22 2016 annual report performance graph the following chart presents a comparison for the five-year period ended june 30 , 2016 , of the market performance of the company 2019s common stock with the s&p 500 index and an index of peer companies selected by the company : comparison of 5 year cumulative total return among jack henry & associates , inc. , the s&p 500 index , and a peer group the following information depicts a line graph with the following values: .

           | 2011   | 2012   | 2013   | 2014   | 2015   | 2016
---------- | ------ | ------ | ------ | ------ | ------ | ------
jkhy       | 100.00 | 116.62 | 161.33 | 206.53 | 228.24 | 312.11
peer group | 100.00 | 107.65 | 126.89 | 174.28 | 219.46 | 251.24
s&p 500    | 100.00 | 105.45 | 127.17 | 158.46 | 170.22 | 177.02

this comparison assumes $ 100 was invested on june 30 , 2011 , and assumes reinvestments of dividends .
total returns are calculated according to market capitalization of peer group members at the beginning of each period .
peer companies selected are in the business of providing specialized computer software , hardware and related services to financial institutions and other businesses .
companies in the peer group are aci worldwide , inc. , bottomline technology , inc. , broadridge financial solutions , cardtronics , inc. , convergys corp. , corelogic , inc. , dst systems , inc. , euronet worldwide , inc. , fair isaac corp. , fidelity national information services , inc. , fiserv , inc. , global payments , inc. , moneygram international , inc. , ss&c technologies holdings , inc. , total systems services , inc. , tyler technologies , inc. , verifone systems , inc. , and wex , inc. .
heartland payment systems , inc .
was removed from the peer group as it merged with global payments , inc .
in april 2016.


proceeds from the sale of equity securities .
from time to time , we raise funds through public offerings of our equity securities .
in addition , we receive proceeds from sales of our equity securities pursuant to our stock option and stock purchase plans .
for the year ended december 31 , 2004 , we received approximately $ 40.6 million in proceeds from sales of shares of our class a common stock and the common stock of atc mexico pursuant to our stock option and stock purchase plans .
financing activities during the year ended december 31 , 2004 , we took several actions to increase our financial flexibility and reduce our interest costs .
new credit facility .
in may 2004 , we refinanced our previous credit facility with a new $ 1.1 billion senior secured credit facility .
at closing , we received $ 685.5 million of net proceeds from the borrowings under the new facility , after deducting related expenses and fees , approximately $ 670.0 million of which we used to repay principal and interest under the previous credit facility .
we used the remaining net proceeds of $ 15.5 million for general corporate purposes , including the repurchase of other outstanding debt securities .
the new credit facility consists of the following : 2022 $ 400.0 million in undrawn revolving loan commitments , against which approximately $ 19.3 million of undrawn letters of credit were outstanding at december 31 , 2004 , maturing on february 28 , 2011 ; 2022 a $ 300.0 million term loan a , which is fully drawn , maturing on february 28 , 2011 ; and 2022 a $ 398.0 million term loan b , which is fully drawn , maturing on august 31 , 2011 .
the new credit facility extends the previous credit facility maturity dates from 2007 to 2011 for a majority of the borrowings outstanding , subject to earlier maturity upon the occurrence of certain events described below , and allows us to use credit facility borrowings and internally generated funds to repurchase other indebtedness without additional lender approval .
the new credit facility is guaranteed by us and is secured by a pledge of substantially all of our assets .
the maturity date for term loan a and any outstanding revolving loans will be accelerated to august 15 , 2008 , and the maturity date for term loan b will be accelerated to october 31 , 2008 , if ( 1 ) on or prior to august 1 , 2008 , our 93 20448% ( 20448 % ) senior notes have not been ( a ) refinanced with parent company indebtedness having a maturity date of february 28 , 2012 or later or with loans under the new credit facility , or ( b ) repaid , prepaid , redeemed , repurchased or otherwise retired , and ( 2 ) our consolidated leverage ratio ( total parent company debt to annualized operating cash flow ) at june 30 , 2008 is greater than 4.50 to 1.00 .
if this were to occur , the payments due in 2008 for term loan a and term loan b would be $ 225.0 million and $ 386.0 million , respectively .
note offerings .
during 2004 , we raised approximately $ 1.1 billion in net proceeds from the sale of debt securities through institutional private placements as follows ( in millions ) : debt security date of offering principal amount approximate net proceeds .

debt security                                         | date of offering | principal amount | approximate net proceeds
----------------------------------------------------- | ---------------- | ---------------- | ------------------------
7.50% ( 7.50 % ) senior notes due 2012                | february 2004    | $ 225.0          | $ 221.7
3.00% ( 3.00 % ) convertible notes due august 15 2012 | august 2004      | 345.0            | 335.9
7.125% ( 7.125 % ) senior notes due 2012              | october 2004     | 300.0            | 292.8
7.125% ( 7.125 % ) senior notes due 2012              | december 2004    | 200.0            | 199.8
total                                                 |                  | $ 1070.0         | $ 1050.2

2022 7.50% ( 7.50 % ) senior notes offering .
in february 2004 , we sold $ 225.0 million principal amount of our 7.50% ( 7.50 % ) senior notes due 2012 through an institutional private placement .
the 7.50% ( 7.50 % ) senior notes mature on may 1 , 2012 , and interest is payable semiannually in arrears on may 1 and november 1 of each year.


contractual commitments we have contractual obligations and commitments in the form of capital leases , operating leases , debt obligations , purchase commitments , and certain other liabilities .
we intend to satisfy these obligations through the use of cash flow from operations .
the following table summarizes the expected cash outflow to satisfy our contractual obligations and commitments as of december 31 , 2010 ( in millions ) : .

commitment type      | 2011   | 2012   | 2013   | 2014   | 2015  | after 2016 | total
-------------------- | ------ | ------ | ------ | ------ | ----- | ---------- | -------
capital leases       | $ 18   | $ 19   | $ 19   | $ 20   | $ 21  | $ 112      | $ 209
operating leases     | 348    | 268    | 205    | 150    | 113   | 431        | 1515
debt principal       | 345    | 2014   | 1750   | 1000   | 100   | 7363       | 10558
debt interest        | 322    | 321    | 300    | 274    | 269   | 4940       | 6426
purchase commitments | 642    | 463    | 425    | 16     | 2014  | 2014       | 1546
pension fundings     | 1200   | 196    | 752    | 541    | 274   | 2014       | 2963
other liabilities    | 69     | 67     | 64     | 58     | 43    | 38         | 339
total                | $ 2944 | $ 1334 | $ 3515 | $ 2059 | $ 820 | $ 12884    | $ 23556

our capital lease obligations relate primarily to leases on aircraft .
capital leases , operating leases , and purchase commitments , as well as our debt principal obligations , are discussed further in note 7 to our consolidated financial statements .
the amount of interest on our debt was calculated as the contractual interest payments due on our fixed-rate debt , in addition to interest on variable rate debt that was calculated based on interest rates as of december 31 , 2010 .
the calculations of debt interest take into account the effect of interest rate swap agreements .
for debt denominated in a foreign currency , the u.s .
dollar equivalent principal amount of the debt at the end of the year was used as the basis to calculate future interest payments .
purchase commitments represent contractual agreements to purchase goods or services that are legally binding , the largest of which are orders for aircraft , engines , and parts .
as of december 31 , 2010 , we have firm commitments to purchase 20 boeing 767-300er freighters to be delivered between 2011 and 2013 , and two boeing 747-400f aircraft scheduled for delivery during 2011 .
these aircraft purchase orders will provide for the replacement of existing capacity and anticipated future growth .
pension fundings represent the anticipated required cash contributions that will be made to our qualified pension plans .
these contributions include those to the ups ibt pension plan , which was established upon ratification of the national master agreement with the teamsters , as well as the ups pension plan .
these plans are discussed further in note 5 to the consolidated financial statements .
the pension funding requirements were estimated under the provisions of the pension protection act of 2006 and the employee retirement income security act of 1974 , using discount rates , asset returns , and other assumptions appropriate for these plans .
to the extent that the funded status of these plans in future years differs from our current projections , the actual contributions made in future years could materially differ from the amounts shown in the table above .
additionally , we have not included minimum funding requirements beyond 2015 , because these projected contributions are not reasonably determinable .
we are not subject to any minimum funding requirement for cash contributions in 2011 in the ups retirement plan or ups pension plan .
the amount of any minimum funding requirement , as applicable , for these plans could change significantly in future periods , depending on many factors , including future plan asset returns and discount rates .
a sustained significant decline in the world equity markets , and the resulting impact on our pension assets and investment returns , could result in our domestic pension plans being subject to significantly higher minimum funding requirements .
such an outcome could have a material adverse impact on our financial position and cash flows in future periods .
the contractual payments due for 201cother liabilities 201d primarily include commitment payments related to our investment in certain partnerships .
the table above does not include approximately $ 284 million of liabilities for


agreements associated with the agency securitizations , most sale agreements do not provide for penalties or other remedies if we do not respond timely to investor indemnification or repurchase requests .
origination and sale of residential mortgages is an ongoing business activity and , accordingly , management continually assesses the need to recognize indemnification and repurchase liabilities pursuant to the associated investor sale agreements .
we establish indemnification and repurchase liabilities for estimated losses on sold first and second-lien mortgages and home equity loans/lines for which indemnification is expected to be provided or for loans that are expected to be repurchased .
for the first and second-lien mortgage sold portfolio , we have established an indemnification and repurchase liability pursuant to investor sale agreements based on claims made and our estimate of future claims on a loan by loan basis .
these relate primarily to loans originated during 2006-2008 .
for the home equity loans/lines sold portfolio , we have established indemnification and repurchase liabilities based upon this same methodology for loans sold during 2005-2007 .
indemnification and repurchase liabilities are initially recognized when loans are sold to investors and are subsequently evaluated by management .
initial recognition and subsequent adjustments to the indemnification and repurchase liability for the sold residential mortgage portfolio are recognized in residential mortgage revenue on the consolidated income statement .
since pnc is no longer engaged in the brokered home equity lending business , only subsequent adjustments are recognized to the home equity loans/lines indemnification and repurchase liability .
these adjustments are recognized in other noninterest income on the consolidated income statement .
management 2019s subsequent evaluation of these indemnification and repurchase liabilities is based upon trends in indemnification and repurchase requests , actual loss experience , risks in the underlying serviced loan portfolios , and current economic conditions .
as part of its evaluation , management considers estimated loss projections over the life of the subject loan portfolio .
at december 31 , 2011 and december 31 , 2010 , the total indemnification and repurchase liability for estimated losses on indemnification and repurchase claims totaled $ 130 million and $ 294 million , respectively , and was included in other liabilities on the consolidated balance sheet .
an analysis of the changes in this liability during 2011 and 2010 follows : analysis of indemnification and repurchase liability for asserted claims and unasserted claims .

in millions                                  | 2011 residential mortgages ( a ) | 2011 home equity loans/lines ( b ) | 2011 total   | 2011 residential mortgages ( a ) | 2011 home equity loans/lines ( b ) | total
-------------------------------------------- | -------------------------------- | ---------------------------------- | ------------ | -------------------------------- | ---------------------------------- | ------------
january 1                                    | $ 144                            | $ 150                              | $ 294        | $ 229                            | $ 41                               | $ 270
reserve adjustments net                      | 102                              | 4                                  | 106          | 120                              | 144                                | 264
losses 2013 loan repurchases and settlements | -163 ( 163 )                     | -107 ( 107 )                       | -270 ( 270 ) | -205 ( 205 )                     | -35 ( 35 )                         | -240 ( 240 )
december 31                                  | $ 83                             | $ 47                               | $ 130        | $ 144                            | $ 150                              | $ 294

( a ) repurchase obligation associated with sold loan portfolios of $ 121.4 billion and $ 139.8 billion at december 31 , 2011 and december 31 , 2010 , respectively .
( b ) repurchase obligation associated with sold loan portfolios of $ 4.5 billion and $ 6.5 billion at december 31 , 2011 and december 31 , 2010 , respectively .
pnc is no longer engaged in the brokered home equity lending business , which was acquired with national city .
management believes our indemnification and repurchase liabilities appropriately reflect the estimated probable losses on investor indemnification and repurchase claims at december 31 , 2011 and 2010 .
while management seeks to obtain all relevant information in estimating the indemnification and repurchase liability , the estimation process is inherently uncertain and imprecise and , accordingly , it is reasonably possible that future indemnification and repurchase losses could be more or less than our established liability .
factors that could affect our estimate include the volume of valid claims driven by investor strategies and behavior , our ability to successfully negotiate claims with investors , housing prices , and other economic conditions .
at december 31 , 2011 , we estimate that it is reasonably possible that we could incur additional losses in excess of our indemnification and repurchase liability of up to $ 85 million .
this estimate of potential additional losses in excess of our liability is based on assumed higher investor demands , lower claim rescissions , and lower home prices than our current assumptions .
reinsurance agreements we have two wholly-owned captive insurance subsidiaries which provide reinsurance to third-party insurers related to insurance sold to our customers .
these subsidiaries enter into various types of reinsurance agreements with third-party insurers where the subsidiary assumes the risk of loss through either an excess of loss or quota share agreement up to 100% ( 100 % ) reinsurance .
in excess of loss agreements , these subsidiaries assume the risk of loss for an excess layer of coverage up to specified limits , once a defined first loss percentage is met .
in quota share agreements , the subsidiaries and third-party insurers share the responsibility for payment of all claims .
these subsidiaries provide reinsurance for accidental death & dismemberment , credit life , accident & health , lender placed 200 the pnc financial services group , inc .
2013 form 10-k


the fair value of performance awards is calculated using the market value of a share of snap-on 2019s common stock on the date of grant .
the weighted-average grant date fair value of performance awards granted during 2013 , 2012 and 2011 was $ 77.33 , $ 60.00 and $ 55.97 , respectively .
vested performance share units approximated 148000 shares as of 2013 year end , 213000 shares as of 2012 year end and 54208 shares as of 2011 year end .
performance share units of 213459 shares were paid out in 2013 and 53990 shares were paid out in 2012 ; no performance share units were paid out in 2011 .
earned performance share units are generally paid out following the conclusion of the applicable performance period upon approval by the organization and executive compensation committee of the company 2019s board of directors ( the 201cboard 201d ) .
based on the company 2019s 2013 performance , 84413 rsus granted in 2013 were earned ; assuming continued employment , these rsus will vest at the end of fiscal 2015 .
based on the company 2019s 2012 performance , 95047 rsus granted in 2012 were earned ; assuming continued employment , these rsus will vest at the end of fiscal 2014 .
based on the company 2019s 2011 performance , 159970 rsus granted in 2011 were earned ; these rsus vested as of fiscal 2013 year end and were paid out shortly thereafter .
as a result of employee retirements , a total of 1614 of the rsus earned in 2012 and 2011 vested pursuant to the terms of the related award agreements and the underlying shares were paid out in the third quarter of 2013 .
the changes to the company 2019s non-vested performance awards in 2013 are as follows : shares ( in thousands ) fair value price per share* .

                                                   | shares ( in thousands ) | fair valueprice pershare*
-------------------------------------------------- | ----------------------- | -------------------------
non-vested performance awards at beginning of year | 509                     | $ 59.36
granted                                            | 180                     | 77.33
vested                                             | -306 ( 306 )            | 58.94
cancellations                                      | -2 ( 2 )                | 69.23
non-vested performance awards at end of year       | 381                     | 68.13

* weighted-average as of 2013 year end there was approximately $ 12.9 million of unrecognized compensation cost related to non-vested performance awards that is expected to be recognized as a charge to earnings over a weighted-average period of 1.6 years .
stock appreciation rights ( 201csars 201d ) the company also issues cash-settled and stock-settled sars to certain key non-u.s .
employees .
sars have a contractual term of ten years and vest ratably on the first , second and third anniversaries of the date of grant .
sars are granted with an exercise price equal to the market value of a share of snap-on 2019s common stock on the date of grant .
cash-settled sars provide for the cash payment of the excess of the fair market value of snap-on 2019s common stock price on the date of exercise over the grant price .
cash-settled sars have no effect on dilutive shares or shares outstanding as any appreciation of snap-on 2019s common stock value over the grant price is paid in cash and not in common stock .
in 2013 , the company began issuing stock-settled sars that are accounted for as equity instruments and provide for the issuance of snap-on common stock equal to the amount by which the company 2019s stock has appreciated over the exercise price .
stock-settled sars have an effect on dilutive shares and shares outstanding as any appreciation of snap-on 2019s common stock value over the exercise price will be settled in shares of common stock .
2013 annual report 101


loan activity .
from time to time , we make loans to owners of hotels that we operate or franchise .
loan collections , net of loan advances , amounted to $ 35 million in 2018 , compared to net collections of $ 94 million in 2017 .
at year-end 2018 , we had $ 131 million of senior , mezzanine , and other loans outstanding , compared to $ 149 million outstanding at year-end 2017 .
equity method investments .
cash outflows of $ 72 million in 2018 , $ 62 million in 2017 , and $ 13 million in 2016 for equity method investments primarily reflect our investments in several joint ventures .
financing activities cash flows debt .
debt increased by $ 1109 million in 2018 , to $ 9347 million at year-end 2018 from $ 8238 million at year-end 2017 , primarily due to the issuance of our series x , y , z , and aa notes , partially offset by the maturity of our series s notes ( $ 330 million ) and lower outstanding commercial paper ( $ 126 million ) .
see footnote 10 .
long-term debt for additional information on the debt issuances .
our financial objectives include diversifying our financing sources , optimizing the mix and maturity of our long-term debt , and reducing our working capital .
at year-end 2018 , our long-term debt had a weighted average interest rate of 3.3 percent and a weighted average maturity of approximately 4.8 years .
the ratio of our fixed-rate long-term debt to our total long-term debt was 0.7 to 1.0 at year-end 2018 .
see the 201ccash requirements and our credit facility , 201d caption in this 201cliquidity and capital resources 201d section for more information on our credit facility .
share repurchases .
we purchased 21.5 million shares of our common stock in 2018 at an average price of $ 130.67 per share , 29.2 million shares in 2017 at an average price of $ 103.66 per share , and 8.0 million shares in 2016 at an average price of $ 71.55 per share .
at year-end 2018 , 10.7 million shares remained available for repurchase under board approved authorizations , and on february 15 , 2019 , our board of directors further increased our common stock repurchase authorization by 25 million shares .
for additional information , see 201cfourth quarter 2018 issuer purchases of equity securities 201d in part ii , item 5 .
dividends .
our board of directors declared the following quarterly cash dividends in 2018 : ( 1 ) $ 0.33 per share declared on february 9 , 2018 and paid march 30 , 2018 to shareholders of record on february 23 , 2018 , ( 2 ) $ 0.41 per share declared on may 4 , 2018 and paid june 29 , 2018 to shareholders of record on may 18 , 2018 , ( 3 ) $ 0.41 per share declared on august 9 , 2018 and paid september 28 , 2018 to shareholders of record on august 23 , 2018 , and ( 4 ) $ 0.41 per share declared on november 8 , 2018 and paid december 31 , 2018 to shareholders of record on november 21 , 2018 .
our board of directors declared a cash dividend of $ 0.41 per share on february 15 , 2019 , payable on march 29 , 2019 to shareholders of record on march 1 , 2019 .
contractual obligations and off-balance sheet arrangements contractual obligations the following table summarizes our contractual obligations at year-end 2018: .

( $ in millions )                                 | total   | payments due by period less than1 year | payments due by period 1-3 years | payments due by period 3-5 years | payments due by period after5 years
------------------------------------------------- | ------- | -------------------------------------- | -------------------------------- | -------------------------------- | -----------------------------------
debt ( 1 )                                        | $ 10483 | $ 1074                                 | $ 4392                           | $ 2054                           | $ 2963
capital lease obligations ( 1 )                   | 230     | 13                                     | 26                               | 26                               | 165
operating leases where we are the primary obligor | 2073    | 171                                    | 315                              | 292                              | 1295
purchase obligations                              | 286     | 153                                    | 116                              | 17                               | 2014
other noncurrent liabilities                      | 136     | 3                                      | 28                               | 20                               | 85
total contractual obligations                     | $ 13208 | $ 1414                                 | $ 4877                           | $ 2409                           | $ 4508

( 1 ) includes principal as well as interest payments .
the preceding table does not reflect transition tax payments totaling $ 507 million as a result of the 2017 tax act .
in addition , the table does not reflect unrecognized tax benefits at year-end 2018 of $ 559 million .
in addition to the purchase obligations noted in the preceding table , in the normal course of business we enter into purchase commitments to manage the daily operating needs of the hotels that we manage .
since we are reimbursed from the cash flows of the hotels , these obligations have minimal impact on our net income and cash flow.


unconditional purchase obligations approximately $ 390 of our long-term unconditional purchase obligations relate to feedstock supply for numerous hyco ( hydrogen , carbon monoxide , and syngas ) facilities .
the price of feedstock supply is principally related to the price of natural gas .
however , long-term take-or-pay sales contracts to hyco customers are generally matched to the term of the feedstock supply obligations and provide recovery of price increases in the feedstock supply .
due to the matching of most long-term feedstock supply obligations to customer sales contracts , we do not believe these purchase obligations would have a material effect on our financial condition or results of operations .
refer to note 17 , commitments and contingencies , to the consolidated financial statements for additional information on our unconditional purchase obligations .
the unconditional purchase obligations also include other product supply and purchase commitments and electric power and natural gas supply purchase obligations , which are primarily pass-through contracts with our customers .
in addition , purchase commitments to spend approximately $ 540 for additional plant and equipment are included in the unconditional purchase obligations in 2016 .
we also purchase materials , energy , capital equipment , supplies , and services as part of the ordinary course of business under arrangements that are not unconditional purchase obligations .
the majority of such purchases are for raw materials and energy , which are obtained under requirements-type contracts at market prices .
obligation for future contribution to an equity affiliate on 19 april 2015 , a joint venture between air products and acwa holding entered into a 20-year oxygen and nitrogen supply agreement to supply saudi aramco 2019s oil refinery and power plant being built in jazan , saudi arabia .
air products owns 25% ( 25 % ) of the joint venture and guarantees the repayment of its share of an equity bridge loan .
in total , we expect to invest approximately $ 100 in this joint venture .
as of 30 september 2015 , we recorded a noncurrent liability of $ 67.5 for our obligation to make future equity contributions based on advances received by the joint venture under the loan .
income tax liabilities noncurrent deferred income tax liabilities as of 30 september 2015 were $ 903.3 .
tax liabilities related to unrecognized tax benefits as of 30 september 2015 were $ 97.5 .
these tax liabilities were excluded from the contractual obligations table , as it is impractical to determine a cash impact by year given that payments will vary according to changes in tax laws , tax rates , and our operating results .
in addition , there are uncertainties in timing of the effective settlement of our uncertain tax positions with respective taxing authorities .
refer to note 23 , income taxes , to the consolidated financial statements for additional information .
pension benefits the company sponsors defined benefit pension plans and defined contribution plans that cover a substantial portion of its worldwide employees .
the principal defined benefit pension plans 2014the u.s .
salaried pension plan and the u.k .
pension plan 2014were closed to new participants in 2005 and were replaced with defined contribution plans .
over the long run , the shift to defined contribution plans is expected to reduce volatility of both plan expense and contributions .
the fair market value of plan assets for our defined benefit pension plans as of the 30 september 2015 measurement date decreased to $ 3916.4 from $ 4114.6 at the end of fiscal year 2014 .
the projected benefit obligation for these plans was $ 4787.8 and $ 4738.6 at the end of the fiscal years 2015 and 2014 , respectively .
refer to note 16 , retirement benefits , to the consolidated financial statements for comprehensive and detailed disclosures on our postretirement benefits .
pension expense .

                                                                     | 2015           | 2014           | 2013
-------------------------------------------------------------------- | -------------- | -------------- | --------------
pension expense                                                      | $ 135.6        | $ 135.9        | $ 169.7
special terminations settlements and curtailments ( included above ) | 35.2           | 5.8            | 19.8
weighted average discount rate                                       | 4.0% ( 4.0 % ) | 4.6% ( 4.6 % ) | 4.0% ( 4.0 % )
weighted average expected rate of return on plan assets              | 7.4% ( 7.4 % ) | 7.7% ( 7.7 % ) | 7.7% ( 7.7 % )
weighted average expected rate of compensation increase              | 3.5% ( 3.5 % ) | 3.9% ( 3.9 % ) | 3.8% ( 3.8 % )


abiomed , inc .
and subsidiaries notes to consolidated financial statements 2014 ( continued ) evidence of an arrangement exists , ( 2 ) delivery has occurred or services have been rendered , ( 3 ) the seller 2019s price to the buyer is fixed or determinable , and ( 4 ) collectibility is reasonably assured .
further , sab 104 requires that both title and the risks and rewards of ownership be transferred to the buyer before revenue can be recognized .
in addition to sab 104 , we follow the guidance of eitf 00-21 , revenue arrangements with multiple deliverables .
we derive our revenues primarily from product sales , including maintenance service agreements .
the great majority of our product revenues are derived from shipments of our ab5000 and bvs 5000 product lines to fulfill customer orders for a specified number of consoles and/or blood pumps for a specified price .
we recognize revenues and record costs related to such sales upon product shipment .
maintenance and service support contract revenues are recognized ratably over the term of the service contracts based upon the elapsed term of the service contract .
government-sponsored research and development contracts and grants generally provide for payment on a cost-plus-fixed-fee basis .
revenues from these contracts and grants are recognized as work is performed , provided the government has appropriated sufficient funds for the work .
under contracts in which the company elects to spend significantly more on the development project during the term of the contract than the total contract amount , the company prospectively recognizes revenue on such contracts ratably over the term of the contract as it incurs related research and development costs , provided the government has appropriated sufficient funds for the work .
( d ) translation of foreign currencies all assets and liabilities of the company 2019s non-u.s .
subsidiaries are translated at year-end exchange rates , and revenues and expenses are translated at average exchange rates for the year in accordance with sfas no .
52 , foreign currency translation .
resulting translation adjustments are reflected in the accumulated other comprehensive loss component of shareholders 2019 equity .
currency transaction gains and losses are included in the accompanying statement of income and are not material for the three years presented .
( e ) warranties the company routinely accrues for estimated future warranty costs on its product sales at the time of sale .
our products are subject to rigorous regulation and quality standards .
warranty costs are included in cost of product revenues within the consolidated statements of operations .
the following table summarizes the activities in the warranty reserve for the two fiscal years ended march 31 , 2006 ( in thousands ) .

                                       | 2005         | 2006
-------------------------------------- | ------------ | ------------
balance at the beginning of the year   | $ 245        | $ 231
accrual for warranties                 | 198          | 193
warranty expense incurred for the year | -212 ( 212 ) | -257 ( 257 )
balance at the end of the year         | $ 231        | $ 167


notes to consolidated financial statements 4 .
the sum of the quarters 2019 earnings per common share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year .
5 .
during the fourth quarter of 2016 , net revenues included losses of approximately $ 60 million on sales and markdowns of legacy limited partnership investments in third-party-sponsored funds within the invest- ment management business segment .
the fourth quarter of 2016 also included a $ 70 million provision within the wealth management busi- ness segment related to certain brokerage service reporting activities .
employee share-based awards .

$ in millions        | 2017 quarter first | 2017 quarter second | 2017 quarter third | 2017 quarter fourth
-------------------- | ------------------ | ------------------- | ------------------ | -------------------
discrete tax benefit | $ 112              | $ 16                | $ 11               | $ 16

24 .
subsequent events the firm has evaluated subsequent events for adjustment to or disclosure in the financial statements through the date of this report and has not identified any recordable or disclos- able events not otherwise reported in these financial state- ments or the notes thereto .
175 december 2017 form 10-k


stock performance graph the following line-graph presentation compares our cumulative shareholder returns with the standard & poor 2019s information technology index and the standard & poor 2019s 500 stock index for the past five years .
the line graph assumes the investment of $ 100 in our common stock , the standard & poor 2019s information technology index , and the standard & poor 2019s 500 stock index on may 31 , 2003 and assumes reinvestment of all dividends .
comparison of 5 year cumulative total return* among global payments inc. , the s&p 500 index and the s&p information technology index 5/03 5/04 5/05 5/06 5/07 5/08 global payments inc .
s&p 500 s&p information technology * $ 100 invested on 5/31/03 in stock or index-including reinvestment of dividends .
fiscal year ending may 31 .
global payments s&p 500 information technology .

            | global payments | s&p 500  | s&p information technology
----------- | --------------- | -------- | --------------------------
may 31 2003 | $ 100.00        | $ 100.00 | $ 100.00
may 31 2004 | 137.75          | 118.33   | 121.98
may 31 2005 | 205.20          | 128.07   | 123.08
may 31 2006 | 276.37          | 139.14   | 123.99
may 31 2007 | 238.04          | 170.85   | 152.54
may 31 2008 | 281.27          | 159.41   | 156.43

issuer purchases of equity securities in fiscal 2007 , our board of directors approved a share repurchase program that authorized the purchase of up to $ 100 million of global payments 2019 stock in the open market or as otherwise may be determined by us , subject to market conditions , business opportunities , and other factors .
under this authorization , we have repurchased 2.3 million shares of our common stock .
this authorization has no expiration date and may be suspended or terminated at any time .
repurchased shares will be retired but will be available for future issuance.


united parcel service , inc .
and subsidiaries management's discussion and analysis of financial condition and results of operations liquidity and capital resources operating activities the following is a summary of the significant sources ( uses ) of cash from operating activities ( amounts in millions ) : .

                                                                       | 2012         | 2011           | 2010
---------------------------------------------------------------------- | ------------ | -------------- | --------------
net income                                                             | $ 807        | $ 3804         | $ 3338
non-cash operating activities ( a )                                    | 7301         | 4505           | 4398
pension and postretirement plan contributions ( ups-sponsored plans )  | -917 ( 917 ) | -1436 ( 1436 ) | -3240 ( 3240 )
income tax receivables and payables                                    | 280          | 236            | -319 ( 319 )
changes in working capital and other noncurrent assets and liabilities | -148 ( 148 ) | -12 ( 12 )     | -340 ( 340 )
other operating activities                                             | -107 ( 107 ) | -24 ( 24 )     | -2 ( 2 )
net cash from operating activities                                     | $ 7216       | $ 7073         | $ 3835

( a ) represents depreciation and amortization , gains and losses on derivative and foreign exchange transactions , deferred income taxes , provisions for uncollectible accounts , pension and postretirement benefit expense , stock compensation expense , impairment charges and other non-cash items .
cash from operating activities remained strong throughout the 2010 to 2012 time period .
operating cash flow was favorably impacted in 2012 , compared with 2011 , by lower contributions into our defined benefit pension and postretirement benefit plans ; however , this was partially offset by changes in our working capital position , which was impacted by overall growth in the business .
the change in the cash flows for income tax receivables and payables in 2011 and 2010 was primarily related to the timing of discretionary pension contributions during 2010 , as discussed further in the following paragraph .
except for discretionary or accelerated fundings of our plans , contributions to our company-sponsored pension plans have largely varied based on whether any minimum funding requirements are present for individual pension plans .
2022 in 2012 , we made a $ 355 million required contribution to the ups ibt pension plan .
2022 in 2011 , we made a $ 1.2 billion contribution to the ups ibt pension plan , which satisfied our 2011 contribution requirements and also approximately $ 440 million in contributions that would not have been required until after 2011 .
2022 in 2010 , we made $ 2.0 billion in discretionary contributions to our ups retirement and ups pension plans , and $ 980 million in required contributions to our ups ibt pension plan .
2022 the remaining contributions in the 2010 through 2012 period were largely due to contributions to our international pension plans and u.s .
postretirement medical benefit plans .
as discussed further in the 201ccontractual commitments 201d section , we have minimum funding requirements in the next several years , primarily related to the ups ibt pension , ups retirement and ups pension plans .
as of december 31 , 2012 , the total of our worldwide holdings of cash and cash equivalents was $ 7.327 billion .
approximately $ 4.211 billion of this amount was held in european subsidiaries with the intended purpose of completing the acquisition of tnt express n.v .
( see note 16 to the consolidated financial statements ) .
excluding this portion of cash held outside the u.s .
for acquisition-related purposes , approximately 50%-60% ( 50%-60 % ) of the remaining cash and cash equivalents are held by foreign subsidiaries throughout the year .
the amount of cash held by our u.s .
and foreign subsidiaries fluctuates throughout the year due to a variety of factors , including the timing of cash receipts and disbursements in the normal course of business .
cash provided by operating activities in the united states continues to be our primary source of funds to finance domestic operating needs , capital expenditures , share repurchases and dividend payments to shareowners .
to the extent that such amounts represent previously untaxed earnings , the cash held by foreign subsidiaries would be subject to tax if such amounts were repatriated in the form of dividends ; however , not all international cash balances would have to be repatriated in the form of a dividend if returned to the u.s .
when amounts earned by foreign subsidiaries are expected to be indefinitely reinvested , no accrual for taxes is provided.


management 2019s discussion and analysis of financial condition and results of operations 2013 ( continued ) ( amounts in millions , except per share amounts ) operating income increased during 2017 when compared to 2016 , comprised of a decrease in revenue of $ 42.1 , as discussed above , a decrease in salaries and related expenses of $ 28.0 and a decrease in office and general expenses of $ 16.9 .
the decrease in salaries and related expenses was primarily due to lower discretionary bonuses and incentive expense as well as a decrease in base salaries , benefits and tax .
the decrease in office and general expenses was primarily due to decreases in adjustments to contingent acquisition obligations , as compared to the prior year .
operating income increased during 2016 when compared to 2015 due to an increase in revenue of $ 58.8 , as discussed above , and a decrease in office and general expenses of $ 3.7 , partially offset by an increase in salaries and related expenses of $ 38.8 .
the increase in salaries and related expenses was attributable to an increase in base salaries , benefits and tax primarily due to increases in our workforce to support business growth over the last twelve months .
the decrease in office and general expenses was primarily due to lower production expenses related to pass-through costs , which are also reflected in revenue , for certain projects in which we acted as principal that decreased in size or did not recur during the current year .
corporate and other certain corporate and other charges are reported as a separate line item within total segment operating income and include corporate office expenses , as well as shared service center and certain other centrally managed expenses that are not fully allocated to operating divisions .
salaries and related expenses include salaries , long-term incentives , annual bonuses and other miscellaneous benefits for corporate office employees .
office and general expenses primarily include professional fees related to internal control compliance , financial statement audits and legal , information technology and other consulting services that are engaged and managed through the corporate office .
office and general expenses also include rental expense and depreciation of leasehold improvements for properties occupied by corporate office employees .
a portion of centrally managed expenses are allocated to operating divisions based on a formula that uses the planned revenues of each of the operating units .
amounts allocated also include specific charges for information technology-related projects , which are allocated based on utilization .
corporate and other expenses decreased during 2017 by $ 20.6 to $ 126.6 compared to 2016 , primarily due to lower annual incentive expense .
corporate and other expenses increased during 2016 by $ 5.4 to $ 147.2 compared to 2015 .
liquidity and capital resources cash flow overview the following tables summarize key financial data relating to our liquidity , capital resources and uses of capital. .

cash flow data                                                                 | years ended december 31 , 2017 | years ended december 31 , 2016 | years ended december 31 , 2015
------------------------------------------------------------------------------ | ------------------------------ | ------------------------------ | ------------------------------
net income adjusted to reconcile to net cash provided by operating activities1 | $ 887.3                        | $ 1023.2                       | $ 848.8
net cash used in working capital2                                              | -29.9 ( 29.9 )                 | -414.9 ( 414.9 )               | -99.9 ( 99.9 )
changes in other non-current assets and liabilities                            | 24.4                           | -95.5 ( 95.5 )                 | -60.4 ( 60.4 )
net cash provided by operating activities                                      | $ 881.8                        | $ 512.8                        | $ 688.5
net cash used in investing activities                                          | -196.2 ( 196.2 )               | -263.9 ( 263.9 )               | -199.7 ( 199.7 )
net cash used in financing activities                                          | -1004.9 ( 1004.9 )             | -666.4 ( 666.4 )               | -490.9 ( 490.9 )

1 reflects net income adjusted primarily for depreciation and amortization of fixed assets and intangible assets , amortization of restricted stock and other non-cash compensation , net losses on sales of businesses and deferred income taxes .
2 reflects changes in accounts receivable , expenditures billable to clients , other current assets , accounts payable and accrued liabilities .
operating activities due to the seasonality of our business , we typically use cash from working capital in the first nine months of a year , with the largest impact in the first quarter , and generate cash from working capital in the fourth quarter , driven by the seasonally strong media spending by our clients .
quarterly and annual working capital results are impacted by the fluctuating annual media spending budgets of our clients as well as their changing media spending patterns throughout each year across various countries.


table of contents the company uses some custom components that are not commonly used by its competitors , and new products introduced by the company often utilize custom components available from only one source .
when a component or product uses new technologies , initial capacity constraints may exist until the suppliers 2019 yields have matured or manufacturing capacity has increased .
if the company 2019s supply of components for a new or existing product were delayed or constrained , or if an outsourcing partner delayed shipments of completed products to the company , the company 2019s financial condition and operating results could be materially adversely affected .
the company 2019s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source , or to identify and obtain sufficient quantities from an alternative source .
continued availability of these components at acceptable prices , or at all , may be affected if those suppliers concentrated on the production of common components instead of components customized to meet the company 2019s requirements .
the company has entered into agreements for the supply of many components ; however , there can be no guarantee that the company will be able to extend or renew these agreements on similar terms , or at all .
therefore , the company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results .
substantially all of the company 2019s hardware products are manufactured by outsourcing partners that are located primarily in asia .
a significant concentration of this manufacturing is currently performed by a small number of outsourcing partners , often in single locations .
certain of these outsourcing partners are the sole- sourced suppliers of components and manufacturers for many of the company 2019s products .
although the company works closely with its outsourcing partners on manufacturing schedules , the company 2019s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments .
the company 2019s purchase commitments typically cover its requirements for periods up to 150 days .
other off-balance sheet commitments operating leases the company leases various equipment and facilities , including retail space , under noncancelable operating lease arrangements .
the company does not currently utilize any other off-balance sheet financing arrangements .
the major facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options .
as of september 26 , 2015 , the company had a total of 463 retail stores .
leases for retail space are for terms ranging from five to 20 years , the majority of which are for 10 years , and often contain multi-year renewal options .
as of september 26 , 2015 , the company 2019s total future minimum lease payments under noncancelable operating leases were $ 6.3 billion , of which $ 3.6 billion related to leases for retail space .
rent expense under all operating leases , including both cancelable and noncancelable leases , was $ 794 million , $ 717 million and $ 645 million in 2015 , 2014 and 2013 , respectively .
future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of september 26 , 2015 , are as follows ( in millions ) : .

2016       | $ 772
---------- | ------
2017       | 774
2018       | 744
2019       | 715
2020       | 674
thereafter | 2592
total      | $ 6271

other commitments the company utilizes several outsourcing partners to manufacture sub-assemblies for the company 2019s products and to perform final assembly and testing of finished products .
these outsourcing partners acquire components and build product based on demand information supplied by the company , which typically covers periods up to 150 days .
the company also obtains individual components for its products from a wide variety of individual suppliers .
consistent with industry practice , the company acquires components through a combination of purchase orders , supplier contracts and open orders based on projected demand information .
where appropriate , the purchases are applied to inventory component prepayments that are outstanding with the respective supplier .
as of september 26 , 2015 , the company had outstanding off-balance sheet third-party manufacturing commitments and component purchase commitments of $ 29.5 billion .
apple inc .
| 2015 form 10-k | 65


higher in the first half of the year , but declined dur- ing the second half of the year reflecting the pass- through to customers of lower resin input costs .
however , average margins benefitted from a more favorable mix of products sold .
raw material costs were lower , primarily for resins .
freight costs were also favorable , while operating costs increased .
shorewood sales volumes in 2009 declined from 2008 levels reflecting weaker demand in the home entertainment segment and a decrease in tobacco segment orders as customers have shifted pro- duction outside of the united states , partially offset by higher shipments in the consumer products segment .
average sales margins improved reflecting a more favorable mix of products sold .
raw material costs were higher , but were partially offset by lower freight costs .
operating costs were favorable , reflect- ing benefits from business reorganization and cost reduction actions taken in 2008 and 2009 .
charges to restructure operations totaled $ 7 million in 2009 and $ 30 million in 2008 .
entering 2010 , coated paperboard sales volumes are expected to increase , while average sales price real- izations should be comparable to 2009 fourth-quarter levels .
raw material costs are expected to be sig- nificantly higher for wood , energy and chemicals , but planned maintenance downtime costs will decrease .
foodservice sales volumes are expected to remain about flat , but average sales price realizations should improve slightly .
input costs for resins should be higher , but will be partially offset by lower costs for bleached board .
shorewood sales volumes are expected to decline reflecting seasonal decreases in home entertainment segment shipments .
operating costs are expected to be favorable reflecting the benefits of business reorganization efforts .
european consumer packaging net sales in 2009 were $ 315 million compared with $ 300 million in 2008 and $ 280 million in 2007 .
operating earnings in 2009 of $ 66 million increased from $ 22 million in 2008 and $ 30 million in 2007 .
sales volumes in 2009 were higher than in 2008 reflecting increased ship- ments to export markets .
average sales margins declined due to increased shipments to lower- margin export markets and lower average sales prices in western europe .
entering 2010 , sales volumes for the first quarter are expected to remain strong .
average margins should improve reflecting increased sales price realizations and a more favorable geographic mix of products sold .
input costs are expected to be higher due to increased wood prices in poland and annual energy tariff increases in russia .
asian consumer packaging net sales were $ 545 million in 2009 compared with $ 390 million in 2008 and $ 330 million in 2007 .
operating earnings in 2009 were $ 24 million compared with a loss of $ 13 million in 2008 and earnings of $ 12 million in 2007 .
the improved operating earnings in 2009 reflect increased sales volumes , higher average sales mar- gins and lower input costs , primarily for chemicals .
the loss in 2008 was primarily due to a $ 12 million charge to revalue pulp inventories at our shandong international paper and sun coated paperboard co. , ltd .
joint venture and start-up costs associated with the joint venture 2019s new folding box board paper machine .
distribution xpedx , our distribution business , markets a diverse array of products and supply chain services to cus- tomers in many business segments .
customer demand is generally sensitive to changes in general economic conditions , although the commercial printing segment is also dependent on consumer advertising and promotional spending .
distribution 2019s margins are relatively stable across an economic cycle .
providing customers with the best choice and value in both products and supply chain services is a key competitive factor .
additionally , efficient customer service , cost-effective logistics and focused working capital management are key factors in this segment 2019s profitability .
distribution in millions 2009 2008 2007 .

in millions      | 2009   | 2008   | 2007
---------------- | ------ | ------ | ------
sales            | $ 6525 | $ 7970 | $ 7320
operating profit | 50     | 103    | 108

distribution 2019s 2009 annual sales decreased 18% ( 18 % ) from 2008 and 11% ( 11 % ) from 2007 while operating profits in 2009 decreased 51% ( 51 % ) compared with 2008 and 54% ( 54 % ) compared with 2007 .
annual sales of printing papers and graphic arts supplies and equipment totaled $ 4.1 billion in 2009 compared with $ 5.2 billion in 2008 and $ 4.7 billion in 2007 , reflecting weak economic conditions in 2009 .
trade margins as a percent of sales for printing papers increased from 2008 but decreased from 2007 due to a higher mix of lower margin direct ship- ments from manufacturers .
revenue from packaging products was $ 1.3 billion in 2009 compared with $ 1.7 billion in 2008 and $ 1.5 billion in 2007 .
trade margins as a percent of sales for packaging products were higher than in the past two years reflecting an improved product and service mix .
facility supplies annual revenue was $ 1.1 billion in 2009 , essentially


discount to brent was narrower in 2013 than in 2012 and 2011 .
as a result of the significant increase in u.s .
production of light sweet crude oil , the historical relationship between wti , brent and lls pricing may not be indicative of future periods .
composition 2013 the proportion of our liquid hydrocarbon sales volumes that are ngls continues to increase due to our development of united states unconventional liquids-rich plays .
ngls were 15 percent of our north america e&p liquid hydrocarbon sales volumes in 2013 compared to 10 percent in 2012 and 7 percent in 2011 .
natural gas 2013 a significant portion of our natural gas production in the u.s .
is sold at bid-week prices , or first-of-month indices relative to our specific producing areas .
average henry hub settlement prices for natural gas were 31 percent higher for 2013 than for 2012 .
international e&p liquid hydrocarbons 2013 our international e&p crude oil production is relatively sweet and has historically sold in relation to the brent crude benchmark , which on average was 3 percent lower for 2013 than 2012 .
natural gas 2013 our major international e&p natural gas-producing regions are europe and e.g .
natural gas prices in europe have been considerably higher than the u.s .
in recent years .
in the case of e.g. , our natural gas sales are subject to term contracts , making realized prices in these areas less volatile .
the natural gas sales from e.g .
are at fixed prices ; therefore , our reported average international e&p natural gas realized prices may not fully track market price movements .
oil sands mining the oil sands mining segment produces and sells various qualities of synthetic crude oil .
output mix can be impacted by operational problems or planned unit outages at the mines or upgrader .
sales prices for roughly two-thirds of the normal output mix has historically tracked movements in wti and one-third has historically tracked movements in the canadian heavy crude oil marker , primarily wcs .
the wcs discount to wti has been increasing on average in each year presented below .
despite a wider wcs discount in 2013 , our average oil sands mining price realizations increased due to a greater proportion of higher value synthetic crude oil sales volumes compared to 2012 .
the operating cost structure of the oil sands mining operations is predominantly fixed and therefore many of the costs incurred in times of full operation continue during production downtime .
per-unit costs are sensitive to production rates .
key variable costs are natural gas and diesel fuel , which track commodity markets such as the aeco natural gas sales index and crude oil prices , respectively .
the table below shows average benchmark prices that impact both our revenues and variable costs: .

benchmark                                                | 2013    | 2012    | 2011
-------------------------------------------------------- | ------- | ------- | -------
wti crude oil ( dollars per bbl )                        | $ 98.05 | $ 94.15 | $ 95.11
wcs ( dollars per bbl ) ( a )                            | $ 72.77 | $ 73.18 | $ 77.97
aeco natural gas sales index ( dollars per mmbtu ) ( b ) | $ 3.08  | $ 2.39  | $ 3.68

wcs ( dollars per bbl ) ( a ) $ 72.77 $ 73.18 $ 77.97 aeco natural gas sales index ( dollars per mmbtu ) ( b ) $ 3.08 $ 2.39 $ 3.68 ( a ) monthly pricing based upon average wti adjusted for differentials unique to western canada .
( b ) monthly average day ahead index.


the goldman sachs group , inc .
and subsidiaries notes to consolidated financial statements commercial lending .
the firm 2019s commercial lending commitments are extended to investment-grade and non- investment-grade corporate borrowers .
commitments to investment-grade corporate borrowers are principally used for operating liquidity and general corporate purposes .
the firm also extends lending commitments in connection with contingent acquisition financing and other types of corporate lending as well as commercial real estate financing .
commitments that are extended for contingent acquisition financing are often intended to be short-term in nature , as borrowers often seek to replace them with other funding sources .
sumitomo mitsui financial group , inc .
( smfg ) provides the firm with credit loss protection on certain approved loan commitments ( primarily investment-grade commercial lending commitments ) .
the notional amount of such loan commitments was $ 26.88 billion and $ 27.03 billion as of december 2016 and december 2015 , respectively .
the credit loss protection on loan commitments provided by smfg is generally limited to 95% ( 95 % ) of the first loss the firm realizes on such commitments , up to a maximum of approximately $ 950 million .
in addition , subject to the satisfaction of certain conditions , upon the firm 2019s request , smfg will provide protection for 70% ( 70 % ) of additional losses on such commitments , up to a maximum of $ 1.13 billion , of which $ 768 million of protection had been provided as of both december 2016 and december 2015 .
the firm also uses other financial instruments to mitigate credit risks related to certain commitments not covered by smfg .
these instruments primarily include credit default swaps that reference the same or similar underlying instrument or entity , or credit default swaps that reference a market index .
warehouse financing .
the firm provides financing to clients who warehouse financial assets .
these arrangements are secured by the warehoused assets , primarily consisting of consumer and corporate loans .
contingent and forward starting resale and securities borrowing agreements/forward starting repurchase and secured lending agreements the firm enters into resale and securities borrowing agreements and repurchase and secured lending agreements that settle at a future date , generally within three business days .
the firm also enters into commitments to provide contingent financing to its clients and counterparties through resale agreements .
the firm 2019s funding of these commitments depends on the satisfaction of all contractual conditions to the resale agreement and these commitments can expire unused .
letters of credit the firm has commitments under letters of credit issued by various banks which the firm provides to counterparties in lieu of securities or cash to satisfy various collateral and margin deposit requirements .
investment commitments the firm 2019s investment commitments include commitments to invest in private equity , real estate and other assets directly and through funds that the firm raises and manages .
investment commitments include $ 2.10 billion and $ 2.86 billion as of december 2016 and december 2015 , respectively , related to commitments to invest in funds managed by the firm .
if these commitments are called , they would be funded at market value on the date of investment .
leases the firm has contractual obligations under long-term noncancelable lease agreements for office space expiring on various dates through 2069 .
certain agreements are subject to periodic escalation provisions for increases in real estate taxes and other charges .
the table below presents future minimum rental payments , net of minimum sublease rentals .
$ in millions december 2016 .

$ in millions     | as of december 2016
----------------- | -------------------
2017              | $ 290
2018              | 282
2019              | 238
2020              | 206
2021              | 159
2022 - thereafter | 766
total             | $ 1941

rent charged to operating expense was $ 244 million for 2016 , $ 249 million for 2015 and $ 309 million for 2014 .
operating leases include office space held in excess of current requirements .
rent expense relating to space held for growth is included in 201coccupancy . 201d the firm records a liability , based on the fair value of the remaining lease rentals reduced by any potential or existing sublease rentals , for leases where the firm has ceased using the space and management has concluded that the firm will not derive any future economic benefits .
costs to terminate a lease before the end of its term are recognized and measured at fair value on termination .
during 2016 , the firm incurred exit costs of approximately $ 68 million related to excess office space .
goldman sachs 2016 form 10-k 169


table of contents other areas in which we do business .
depending on the scope of such regulation , certain of our facilities and operations , or the operations of our suppliers , may be subject to additional operating and other permit requirements , potentially resulting in increased operating costs .
future regulatory developments future regulatory developments and actions could affect operations and increase operating costs for the airline industry , including our airline subsidiaries .
see part i , item 1a .
risk factors 2013 201cif we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and , at some airports , adequate slots , we may be unable to operate our existing flight schedule and to expand or change our route network in the future , which may have a material adverse impact on our operations , 201d 201cour business is subject to extensive government regulation , which may result in increases in our costs , disruptions to our operations , limits on our operating flexibility , reductions in the demand for air travel , and competitive disadvantages 201d and 201cwe are subject to many forms of environmental regulation and may incur substantial costs as a result 201d for additional information .
employees and labor relations the airline business is labor intensive .
in 2015 , salaries , wages and benefits were our largest expenses and represented approximately 31% ( 31 % ) of our operating expenses .
the table below presents our approximate number of active full-time equivalent employees as of december 31 , 2015 .
mainline operations wholly-owned regional carriers total .

                                            | mainline operations | wholly-owned regional carriers | total
------------------------------------------- | ------------------- | ------------------------------ | ------
pilots and flight crew training instructors | 13100               | 3200                           | 16300
flight attendants                           | 24100               | 1900                           | 26000
maintenance personnel                       | 14400               | 1800                           | 16200
fleet service personnel                     | 16100               | 3200                           | 19300
passenger service personnel                 | 16500               | 7100                           | 23600
administrative and other                    | 14700               | 2400                           | 17100
total                                       | 98900               | 19600                          | 118500


marketing we are a supplier of gasoline and distillates to resellers and consumers within our market area in the midwest , upper great plains , gulf coast and southeastern regions of the united states .
in 2007 , our refined products sales volumes totaled 21.6 billion gallons , or 1.410 mmbpd .
the average sales price of our refined products in aggregate was $ 86.53 per barrel for 2007 .
the following table sets forth our refined products sales by product group and our average sales price for each of the last three years .
refined product sales ( thousands of barrels per day ) 2007 2006 2005 .

( thousands of barrels per day )           | 2007    | 2006    | 2005
------------------------------------------ | ------- | ------- | -------
gasoline                                   | 791     | 804     | 836
distillates                                | 377     | 375     | 385
propane                                    | 23      | 23      | 22
feedstocks and special products            | 103     | 106     | 96
heavy fuel oil                             | 29      | 26      | 29
asphalt                                    | 87      | 91      | 87
total ( a )                                | 1410    | 1425    | 1455
average sales price ( dollars per barrel ) | $ 86.53 | $ 77.76 | $ 66.42

total ( a ) 1410 1425 1455 average sales price ( dollars per barrel ) $ 86.53 $ 77.76 $ 66.42 ( a ) includes matching buy/sell volumes of 24 mbpd and 77 mbpd in 2006 and 2005 .
on april 1 , 2006 , we changed our accounting for matching buy/sell arrangements as a result of a new accounting standard .
this change resulted in lower refined products sales volumes for 2007 and the remainder of 2006 than would have been reported under our previous accounting practices .
see note 2 to the consolidated financial statements .
the wholesale distribution of petroleum products to private brand marketers and to large commercial and industrial consumers and sales in the spot market accounted for 69 percent of our refined products sales volumes in 2007 .
we sold 49 percent of our gasoline volumes and 89 percent of our distillates volumes on a wholesale or spot market basis .
half of our propane is sold into the home heating market , with the balance being purchased by industrial consumers .
propylene , cumene , aromatics , aliphatics and sulfur are domestically marketed to customers in the chemical industry .
base lube oils , maleic anhydride , slack wax , extract and pitch are sold throughout the united states and canada , with pitch products also being exported worldwide .
we market asphalt through owned and leased terminals throughout the midwest , upper great plains , gulf coast and southeastern regions of the united states .
our customer base includes approximately 750 asphalt-paving contractors , government entities ( states , counties , cities and townships ) and asphalt roofing shingle manufacturers .
we have blended ethanol with gasoline for over 15 years and increased our blending program in 2007 , in part due to renewable fuel mandates .
we blended 41 mbpd of ethanol into gasoline in 2007 and 35 mbpd in both 2006 and 2005 .
the future expansion or contraction of our ethanol blending program will be driven by the economics of the ethanol supply and changes in government regulations .
we sell reformulated gasoline in parts of our marketing territory , primarily chicago , illinois ; louisville , kentucky ; northern kentucky ; milwaukee , wisconsin and hartford , illinois , and we sell low-vapor-pressure gasoline in nine states .
we also sell biodiesel in minnesota , illinois and kentucky .
as of december 31 , 2007 , we supplied petroleum products to about 4400 marathon branded-retail outlets located primarily in ohio , michigan , indiana , kentucky and illinois .
branded retail outlets are also located in georgia , florida , minnesota , wisconsin , north carolina , tennessee , west virginia , virginia , south carolina , alabama , pennsylvania , and texas .
sales to marathon-brand jobbers and dealers accounted for 16 percent of our refined product sales volumes in 2007 .
speedway superamerica llc ( 201cssa 201d ) , our wholly-owned subsidiary , sells gasoline and diesel fuel primarily through retail outlets that we operate .
sales of refined products through these ssa retail outlets accounted for 15 percent of our refined products sales volumes in 2007 .
as of december 31 , 2007 , ssa had 1636 retail outlets in nine states that sold petroleum products and convenience store merchandise and services , primarily under the brand names 201cspeedway 201d and 201csuperamerica . 201d ssa 2019s revenues from the sale of non-petroleum merchandise totaled $ 2.796 billion in 2007 , compared with $ 2.706 billion in 2006 .
profit levels from the sale of such merchandise and services tend to be less volatile than profit levels from the retail sale of gasoline and diesel fuel .
ssa also operates 59 valvoline instant oil change retail outlets located in michigan and northwest ohio .
pilot travel centers llc ( 201cptc 201d ) , our joint venture with pilot corporation ( 201cpilot 201d ) , is the largest operator of travel centers in the united states with 286 locations in 37 states and canada at december 31 , 2007 .
the travel centers offer diesel fuel , gasoline and a variety of other services , including on-premises brand-name restaurants at many locations .
pilot and marathon each own a 50 percent interest in ptc.


table of contents global brand concepts american living launched exclusively at jcpenney in february 2008 , american living offers classic american style with a fresh , modern spirit and authentic sensibility .
from everyday essentials to special occasion looks for the entire family to finely crafted bedding and home furnishings , american living promises stylish clothing and home products that are exceptionally made and offered at an incredible value .
american living is available exclusively at jcpenney and jcp.com .
chaps translates the classic heritage and timeless aesthetic of ralph lauren into an accessible line for men , women , children and the home .
from casual basics designed for versatility and ease of wear to smart , finely tailored silhouettes perfect for business and more formal occasions , chaps creates interchangeable classics that are both enduring and affordable .
the chaps men 2019s collection is available at select department and specialty stores .
the chaps collections for women , children and the home are available exclusively at kohl 2019s and kohls.com .
our wholesale segment our wholesale segment sells our products to leading upscale and certain mid-tier department stores , specialty stores and golf and pro shops , both domestically and internationally .
we have continued to focus on elevating our brand by improving in-store product assortment and presentation , and improving full-price sell-throughs to consumers .
as of the end of fiscal 2011 , our ralph lauren- branded products were sold through approximately 10000 doors worldwide and during fiscal 2011 , we invested approximately $ 35 million in related shop-within-shops primarily in domestic and international department and specialty stores .
department stores are our major wholesale customers in north america .
in europe , our wholesale sales are a varying mix of sales to both department stores and specialty shops , depending on the country .
our collection brands 2014 women 2019s ralph lauren collection and black label and men 2019s purple label and black label 2014 are distributed through a limited number of premier fashion retailers .
in addition , we sell excess and out-of-season products through secondary distribution channels , including our retail factory stores .
in japan , our wholesale products are distributed primarily through shop-within-shops at premiere and top-tier department stores , and the mix of business is weighted to women 2019s blue label .
in asia ( excluding japan and south korea ) , our wholesale products are sold at mid and top- tier department stores , and the mix of business is primarily weighted to men 2019s and women 2019s blue label .
in asia and on a worldwide basis , products distributed through concessions-based sales arrangements are reported within our retail segment ( see 201cour retail segment 201d for further discussion ) .
worldwide distribution channels the following table presents the number of doors by geographic location , in which ralph lauren-branded products distributed by our wholesale segment were sold to consumers in our primary channels of distribution as of april 2 , 2011 : number of location doors .

location                 | number of doors
------------------------ | ---------------
united states and canada | 5943
europe                   | 3919
asia                     | 93
total                    | 9955

in addition , american living and chaps-branded products distributed by our wholesale segment were sold domestically through approximately 1700 doors as of april 2 , 2011.


in summary , our cash flows for each period were as follows: .

( in millions )                                                   | 2013             | 2012             | 2011
----------------------------------------------------------------- | ---------------- | ---------------- | ----------------
net cash provided by operating activities                         | $ 20776          | $ 18884          | $ 20963
net cash used for investing activities                            | -18073 ( 18073 ) | -14060 ( 14060 ) | -10301 ( 10301 )
net cash used for financing activities                            | -5498 ( 5498 )   | -1408 ( 1408 )   | -11100 ( 11100 )
effect of exchange rate fluctuations on cash and cash equivalents | -9 ( 9 )         | -3 ( 3 )         | 5
net increase ( decrease ) in cash and cash equivalents            | $ -2804 ( 2804 ) | $ 3413           | $ -433 ( 433 )

operating activities cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities .
for 2013 compared to 2012 , the $ 1.9 billion increase in cash provided by operating activities was due to changes in working capital , partially offset by lower net income in 2013 .
income taxes paid , net of refunds , in 2013 compared to 2012 were $ 1.1 billion lower due to lower income before taxes in 2013 and 2012 income tax overpayments .
changes in assets and liabilities as of december 28 , 2013 , compared to december 29 , 2012 , included lower income taxes payable and receivable resulting from a reduction in taxes due in 2013 , and lower inventories due to the sell-through of older-generation products , partially offset by the ramp of 4th generation intel core processor family products .
for 2013 , our three largest customers accounted for 44% ( 44 % ) of our net revenue ( 43% ( 43 % ) in 2012 and 2011 ) , with hewlett- packard company accounting for 17% ( 17 % ) of our net revenue ( 18% ( 18 % ) in 2012 and 19% ( 19 % ) in 2011 ) , dell accounting for 15% ( 15 % ) of our net revenue ( 14% ( 14 % ) in 2012 and 15% ( 15 % ) in 2011 ) , and lenovo accounting for 12% ( 12 % ) of our net revenue ( 11% ( 11 % ) in 2012 and 9% ( 9 % ) in 2011 ) .
these three customers accounted for 34% ( 34 % ) of our accounts receivable as of december 28 , 2013 ( 33% ( 33 % ) as of december 29 , 2012 ) .
for 2012 compared to 2011 , the $ 2.1 billion decrease in cash provided by operating activities was due to lower net income and changes in our working capital , partially offset by adjustments for non-cash items .
the adjustments for noncash items were higher due primarily to higher depreciation in 2012 compared to 2011 , partially offset by increases in non-acquisition-related deferred tax liabilities as of december 31 , 2011 .
investing activities investing cash flows consist primarily of capital expenditures ; investment purchases , sales , maturities , and disposals ; as well as cash used for acquisitions .
the increase in cash used for investing activities in 2013 compared to 2012 was primarily due to an increase in purchases of available-for-sale investments and a decrease in maturities and sales of trading assets , partially offset by an increase in maturities and sales of available-for-sale investments and a decrease in purchases of licensed technology and patents .
our capital expenditures were $ 10.7 billion in 2013 ( $ 11.0 billion in 2012 and $ 10.8 billion in 2011 ) .
cash used for investing activities increased in 2012 compared to 2011 primarily due to net purchases of available- for-sale investments and trading assets in 2012 , as compared to net maturities and sales of available-for-sale investments and trading assets in 2011 , partially offset by a decrease in cash paid for acquisitions .
net purchases of available-for-sale investments in 2012 included our purchase of $ 3.2 billion of equity securities in asml in q3 2012 .
financing activities financing cash flows consist primarily of repurchases of common stock , payment of dividends to stockholders , issuance and repayment of long-term debt , and proceeds from the sale of shares through employee equity incentive plans .
table of contents management 2019s discussion and analysis of financial condition and results of operations ( continued )


sl green realty corp .
it happens here 2012 annual report 85 | 85 in april a02011 , we purchased sitq immobilier , a subsid- iary of caisse de depot et placement du quebec , or sitq 2019s , 31.5% ( 31.5 % ) economic interest in 1515 a0 broadway , thereby consoli- dating full ownership of the 1750000 a0square foot ( unaudited ) building .
the transaction valued the consolidated interests at $ 1.23 a0 billion .
this valuation was based on a negotiated sales agreement and took into consideration such factors as whether this was a distressed sale and whether a minority dis- count was warranted .
we acquired the interest subject to the $ 458.8 a0million mortgage encumbering the property .
we rec- ognized a purchase price fair value adjustment of $ 475.1 a0mil- lion upon the closing of this transaction .
this property , which we initially acquired in may a02002 , was previously accounted for as an investment in unconsolidated joint ventures .
in january a0 2011 , we purchased city investment fund , or cif 2019s , 49.9% ( 49.9 % ) a0interest in 521 a0fifth avenue , thereby assum- ing full ownership of the 460000 a0 square foot ( unaudited ) building .
the transaction valued the consolidated interests at approximately $ 245.7 a0 million , excluding $ 4.5 a0 million of cash and other assets acquired .
we acquired the interest subject to the $ 140.0 a0 million mortgage encumbering the property .
we recognized a purchase price fair value adjust- ment of $ 13.8 a0million upon the closing of this transaction .
in april a02011 , we refinanced the property with a new $ 150.0 a0mil- lion 2-year mortgage which carries a floating rate of interest of 200 a0basis points over the 30-day libor .
in connection with that refinancing , we acquired the fee interest in the property for $ 15.0 a0million .
the following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these 2011 acquisitions ( amounts in thousands ) : 51 east 180 110 east 1515 521 fifth 42nd street maiden lane 42nd street broadway avenue land fffd$ 44095 $ 191523 $ 34000 $ 2002 2008462700 $ 110100 .

                                               | 51 east 42nd street | 180 maiden lane | 110 east 42nd street | 1515 broadway  | 521 fifth avenue
---------------------------------------------- | ------------------- | --------------- | -------------------- | -------------- | ----------------
land                                           | $ 44095             | $ 191523        | $ 34000              | $ 462700       | $ 110100
building                                       | 33470               | 233230          | 46411                | 707938         | 146686
above market lease value                       | 5616                | 7944            | 823                  | 18298          | 3318
acquired in-place leases                       | 4333                | 29948           | 5396                 | 98661          | 23016
other assets net of other liabilities          | 2014                | 2014            | 2014                 | 27127          | 2014
assets acquired                                | 87514               | 462645          | 86630                | 1314724        | 283120
fair value adjustment to mortgage note payable | 2014                | 2014            | 2014                 | -3693 ( 3693 ) | 2014
below market lease value                       | 7514                | 20320           | 2326                 | 84417          | 25977
liabilities assumed                            | 7514                | 20320           | 2326                 | 80724          | 25977
purchase price allocation                      | $ 80000             | $ 442325        | $ 84304              | $ 1234000      | $ 257143
net consideration funded by us at closing      | $ 81632             | $ 81835         | $ 2744               | $ 259228       | $ 70000
equity and/or debt investment held             | 2014                | 2014            | $ 16000              | $ 40942        | $ 41432
debt assumed                                   | $ 2014              | $ 2014          | $ 65000              | $ 458767       | $ 140000

net consideration funded by us at closing fffd$ 81632 $ 200281835 $ 20022744 $ 2002 2008259228 $ 200270000 equity and/or debt investment held fffd 2014 2014 $ 16000 $ 2002 2002 200840942 $ 200241432 debt assumed fffd$ 2002 2002 2002 2002 2008 2014 $ 2002 2002 2002 2002 2002 2008 2014 $ 65000 $ 2002 2008458767 $ 140000 2010 acquisitions | in january 2010 , we became the sole owner of 100 a0church street , a 1.05 a0million square foot ( unau- dited ) office tower located in downtown manhattan , following the successful foreclosure of the senior mezzanine loan at the property .
our initial investment totaled $ 40.9 a0million , which was comprised of a 50% ( 50 % ) a0interest in the senior mezzanine loan and two other mezzanine loans at 100 a0 church street , which we acquired from gramercy capital corp .
( nyse : a0gkk ) , or gramercy , in the summer of a0 2007 .
at closing of the foreclo- sure , we funded an additional $ 15.0 a0million of capital into the project as part of our agreement with wachovia bank , n.a .
to extend and restructure the existing financing .
gramercy declined to fund its share of this capital and instead trans- ferred its interests in the investment to us at closing .
the restructured $ 139.7 a0million mortgage carries an interest rate of 350 a0basis points over the 30-day libor .
the restructured mortgage , which was scheduled to mature in january a0 2013 , was repaid in march a02011 .
in august a0 2010 , we acquired 125 a0 park avenue , a manhattan office tower , for $ 330 a0million .
in connection with the acquisition , we assumed $ 146.25 a0million of in-place financ- ing .
the 5.748% ( 5.748 % ) interest-only loan matures in october a02014 .
in december a02010 , we completed the acquisition of various investments from gramercy .
this acquisition included ( 1 ) a0the remaining 45% ( 45 % ) a0interest in the leased fee at 885 a0third avenue for approximately $ 39.3 a0 million plus assumed mortgage debt of approximately $ 120.4 a0million , ( 2 ) a0the remaining 45% ( 45 % ) interest in the leased fee at 2 a0 herald square for approxi- mately $ 25.6 a0 million plus assumed mortgage debt of approximately $ 86.1 a0 million and , ( 3 ) a0 the entire leased fee interest in 292 a0madison avenue for approximately $ 19.2 a0mil- lion plus assumed mortgage debt of approximately $ 59.1 a0million .
these assets are all leased to third a0party operators.


table of contents item 1b .
unresolved staff comments we have no unresolved sec staff comments to report .
item 2 .
properties as of december 31 , 2015 , we owned or leased 126 major manufacturing sites and 14 major technical centers .
a manufacturing site may include multiple plants and may be wholly or partially owned or leased .
we also have many smaller manufacturing sites , sales offices , warehouses , engineering centers , joint ventures and other investments strategically located throughout the world .
we have a presence in 44 countries .
the following table shows the regional distribution of our major manufacturing sites by the operating segment that uses such facilities : north america europe , middle east & africa asia pacific south america total .

                                   | north america | europemiddle east& africa | asia pacific | south america | total
---------------------------------- | ------------- | ------------------------- | ------------ | ------------- | -----
electrical/electronic architecture | 30            | 32                        | 25           | 5             | 92
powertrain systems                 | 4             | 10                        | 5            | 2             | 21
electronics and safety             | 3             | 7                         | 3            | 2014          | 13
total                              | 37            | 49                        | 33           | 7             | 126

in addition to these manufacturing sites , we had 14 major technical centers : four in north america ; five in europe , middle east and africa ; four in asia pacific ; and one in south america .
of our 126 major manufacturing sites and 14 major technical centers , which include facilities owned or leased by our consolidated subsidiaries , 77 are primarily owned and 63 are primarily leased .
we frequently review our real estate portfolio and develop footprint strategies to support our customers 2019 global plans , while at the same time supporting our technical needs and controlling operating expenses .
we believe our evolving portfolio will meet current and anticipated future needs .
item 3 .
legal proceedings we are from time to time subject to various actions , claims , suits , government investigations , and other proceedings incidental to our business , including those arising out of alleged defects , breach of contracts , competition and antitrust matters , product warranties , intellectual property matters , personal injury claims and employment-related matters .
it is our opinion that the outcome of such matters will not have a material adverse impact on our consolidated financial position , results of operations , or cash flows .
with respect to warranty matters , although we cannot ensure that the future costs of warranty claims by customers will not be material , we believe our established reserves are adequate to cover potential warranty settlements .
however , the final amounts required to resolve these matters could differ materially from our recorded estimates .
gm ignition switch recall in the first quarter of 2014 , gm , delphi 2019s largest customer , initiated a product recall related to ignition switches .
delphi received requests for information from , and cooperated with , various government agencies related to this ignition switch recall .
in addition , delphi was initially named as a co-defendant along with gm ( and in certain cases other parties ) in class action and product liability lawsuits related to this matter .
as of december 31 , 2015 , delphi was not named as a defendant in any class action complaints .
although no assurances can be made as to the ultimate outcome of these or any other future claims , delphi does not believe a loss is probable and , accordingly , no reserve has been made as of december 31 , 2015 .
unsecured creditors litigation the fourth amended and restated limited liability partnership agreement of delphi automotive llp ( the 201cfourth llp agreement 201d ) was entered into on july 12 , 2011 by the members of delphi automotive llp in order to position the company for its initial public offering .
under the terms of the fourth llp agreement , if cumulative distributions to the members of delphi automotive llp under certain provisions of the fourth llp agreement exceed $ 7.2 billion , delphi , as disbursing agent on behalf of dphh , is required to pay to the holders of allowed general unsecured claims against dphh $ 32.50 for every $ 67.50 in excess of $ 7.2 billion distributed to the members , up to a maximum amount of $ 300 million .
in december 2014 , a complaint was filed in the bankruptcy court alleging that the redemption by delphi automotive llp of the membership interests of gm and the pbgc , and the repurchase of shares and payment of dividends by delphi automotive plc , constituted distributions under the terms of the fourth llp agreement approximating $ 7.2 billion .
delphi considers cumulative


devon energy corporation and subsidiaries notes to consolidated financial statements 2013 ( continued ) debt maturities as of december 31 , 2014 , excluding premiums and discounts , are as follows ( in millions ) : .

2015                | $ 1432
------------------- | -------
2016                | 350
2017                | 2014
2018                | 875
2019                | 1337
2020 and thereafter | 7263
total               | $ 11257

credit lines devon has a $ 3.0 billion syndicated , unsecured revolving line of credit ( the senior credit facility ) .
the maturity date for $ 30 million of the senior credit facility is october 24 , 2017 .
the maturity date for $ 164 million of the senior credit facility is october 24 , 2018 .
the maturity date for the remaining $ 2.8 billion is october 24 , 2019 .
amounts borrowed under the senior credit facility may , at the election of devon , bear interest at various fixed rate options for periods of up to twelve months .
such rates are generally less than the prime rate .
however , devon may elect to borrow at the prime rate .
the senior credit facility currently provides for an annual facility fee of $ 3.8 million that is payable quarterly in arrears .
as of december 31 , 2014 , there were no borrowings under the senior credit facility .
the senior credit facility contains only one material financial covenant .
this covenant requires devon 2019s ratio of total funded debt to total capitalization , as defined in the credit agreement , to be no greater than 65 percent .
the credit agreement contains definitions of total funded debt and total capitalization that include adjustments to the respective amounts reported in the accompanying consolidated financial statements .
also , total capitalization is adjusted to add back noncash financial write-downs such as full cost ceiling impairments or goodwill impairments .
as of december 31 , 2014 , devon was in compliance with this covenant with a debt-to- capitalization ratio of 20.9 percent .
commercial paper devon has access to $ 3.0 billion of short-term credit under its commercial paper program .
commercial paper debt generally has a maturity of between 1 and 90 days , although it can have a maturity of up to 365 days , and bears interest at rates agreed to at the time of the borrowing .
the interest rate is generally based on a standard index such as the federal funds rate , libor or the money market rate as found in the commercial paper market .
as of december 31 , 2014 , devon 2019s commercial paper borrowings of $ 932 million have a weighted- average borrowing rate of 0.44 percent .
retirement of senior notes on november 13 , 2014 , devon redeemed $ 1.9 billion of senior notes prior to their scheduled maturity , primarily with proceeds received from its asset divestitures .
the redemption includes the 2.4% ( 2.4 % ) $ 500 million senior notes due 2016 , the 1.2% ( 1.2 % ) $ 650 million senior notes due 2016 and the 1.875% ( 1.875 % ) $ 750 million senior notes due 2017 .
the notes were redeemed for $ 1.9 billion , which included 100 percent of the principal amount and a make-whole premium of $ 40 million .
on the date of redemption , these notes also had an unamortized discount of $ 2 million and unamortized debt issuance costs of $ 6 million .
the make-whole premium , unamortized discounts and debt issuance costs are included in net financing costs on the accompanying 2014 consolidated comprehensive statement of earnings.