liquidity and capital resources as of december 31 , 2006 , our principal sources of liquidity included cash , cash equivalents , the sale of receivables , and our revolving credit facilities , as well as the availability of commercial paper and other sources of financing through the capital markets .
we had $ 2 billion of committed credit facilities available , of which there were no borrowings outstanding as of december 31 , 2006 , and we did not make any short-term borrowings under these facilities during the year .
the value of the outstanding undivided interest held by investors under the sale of receivables program was $ 600 million as of december 31 , 2006 .
the sale of receivables program is subject to certain requirements , including the maintenance of an investment grade bond rating .
if our bond rating were to deteriorate , it could have an adverse impact on our liquidity .
access to commercial paper is dependent on market conditions .
deterioration of our operating results or financial condition due to internal or external factors could negatively impact our ability to utilize commercial paper as a source of liquidity .
liquidity through the capital markets is also dependent on our financial stability .
at both december 31 , 2006 and 2005 , we had a working capital deficit of approximately $ 1.1 billion .
a working capital deficit is common in our industry and does not indicate a lack of liquidity .
we maintain adequate resources to meet our daily cash requirements , and we have sufficient financial capacity to satisfy our current liabilities .
financial condition cash flows millions of dollars 2006 2005 2004 .

cash flowsmillions of dollars           | 2006           | 2005           | 2004
--------------------------------------- | -------------- | -------------- | --------------
cash provided by operating activities   | $ 2880         | $ 2595         | $ 2257
cash used in investing activities       | -2042 ( 2042 ) | -2047 ( 2047 ) | -1732 ( 1732 )
cash used in financing activities       | -784 ( 784 )   | -752 ( 752 )   | -75 ( 75 )
net change in cash and cash equivalents | $ 54           | $ -204 ( 204 ) | $ 450

cash provided by operating activities 2013 higher income in 2006 generated the increased cash provided by operating activities , which was partially offset by higher income tax payments , $ 150 million in voluntary pension contributions , higher material and supply inventories , and higher management incentive payments in 2006 .
higher income , lower management incentive payments in 2005 ( executive bonuses , which would have been paid to individuals in 2005 , were not awarded based on company performance in 2004 and bonuses for the professional workforce that were paid out in 2005 were significantly reduced ) , and working capital performance generated higher cash from operating activities in 2005 .
a voluntary pension contribution of $ 100 million in 2004 also augmented the positive year-over-year variance in 2005 as no pension contribution was made in 2005 .
this improvement was partially offset by cash received in 2004 for income tax refunds .
cash used in investing activities 2013 an insurance settlement for the 2005 january west coast storm and lower balances for work in process decreased the amount of cash used in investing activities in 2006 .
higher capital investments and lower proceeds from asset sales partially offset this decrease .
increased capital spending , partially offset by higher proceeds from asset sales , increased the amount of cash used in investing activities in 2005 compared to 2004 .
cash used in financing activities 2013 the increase in cash used in financing activities primarily resulted from lower net proceeds from equity compensation plans ( $ 189 million in 2006 compared to $ 262 million in 2005 ) .
the increase in 2005 results from debt issuances in 2004 and higher debt repayments in 2005 .
we did not issue debt in 2005 versus $ 745 million of debt issuances in 2004 , and we repaid $ 699 million of debt in 2005 compared to $ 588 million in 2004 .
the higher outflows in 2005 were partially offset by higher net proceeds from equity compensation plans ( $ 262 million in 2005 compared to $ 80 million in 2004 ) .


page 74 notes to five year summary ( a ) includes the effects of items not considered in senior management 2019s assessment of the operating performance of the corporation 2019s business segments ( see the section , 201cresults of operations 201d in management 2019s discussion and analysis of financial condition and results of operations ( md&a ) ) which , on a combined basis , increased earnings from continuing operations before income taxes by $ 173 million , $ 113 million after tax ( $ 0.25 per share ) .
( b ) includes the effects of items not considered in senior management 2019s assessment of the operating performance of the corporation 2019s business segments ( see the section , 201cresults of operations 201d in md&a ) which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 215 million , $ 154 million after tax ( $ 0.34 per share ) .
also includes a reduction in income tax expense resulting from the closure of an internal revenue service examination of $ 144 million ( $ 0.32 per share ) .
these items reduced earnings by $ 10 million after tax ( $ 0.02 per share ) .
( c ) includes the effects of items not considered in senior management 2019s assessment of the operating performance of the corporation 2019s business segments ( see the section , 201cresults of operations 201d in md&a ) which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 153 million , $ 102 million after tax ( $ 0.22 per share ) .
( d ) includes the effects of items not considered in senior management 2019s assessment of the operating performance of the corporation 2019s business segments which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 1112 million , $ 632 million after tax ( $ 1.40 per share ) .
in 2002 , the corporation adopted fas 142 which prohibits the amortization of goodwill .
( e ) includes the effects of items not considered in senior management 2019s assessment of the operating performance of the corporation 2019s business segments which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 973 million , $ 651 million after tax ( $ 1.50 per share ) .
also includes a gain from the disposal of a business and charges for the corporation 2019s exit from its global telecommunications services business which is included in discontinued operations and which , on a combined basis , increased the net loss by $ 1 billion ( $ 2.38 per share ) .
( f ) the corporation defines return on invested capital ( roic ) as net income plus after-tax interest expense divided by average invested capital ( stockholders 2019 equity plus debt ) , after adjusting stockholders 2019 equity by adding back the minimum pension liability .
the adjustment to add back the minimum pension liability is a revision to our calculation in 2005 , which the corporation believes more closely links roic to management performance .
further , the corporation believes that reporting roic provides investors with greater visibility into how effectively lockheed martin uses the capital invested in its operations .
the corporation uses roic to evaluate multi-year investment decisions and as a long-term performance measure , and also uses roic as a factor in evaluating management performance under certain incentive compensation plans .
roic is not a measure of financial performance under gaap , and may not be defined and calculated by other companies in the same manner .
roic should not be considered in isola- tion or as an alternative to net earnings as an indicator of performance .
the following calculations of roic reflect the revision to the calculation discussed above for all periods presented .
( in millions ) 2005 2004 2003 2002 2001 .

( in millions )                                   | 2005             | 2004             | 2003           | 2002           | 2001
------------------------------------------------- | ---------------- | ---------------- | -------------- | -------------- | ----------------
net earnings                                      | $ 1825           | $ 1266           | $ 1053         | $ 500          | $ -1046 ( 1046 )
interest expense ( multiplied by 65% ( 65 % ) ) 1 | 241              | 276              | 317            | 378            | 455
return                                            | $ 2066           | $ 1542           | $ 1370         | $ 878          | $ -591 ( 591 )
average debt2 5                                   | $ 5077           | $ 5932           | $ 6612         | $ 7491         | $ 8782
average equity3 5                                 | 7590             | 7015             | 6170           | 6853           | 7221
average minimum pension liability3 4 5            | 1545             | 1296             | 1504           | 341            | 6
average invested capital                          | $ 14212          | $ 14243          | $ 14286        | $ 14685        | $ 16009
return on invested capital                        | 14.5% ( 14.5 % ) | 10.8% ( 10.8 % ) | 9.6% ( 9.6 % ) | 6.0% ( 6.0 % ) | ( 3.7 ) % (  % )

1 represents after-tax interest expense utilizing the federal statutory rate of 35% ( 35 % ) .
2 debt consists of long-term debt , including current maturities , and short-term borrowings ( if any ) .
3 equity includes non-cash adjustments for other comprehensive losses , primarily for the additional minimum pension liability .
4 minimum pension liability values reflect the cumulative value of entries identified in our statement of stockholders equity under the caption 201cminimum pension liability . 201d the annual minimum pension liability adjustments to equity were : 2001 = ( $ 33 million ) ; 2002 = ( $ 1537 million ) ; 2003 = $ 331 million ; 2004 = ( $ 285 million ) ; 2005 = ( $ 105 million ) .
as these entries are recorded in the fourth quarter , the value added back to our average equity in a given year is the cumulative impact of all prior year entries plus 20% ( 20 % ) of the cur- rent year entry value .
5 yearly averages are calculated using balances at the start of the year and at the end of each quarter .
lockheed martin corporation


shareholder return performance presentation the graph presented below compares the cumulative total shareholder return on state street's common stock to the cumulative total return of the s&p 500 index and the s&p financial index over a five-year period .
the cumulative total shareholder return assumes the investment of $ 100 in state street common stock and in each index on december 31 , 2007 at the closing price on the last trading day of 2007 , and also assumes reinvestment of common stock dividends .
the s&p financial index is a publicly available measure of 80 of the standard & poor's 500 companies , representing 26 diversified financial services companies , 22 insurance companies , 17 real estate companies and 15 banking companies .
comparison of five-year cumulative total shareholder return .

                         | 2007  | 2008 | 2009 | 2010 | 2011 | 2012
------------------------ | ----- | ---- | ---- | ---- | ---- | ----
state street corporation | $ 100 | $ 49 | $ 55 | $ 58 | $ 52 | $ 61
s&p 500 index            | 100   | 63   | 80   | 92   | 94   | 109
s&p financial index      | 100   | 45   | 52   | 59   | 49   | 63


part ii item 5 .
market for registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities the following table presents reported quarterly high and low per share sale prices of our common stock on the nyse for the years 2015 and 2014. .

2015                       | high     | low
-------------------------- | -------- | -------
quarter ended march 31     | $ 101.88 | $ 93.21
quarter ended june 30      | 98.64    | 91.99
quarter ended september 30 | 101.54   | 86.83
quarter ended december 31  | 104.12   | 87.23
2014                       | high     | low
quarter ended march 31     | $ 84.90  | $ 78.38
quarter ended june 30      | 90.73    | 80.10
quarter ended september 30 | 99.90    | 89.05
quarter ended december 31  | 106.31   | 90.20

on february 19 , 2016 , the closing price of our common stock was $ 87.32 per share as reported on the nyse .
as of february 19 , 2016 , we had 423897556 outstanding shares of common stock and 159 registered holders .
dividends as a reit , we must annually distribute to our stockholders an amount equal to at least 90% ( 90 % ) of our reit taxable income ( determined before the deduction for distributed earnings and excluding any net capital gain ) .
generally , we have distributed and expect to continue to distribute all or substantially all of our reit taxable income after taking into consideration our utilization of net operating losses ( 201cnols 201d ) .
we have two series of preferred stock outstanding , 5.25% ( 5.25 % ) mandatory convertible preferred stock , series a , issued in may 2014 ( the 201cseries a preferred stock 201d ) , with a dividend rate of 5.25% ( 5.25 % ) , and the 5.50% ( 5.50 % ) mandatory convertible preferred stock , series b ( the 201cseries b preferred stock 201d ) , issued in march 2015 , with a dividend rate of 5.50% ( 5.50 % ) .
dividends are payable quarterly in arrears , subject to declaration by our board of directors .
the amount , timing and frequency of future distributions will be at the sole discretion of our board of directors and will be dependent upon various factors , a number of which may be beyond our control , including our financial condition and operating cash flows , the amount required to maintain our qualification for taxation as a reit and reduce any income and excise taxes that we otherwise would be required to pay , limitations on distributions in our existing and future debt and preferred equity instruments , our ability to utilize nols to offset our distribution requirements , limitations on our ability to fund distributions using cash generated through our trss and other factors that our board of directors may deem relevant .
we have distributed an aggregate of approximately $ 2.3 billion to our common stockholders , including the dividend paid in january 2016 , primarily subject to taxation as ordinary income .
during the year ended december 31 , 2015 , we declared the following cash distributions:


reinvested for continued use in foreign operations .
if the total undistributed earnings of foreign subsidiaries were remitted , a significant amount of the additional tax would be offset by the allowable foreign tax credits .
it is not practical for us to determine the additional tax of remitting these earnings .
in september 2007 , we reached a settlement with the united states department of justice to resolve an investigation into financial relationships between major orthopaedic manufacturers and consulting orthopaedic surgeons .
under the terms of the settlement , we paid a civil settlement amount of $ 169.5 million and we recorded an expense in that amount .
at the time , no tax benefit was recorded related to the settlement expense due to the uncertainty as to the tax treatment .
during the third quarter of 2008 , we reached an agreement with the u.s .
internal revenue service ( irs ) confirming the deductibility of a portion of the settlement payment .
as a result , during 2008 we recorded a current tax benefit of $ 31.7 million .
in june 2006 , the financial accounting standards board ( fasb ) issued interpretation no .
48 , accounting for uncertainty in income taxes 2013 an interpretation of fasb statement no .
109 , accounting for income taxes ( fin 48 ) .
fin 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements .
under fin 48 , we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities , based on the technical merits of the position .
the tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement .
fin 48 also provides guidance on derecognition , classification , interest and penalties on income taxes , accounting in interim periods and requires increased disclosures .
we adopted fin 48 on january 1 , 2007 .
prior to the adoption of fin 48 we had a long term tax liability for expected settlement of various federal , state and foreign income tax liabilities that was reflected net of the corollary tax impact of these expected settlements of $ 102.1 million , as well as a separate accrued interest liability of $ 1.7 million .
as a result of the adoption of fin 48 , we are required to present the different components of such liability on a gross basis versus the historical net presentation .
the adoption resulted in the financial statement liability for unrecognized tax benefits decreasing by $ 6.4 million as of january 1 , 2007 .
the adoption resulted in this decrease in the liability as well as a reduction to retained earnings of $ 4.8 million , a reduction in goodwill of $ 61.4 million , the establishment of a tax receivable of $ 58.2 million , which was recorded in other current and non-current assets on our consolidated balance sheet , and an increase in an interest/penalty payable of $ 7.9 million , all as of january 1 , 2007 .
therefore , after the adoption of fin 48 , the amount of unrecognized tax benefits is $ 95.7 million as of january 1 , 2007 .
as of december 31 , 2008 , the amount of unrecognized tax benefits is $ 129.5 million .
of this amount , $ 45.5 million would impact our effective tax rate if recognized .
$ 38.2 million of the $ 129.5 million liability for unrecognized tax benefits relate to tax positions of acquired entities taken prior to their acquisition by us .
under fas 141 ( r ) , if these liabilities are settled for different amounts , they will affect the income tax expense in the period of reversal or settlement .
the following is a tabular reconciliation of the total amounts of unrecognized tax benefits ( in millions ) : .

                                                         | 2008           | 2007
-------------------------------------------------------- | -------------- | ------------
balance at january 1                                     | $ 135.2        | $ 95.7
increases related to prior periods                       | 12.1           | 27.4
decreases related to prior periods                       | -32.0 ( 32.0 ) | -5.5 ( 5.5 )
increases related to current period                      | 15.8           | 21.9
decreases related to settlements with taxing authorities | -1.3 ( 1.3 )   | -1.3 ( 1.3 )
decreases related to lapse of statue of limitations      | -0.3 ( 0.3 )   | -3.0 ( 3.0 )
balance at december 31                                   | $ 129.5        | $ 135.2

we recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of earnings , which is consistent with the recognition of these items in prior reporting periods .
as of december 31 , 2007 , we recorded a liability of $ 19.6 million for accrued interest and penalties , of which $ 14.7 million would impact our effective tax rate , if recognized .
the amount of this liability is $ 22.9 million as of december 31 , 2008 .
of this amount , $ 17.1 million would impact our effective tax rate , if recognized .
we expect that the amount of tax liability for unrecognized tax benefits will change in the next twelve months ; however , we do not expect these changes will have a significant impact on our results of operations or financial position .
the u.s .
federal statute of limitations remains open for the year 2003 and onward .
the u.s .
federal returns for years 2003 and 2004 are currently under examination by the irs .
on july 15 , 2008 , the irs issued its examination report .
we filed a formal protest on august 15 , 2008 and requested a conference with the appeals office regarding disputed issues .
although the appeals process could take several years , we do not anticipate resolution of the audit will result in any significant impact on our results of operations , financial position or cash flows .
in addition , for the 1999 tax year of centerpulse , which we acquired in october 2003 , one issue remains in dispute .
state income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the respective return .
the state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states .
we have various state income tax returns in the process of examination , administrative appeals or litigation .
it is z i m m e r h o l d i n g s , i n c .
2 0 0 8 f o r m 1 0 - k a n n u a l r e p o r t notes to consolidated financial statements ( continued ) %%transmsg*** transmitting job : c48761 pcn : 057000000 ***%%pcmsg|57 |00010|yes|no|02/24/2009 06:10|0|0|page is valid , no graphics -- color : d|


stock options 2005 stock and incentive plan in june 2005 , the stockholders of the company approved the 2005 stock and incentive plan ( the 2005 stock plan ) .
upon adoption of the 2005 stock plan , issuance of options under the company 2019s existing 2000 stock plan ceased .
additionally , in connection with the acquisition of solexa , the company assumed stock options granted under the 2005 solexa equity incentive plan ( the 2005 solexa equity plan ) .
as of december 30 , 2007 , an aggregate of up to 13485619 shares of the company 2019s common stock were reserved for issuance under the 2005 stock plan and the 2005 solexa equity plan .
the 2005 stock plan provides for an automatic annual increase in the shares reserved for issuance by the lesser of 5% ( 5 % ) of outstanding shares of the company 2019s common stock on the last day of the immediately preceding fiscal year , 1200000 shares or such lesser amount as determined by the company 2019s board of directors .
as of december 30 , 2007 , options to purchase 1834384 shares remained available for future grant under the 2005 stock plan and 2005 solexa equity plan .
the company 2019s stock option activity under all stock option plans from january 2 , 2005 through december 30 , 2007 is as follows : options weighted- average exercise price .

                                             | options              | weighted- average exercise price
-------------------------------------------- | -------------------- | --------------------------------
outstanding at january 2 2005                | 6205020              | $ 6.99
granted                                      | 2992300              | $ 10.02
exercised                                    | -869925 ( 869925 )   | $ 4.66
cancelled                                    | -1001964 ( 1001964 ) | $ 11.00
outstanding at january 1 2006                | 7325431              | $ 7.96
granted                                      | 2621050              | $ 27.24
exercised                                    | -1273119 ( 1273119 ) | $ 7.28
cancelled                                    | -314242 ( 314242 )   | $ 12.44
outstanding at december 31 2006              | 8359120              | $ 13.94
options assumed through business combination | 1424332              | $ 21.37
granted                                      | 3784508              | $ 40.64
exercised                                    | -2179286 ( 2179286 ) | $ 12.06
cancelled                                    | -964740 ( 964740 )   | $ 22.38
outstanding at december 30 2007              | 10423934             | $ 24.26

illumina , inc .
notes to consolidated financial statements 2014 ( continued )


38 2015 ppg annual report and form 10-k notes to the consolidated financial statements 1 .
summary of significant accounting policies principles of consolidation the accompanying consolidated financial statements include the accounts of ppg industries , inc .
( 201cppg 201d or the 201ccompany 201d ) and all subsidiaries , both u.s .
and non-u.s. , that it controls .
ppg owns more than 50% ( 50 % ) of the voting stock of most of the subsidiaries that it controls .
for those consolidated subsidiaries in which the company 2019s ownership is less than 100% ( 100 % ) , the outside shareholders 2019 interests are shown as noncontrolling interests .
investments in companies in which ppg owns 20% ( 20 % ) to 50% ( 50 % ) of the voting stock and has the ability to exercise significant influence over operating and financial policies of the investee are accounted for using the equity method of accounting .
as a result , ppg 2019s share of the earnings or losses of such equity affiliates is included in the accompanying consolidated statement of income and ppg 2019s share of these companies 2019 shareholders 2019 equity is included in 201cinvestments 201d in the accompanying consolidated balance sheet .
transactions between ppg and its subsidiaries are eliminated in consolidation .
use of estimates in the preparation of financial statements the preparation of financial statements in conformity with u.s .
generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported amounts of income and expenses during the reporting period .
such estimates also include the fair value of assets acquired and liabilities assumed resulting from the allocation of the purchase price related to business combinations consummated .
actual outcomes could differ from those estimates .
revenue recognition the company recognizes revenue when the earnings process is complete .
revenue from sales is recognized by all operating segments when goods are shipped and title to inventory and risk of loss passes to the customer or when services have been rendered .
shipping and handling costs amounts billed to customers for shipping and handling are reported in 201cnet sales 201d in the accompanying consolidated statement of income .
shipping and handling costs incurred by the company for the delivery of goods to customers are included in 201ccost of sales , exclusive of depreciation and amortization 201d in the accompanying consolidated statement of income .
selling , general and administrative costs amounts presented as 201cselling , general and administrative 201d in the accompanying consolidated statement of income are comprised of selling , customer service , distribution and advertising costs , as well as the costs of providing corporate- wide functional support in such areas as finance , law , human resources and planning .
distribution costs pertain to the movement and storage of finished goods inventory at company- owned and leased warehouses , terminals and other distribution facilities .
advertising costs advertising costs are expensed as incurred and totaled $ 324 million , $ 297 million and $ 235 million in 2015 , 2014 and 2013 , respectively .
research and development research and development costs , which consist primarily of employee related costs , are charged to expense as incurred. .

( $ in millions )                        | 2015  | 2014  | 2013
---------------------------------------- | ----- | ----- | -----
research and development 2013 total      | $ 505 | $ 509 | $ 479
less depreciation on research facilities | 19    | 17    | 16
research and development net             | $ 486 | $ 492 | $ 463

legal costs legal costs , primarily include costs associated with acquisition and divestiture transactions , general litigation , environmental regulation compliance , patent and trademark protection and other general corporate purposes , are charged to expense as incurred .
foreign currency translation the functional currency of most significant non-u.s .
operations is their local currency .
assets and liabilities of those operations are translated into u.s .
dollars using year-end exchange rates ; income and expenses are translated using the average exchange rates for the reporting period .
unrealized foreign currency translation adjustments are deferred in accumulated other comprehensive loss , a separate component of shareholders 2019 equity .
cash equivalents cash equivalents are highly liquid investments ( valued at cost , which approximates fair value ) acquired with an original maturity of three months or less .
short-term investments short-term investments are highly liquid , high credit quality investments ( valued at cost plus accrued interest ) that have stated maturities of greater than three months to one year .
the purchases and sales of these investments are classified as investing activities in the consolidated statement of cash flows .
marketable equity securities the company 2019s investment in marketable equity securities is recorded at fair market value and reported in 201cother current assets 201d and 201cinvestments 201d in the accompanying consolidated balance sheet with changes in fair market value recorded in income for those securities designated as trading securities and in other comprehensive income , net of tax , for those designated as available for sale securities.


expenditures and acquisitions of leased properties are funded by the original contributor of the assets , but no change in ownership interest may result from these contributions .
an excess of ashland funded improvements over marathon funded improvements results in a net gain and an excess of marathon funded improvements over ashland funded improvements results in a net loss .
cost of revenues increased by $ 8.718 billion in 2003 from 2002 and $ 367 million in 2002 from 2001 .
the increases in the oerb segment were primarily a result of higher natural gas and liquid hydrocarbon costs .
the increases in the rm&t segment primarily reflected higher acquisition costs for crude oil , refined products , refinery charge and blend feedstocks and increased manufacturing expenses .
selling , general and administrative expenses increased by $ 107 million in 2003 from 2002 and $ 125 million in 2002 from 2001 .
the increase in 2003 was primarily a result of increased employee benefits ( caused by increased pension expense resulting from changes in actuarial assumptions and a decrease in realized returns on plan assets ) and other employee related costs .
also , marathon changed assumptions in the health care cost trend rate from 7.5% ( 7.5 % ) to 10% ( 10 % ) , resulting in higher retiree health care costs .
additionally , during 2003 , marathon recorded a charge of $ 24 million related to organizational and business process changes .
the increase in 2002 primarily reflected increased employee related costs .
inventory market valuation reserve is established to reduce the cost basis of inventories to current market value .
the 2002 results of operations include credits to income from operations of $ 71 million , reversing the imv reserve at december 31 , 2001 .
for additional information on this adjustment , see 201cmanagement 2019s discussion and analysis of critical accounting estimates 2013 net realizable value of inventories 201d on page 31 .
net interest and other financial costs decreased by $ 82 million in 2003 from 2002 , following an increase of $ 96 million in 2002 from 2001 .
the decrease in 2003 is primarily due to an increase in capitalized interest related to increased long-term construction projects , the favorable effect of interest rate swaps , the favorable effect of interest on tax deficiencies and increased interest income on investments .
the increase in 2002 was primarily due to higher average debt levels resulting from acquisitions and the separation .
additionally , included in net interest and other financing costs are foreign currency gains of $ 13 million and $ 8 million for 2003 and 2002 and losses of $ 5 million for 2001 .
loss from early extinguishment of debt in 2002 was attributable to the retirement of $ 337 million aggregate principal amount of debt , resulting in a loss of $ 53 million .
as a result of the adoption of statement of financial accounting standards no .
145 201crescission of fasb statements no .
4 , 44 , and 64 , amendment of fasb statement no .
13 , and technical corrections 201d ( 201csfas no .
145 201d ) , the loss from early extinguishment of debt that was previously reported as an extraordinary item ( net of taxes of $ 20 million ) has been reclassified into income before income taxes .
the adoption of sfas no .
145 had no impact on net income for 2002 .
minority interest in income of map , which represents ashland 2019s 38 percent ownership interest , increased by $ 129 million in 2003 from 2002 , following a decrease of $ 531 million in 2002 from 2001 .
map income was higher in 2003 compared to 2002 as discussed below in the rm&t segment .
map income was significantly lower in 2002 compared to 2001 as discussed below in the rm&t segment .
provision for income taxes increased by $ 215 million in 2003 from 2002 , following a decrease of $ 458 million in 2002 from 2001 , primarily due to $ 720 million increase and $ 1.356 billion decrease in income before income taxes .
the effective tax rate for 2003 was 36.6% ( 36.6 % ) compared to 42.1% ( 42.1 % ) and 37.1% ( 37.1 % ) for 2002 and 2001 .
the higher rate in 2002 was due to the united kingdom enactment of a supplementary 10 percent tax on profits from the north sea oil and gas production , retroactively effective to april 17 , 2002 .
in 2002 , marathon recognized a one-time noncash deferred tax adjustment of $ 61 million as a result of the rate increase .
the following is an analysis of the effective tax rate for the periods presented: .

                                                              | 2003             | 2002             | 2001
------------------------------------------------------------- | ---------------- | ---------------- | ----------------
statutory tax rate                                            | 35.0% ( 35.0 % ) | 35.0% ( 35.0 % ) | 35.0% ( 35.0 % )
effects of foreign operations ( a )                           | -0.4 ( 0.4 )     | 5.6              | -0.7 ( 0.7 )
state and local income taxes after federal income tax effects | 2.2              | 3.9              | 3.0
other federal tax effects                                     | -0.2 ( 0.2 )     | -2.4 ( 2.4 )     | -0.2 ( 0.2 )
effective tax rate                                            | 36.6% ( 36.6 % ) | 42.1% ( 42.1 % ) | 37.1% ( 37.1 % )

( a ) the deferred tax effect related to the enactment of a supplemental tax in the u.k .
increased the effective tax rate 7.0 percent in 2002.


17 .
leases we lease certain locomotives , freight cars , and other property .
the consolidated statements of financial position as of december 31 , 2017 , and 2016 included $ 1635 million , net of $ 953 million of accumulated depreciation , and $ 1997 million , net of $ 1121 million of accumulated depreciation , respectively , for properties held under capital leases .
a charge to income resulting from the depreciation for assets held under capital leases is included within depreciation expense in our consolidated statements of income .
future minimum lease payments for operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of december 31 , 2017 , were as follows : millions operating leases capital leases .

millions                                | operatingleases | capitalleases
--------------------------------------- | --------------- | -------------
2018                                    | $ 398           | $ 173
2019                                    | 359             | 156
2020                                    | 297             | 164
2021                                    | 259             | 168
2022                                    | 221             | 147
later years                             | 1115            | 271
total minimum lease payments            | $ 2649          | $ 1079
amount representing interest            | n/a             | -187 ( 187 )
present value of minimum lease payments | n/a             | $ 892

approximately 97% ( 97 % ) of capital lease payments relate to locomotives .
rent expense for operating leases with terms exceeding one month was $ 480 million in 2017 , $ 535 million in 2016 , and $ 590 million in 2015 .
when cash rental payments are not made on a straight-line basis , we recognize variable rental expense on a straight-line basis over the lease term .
contingent rentals and sub-rentals are not significant .
18 .
commitments and contingencies asserted and unasserted claims 2013 various claims and lawsuits are pending against us and certain of our subsidiaries .
we cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations , financial condition , or liquidity .
to the extent possible , we have recorded a liability where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated .
we do not expect that any known lawsuits , claims , environmental costs , commitments , contingent liabilities , or guarantees will have a material adverse effect on our consolidated results of operations , financial condition , or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters .
personal injury 2013 the cost of personal injuries to employees and others related to our activities is charged to expense based on estimates of the ultimate cost and number of incidents each year .
we use an actuarial analysis to measure the expense and liability , including unasserted claims .
the federal employers 2019 liability act ( fela ) governs compensation for work-related accidents .
under fela , damages are assessed based on a finding of fault through litigation or out-of-court settlements .
we offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work .
our personal injury liability is not discounted to present value due to the uncertainty surrounding the timing of future payments .
approximately 95% ( 95 % ) of the recorded liability is related to asserted claims and approximately 5% ( 5 % ) is related to unasserted claims at december 31 , 2017 .
because of the uncertainty surrounding the ultimate outcome of personal injury claims , it is reasonably possible that future costs to settle these claims may range from approximately $ 285 million to $ 310 million .
we record an accrual at the low end of the range as no amount of loss within the range is more probable than any other .
estimates can vary over time due to evolving trends in litigation.


notes to consolidated financial statements investments in funds that calculate net asset value per share cash instruments at fair value include investments in funds that are valued based on the net asset value per share ( nav ) of the investment fund .
the firm uses nav as its measure of fair value for fund investments when ( i ) the fund investment does not have a readily determinable fair value and ( ii ) the nav of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting , including measurement of the underlying investments at fair value .
the firm 2019s investments in funds that calculate nav primarily consist of investments in firm-sponsored funds where the firm co-invests with third-party investors .
the private equity , credit and real estate funds are primarily closed-end funds in which the firm 2019s investments are not eligible for redemption .
distributions will be received from these funds as the underlying assets are liquidated and it is estimated that substantially all of the underlying assets of existing funds will be liquidated over the next seven years .
the firm continues to manage its existing funds taking into account the transition periods under the volcker rule of the u.s .
dodd-frank wall street reform and consumer protection act ( dodd-frank act ) , although the rules have not yet been finalized .
the firm 2019s investments in hedge funds are generally redeemable on a quarterly basis with 91 days 2019 notice , subject to a maximum redemption level of 25% ( 25 % ) of the firm 2019s initial investments at any quarter-end .
the firm currently plans to comply with the volcker rule by redeeming certain of its interests in hedge funds .
the firm redeemed approximately $ 1.06 billion of these interests in hedge funds during the year ended december 2012 .
the table below presents the fair value of the firm 2019s investments in , and unfunded commitments to , funds that calculate nav. .

in millions           | as of december 2012 fair value of investments | as of december 2012 unfunded commitments | as of december 2012 fair value of investments | unfunded commitments
--------------------- | --------------------------------------------- | ---------------------------------------- | --------------------------------------------- | --------------------
private equity funds1 | $ 7680                                        | $ 2778                                   | $ 8074                                        | $ 3514
credit funds2         | 3927                                          | 2843                                     | 3596                                          | 3568
hedge funds3          | 2167                                          | 2014                                     | 3165                                          | 2014
real estatefunds4     | 2006                                          | 870                                      | 1531                                          | 1613
total                 | $ 15780                                       | $ 6491                                   | $ 16366                                       | $ 8695

1 .
these funds primarily invest in a broad range of industries worldwide in a variety of situations , including leveraged buyouts , recapitalizations and growth investments .
2 .
these funds generally invest in loans and other fixed income instruments and are focused on providing private high-yield capital for mid- to large-sized leveraged and management buyout transactions , recapitalizations , financings , refinancings , acquisitions and restructurings for private equity firms , private family companies and corporate issuers .
3 .
these funds are primarily multi-disciplinary hedge funds that employ a fundamental bottom-up investment approach across various asset classes and strategies including long/short equity , credit , convertibles , risk arbitrage , special situations and capital structure arbitrage .
4 .
these funds invest globally , primarily in real estate companies , loan portfolios , debt recapitalizations and direct property .
goldman sachs 2012 annual report 127


35% ( 35 % ) due primarily to certain undistributed foreign earnings for which no u.s .
taxes are provided because such earnings are intended to be indefinitely reinvested outside the u.s .
as of september 29 , 2012 , the company had deferred tax assets arising from deductible temporary differences , tax losses , and tax credits of $ 4.0 billion , and deferred tax liabilities of $ 14.9 billion .
management believes it is more likely than not that forecasted income , including income that may be generated as a result of certain tax planning strategies , together with future reversals of existing taxable temporary differences , will be sufficient to fully recover the deferred tax assets .
the company will continue to evaluate the realizability of deferred tax assets quarterly by assessing the need for and amount of a valuation allowance .
the internal revenue service ( the 201cirs 201d ) has completed its field audit of the company 2019s federal income tax returns for the years 2004 through 2006 and proposed certain adjustments .
the company has contested certain of these adjustments through the irs appeals office .
the irs is currently examining the years 2007 through 2009 .
all irs audit issues for years prior to 2004 have been resolved .
in addition , the company is subject to audits by state , local , and foreign tax authorities .
management believes that adequate provisions have been made for any adjustments that may result from tax examinations .
however , the outcome of tax audits cannot be predicted with certainty .
if any issues addressed in the company 2019s tax audits are resolved in a manner not consistent with management 2019s expectations , the company could be required to adjust its provision for income taxes in the period such resolution occurs .
liquidity and capital resources the following table presents selected financial information and statistics as of and for the years ended september 29 , 2012 , september 24 , 2011 , and september 25 , 2010 ( in millions ) : .

                                                | 2012     | 2011    | 2010
----------------------------------------------- | -------- | ------- | -------
cash cash equivalents and marketable securities | $ 121251 | $ 81570 | $ 51011
accounts receivable net                         | $ 10930  | $ 5369  | $ 5510
inventories                                     | $ 791    | $ 776   | $ 1051
working capital                                 | $ 19111  | $ 17018 | $ 20956
annual operating cash flow                      | $ 50856  | $ 37529 | $ 18595

as of september 29 , 2012 , the company had $ 121.3 billion in cash , cash equivalents and marketable securities , an increase of $ 39.7 billion or 49% ( 49 % ) from september 24 , 2011 .
the principal components of this net increase was the cash generated by operating activities of $ 50.9 billion , which was partially offset by payments for acquisition of property , plant and equipment of $ 8.3 billion , payments for acquisition of intangible assets of $ 1.1 billion and payments of dividends and dividend equivalent rights of $ 2.5 billion .
the company 2019s marketable securities investment portfolio is invested primarily in highly-rated securities and its investment policy generally limits the amount of credit exposure to any one issuer .
the policy requires investments generally to be investment grade with the objective of minimizing the potential risk of principal loss .
as of september 29 , 2012 and september 24 , 2011 , $ 82.6 billion and $ 54.3 billion , respectively , of the company 2019s cash , cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in u.s .
dollar-denominated holdings .
amounts held by foreign subsidiaries are generally subject to u.s .
income taxation on repatriation to the u.s .
the company believes its existing balances of cash , cash equivalents and marketable securities will be sufficient to satisfy its working capital needs , capital asset purchases , outstanding commitments , common stock repurchases , dividends on its common stock , and other liquidity requirements associated with its existing operations over the next 12 months .
capital assets the company 2019s capital expenditures were $ 10.3 billion during 2012 , consisting of $ 865 million for retail store facilities and $ 9.5 billion for other capital expenditures , including product tooling and manufacturing process


packaging corporation of america notes to consolidated financial statements ( continued ) december 31 , 2005 9 .
shareholders 2019 equity ( continued ) stockholder received proceeds , net of the underwriting discount , of $ 20.69 per share .
the company did not sell any shares in , or receive any proceeds from , the secondary offering .
concurrent with the closing of the secondary offering on december 21 , 2005 , the company entered into a common stock repurchase agreement with pca holdings llc .
pursuant to the repurchase agreement , the company purchased 4500000 shares of common stock directly from pca holdings llc at the initial price to the public net of the underwriting discount or $ 20.69 per share , the same net price per share received by pca holdings llc in the secondary offering .
these shares were retired on december 21 , 2005 .
10 .
commitments and contingencies capital commitments the company had authorized capital expenditures of approximately $ 33.1 million and $ 55.2 million as of december 31 , 2005 and 2004 , respectively , in connection with the expansion and replacement of existing facilities and equipment .
operating leases pca leases space for certain of its facilities and cutting rights to approximately 108000 acres of timberland under long-term leases .
the company also leases equipment , primarily vehicles and rolling stock , and other assets under long-term leases of a duration generally of three years .
the minimum lease payments under non-cancelable operating leases with lease terms in excess of one year are as follows : ( in thousands ) .

2006       | $ 24569
---------- | --------
2007       | 21086
2008       | 14716
2009       | 9801
2010       | 6670
thereafter | 37130
total      | $ 113972

capital lease obligations were not significant to the accompanying financial statements .
total lease expense , including base rent on all leases and executory costs , such as insurance , taxes , and maintenance , for the years ended december 31 , 2005 , 2004 and 2003 was $ 35.8 million , $ 33.0 million and $ 31.6 million , respectively .
these costs are included in cost of goods sold and selling and administrative expenses.


key operating and financial activities significant operating and financial activities during 2012 include : 2022 net proved reserve additions for the e&p and osm segments combined of 389 mmboe , for a 226 percent reserve replacement 2022 increased proved liquid hydrocarbon and synthetic crude oil reserves by 316 mmbbls , for a reserve replacement of 268 percent for these commodities 2022 recorded more than 95 percent average operational availability for operated e&p assets 2022 increased e&p net sales volumes , excluding libya , by 8 percent 2022 eagle ford shale average net sales volumes of 65 mboed for december 2012 , a fourfold increase over december 2011 2022 bakken shale average net sales volumes of 29 mboed , a 71 percent increase over last year 2022 resumed sales from libya and reached pre-conflict production levels 2022 international liquid hydrocarbon sales volumes , for which average realizations have exceeded wti , were 62 percent of net e&p liquid hydrocarbon sales 2022 closed $ 1 billion of acquisitions in the core of the eagle ford shale 2022 assumed operatorship of the vilje field located offshore norway 2022 signed agreements for new exploration positions in e.g. , gabon , kenya and ethiopia 2022 issued $ 1 billion of 3-year senior notes at 0.9 percent interest and $ 1 billion of 10-year senior notes at 2.8 percent interest some significant 2013 activities through february 22 , 2013 include : 2022 closed sale of our alaska assets in january 2013 2022 closed sale of our interest in the neptune gas plant in february 2013 consolidated results of operations : 2012 compared to 2011 consolidated income before income taxes was 38 percent higher in 2012 than consolidated income from continuing operations before income taxes were in 2011 , largely due to higher liquid hydrocarbon sales volumes in our e&p segment , partially offset by lower earnings from our osm and ig segments .
the 7 percent decrease in income from continuing operations included lower earnings in the u.k .
and e.g. , partially offset by higher earnings in libya .
also , in 2011 we were not in an excess foreign tax credit position for the entire year as we were in 2012 .
the effective income tax rate for continuing operations was 74 percent in 2012 compared to 61 percent in 2011 .
revenues are summarized in the following table: .

( in millions )                                     | 2012    | 2011
--------------------------------------------------- | ------- | ----------
e&p                                                 | $ 14084 | $ 13029
osm                                                 | 1552    | 1588
ig                                                  | 2014    | 93
segment revenues                                    | 15636   | 14710
elimination of intersegment revenues                | 2014    | -47 ( 47 )
unrealized gain on crude oil derivative instruments | 52      | 2014
total revenues                                      | $ 15688 | $ 14663

e&p segment revenues increased $ 1055 million from 2011 to 2012 , primarily due to higher average liquid hydrocarbon sales volumes .
e&p segment revenues included a net realized gain on crude oil derivative instruments of $ 15 million in 2012 while the impact of derivatives was not significant in 2011 .
see item 8 .
financial statements and supplementary data 2013 note 16 to the consolidated financial statement for more information about our crude oil derivative instruments .
included in our e&p segment are supply optimization activities which include the purchase of commodities from third parties for resale .
see the cost of revenues discussion as revenues from supply optimization approximate the related costs .
supply optimization serves to aggregate volumes in order to satisfy transportation commitments and to achieve flexibility within product


the regulatory credit resulting from reduction of the federal corporate income tax rate variance is due to the reduction of the vidalia purchased power agreement regulatory liability by $ 30.5 million and the reduction of the louisiana act 55 financing savings obligation regulatory liabilities by $ 25 million as a result of the enactment of the tax cuts and jobs act , in december 2017 , which lowered the federal corporate income tax rate from 35% ( 35 % ) to 21% ( 21 % ) .
the effects of the tax cuts and jobs act are discussed further in note 3 to the financial statements .
the grand gulf recovery variance is primarily due to increased recovery of higher operating costs .
the louisiana act 55 financing savings obligation variance results from a regulatory charge in 2016 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 .
the volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales , partially offset by an increase in industrial usage .
the increase in industrial usage is primarily due to new customers in the primary metals industry and expansion projects and an increase in demand for existing customers in the chlor-alkali industry .
entergy wholesale commodities following is an analysis of the change in net revenue comparing 2017 to 2016 .
amount ( in millions ) .

                                    | amount ( in millions )
----------------------------------- | ----------------------
2016 net revenue                    | $ 1542
fitzpatrick sale                    | -158 ( 158 )
nuclear volume                      | -89 ( 89 )
fitzpatrick reimbursement agreement | 57
nuclear fuel expenses               | 108
other                               | 9
2017 net revenue                    | $ 1469

as shown in the table above , net revenue for entergy wholesale commodities decreased by approximately $ 73 million in 2017 primarily due to the absence of net revenue from the fitzpatrick plant after it was sold to exelon in march 2017 and lower volume in the entergy wholesale commodities nuclear fleet resulting from more outage days in 2017 as compared to 2016 .
the decrease was partially offset by an increase resulting from the reimbursement agreement with exelon pursuant to which exelon reimbursed entergy for specified out-of-pocket costs associated with preparing for the refueling and operation of fitzpatrick that otherwise would have been avoided had entergy shut down fitzpatrick in january 2017 and a decrease in nuclear fuel expenses primarily related to the impairments of the indian point 2 , indian point 3 , and palisades plants and related assets .
revenues received from exelon in 2017 under the reimbursement agreement are offset by other operation and maintenance expenses and taxes other than income taxes and had no effect on net income .
see note 14 to the financial statements for discussion of the sale of fitzpatrick , the reimbursement agreement with exelon , and the impairments and related charges .
entergy corporation and subsidiaries management 2019s financial discussion and analysis


measurement point december 31 booking holdings nasdaq composite index s&p 500 rdg internet composite .

measurement pointdecember 31 | booking holdings inc . | nasdaqcomposite index | s&p 500index | rdg internetcomposite
---------------------------- | ---------------------- | --------------------- | ------------ | ---------------------
2012                         | 100.00                 | 100.00                | 100.00       | 100.00
2013                         | 187.37                 | 141.63                | 132.39       | 163.02
2014                         | 183.79                 | 162.09                | 150.51       | 158.81
2015                         | 205.51                 | 173.33                | 152.59       | 224.05
2016                         | 236.31                 | 187.19                | 170.84       | 235.33
2017                         | 280.10                 | 242.29                | 208.14       | 338.52

sales of unregistered securities between october 1 , 2017 and december 31 , 2017 , we issued 103343 shares of our common stock in connection with the conversion of $ 196.1 million principal amount of our 1.0% ( 1.0 % ) convertible senior notes due 2018 .
the conversions were effected in accordance with the indenture , which provides that the principal amount of converted notes be paid in cash and the conversion premium be paid in cash and/or shares of common stock at our election .
in each case , we chose to pay the conversion premium in shares of common stock ( fractional shares are paid in cash ) .
the issuances of the shares were not registered under the securities act of 1933 , as amended ( the "act" ) pursuant to section 3 ( a ) ( 9 ) of the act.


we maintain an effective universal shelf registration that allows for the public offering and sale of debt securities , capital securities , common stock , depositary shares and preferred stock , and warrants to purchase such securities , including any shares into which the preferred stock and depositary shares may be convertible , or any combination thereof .
we have , as discussed previously , issued in the past , and we may issue in the future , securities pursuant to the shelf registration .
the issuance of debt or equity securities will depend on future market conditions , funding needs and other factors .
additional information about debt and equity securities issued pursuant to this shelf registration is provided in notes 9 and 12 to the consolidated financial statements included under item 8 .
we currently maintain a corporate commercial paper program , under which we can issue up to $ 3 billion with original maturities of up to 270 days from the date of issue .
at december 31 , 2011 , we had $ 2.38 billion of commercial paper outstanding , compared to $ 2.80 billion at december 31 , 2010 .
additional information about our corporate commercial paper program is provided in note 8 to the consolidated financial statements included under item 8 .
state street bank had initial board authority to issue bank notes up to an aggregate of $ 5 billion , including up to $ 1 billion of subordinated bank notes .
approximately $ 2.05 billion was available under this board authority as of december 31 , 2011 .
in 2011 , $ 2.45 billion of senior notes , which were outstanding at december 31 , 2010 , matured .
state street bank currently maintains a line of credit with a financial institution of cad $ 800 million , or approximately $ 787 million as of december 31 , 2011 , to support its canadian securities processing operations .
the line of credit has no stated termination date and is cancelable by either party with prior notice .
as of december 31 , 2011 , no balance was outstanding on this line of credit .
contractual cash obligations .

as of december 31 2011 ( in millions ) | payments due by period total | payments due by period less than 1 year | payments due by period 1-3 years | payments due by period 4-5 years | payments due by period over 5 years
-------------------------------------- | ---------------------------- | --------------------------------------- | -------------------------------- | -------------------------------- | -----------------------------------
long-term debt ( 1 )                   | $ 9276                       | $ 1973                                  | $ 1169                           | $ 1944                           | $ 4190
operating leases                       | 1129                         | 237                                     | 389                              | 228                              | 275
capital lease obligations              | 989                          | 68                                      | 136                              | 138                              | 647
total contractual cash obligations     | $ 11394                      | $ 2278                                  | $ 1694                           | $ 2310                           | $ 5112

( 1 ) long-term debt excludes capital lease obligations ( presented as a separate line item ) and the effect of interest-rate swaps .
interest payments were calculated at the stated rate with the exception of floating-rate debt , for which payments were calculated using the indexed rate in effect as of december 31 , 2011 .
the obligations presented in the table above are recorded in our consolidated statement of condition at december 31 , 2011 , except for interest on long-term debt and capital lease obligations .
the table does not include obligations which will be settled in cash , primarily in less than one year , such as deposits , federal funds purchased , securities sold under repurchase agreements and other short-term borrowings .
additional information about deposits , federal funds purchased , securities sold under repurchase agreements and other short-term borrowings is provided in notes 7 and 8 to the consolidated financial statements included under item 8 .
the table does not include obligations related to derivative instruments , because the amounts included in our consolidated statement of condition at december 31 , 2011 related to derivatives do not represent the amounts that may ultimately be paid under the contracts upon settlement .
additional information about derivative contracts is provided in note 16 to the consolidated financial statements included under item 8 .
we have obligations under pension and other post-retirement benefit plans , more fully described in note 18 to the consolidated financial statements included under item 8 , which are not included in the above table .
additional information about contractual cash obligations related to long-term debt and operating and capital leases is provided in notes 9 and 19 to the consolidated financial statements included under item 8 .
the consolidated statement of cash flows , also included under item 8 , provides additional liquidity information.


( a ) the net change in the total valuation allowance for the years ended december 31 , 2018 and 2017 was an increase of $ 12 million and an increase of $ 26 million , respectively .
deferred income tax assets and liabilities are recorded in the accompanying consolidated balance sheet under the captions deferred charges and other assets and deferred income taxes .
there was a decrease in deferred income tax assets principally relating to the utilization of u.s .
federal alternative minimum tax credits as permitted under tax reform .
deferred tax liabilities increased primarily due to the tax deferral of the book gain recognized on the transfer of the north american consumer packaging business to a subsidiary of graphic packaging holding company .
of the $ 1.5 billion of deferred tax liabilities for forestlands , related installment sales , and investment in subsidiary , $ 884 million is attributable to an investment in subsidiary and relates to a 2006 international paper installment sale of forestlands and $ 538 million is attributable to a 2007 temple-inland installment sale of forestlands ( see note 14 ) .
a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended december 31 , 2018 , 2017 and 2016 is as follows: .

in millions                                                             | 2018           | 2017           | 2016
----------------------------------------------------------------------- | -------------- | -------------- | --------------
balance at january 1                                                    | $ -188 ( 188 ) | $ -98 ( 98 )   | $ -150 ( 150 )
( additions ) reductions based on tax positions related to current year | -7 ( 7 )       | -54 ( 54 )     | -4 ( 4 )
( additions ) for tax positions of prior years                          | -37 ( 37 )     | -40 ( 40 )     | -3 ( 3 )
reductions for tax positions of prior years                             | 5              | 4              | 33
settlements                                                             | 2              | 6              | 19
expiration of statutes oflimitations                                    | 2              | 1              | 5
currency translation adjustment                                         | 3              | -7 ( 7 )       | 2
balance at december 31                                                  | $ -220 ( 220 ) | $ -188 ( 188 ) | $ -98 ( 98 )

if the company were to prevail on the unrecognized tax benefits recorded , substantially all of the balances at december 31 , 2018 , 2017 and 2016 would benefit the effective tax rate .
the company accrues interest on unrecognized tax benefits as a component of interest expense .
penalties , if incurred , are recognized as a component of income tax expense .
the company had approximately $ 21 million and $ 17 million accrued for the payment of estimated interest and penalties associated with unrecognized tax benefits at december 31 , 2018 and 2017 , respectively .
the major jurisdictions where the company files income tax returns are the united states , brazil , france , poland and russia .
generally , tax years 2006 through 2017 remain open and subject to examination by the relevant tax authorities .
the company frequently faces challenges regarding the amount of taxes due .
these challenges include positions taken by the company related to the timing , nature , and amount of deductions and the allocation of income among various tax jurisdictions .
pending audit settlements and the expiration of statute of limitations could reduce the uncertain tax positions by $ 30 million during the next twelve months .
the brazilian federal revenue service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by international paper do brasil ltda. , a wholly-owned subsidiary of the company .
the company received assessments for the tax years 2007-2015 totaling approximately $ 150 million in tax , and $ 380 million in interest and penalties as of december 31 , 2018 ( adjusted for variation in currency exchange rates ) .
after a previous favorable ruling challenging the basis for these assessments , we received an unfavorable decision in october 2018 from the brazilian administrative council of tax appeals .
the company intends to further appeal the matter in the brazilian federal courts in 2019 ; however , this tax litigation matter may take many years to resolve .
the company believes that it has appropriately evaluated the transaction underlying these assessments , and has concluded based on brazilian tax law , that its tax position would be sustained .
the company intends to vigorously defend its position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015 .
international paper uses the flow-through method to account for investment tax credits earned on eligible open-loop biomass facilities and combined heat and power system expenditures .
under this method , the investment tax credits are recognized as a reduction to income tax expense in the year they are earned rather than a reduction in the asset basis .
the company recorded a tax benefit of $ 6 million during 2018 and recorded a tax benefit of $ 68 million during 2017 related to investment tax credits earned in tax years 2013-2017.


our debt issuances in 2014 were as follows : ( in millions ) type face value ( e ) interest rate issuance maturity euro notes ( a ) 20ac750 ( approximately $ 1029 ) 1.875% ( 1.875 % ) march 2014 march 2021 euro notes ( a ) 20ac1000 ( approximately $ 1372 ) 2.875% ( 2.875 % ) march 2014 march 2026 euro notes ( b ) 20ac500 ( approximately $ 697 ) 2.875% ( 2.875 % ) may 2014 may 2029 swiss franc notes ( c ) chf275 ( approximately $ 311 ) 0.750% ( 0.750 % ) may 2014 december 2019 swiss franc notes ( b ) chf250 ( approximately $ 283 ) 1.625% ( 1.625 % ) may 2014 may 2024 u.s .
dollar notes ( d ) $ 500 1.250% ( 1.250 % ) november 2014 november 2017 u.s .
dollar notes ( d ) $ 750 3.250% ( 3.250 % ) november 2014 november 2024 u.s .
dollar notes ( d ) $ 750 4.250% ( 4.250 % ) november 2014 november 2044 ( a ) interest on these notes is payable annually in arrears beginning in march 2015 .
( b ) interest on these notes is payable annually in arrears beginning in may 2015 .
( c ) interest on these notes is payable annually in arrears beginning in december 2014 .
( d ) interest on these notes is payable semiannually in arrears beginning in may 2015 .
( e ) u.s .
dollar equivalents for foreign currency notes were calculated based on exchange rates on the date of issuance .
the net proceeds from the sale of the securities listed in the table above will be used for general corporate purposes .
the weighted-average time to maturity of our long-term debt was 10.8 years at the end of 2013 and 2014 .
2022 off-balance sheet arrangements and aggregate contractual obligations we have no off-balance sheet arrangements , including special purpose entities , other than guarantees and contractual obligations discussed below .
guarantees 2013 at december 31 , 2014 , we were contingently liable for $ 1.0 billion of guarantees of our own performance , which were primarily related to excise taxes on the shipment of our products .
there is no liability in the consolidated financial statements associated with these guarantees .
at december 31 , 2014 , our third-party guarantees were insignificant. .

type               |       | face value ( e )                  | interest rate      | issuance      | maturity
------------------ | ----- | --------------------------------- | ------------------ | ------------- | -------------
euro notes         | ( a ) | 20ac750 ( approximately $ 1029 )  | 1.875% ( 1.875 % ) | march 2014    | march 2021
euro notes         | ( a ) | 20ac1000 ( approximately $ 1372 ) | 2.875% ( 2.875 % ) | march 2014    | march 2026
euro notes         | ( b ) | 20ac500 ( approximately $ 697 )   | 2.875% ( 2.875 % ) | may 2014      | may 2029
swiss franc notes  | ( c ) | chf275 ( approximately $ 311 )    | 0.750% ( 0.750 % ) | may 2014      | december 2019
swiss franc notes  | ( b ) | chf250 ( approximately $ 283 )    | 1.625% ( 1.625 % ) | may 2014      | may 2024
u.s . dollar notes | ( d ) | $ 500                             | 1.250% ( 1.250 % ) | november 2014 | november 2017
u.s . dollar notes | ( d ) | $ 750                             | 3.250% ( 3.250 % ) | november 2014 | november 2024
u.s . dollar notes | ( d ) | $ 750                             | 4.250% ( 4.250 % ) | november 2014 | november 2044

our debt issuances in 2014 were as follows : ( in millions ) type face value ( e ) interest rate issuance maturity euro notes ( a ) 20ac750 ( approximately $ 1029 ) 1.875% ( 1.875 % ) march 2014 march 2021 euro notes ( a ) 20ac1000 ( approximately $ 1372 ) 2.875% ( 2.875 % ) march 2014 march 2026 euro notes ( b ) 20ac500 ( approximately $ 697 ) 2.875% ( 2.875 % ) may 2014 may 2029 swiss franc notes ( c ) chf275 ( approximately $ 311 ) 0.750% ( 0.750 % ) may 2014 december 2019 swiss franc notes ( b ) chf250 ( approximately $ 283 ) 1.625% ( 1.625 % ) may 2014 may 2024 u.s .
dollar notes ( d ) $ 500 1.250% ( 1.250 % ) november 2014 november 2017 u.s .
dollar notes ( d ) $ 750 3.250% ( 3.250 % ) november 2014 november 2024 u.s .
dollar notes ( d ) $ 750 4.250% ( 4.250 % ) november 2014 november 2044 ( a ) interest on these notes is payable annually in arrears beginning in march 2015 .
( b ) interest on these notes is payable annually in arrears beginning in may 2015 .
( c ) interest on these notes is payable annually in arrears beginning in december 2014 .
( d ) interest on these notes is payable semiannually in arrears beginning in may 2015 .
( e ) u.s .
dollar equivalents for foreign currency notes were calculated based on exchange rates on the date of issuance .
the net proceeds from the sale of the securities listed in the table above will be used for general corporate purposes .
the weighted-average time to maturity of our long-term debt was 10.8 years at the end of 2013 and 2014 .
2022 off-balance sheet arrangements and aggregate contractual obligations we have no off-balance sheet arrangements , including special purpose entities , other than guarantees and contractual obligations discussed below .
guarantees 2013 at december 31 , 2014 , we were contingently liable for $ 1.0 billion of guarantees of our own performance , which were primarily related to excise taxes on the shipment of our products .
there is no liability in the consolidated financial statements associated with these guarantees .
at december 31 , 2014 , our third-party guarantees were insignificant.


entergy arkansas , inc .
management's financial discussion and analysis results of operations net income 2008 compared to 2007 net income decreased $ 92.0 million primarily due to higher other operation and maintenance expenses , higher depreciation and amortization expenses , and a higher effective income tax rate , partially offset by higher net revenue .
the higher other operation and maintenance expenses resulted primarily from the write-off of approximately $ 70.8 million of costs as a result of the december 2008 arkansas court of appeals decision in entergy arkansas' base rate case .
the base rate case is discussed in more detail in note 2 to the financial statements .
2007 compared to 2006 net income decreased $ 34.0 million primarily due to higher other operation and maintenance expenses , higher depreciation and amortization expenses , and a higher effective income tax rate .
the decrease was partially offset by higher net revenue .
net revenue 2008 compared to 2007 net revenue consists of operating revenues net of : 1 ) fuel , fuel-related expenses , and gas purchased for resale , 2 ) purchased power expenses , and 3 ) other regulatory credits .
following is an analysis of the change in net revenue comparing 2008 to 2007 .
amount ( in millions ) .

                         | amount ( in millions )
------------------------ | ----------------------
2007 net revenue         | $ 1110.6
rider revenue            | 13.6
purchased power capacity | 4.8
volume/weather           | -14.6 ( 14.6 )
other                    | 3.5
2008 net revenue         | $ 1117.9

the rider revenue variance is primarily due to an energy efficiency rider which became effective in november 2007 .
the establishment of the rider results in an increase in rider revenue and a corresponding increase in other operation and maintenance expense with no effect on net income .
also contributing to the variance was an increase in franchise tax rider revenue as a result of higher retail revenues .
the corresponding increase is in taxes other than income taxes , resulting in no effect on net income .
the purchased power capacity variance is primarily due to lower reserve equalization expenses .
the volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales during the billed and unbilled sales periods compared to 2007 and a 2.9% ( 2.9 % ) volume decrease in industrial sales , primarily in the wood industry and the small customer class .
billed electricity usage decreased 333 gwh in all sectors .
see "critical accounting estimates" below and note 1 to the financial statements for further discussion of the accounting for unbilled revenues.


item 1 .
business loews hotels holding corporation the subsidiaries of loews hotels holding corporation ( 201cloews hotels 201d ) , our wholly owned subsidiary , presently operate the following 18 hotels .
loews hotels accounted for 2.0% ( 2.0 % ) , 2.9% ( 2.9 % ) and 2.7% ( 2.7 % ) of our consolidated total revenue for the years ended december 31 , 2009 , 2008 and 2007 .
number of name and location rooms owned , leased or managed loews annapolis hotel 220 owned annapolis , maryland loews coronado bay 440 land lease expiring 2034 san diego , california loews denver hotel 185 owned denver , colorado the don cesar , a loews hotel 347 management contract ( a ) ( b ) st .
pete beach , florida hard rock hotel , 650 management contract ( c ) at universal orlando orlando , florida loews lake las vegas 493 management contract ( a ) henderson , nevada loews le concorde hotel 405 land lease expiring 2069 quebec city , canada the madison , a loews hotel 353 management contract expiring 2021 ( a ) washington , d.c .
loews miami beach hotel 790 owned miami beach , florida loews new orleans hotel 285 management contract expiring 2018 ( a ) new orleans , louisiana loews philadelphia hotel 585 owned philadelphia , pennsylvania loews portofino bay hotel , 750 management contract ( c ) at universal orlando orlando , florida loews regency hotel 350 land lease expiring 2013 , with renewal option new york , new york for 47 years loews royal pacific resort 1000 management contract ( c ) at universal orlando orlando , florida loews santa monica beach hotel 340 management contract expiring 2018 , with santa monica , california renewal option for 5 years ( a ) loews vanderbilt hotel 340 owned nashville , tennessee loews ventana canyon 400 management contract expiring 2019 ( a ) tucson , arizona loews hotel vogue 140 owned montreal , canada ( a ) these management contracts are subject to termination rights .
( b ) a loews hotels subsidiary is a 20% ( 20 % ) owner of the hotel , which is being operated by loews hotels pursuant to a management contract .
( c ) a loews hotels subsidiary is a 50% ( 50 % ) owner of these hotels located at the universal orlando theme park , through a joint venture with universal studios and the rank group .
the hotels are on land leased by the joint venture and are operated by loews hotels pursuant to a management contract. .

name and location                                               | number of rooms | owned leased or managed
--------------------------------------------------------------- | --------------- | ----------------------------------------------------------------------
loews annapolis hotel annapolis maryland                        | 220             | owned
loews coronado bay san diego california                         | 440             | land lease expiring 2034
loews denver hotel denver colorado                              | 185             | owned
the don cesar a loews hotel st . pete beach florida             | 347             | management contract ( a ) ( b )
hard rock hotel at universal orlando orlando florida            | 650             | management contract ( c )
loews lake las vegas henderson nevada                           | 493             | management contract ( a )
loews le concorde hotel quebec city canada                      | 405             | land lease expiring 2069
the madison a loews hotel washington d.c .                      | 353             | management contract expiring 2021 ( a )
loews miami beach hotel miami beach florida                     | 790             | owned
loews new orleans hotel new orleans louisiana                   | 285             | management contract expiring 2018 ( a )
loews philadelphia hotel philadelphia pennsylvania              | 585             | owned
loews portofino bay hotel at universal orlando orlando florida  | 750             | management contract ( c )
loews regency hotel new york new york                           | 350             | land lease expiring 2013 with renewal option for 47 years
loews royal pacific resort at universal orlando orlando florida | 1000            | management contract ( c )
loews santa monica beach hotel santa monica california          | 340             | management contract expiring 2018 with renewal option for5 years ( a )
loews vanderbilt hotel nashville tennessee                      | 340             | owned
loews ventana canyon tucson arizona                             | 400             | management contract expiring 2019 ( a )
loews hotel vogue montreal canada                               | 140             | owned

item 1 .
business loews hotels holding corporation the subsidiaries of loews hotels holding corporation ( 201cloews hotels 201d ) , our wholly owned subsidiary , presently operate the following 18 hotels .
loews hotels accounted for 2.0% ( 2.0 % ) , 2.9% ( 2.9 % ) and 2.7% ( 2.7 % ) of our consolidated total revenue for the years ended december 31 , 2009 , 2008 and 2007 .
number of name and location rooms owned , leased or managed loews annapolis hotel 220 owned annapolis , maryland loews coronado bay 440 land lease expiring 2034 san diego , california loews denver hotel 185 owned denver , colorado the don cesar , a loews hotel 347 management contract ( a ) ( b ) st .
pete beach , florida hard rock hotel , 650 management contract ( c ) at universal orlando orlando , florida loews lake las vegas 493 management contract ( a ) henderson , nevada loews le concorde hotel 405 land lease expiring 2069 quebec city , canada the madison , a loews hotel 353 management contract expiring 2021 ( a ) washington , d.c .
loews miami beach hotel 790 owned miami beach , florida loews new orleans hotel 285 management contract expiring 2018 ( a ) new orleans , louisiana loews philadelphia hotel 585 owned philadelphia , pennsylvania loews portofino bay hotel , 750 management contract ( c ) at universal orlando orlando , florida loews regency hotel 350 land lease expiring 2013 , with renewal option new york , new york for 47 years loews royal pacific resort 1000 management contract ( c ) at universal orlando orlando , florida loews santa monica beach hotel 340 management contract expiring 2018 , with santa monica , california renewal option for 5 years ( a ) loews vanderbilt hotel 340 owned nashville , tennessee loews ventana canyon 400 management contract expiring 2019 ( a ) tucson , arizona loews hotel vogue 140 owned montreal , canada ( a ) these management contracts are subject to termination rights .
( b ) a loews hotels subsidiary is a 20% ( 20 % ) owner of the hotel , which is being operated by loews hotels pursuant to a management contract .
( c ) a loews hotels subsidiary is a 50% ( 50 % ) owner of these hotels located at the universal orlando theme park , through a joint venture with universal studios and the rank group .
the hotels are on land leased by the joint venture and are operated by loews hotels pursuant to a management contract.


31mar201122064257 notes to consolidated financial statements ( continued ) 10 .
income taxes ( continued ) a reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows ( in thousands ) : .

balance at october 2 2009                                          | $ 8859
------------------------------------------------------------------ | ------------
increases based on positions related to prior years                | 437
increases based on positions related to current year               | 11221
decreases relating to settlements with taxing authorities          | 2014
decreases relating to lapses of applicable statutes of limitations | -617 ( 617 )
balance at october 1 2010                                          | $ 19900

the company 2019s major tax jurisdictions as of october 1 , 2010 are the united states , california , and iowa .
for the united states , the company has open tax years dating back to fiscal year 1998 due to the carry forward of tax attributes .
for california and iowa , the company has open tax years dating back to fiscal year 2002 due to the carry forward of tax attributes .
during the year ended october 1 , 2010 , $ 0.6 million of previously unrecognized tax benefits related to the expiration of the statute of limitations period were recognized .
the company 2019s policy is to recognize accrued interest and penalties , if incurred , on any unrecognized tax benefits as a component of income tax expense .
the company did not incur any significant accrued interest or penalties related to unrecognized tax benefits during fiscal year 2010 .
11 .
stockholders 2019 equity common stock the company is authorized to issue ( 1 ) 525000000 shares of common stock , par value $ 0.25 per share , and ( 2 ) 25000000 shares of preferred stock , without par value .
holders of the company 2019s common stock are entitled to such dividends as may be declared by the company 2019s board of directors out of funds legally available for such purpose .
dividends may not be paid on common stock unless all accrued dividends on preferred stock , if any , have been paid or declared and set aside .
in the event of the company 2019s liquidation , dissolution or winding up , the holders of common stock will be entitled to share pro rata in the assets remaining after payment to creditors and after payment of the liquidation preference plus any unpaid dividends to holders of any outstanding preferred stock .
each holder of the company 2019s common stock is entitled to one vote for each such share outstanding in the holder 2019s name .
no holder of common stock is entitled to cumulate votes in voting for directors .
the company 2019s second amended and restated certificate of incorporation provides that , unless otherwise determined by the company 2019s board of directors , no holder of common stock has any preemptive right to purchase or subscribe for any stock of any class which the company may issue or on august 3 , 2010 , the company 2019s board of directors approved a stock repurchase program , pursuant to which the company is authorized to repurchase up to $ 200 million of the company 2019s common stock from time to time on the open market or in privately negotiated transactions as permitted by securities laws and other legal requirements .
the company had not repurchased any shares under the program for the fiscal year ended october 1 , 2010 .
as of november 29 , 2010 , the skyworks / 2010 annual report 137


devon energy corporation and subsidiaries notes to consolidated financial statements 2013 ( continued ) restricted stock awards and units restricted stock awards and units are subject to the terms , conditions , restrictions and limitations , if any , that the compensation committee deems appropriate , including restrictions on continued employment .
generally , the service requirement for vesting ranges from zero to four years .
during the vesting period , recipients of restricted stock awards receive dividends that are not subject to restrictions or other limitations .
devon estimates the fair values of restricted stock awards and units as the closing price of devon 2019s common stock on the grant date of the award or unit , which is expensed over the applicable vesting period .
performance-based restricted stock awards performance-based restricted stock awards are granted to certain members of devon 2019s senior management .
vesting of the awards is dependent on devon meeting certain internal performance targets and the recipient meeting certain service requirements .
generally , the service requirement for vesting ranges from zero to four years .
in order for awards to vest , the performance target must be met in the first year , and if met , recipients are entitled to dividends on the awards over the remaining service vesting period .
if the performance target and service period requirements are not met , the award does not vest .
devon estimates the fair values of the awards as the closing price of devon 2019s common stock on the grant date of the award , which is expensed over the applicable vesting period .
performance share units performance share units are granted to certain members of devon 2019s senior management .
each unit that vests entitles the recipient to one share of devon common stock .
the vesting of these units is based on comparing devon 2019s tsr to the tsr of a predetermined group of fourteen peer companies over the specified two- or three- year performance period .
the vesting of units may be between zero and 200% ( 200 % ) of the units granted depending on devon 2019s tsr as compared to the peer group on the vesting date .
at the end of the vesting period , recipients receive dividend equivalents with respect to the number of units vested .
the fair value of each performance share unit is estimated as of the date of grant using a monte carlo simulation with the following assumptions used for all grants made under the plan : ( i ) a risk-free interest rate based on u.s .
treasury rates as of the grant date ; ( ii ) a volatility assumption based on the historical realized price volatility of devon and the designated peer group ; and ( iii ) an estimated ranking of devon among the designated peer group .
the fair value of the unit on the date of grant is expensed over the applicable vesting period .
the following table presents the assumptions related to performance share units granted. .

                           | 2015                 | 2014                 | 2013
-------------------------- | -------------------- | -------------------- | --------------------------------------
grant-date fair value      | $ 81.99 2013 $ 85.05 | $ 70.18 2013 $ 81.05 | $ 61.27 2013 $ 63.48
risk-free interest rate    | 1.06% ( 1.06 % )     | 0.54% ( 0.54 % )     | 0.26% ( 0.26 % ) 2013 0.36% ( 0.36 % )
volatility factor          | 26.2% ( 26.2 % )     | 28.8% ( 28.8 % )     | 30.3% ( 30.3 % )
contractual term ( years ) | 2.89                 | 2.89                 | 3.0

stock options in accordance with devon 2019s incentive plans , the exercise price of stock options granted may not be less than the market value of the stock at the date of grant .
in addition , options granted are exercisable during a period established for each grant , which may not exceed eight years from the date of grant .
the recipient must pay the exercise price in cash or in common stock , or a combination thereof , at the time that the option is exercised .
generally , the service requirement for vesting ranges from zero to four years .
the fair value of stock options on


the hartford financial services group , inc .
notes to consolidated financial statements ( continued ) 7 .
deferred policy acquisition costs and present value of future profits ( continued ) results changes in the dac balance are as follows: .

                                                                                | 2011           | 2010           | 2009
----------------------------------------------------------------------------------------- | -------------- | -------------- | --------------
balance january 1                                                                         | $ 9857         | $ 10686        | $ 13248
deferred costs                                                                            | 2608           | 2648           | 2853
amortization 2014 dac                                                                     | -2920 ( 2920 ) | -2665 ( 2665 ) | -3247 ( 3247 )
amortization 2014 dac from discontinued operations                                        | 2014           | -17 ( 17 )     | -10 ( 10 )
amortization 2014 unlock benefit ( charge ) pre-tax [1]                                   | -507 ( 507 )   | 138            | -1010 ( 1010 )
adjustments to unrealized gains and losses on securities available-for-sale and other [2] | -377 ( 377 )   | -1159 ( 1159 ) | -1031 ( 1031 )
effect of currency translation                                                            | 83             | 215            | -39 ( 39 )
cumulative effect of accounting change pre-tax [3]                                        | 2014           | 11             | -78 ( 78 )
balance december 31                                                                       | $ 8744         | $ 9857         | $ 10686

[1] the most significant contributors to the unlock charge recorded during the year ended december 31 , 2011 were assumption changes which reduced expected future gross profits including additional costs associated with implementing the japan hedging strategy and the u.s .
variable annuity macro hedge program , as well as actual separate account returns below our aggregated estimated return .
the most significant contributors to the unlock benefit recorded during the year ended december 31 , 2010 were actual separate account returns being above our aggregated estimated return .
also included in the benefit are assumption updates related to benefits from withdrawals and lapses , offset by hedging , annuitization estimates on japan products , and long-term expected rate of return updates .
the most significant contributors to the unlock charge recorded during the year ended december 31 , 2009 were the results of actual separate account returns being significantly below our aggregated estimated return for the first quarter of 2009 , partially offset by actual returns being greater than our aggregated estimated return for the period from april 1 , 2009 to december 31 , 2009 .
[2] the most significant contributor to the adjustments was the effect of declining interest rates , resulting in unrealized gains on securities classified in aoci .
other includes a $ 34 decrease as a result of the disposition of dac from the sale of the hartford investment canadian canada in 2010 .
[3] for the year ended december 31 , 2010 the effect of adopting new accounting guidance for embedded credit derivatives resulted in a decrease to retained earnings and , as a result , a dac benefit .
in addition , an offsetting amount was recorded in unrealized losses as unrealized losses decreased upon adoption of the new accounting guidance .
for the year ended december 31 , 2009 the effect of adopting new accounting guidance for investments other- than- temporarily impaired resulted in an increase to retained earnings and , as a result , a dac charge .
in addition , an offsetting amount was recorded in unrealized losses as unrealized losses increased upon adoption of the new accounting guidance .
as of december 31 , 2011 , estimated future net amortization expense of present value of future profits for the succeeding five years is $ 39 , $ 58 , $ 24 , $ 23 and $ 22 in 2012 , 2013 , 2014 , 2015 and 2016 , respectively.