co-headquarters are located in pittsburgh , pennsylvania and chicago , illinois .
our co-headquarters are leased and house our executive offices , certain u.s .
business units , and our administrative , finance , and human resource functions .
we maintain additional owned and leased offices throughout the regions in which we operate .
we manufacture our products in our network of manufacturing and processing facilities located throughout the world .
as of december 31 , 2016 , we operated 87 manufacturing and processing facilities .
we own 83 and lease four of these facilities .
our manufacturing and processing facilities count by segment as of december 31 , 2016 was: .

              | owned | leased
------------- | ----- | ------
united states | 43    | 2
canada        | 3     | 2014
europe        | 11    | 2014
rest of world | 26    | 2

we maintain all of our manufacturing and processing facilities in good condition and believe they are suitable and are adequate for our present needs .
we also enter into co-manufacturing arrangements with third parties if we determine it is advantageous to outsource the production of any of our products .
in the fourth quarter of 2016 , we reorganized our segment structure to move our russia business from the rest of world segment to the europe segment .
we have reflected this change in the table above .
see note 18 , segment reporting , to the consolidated financial statements for additional information .
several of our current manufacturing and processing facilities are scheduled to be closed within the next year .
see note 3 , integration and restructuring expenses , to the consolidated financial statements for additional information .
item 3 .
legal proceedings .
we are routinely involved in legal proceedings , claims , and governmental inquiries , inspections or investigations ( 201clegal matters 201d ) arising in the ordinary course of our business .
on april 1 , 2015 , the commodity futures trading commission ( 201ccftc 201d ) filed a formal complaint against mondel 0113z international ( formerly known as kraft foods inc. ) and kraft in the u.s .
district court for the northern district of illinois , eastern division , related to activities involving the trading of december 2011 wheat futures contracts .
the complaint alleges that mondel 0113z international and kraft ( 1 ) manipulated or attempted to manipulate the wheat markets during the fall of 2011 , ( 2 ) violated position limit levels for wheat futures , and ( 3 ) engaged in non-competitive trades by trading both sides of exchange-for-physical chicago board of trade wheat contracts .
as previously disclosed by kraft , these activities arose prior to the october 1 , 2012 spin-off of kraft by mondel 0113z international to its shareholders and involve the business now owned and operated by mondel 0113z international or its affiliates .
the separation and distribution agreement between kraft and mondel 0113z international , dated as of september 27 , 2012 , governs the allocation of liabilities between mondel 0113z international and kraft and , accordingly , mondel 0113z international will predominantly bear the costs of this matter and any monetary penalties or other payments that the cftc may impose .
we do not expect this matter to have a material adverse effect on our financial condition , results of operations , or business .
while we cannot predict with certainty the results of legal matters in which we are currently involved or may in the future be involved , we do not expect that the ultimate costs to resolve any of the legal matters that are currently pending will have a material adverse effect on our financial condition or results of operations .
item 4 .
mine safety disclosures .
not applicable.


hr solutions .

years ended december 31, | 2010             | 2009             | 2008
------------------------ | ---------------- | ---------------- | ----------------
revenue                  | $ 2111           | $ 1267           | $ 1356
operating income         | 234              | 203              | 208
operating margin         | 11.1% ( 11.1 % ) | 16.0% ( 16.0 % ) | 15.3% ( 15.3 % )

in october 2010 , we completed the acquisition of hewitt , one of the world 2019s leading human resource consulting and outsourcing companies .
hewitt operates globally together with aon 2019s existing consulting and outsourcing operations under the newly created aon hewitt brand .
hewitt 2019s operating results are included in aon 2019s results of operations beginning october 1 , 2010 .
our hr solutions segment generated approximately 25% ( 25 % ) of our consolidated total revenues in 2010 and provides a broad range of human capital services , as follows : consulting services : 2022 health and benefits advises clients about how to structure , fund , and administer employee benefit programs that attract , retain , and motivate employees .
benefits consulting includes health and welfare , executive benefits , workforce strategies and productivity , absence management , benefits administration , data-driven health , compliance , employee commitment , investment advisory and elective benefits services .
2022 retirement specializes in global actuarial services , defined contribution consulting , investment 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 .
outsourcing services : 2022 benefits outsourcing applies our hr 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 human resource business processing outsourcing ( 2018 2018hr bpo 2019 2019 ) 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 hr process transactions as well as other complementary services such as absence management , flexible spending , dependent audit and participant advocacy .
beginning in late 2008 , the disruption in the global credit markets and the deterioration of the financial markets created significant uncertainty in the marketplace .
weak economic conditions globally continued throughout 2010 .
the prolonged economic downturn is adversely impacting our clients 2019 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


pipeline transportation 2013 we own a system of pipelines through marathon pipe line llc ( 201cmpl 201d ) and ohio river pipe line llc ( 201corpl 201d ) , our wholly-owned subsidiaries .
our pipeline systems transport crude oil and refined products primarily in the midwest and gulf coast regions to our refineries , our terminals and other pipeline systems .
our mpl and orpl wholly-owned and undivided interest common carrier systems consist of 1737 miles of crude oil lines and 1825 miles of refined product lines comprising 32 systems located in 11 states .
the mpl common carrier pipeline network is one of the largest petroleum pipeline systems in the united states , based on total barrels delivered .
our common carrier pipeline systems are subject to state and federal energy regulatory commission regulations and guidelines , including published tariffs for the transportation of crude oil and refined products .
third parties generated 13 percent of the crude oil and refined product shipments on our mpl and orpl common carrier pipelines in 2009 .
our mpl and orpl common carrier pipelines transported the volumes shown in the following table for each of the last three years .
pipeline barrels handled ( thousands of barrels per day ) 2009 2008 2007 .

( thousands of barrels per day ) | 2009 | 2008 | 2007
-------------------------------- | ---- | ---- | ----
crude oil trunk lines            | 1279 | 1405 | 1451
refined products trunk lines     | 953  | 960  | 1049
total                            | 2232 | 2365 | 2500

we also own 196 miles of private crude oil pipelines and 850 miles of private refined products pipelines , and we lease 217 miles of common carrier refined product pipelines .
we have partial ownership interests in several pipeline companies that have approximately 780 miles of crude oil pipelines and 3600 miles of refined products pipelines , including about 970 miles operated by mpl .
in addition , mpl operates most of our private pipelines and 985 miles of crude oil and 160 miles of natural gas pipelines owned by our e&p segment .
our major refined product pipelines include the owned and operated cardinal products pipeline and the wabash pipeline .
the cardinal products pipeline delivers refined products from kenova , west virginia , to columbus , ohio .
the wabash pipeline system delivers product from robinson , illinois , to various terminals in the area of chicago , illinois .
other significant refined product pipelines owned and operated by mpl extend from : robinson , illinois , to louisville , kentucky ; garyville , louisiana , to zachary , louisiana ; and texas city , texas , to pasadena , texas .
in addition , as of december 31 , 2009 , we had interests in the following refined product pipelines : 2022 65 percent undivided ownership interest in the louisville-lexington system , a petroleum products pipeline system extending from louisville to lexington , kentucky ; 2022 60 percent interest in muskegon pipeline llc , which owns a refined products pipeline extending from griffith , indiana , to north muskegon , michigan ; 2022 50 percent interest in centennial pipeline llc , which owns a refined products system connecting the gulf coast region with the midwest market ; 2022 17 percent interest in explorer pipeline company , a refined products pipeline system extending from the gulf coast to the midwest ; and 2022 6 percent interest in wolverine pipe line company , a refined products pipeline system extending from chicago , illinois , to toledo , ohio .
our major owned and operated crude oil lines run from : patoka , illinois , to catlettsburg , kentucky ; patoka , illinois , to robinson , illinois ; patoka , illinois , to lima , ohio ; lima , ohio to canton , ohio ; samaria , michigan , to detroit , michigan ; and st .
james , louisiana , to garyville , louisiana .
as of december 31 , 2009 , we had interests in the following crude oil pipelines : 2022 51 percent interest in loop llc , the owner and operator of loop , which is the only u.s .
deepwater oil port , located 18 miles off the coast of louisiana , and a crude oil pipeline connecting the port facility to storage caverns and tanks at clovelly , louisiana ; 2022 59 percent interest in locap llc , which owns a crude oil pipeline connecting loop and the capline system;


n o t e s t o c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s ( continued ) ace limited and subsidiaries the following table shows changes in the company 2019s stock options for the years ended december 31 , 2008 , 2007 , and number of options weighted average exercise price .

                                     | number of options    | weightedaverageexercise price
------------------------------------ | -------------------- | -----------------------------
options outstanding december 31 2005 | 12643761             | $ 36.53
granted                              | 1505215              | $ 56.29
exercised                            | -1982560 ( 1982560 ) | $ 33.69
forfeited                            | -413895 ( 413895 )   | $ 39.71
options outstanding december 31 2006 | 11752521             | $ 39.43
granted                              | 1549091              | $ 56.17
exercised                            | -1830004 ( 1830004 ) | $ 35.73
forfeited                            | -200793 ( 200793 )   | $ 51.66
options outstanding december 31 2007 | 11270815             | $ 42.12
granted                              | 1612507              | $ 60.17
exercised                            | -2650733 ( 2650733 ) | $ 36.25
forfeited                            | -309026 ( 309026 )   | $ 54.31
options outstanding december 31 2008 | 9923563              | $ 46.24

the weighted-average remaining contractual term was 5.8 years for the stock options outstanding and 4.6 years for the stock options exercisable at december 31 , 2008 .
the total intrinsic value was approximately $ 66 million for stock options out- standing and $ 81 million for stock options exercisable at december 31 , 2008 .
the weighted-average fair value for the stock options granted for the year ended december 31 , 2008 was $ 17.60 .
the total intrinsic value for stock options exercised dur- ing the years ended december 31 , 2008 , 2007 , and 2006 , was approximately $ 54 million , $ 44 million , and $ 43 million , respectively .
the amount of cash received during the year ended december 31 , 2008 , from the exercise of stock options was $ 97 million .
restricted stock the company 2019s 2004 ltip also provides for grants of restricted stock .
the company generally grants restricted stock with a 4-year vesting period , based on a graded vesting schedule .
the restricted stock is granted at market close price on the date of grant .
included in the company 2019s share-based compensation expense in the year ended december 31 , 2008 , is a portion of the cost related to the unvested restricted stock granted in the years 2004 to 2008.


payments ( receipts ) ( in millions ) .

                    | payments ( receipts ) ( in millions )
------------------- | -------------------------------------
entergy arkansas    | $ 2
entergy louisiana   | $ 6
entergy mississippi | ( $ 4 )
entergy new orleans | ( $ 1 )
entergy texas       | ( $ 3 )

in september 2016 the ferc accepted the february 2016 compliance filing subject to a further compliance filing made in november 2016 .
the further compliance filing was required as a result of an order issued in september 2016 ruling on the january 2016 rehearing requests filed by the lpsc , the apsc , and entergy .
in the order addressing the rehearing requests , the ferc granted the lpsc 2019s rehearing request and directed that interest be calculated on the payment/receipt amounts .
the ferc also granted the apsc 2019s and entergy 2019s rehearing request and ordered the removal of both securitized asset accumulated deferred income taxes and contra-securitization accumulated deferred income taxes from the calculation .
in november 2016 , entergy submitted its compliance filing in response to the ferc 2019s order on rehearing .
the compliance filing included a revised refund calculation of the true-up payments and receipts based on 2009 test year data and interest calculations .
the lpsc protested the interest calculations .
in november 2017 the ferc issued an order rejecting the november 2016 compliance filing .
the ferc determined that the payments detailed in the november 2016 compliance filing did not include adequate interest for the payments from entergy arkansas to entergy louisiana because it did not include interest on the principal portion of the payment that was made in february 2016 .
in december 2017 , entergy recalculated the interest pursuant to the november 2017 order .
as a result of the recalculations , entergy arkansas owed very minor payments to entergy louisiana , entergy mississippi , and entergy new orleans .
2011 rate filing based on calendar year 2010 production costs in may 2011 , entergy filed with the ferc the 2011 rates in accordance with the ferc 2019s orders in the system agreement proceeding . a0 a0several parties intervened in the proceeding at the ferc , including the lpsc , which also filed a protest . a0 a0in july a02011 the ferc a0accepted entergy 2019s proposed rates for filing , a0effective june a01 , a02011 , a0subject to refund .
after an abeyance of the proceeding schedule , in december 2014 the ferc consolidated the 2011 rate filing with the 2012 , 2013 , and 2014 rate filings for settlement and hearing procedures .
see discussion below regarding the consolidated settlement and hearing procedures in connection with this proceeding .
2012 rate filing based on calendar year 2011 production costs in may 2012 , entergy filed with the ferc the 2012 rates in accordance with the ferc 2019s orders in the system agreement proceeding . a0 a0several parties intervened in the proceeding at the ferc , including the lpsc , which also filed a protest . a0 a0in august 2012 the ferc a0accepted entergy 2019s proposed rates for filing , a0effective june a02012 , a0subject to refund .
after an abeyance of the proceeding schedule , in december 2014 the ferc consolidated the 2012 rate filing with the 2011 , 2013 , and 2014 rate filings for settlement and hearing procedures .
see discussion below regarding the consolidated settlement and hearing procedures in connection with this proceeding .
2013 rate filing based on calendar year 2012 production costs in may 2013 , entergy filed with the ferc the 2013 rates in accordance with the ferc 2019s orders in the system agreement proceeding .
several parties intervened in the proceeding at the ferc , including the lpsc , which also filed a protest .
the city council intervened and filed comments related to including the outcome of a related ferc proceeding in the 2013 cost equalization calculation .
in august 2013 the ferc issued an order accepting the 2013 rates , effective june 1 , 2013 , subject to refund .
after an abeyance of the proceeding schedule , in december 2014 the ferc consolidated the 2013 rate filing with the 2011 , 2012 , and 2014 rate filings for settlement and hearing procedures .
entergy corporation and subsidiaries notes to financial statements


table of contents the following discussion of nonoperating income and expense excludes the results of the merger in order to provide a more meaningful year-over-year comparison .
interest expense , net of capitalized interest decreased $ 249 million in 2014 from 2013 primarily due to a $ 149 million decrease in special charges recognized year-over-year as further described below , as well as refinancing activities that resulted in $ 100 million less interest expense recognized in 2014 .
( 1 ) in 2014 , we recognized $ 33 million of special charges relating to non-cash interest accretion on bankruptcy settlement obligations .
in 2013 , we recognized $ 138 million of special charges relating to post-petition interest expense on unsecured obligations pursuant to the plan and penalty interest related to american 2019s 10.5% ( 10.5 % ) secured notes and 7.50% ( 7.50 % ) senior secured notes .
in addition , in 2013 we recorded special charges of $ 44 million for debt extinguishment costs incurred as a result of the repayment of certain aircraft secured indebtedness , including cash interest charges and non-cash write offs of unamortized debt issuance costs .
( 2 ) as a result of the 2013 refinancing activities and the early extinguishment of american 2019s 7.50% ( 7.50 % ) senior secured notes in 2014 , we recognized $ 100 million less interest expense in 2014 as compared to 2013 .
other nonoperating expense , net in 2014 consisted of $ 114 million of net foreign currency losses , including a $ 43 million special charge for venezuelan foreign currency losses , and $ 56 million in other nonoperating special charges primarily due to early debt extinguishment costs related to the prepayment of our 7.50% ( 7.50 % ) senior secured notes and other indebtedness .
the foreign currency losses were driven primarily by the strengthening of the u.s .
dollar relative to other currencies during 2014 , principally in the latin american market , including a 48% ( 48 % ) decrease in the value of the venezuelan bolivar and a 14% ( 14 % ) decrease in the value of the brazilian real .
other nonoperating expense , net in 2013 consisted principally of net foreign currency losses of $ 56 million and early debt extinguishment charges of $ 29 million .
reorganization items , net reorganization items refer to revenues , expenses ( including professional fees ) , realized gains and losses and provisions for losses that are realized or incurred as a direct result of the chapter 11 cases .
the following table summarizes the components included in reorganization items , net on aag 2019s consolidated statement of operations for the year ended december 31 , 2013 ( in millions ) : .

                                                                          | 2013
------------------------------------------------------------------------- | ------
labor-related deemed claim ( 1 )                                          | $ 1733
aircraft and facility financing renegotiations and rejections ( 2 ) ( 3 ) | 325
fair value of conversion discount ( 4 )                                   | 218
professional fees                                                         | 199
other                                                                     | 180
total reorganization items net                                            | $ 2655

( 1 ) in exchange for employees 2019 contributions to the successful reorganization , including agreeing to reductions in pay and benefits , we agreed in the plan to provide each employee group a deemed claim , which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees .
each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes .
the total value of this deemed claim was approximately $ 1.7 billion .
( 2 ) amounts include allowed claims ( claims approved by the bankruptcy court ) and estimated allowed claims relating to ( i ) the rejection or modification of financings related to aircraft and ( ii ) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds .
the debtors recorded an estimated claim associated with the rejection or modification of a financing


contingencies we are exposed to certain known contingencies that are material to our investors .
the facts and circumstances surrounding these contingencies and a discussion of their effect on us are in note 12 to our audited consolidated financial statements included elsewhere in this annual report on form 10-k .
these contingencies may have a material effect on our liquidity , capital resources or results of operations .
in addition , even where our reserves are adequate , the incurrence of any of these liabilities may have a material effect on our liquidity and the amount of cash available to us for other purposes .
we believe that we have made appropriate arrangements in respect of the future effect on us of these known contingencies .
we also believe that the amount of cash available to us from our operations , together with cash from financing , will be sufficient for us to pay any known contingencies as they become due without materially affecting our ability to conduct our operations and invest in the growth of our business .
off-balance sheet arrangements we do not have any off-balance sheet arrangements except for operating leases entered into in the normal course of business .
contractual obligations and commitments below is a summary of our future payment commitments by year under contractual obligations as of december 31 , 2018: .

( in millions )                                | 2019   | 2020 - 2021 | 2022 - 2023 | thereafter | total
---------------------------------------------- | ------ | ----------- | ----------- | ---------- | -------
long-term debt including interest ( 1 )        | $ 508  | $ 1287      | $ 3257      | $ 8167     | $ 13219
operating leases                               | 167    | 244         | 159         | 119        | 689
data acquisition                               | 289    | 467         | 135         | 4          | 895
purchase obligations ( 2 )                     | 17     | 22          | 15          | 8          | 62
commitments to unconsolidated affiliates ( 3 ) | 2014   | 2014        | 2014        | 2014       | 2014
benefit obligations ( 4 )                      | 25     | 27          | 29          | 81         | 162
uncertain income tax positions ( 5 )           | 17     | 2014        | 2014        | 2014       | 17
total                                          | $ 1023 | $ 2047      | $ 3595      | $ 8379     | $ 15044

( 1 ) interest payments on our debt are based on the interest rates in effect on december 31 , 2018 .
( 2 ) purchase obligations are defined as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms , including fixed or minimum quantities to be purchased , fixed , minimum or variable pricing provisions and the approximate timing of the transactions .
( 3 ) we are currently committed to invest $ 120 million in private equity funds .
as of december 31 , 2018 , we have funded approximately $ 78 million of these commitments and we have approximately $ 42 million remaining to be funded which has not been included in the above table as we are unable to predict when these commitments will be paid .
( 4 ) amounts represent expected future benefit payments for our pension and postretirement benefit plans , as well as expected contributions for 2019 for our funded pension benefit plans .
we made cash contributions totaling approximately $ 31 million to our defined benefit plans in 2018 , and we estimate that we will make contributions totaling approximately $ 25 million to our defined benefit plans in 2019 .
due to the potential impact of future plan investment performance , changes in interest rates , changes in other economic and demographic assumptions and changes in legislation in foreign jurisdictions , we are not able to reasonably estimate the timing and amount of contributions that may be required to fund our defined benefit plans for periods beyond 2019 .
( 5 ) as of december 31 , 2018 , our liability related to uncertain income tax positions was approximately $ 106 million , $ 89 million of which has not been included in the above table as we are unable to predict when these liabilities will be paid due to the uncertainties in the timing of the settlement of the income tax positions.


the company entered into agreements with various governmental entities in the states of kentucky , georgia and tennessee to implement tax abatement plans related to its distribution center in franklin , kentucky ( simpson county ) , its distribution center in macon , georgia ( bibb county ) , and its store support center in brentwood , tennessee ( williamson county ) .
the tax abatement plans provide for reduction of real property taxes for specified time frames by legally transferring title to its real property in exchange for industrial revenue bonds .
this property was then leased back to the company .
no cash was exchanged .
the lease payments are equal to the amount of the payments on the bonds .
the tax abatement period extends through the term of the lease , which coincides with the maturity date of the bonds .
at any time , the company has the option to purchase the real property by paying off the bonds , plus $ 1 .
the terms and amounts authorized and drawn under each industrial revenue bond agreement are outlined as follows , as of december 30 , 2017 : bond term bond authorized amount ( in millions ) amount drawn ( in millions ) .

                                         | bond term | bond authorized amount ( in millions ) | amount drawn ( in millions )
---------------------------------------- | --------- | -------------------------------------- | ----------------------------
franklin kentucky distribution center    | 30 years  | $ 54.0                                 | $ 51.8
macon georgia distribution center        | 15 years  | $ 58.0                                 | $ 49.9
brentwood tennessee store support center | 10 years  | $ 78.0                                 | $ 75.3

due to the form of these transactions , the company has not recorded the bonds or the lease obligation associated with the sale lease-back transaction .
the original cost of the company 2019s property and equipment is recorded on the balance sheet and is being depreciated over its estimated useful life .
capitalized software costs the company capitalizes certain costs related to the acquisition and development of software and amortizes these costs using the straight-line method over the estimated useful life of the software , which is three to five years .
computer software consists of software developed for internal use and third-party software purchased for internal use .
a subsequent addition , modification or upgrade to internal-use software is capitalized to the extent that it enhances the software 2019s functionality or extends its useful life .
these costs are included in computer software and hardware in the accompanying consolidated balance sheets .
certain software costs not meeting the criteria for capitalization are expensed as incurred .
store closing costs the company regularly evaluates the performance of its stores and periodically closes those that are under-performing .
the company records a liability for costs associated with an exit or disposal activity when the liability is incurred , usually in the period the store closes .
store closing costs were not significant to the results of operations for any of the fiscal years presented .
leases assets under capital leases are amortized in accordance with the company 2019s normal depreciation policy for owned assets or over the lease term , if shorter , and the related charge to operations is included in depreciation expense in the consolidated statements of income .
certain operating leases include rent increases during the lease term .
for these leases , the company recognizes the related rental expense on a straight-line basis over the term of the lease ( which includes the pre-opening period of construction , renovation , fixturing and merchandise placement ) and records the difference between the expense charged to operations and amounts paid as a deferred rent liability .
the company occasionally receives reimbursements from landlords to be used towards improving the related store to be leased .
leasehold improvements are recorded at their gross costs , including items reimbursed by landlords .
related reimbursements are deferred and amortized on a straight-line basis as a reduction of rent expense over the applicable lease term .
note 2 - share-based compensation : share-based compensation includes stock option and restricted stock unit awards and certain transactions under the company 2019s espp .
share-based compensation expense is recognized based on the grant date fair value of all stock option and restricted stock unit awards plus a discount on shares purchased by employees as a part of the espp .
the discount under the espp represents the difference between the purchase date market value and the employee 2019s purchase price.


performance graph the following graph is a comparison of the five-year cumulative return of our common shares , the standard & poor 2019s 500 index ( the 201cs&p 500 index 201d ) and the national association of real estate investment trusts 2019 ( 201cnareit 201d ) all equity index , a peer group index .
the graph assumes that $ 100 was invested on december 31 , 2009 in our common shares , the s&p 500 index and the nareit all equity index and that all dividends were reinvested without the payment of any commissions .
there can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below. .

                            | 2009  | 2010  | 2011  | 2012  | 2013  | 2014
--------------------------- | ----- | ----- | ----- | ----- | ----- | -----
vornado realty trust        | $ 100 | $ 123 | $ 118 | $ 128 | $ 147 | $ 201
s&p 500 index               | 100   | 115   | 117   | 136   | 180   | 205
the nareit all equity index | 100   | 128   | 139   | 166   | 171   | 218


contractual obligations the following table summarizes our significant contractual obligations as of december 28 , 2013: .

( in millions )                             | payments due by period total | payments due by period less than1 year | payments due by period 1 20133 years | payments due by period 3 20135 years | payments due by period more than5 years
------------------------------------------- | ---------------------------- | -------------------------------------- | ------------------------------------ | ------------------------------------ | ---------------------------------------
operating lease obligations                 | $ 870                        | $ 208                                  | $ 298                                | $ 166                                | $ 198
capital purchase obligations1               | 5503                         | 5375                                   | 125                                  | 2014                                 | 3
other purchase obligations and commitments2 | 1859                         | 772                                    | 744                                  | 307                                  | 36
long-term debt obligations3                 | 22372                        | 429                                    | 2360                                 | 3761                                 | 15822
other long-term liabilities4 5              | 1496                         | 569                                    | 663                                  | 144                                  | 120
total6                                      | $ 32100                      | $ 7353                                 | $ 4190                               | $ 4378                               | $ 16179

capital purchase obligations1 5503 5375 125 2014 3 other purchase obligations and commitments2 1859 772 744 307 36 long-term debt obligations3 22372 429 2360 3761 15822 other long-term liabilities4 , 5 1496 569 663 144 120 total6 $ 32100 $ 7353 $ 4190 $ 4378 $ 16179 1 capital purchase obligations represent commitments for the construction or purchase of property , plant and equipment .
they were not recorded as liabilities on our consolidated balance sheets as of december 28 , 2013 , as we had not yet received the related goods or taken title to the property .
2 other purchase obligations and commitments include payments due under various types of licenses and agreements to purchase goods or services , as well as payments due under non-contingent funding obligations .
funding obligations include agreements to fund various projects with other companies .
3 amounts represent principal and interest cash payments over the life of the debt obligations , including anticipated interest payments that are not recorded on our consolidated balance sheets .
any future settlement of convertible debt would impact our cash payments .
4 we are unable to reliably estimate the timing of future payments related to uncertain tax positions ; therefore , $ 188 million of long-term income taxes payable has been excluded from the preceding table .
however , long- term income taxes payable , recorded on our consolidated balance sheets , included these uncertain tax positions , reduced by the associated federal deduction for state taxes and u.s .
tax credits arising from non- u.s .
income taxes .
5 amounts represent future cash payments to satisfy other long-term liabilities recorded on our consolidated balance sheets , including the short-term portion of these long-term liabilities .
expected required contributions to our u.s .
and non-u.s .
pension plans and other postretirement benefit plans of $ 62 million to be made during 2014 are also included ; however , funding projections beyond 2014 are not practicable to estimate .
6 total excludes contractual obligations already recorded on our consolidated balance sheets as current liabilities except for the short-term portions of long-term debt obligations and other long-term liabilities .
contractual obligations for purchases of goods or services , included in other purchase obligations and commitments in the preceding table , include agreements that are enforceable and legally binding on intel and that specify all significant terms , including fixed or minimum quantities to be purchased ; fixed , minimum , or variable price provisions ; and the approximate timing of the transaction .
for obligations with cancellation provisions , the amounts included in the preceding table were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee .
we have entered into certain agreements for the purchase of raw materials that specify minimum prices and quantities based on a percentage of the total available market or based on a percentage of our future purchasing requirements .
due to the uncertainty of the future market and our future purchasing requirements , as well as the non-binding nature of these agreements , obligations under these agreements are not included in the preceding table .
our purchase orders for other products are based on our current manufacturing needs and are fulfilled by our vendors within short time horizons .
in addition , some of our purchase orders represent authorizations to purchase rather than binding agreements .
table of contents management 2019s discussion and analysis of financial condition and results of operations ( continued )