december 18 , 2007 , we issued an additional 23182197 shares of common stock to citadel .
the issuances were exempt from registration pursuant to section 4 ( 2 ) of the securities act of 1933 , and each purchaser has represented to us that it is an 201caccredited investor 201d as defined in regulation d promulgated under the securities act of 1933 , and that the common stock was being acquired for investment .
we did not engage in a general solicitation or advertising with regard to the issuances of the common stock and have not offered securities to the public in connection with the issuances .
see item 1 .
business 2014citadel investment .
performance graph the following performance graph shows the cumulative total return to a holder of the company 2019s common stock , assuming dividend reinvestment , compared with the cumulative total return , assuming dividend reinvestment , of the standard & poor 2019s ( 201cs&p 201d ) 500 and the s&p super cap diversified financials during the period from december 31 , 2002 through december 31 , 2007. .

                                     | 12/02  | 12/03  | 12/04  | 12/05  | 12/06  | 12/07
------------------------------------ | ------ | ------ | ------ | ------ | ------ | ------
e*trade financial corporation        | 100.00 | 260.29 | 307.61 | 429.22 | 461.32 | 73.05
s&p 500                              | 100.00 | 128.68 | 142.69 | 149.70 | 173.34 | 182.87
s&p super cap diversified financials | 100.00 | 139.29 | 156.28 | 170.89 | 211.13 | 176.62

2022 $ 100 invested on 12/31/02 in stock or index-including reinvestment of dividends .
fiscal year ending december 31 .
2022 copyright a9 2008 , standard & poor 2019s , a division of the mcgraw-hill companies , inc .
all rights reserved .
www.researchdatagroup.com/s&p.htm


measurement point december 31 the priceline group nasdaq composite index s&p 500 rdg internet composite .

measurement pointdecember 31 | the priceline group inc . | nasdaqcomposite index | s&p 500index | rdg internetcomposite
---------------------------- | ------------------------- | --------------------- | ------------ | ---------------------
2011                         | 100.00                    | 100.00                | 100.00       | 100.00
2012                         | 132.64                    | 116.41                | 116.00       | 119.34
2013                         | 248.53                    | 165.47                | 153.58       | 195.83
2014                         | 243.79                    | 188.69                | 174.60       | 192.42
2015                         | 272.59                    | 200.32                | 177.01       | 264.96
2016                         | 313.45                    | 216.54                | 198.18       | 277.56


part ii item 5 .
market for registrant 2019s common equity , related stockholder matters and issuer purchases of equity securities .
equity compensation plans 2019 information is incorporated by reference from part iii , item 12 , 201csecurity ownership of certain beneficial owners and management and related stockholder matters , 201d of this document , and should be considered an integral part of item 5 .
at january 31 , 2016 , there were 84607 shareholders of record .
3m 2019s stock is listed on the new york stock exchange , inc .
( nyse ) , the chicago stock exchange , inc. , and the swx swiss exchange .
cash dividends declared and paid totaled $ 1.025 per share for each of the second , third , and fourth quarters of 2015 .
cash dividends declared in the fourth quarter of 2014 included a dividend paid in november 2014 of $ 0.855 per share and a dividend paid in march 2015 of $ 1.025 per share .
cash dividends declared and paid totaled $ 0.855 per share for each of the second and third quarters of 2014 .
cash dividends declared in the fourth quarter of 2013 include a dividend paid in march 2014 of $ 0.855 per share .
stock price comparisons follow : stock price comparisons ( nyse composite transactions ) .

( per share amounts ) | first quarter | second quarter | third quarter | fourth quarter | total
--------------------- | ------------- | -------------- | ------------- | -------------- | --------
2015 high             | $ 170.50      | $ 167.70       | $ 157.94      | $ 160.09       | $ 170.50
2015 low              | 157.74        | 153.92         | 134.00        | 138.57         | 134.00
2014 high             | $ 139.29      | $ 145.53       | $ 147.87      | $ 168.16       | $ 168.16
2014 low              | 123.61        | 132.02         | 138.43        | 130.60         | 123.61

issuer purchases of equity securities repurchases of 3m common stock are made to support the company 2019s stock-based employee compensation plans and for other corporate purposes .
in february 2014 , 3m 2019s board of directors authorized the repurchase of up to $ 12 billion of 3m 2019s outstanding common stock , with no pre-established end date .
in february 2016 , 3m 2019s board of directors replaced the company 2019s february 2014 repurchase program with a new repurchase program .
this new program authorizes the repurchase of up to $ 10 billion of 3m 2019s outstanding common stock , with no pre-established end date.


management 2019s discussion and analysis operating expenses our operating expenses are primarily influenced by compensation , headcount and levels of business activity .
in addition , see 201cuse of estimates 201d for expenses that may arise from litigation and regulatory proceedings .
compensation and benefits includes salaries , discretionary compensation , amortization of equity awards and other items such as benefits .
discretionary compensation is significantly impacted by , among other factors , the level of net revenues , overall financial performance , prevailing labor markets , business mix , the structure of our share-based compensation programs and the external environment .
the table below presents our operating expenses and total staff ( which includes employees , consultants and temporary staff ) . .

$ in millions                                    | year ended december 2014 | year ended december 2013 | year ended december 2012
------------------------------------------------ | ------------------------ | ------------------------ | ------------------------
compensation and benefits                        | $ 12691                  | $ 12613                  | $ 12944
brokerage clearing exchange anddistribution fees | 2501                     | 2341                     | 2208
market development                               | 549                      | 541                      | 509
communications and technology                    | 779                      | 776                      | 782
depreciation and amortization                    | 1337                     | 1322                     | 1738
occupancy                                        | 827                      | 839                      | 875
professional fees                                | 902                      | 930                      | 867
insurance reserves1                              | 2014                     | 176                      | 598
other expenses                                   | 2585                     | 2931                     | 2435
total non-compensation expenses                  | 9480                     | 9856                     | 10012
total operating expenses                         | $ 22171                  | $ 22469                  | $ 22956
total staff at period-end                        | 34000                    | 32900                    | 32400

1 .
consists of changes in reserves related to our americas reinsurance business , including interest credited to policyholder account balances , and expenses related to property catastrophe reinsurance claims .
in april 2013 , we completed the sale of a majority stake in our americas reinsurance business and no longer consolidate this business .
2014 versus 2013 .
operating expenses on the consolidated statements of earnings were $ 22.17 billion for 2014 , essentially unchanged compared with 2013 .
compensation and benefits expenses on the consolidated statements of earnings were $ 12.69 billion for 2014 , essentially unchanged compared with 2013 .
the ratio of compensation and benefits to net revenues for 2014 was 36.8% ( 36.8 % ) compared with 36.9% ( 36.9 % ) for 2013 .
total staff increased 3% ( 3 % ) during 2014 .
non-compensation expenses on the consolidated statements of earnings were $ 9.48 billion for 2014 , 4% ( 4 % ) lower than 2013 .
the decrease compared with 2013 included a decrease in other expenses , due to lower net provisions for litigation and regulatory proceedings and lower operating expenses related to consolidated investments , as well as a decline in insurance reserves , reflecting the sale of our americas reinsurance business in 2013 .
these decreases were partially offset by an increase in brokerage , clearing , exchange and distribution fees .
net provisions for litigation and regulatory proceedings for 2014 were $ 754 million compared with $ 962 million for 2013 ( both primarily comprised of net provisions for mortgage-related matters ) .
2014 included a charitable contribution of $ 137 million to goldman sachs gives , our donor-advised fund .
compensation was reduced to fund this charitable contribution to goldman sachs gives .
the firm asks its participating managing directors to make recommendations regarding potential charitable recipients for this contribution .
2013 versus 2012 .
operating expenses on the consolidated statements of earnings were $ 22.47 billion for 2013 , 2% ( 2 % ) lower than 2012 .
compensation and benefits expenses on the consolidated statements of earnings were $ 12.61 billion for 2013 , 3% ( 3 % ) lower compared with $ 12.94 billion for 2012 .
the ratio of compensation and benefits to net revenues for 2013 was 36.9% ( 36.9 % ) compared with 37.9% ( 37.9 % ) for 2012 .
total staff increased 2% ( 2 % ) during 2013 .
non-compensation expenses on the consolidated statements of earnings were $ 9.86 billion for 2013 , 2% ( 2 % ) lower than 2012 .
the decrease compared with 2012 included a decline in insurance reserves , reflecting the sale of our americas reinsurance business , and a decrease in depreciation and amortization expenses , primarily reflecting lower impairment charges and lower operating expenses related to consolidated investments .
these decreases were partially offset by an increase in other expenses , due to higher net provisions for litigation and regulatory proceedings , and higher brokerage , clearing , exchange and distribution fees .
net provisions for litigation and regulatory proceedings for 2013 were $ 962 million ( primarily comprised of net provisions for mortgage-related matters ) compared with $ 448 million for 2012 ( including a settlement with the board of governors of the federal reserve system ( federal reserve board ) regarding the independent foreclosure review ) .
2013 included a charitable contribution of $ 155 million to goldman sachs gives , our donor-advised fund .
compensation was reduced to fund this charitable contribution to goldman sachs gives .
the firm asks its participating managing directors to make recommendations regarding potential charitable recipients for this contribution .
38 goldman sachs 2014 annual report


stock total return performance the following graph compares our total return to stockholders with the returns of the standard & poor 2019s composite 500 index ( 201cs&p 500 201d ) and the dow jones us select health care providers index ( 201cpeer group 201d ) for the five years ended december 31 , 2018 .
the graph assumes an investment of $ 100 in each of our common stock , the s&p 500 , and the peer group on december 31 , 2013 , and that dividends were reinvested when paid. .

           | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018
---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
hum        | $ 100      | $ 140      | $ 176      | $ 202      | $ 247      | $ 287
s&p 500    | $ 100      | $ 114      | $ 115      | $ 129      | $ 157      | $ 150
peer group | $ 100      | $ 128      | $ 135      | $ 137      | $ 173      | $ 191

the stock price performance included in this graph is not necessarily indicative of future stock price performance.


the goldman sachs group , inc .
and subsidiaries management 2019s discussion and analysis investing & lending investing & lending includes our investing activities and the origination of loans , including our relationship lending activities , to provide financing to clients .
these investments and loans are typically longer-term in nature .
we make investments , some of which are consolidated , including through our merchant banking business and our special situations group , in debt securities and loans , public and private equity securities , infrastructure and real estate entities .
some of these investments are made indirectly through funds that we manage .
we also make unsecured and secured loans to retail clients through our digital platforms , marcus and goldman sachs private bank select ( gs select ) , respectively .
the table below presents the operating results of our investing & lending segment. .

$ in millions             | year ended december 2017 | year ended december 2016 | year ended december 2015
------------------------- | ------------------------ | ------------------------ | ------------------------
equity securities         | $ 4578                   | $ 2573                   | $ 3781
debt securities and loans | 2003                     | 1507                     | 1655
total net revenues        | 6581                     | 4080                     | 5436
operating expenses        | 2796                     | 2386                     | 2402
pre-taxearnings           | $ 3785                   | $ 1694                   | $ 3034

operating environment .
during 2017 , generally higher global equity prices and tighter credit spreads contributed to a favorable environment for our equity and debt investments .
results also reflected net gains from company- specific events , including sales , and corporate performance .
this environment contrasts with 2016 , where , in the first quarter of 2016 , market conditions were difficult and corporate performance , particularly in the energy sector , was impacted by a challenging macroeconomic environment .
however , market conditions improved during the rest of 2016 as macroeconomic concerns moderated .
if macroeconomic concerns negatively affect company-specific events or corporate performance , or if global equity markets decline or credit spreads widen , net revenues in investing & lending would likely be negatively impacted .
2017 versus 2016 .
net revenues in investing & lending were $ 6.58 billion for 2017 , 61% ( 61 % ) higher than 2016 .
net revenues in equity securities were $ 4.58 billion , including $ 3.82 billion of net gains from private equities and $ 762 million in net gains from public equities .
net revenues in equity securities were 78% ( 78 % ) higher than 2016 , primarily reflecting a significant increase in net gains from private equities , which were positively impacted by company- specific events and corporate performance .
in addition , net gains from public equities were significantly higher , as global equity prices increased during the year .
of the $ 4.58 billion of net revenues in equity securities , approximately 60% ( 60 % ) was driven by net gains from company-specific events , such as sales , and public equities .
net revenues in debt securities and loans were $ 2.00 billion , 33% ( 33 % ) higher than 2016 , reflecting significantly higher net interest income ( 2017 included approximately $ 1.80 billion of net interest income ) .
net revenues in debt securities and loans for 2017 also included an impairment of approximately $ 130 million on a secured operating expenses were $ 2.80 billion for 2017 , 17% ( 17 % ) higher than 2016 , due to increased compensation and benefits expenses , reflecting higher net revenues , increased expenses related to consolidated investments , and increased expenses related to marcus .
pre-tax earnings were $ 3.79 billion in 2017 compared with $ 1.69 billion in 2016 .
2016 versus 2015 .
net revenues in investing & lending were $ 4.08 billion for 2016 , 25% ( 25 % ) lower than 2015 .
net revenues in equity securities were $ 2.57 billion , including $ 2.17 billion of net gains from private equities and $ 402 million in net gains from public equities .
net revenues in equity securities were 32% ( 32 % ) lower than 2015 , primarily reflecting a significant decrease in net gains from private equities , driven by company-specific events and corporate performance .
net revenues in debt securities and loans were $ 1.51 billion , 9% ( 9 % ) lower than 2015 , reflecting significantly lower net revenues related to relationship lending activities , due to the impact of changes in credit spreads on economic hedges .
losses related to these hedges were $ 596 million in 2016 , compared with gains of $ 329 million in 2015 .
this decrease was partially offset by higher net gains from investments in debt instruments and higher net interest income .
see note 9 to the consolidated financial statements for further information about economic hedges related to our relationship lending activities .
operating expenses were $ 2.39 billion for 2016 , essentially unchanged compared with 2015 .
pre-tax earnings were $ 1.69 billion in 2016 , 44% ( 44 % ) lower than 2015 .
goldman sachs 2017 form 10-k 61


during the year ended december 31 , 2011 , we granted 354660 performance share units having a fair value based on our grant date closing stock price of $ 28.79 .
these units are payable in stock and are subject to certain financial performance criteria .
the fair value of these performance share unit awards is based on the grant date closing stock price of each respective award grant and will apply to the number of units ultimately awarded .
the number of shares ultimately issued for each award will be based on our financial performance as compared to peer group companies over the performance period and can range from zero to 200% ( 200 % ) .
as of december 31 , 2011 , estimated share payouts for outstanding non-vested performance share unit awards ranged from 150% ( 150 % ) to 195% ( 195 % ) .
for the legacy frontier performance share units assumed at july 1 , 2011 , performance is based on market performance criteria , which is calculated as the total shareholder return achieved by hollyfrontier stockholders compared with the average shareholder return achieved by an equally-weighted peer group of independent refining companies over a three-year period .
these share unit awards are payable in stock based on share price performance relative to the defined peer group and can range from zero to 125% ( 125 % ) of the initial target award .
these performance share units were valued at july 1 , 2011 using a monte carlo valuation model , which simulates future stock price movements using key inputs including grant date and measurement date stock prices , expected stock price performance , expected rate of return and volatility of our stock price relative to the peer group over the three-year performance period .
the fair value of these performance share units at july 1 , 2011 was $ 8.6 million .
of this amount , $ 7.3 million relates to post-merger services and will be recognized ratably over the remaining service period through 2013 .
a summary of performance share unit activity and changes during the year ended december 31 , 2011 is presented below: .

performance share units                         | grants
----------------------------------------------- | ------------------
outstanding at january 1 2011 ( non-vested )    | 556186
granted ( 1 )                                   | 354660
vesting and transfer of ownership to recipients | -136058 ( 136058 )
outstanding at december 31 2011 ( non-vested )  | 774788

( 1 ) includes 225116 non-vested performance share grants under the legacy frontier plan that were outstanding and retained by hollyfrontier at july 1 , 2011 .
for the year ended december 31 , 2011 we issued 178148 shares of our common stock having a fair value of $ 2.6 million related to vested performance share units .
based on the weighted average grant date fair value of $ 20.71 there was $ 11.7 million of total unrecognized compensation cost related to non-vested performance share units .
that cost is expected to be recognized over a weighted-average period of 1.1 years .
note 7 : cash and cash equivalents and investments in marketable securities our investment portfolio at december 31 , 2011 consisted of cash , cash equivalents and investments in debt securities primarily issued by government and municipal entities .
we also hold 1000000 shares of connacher oil and gas limited common stock that was received as partial consideration upon the sale of our montana refinery in we invest in highly-rated marketable debt securities , primarily issued by government and municipal entities that have maturities at the date of purchase of greater than three months .
we also invest in other marketable debt securities with the maximum maturity or put date of any individual issue generally not greater than two years from the date of purchase .
all of these instruments , including investments in equity securities , are classified as available- for-sale .
as a result , they are reported at fair value using quoted market prices .
interest income is recorded as earned .
unrealized gains and losses , net of related income taxes , are reported as a component of accumulated other comprehensive income .
upon sale , realized gains and losses on the sale of marketable securities are computed based on the specific identification of the underlying cost of the securities sold and the unrealized gains and losses previously reported in other comprehensive income are reclassified to current earnings.


part i item 1 .
business our company founded in 1886 , american water works company , inc. , ( the 201ccompany , 201d 201camerican water 201d or 201caww 201d ) is a delaware holding company .
american water is the most geographically diversified , as well as the largest publicly-traded , united states water and wastewater utility company , as measured by both operating revenues and population served .
as a holding company , we conduct substantially all of our business operations through our subsidiaries .
our approximately 6400 employees provide an estimated 15 million people with drinking water , wastewater and/or other water-related services in 47 states and one canadian province .
operating segments we report our results of operations in two operating segments : the regulated businesses and the market- based operations .
additional information with respect to our operating segment results is included in the section entitled 201citem 7 2014management 2019s discussion and analysis of financial condition and results of operations , 201d and note 18 of the consolidated financial statements .
regulated businesses our primary business involves the ownership of subsidiaries that provide water and wastewater utility services to residential , commercial , industrial and other customers , including sale for resale and public authority customers .
we report the results of this business in our regulated businesses segment .
our subsidiaries that provide these services are generally subject to economic regulation by certain state commissions or other entities engaged in economic regulation , hereafter referred to as public utility commissions , or 201cpucs , 201d of the states in which we operate .
the federal and state governments also regulate environmental , health and safety , and water quality matters .
our regulated businesses segment operating revenues were $ 2674.3 million for 2014 , $ 2539.9 for 2013 , $ 2564.4 million for 2012 , accounting for 88.8% ( 88.8 % ) , 90.1% ( 90.1 % ) and 89.9% ( 89.9 % ) , respectively , of total operating revenues for the same periods .
the following table sets forth our regulated businesses operating revenues , number of customers and an estimate of population served as of december 31 , 2014 : operating revenues ( in millions ) % (  % ) of total number of customers % (  % ) of total estimated population served ( in millions ) % (  % ) of total .

new jersey                    | operatingrevenues ( in millions ) $ 652.3 | % (  % ) of total 24.5% ( 24.5 % ) | number ofcustomers 648066 | % (  % ) of total 20.2% ( 20.2 % ) | estimatedpopulationserved ( in millions ) 2.7 | % (  % ) of total 22.7% ( 22.7 % )
----------------------------- | ----------------------------------------- | ---------------------------------- | ------------------------- | ---------------------------------- | --------------------------------------------- | ----------------------------------
pennsylvania                  | 605.4                                     | 22.6% ( 22.6 % )                   | 666415                    | 20.7% ( 20.7 % )                   | 2.2                                           | 18.5% ( 18.5 % )
missouri                      | 270.2                                     | 10.1% ( 10.1 % )                   | 464498                    | 14.4% ( 14.4 % )                   | 1.5                                           | 12.7% ( 12.7 % )
illinois ( a )                | 262.3                                     | 9.8% ( 9.8 % )                     | 312017                    | 9.7% ( 9.7 % )                     | 1.3                                           | 10.9% ( 10.9 % )
california                    | 209.8                                     | 7.8% ( 7.8 % )                     | 174198                    | 5.4% ( 5.4 % )                     | 0.6                                           | 5.0% ( 5.0 % )
indiana                       | 200.6                                     | 7.5% ( 7.5 % )                     | 293666                    | 9.1% ( 9.1 % )                     | 1.2                                           | 10.1% ( 10.1 % )
west virginia ( b )           | 127.0                                     | 4.7% ( 4.7 % )                     | 170371                    | 5.3% ( 5.3 % )                     | 0.6                                           | 5.0% ( 5.0 % )
subtotal ( top seven states ) | 2327.6                                    | 87.0% ( 87.0 % )                   | 2729231                   | 84.8% ( 84.8 % )                   | 10.1                                          | 84.9% ( 84.9 % )
other ( c )                   | 346.7                                     | 13.0% ( 13.0 % )                   | 489961                    | 15.2% ( 15.2 % )                   | 1.8                                           | 15.1% ( 15.1 % )
total regulated businesses    | $ 2674.3                                  | 100.0% ( 100.0 % )                 | 3219192                   | 100.0% ( 100.0 % )                 | 11.9                                          | 100.0% ( 100.0 % )

( a ) includes illinois-american water company , which we refer to as ilawc and american lake water company , also a regulated subsidiary in illinois.


management 2019s discussion and analysis of financial condition and results of operations state street corporation | 89 $ 65.35 billion and $ 87.20 billion as of december 31 , 2017 and december 31 , 2016 , respectively .
table 29 : components of average hqla by type of ( in millions ) december 31 , december 31 .

( in millions )              | december 31 2017 | december 31 2016
---------------------------- | ---------------- | ----------------
excess central bank balances | $ 33584          | $ 48407
u.s . treasuries             | 10278            | 17770
other investment securities  | 13422            | 15442
foreign government           | 8064             | 5585
total                        | $ 65348          | $ 87204

with respect to highly liquid short-term investments presented in the preceding table , due to the continued elevated level of client deposits as of december 31 , 2017 , we maintained cash balances in excess of regulatory requirements governing deposits with the federal reserve of approximately $ 33.58 billion at the federal reserve , the ecb and other non-u.s .
central banks , compared to $ 48.40 billion as of december 31 , 2016 .
the lower levels of deposits with central banks as of december 31 , 2017 compared to december 31 , 2016 was due to normal deposit volatility .
liquid securities carried in our asset liquidity include securities pledged without corresponding advances from the frbb , the fhlb , and other non- u.s .
central banks .
state street bank is a member of the fhlb .
this membership allows for advances of liquidity in varying terms against high-quality collateral , which helps facilitate asset-and-liability management .
access to primary , intra-day and contingent liquidity provided by these utilities is an important source of contingent liquidity with utilization subject to underlying conditions .
as of december 31 , 2017 and december 31 , 2016 , we had no outstanding primary credit borrowings from the frbb discount window or any other central bank facility , and as of the same dates , no fhlb advances were outstanding .
in addition to the securities included in our asset liquidity , we have significant amounts of other unencumbered investment securities .
the aggregate fair value of those securities was $ 66.10 billion as of december 31 , 2017 , compared to $ 54.40 billion as of december 31 , 2016 .
these securities are available sources of liquidity , although not as rapidly deployed as those included in our asset liquidity .
measures of liquidity include lcr , nsfr and tlac which are described in "supervision and regulation" included under item 1 , business , of this form 10-k .
uses of liquidity significant uses of our liquidity could result from the following : withdrawals of client deposits ; draw- downs of unfunded commitments to extend credit or to purchase securities , generally provided through lines of credit ; and short-duration advance facilities .
such circumstances would generally arise under stress conditions including deterioration in credit ratings .
a recurring significant use of our liquidity involves our deployment of hqla from our investment portfolio to post collateral to financial institutions and participants in our agency lending program serving as sources of securities under our enhanced custody program .
we had unfunded commitments to extend credit with gross contractual amounts totaling $ 26.49 billion and $ 26.99 billion as of december 31 , 2017 and december 31 , 2016 , respectively .
these amounts do not reflect the value of any collateral .
as of december 31 , 2017 , approximately 72% ( 72 % ) of our unfunded commitments to extend credit expire within one year .
since many of our commitments are expected to expire or renew without being drawn upon , the gross contractual amounts do not necessarily represent our future cash requirements .
information about our resolution planning and the impact actions under our resolution plans could have on our liquidity is provided in "supervision and regulation" included under item 1 .
business , of this form 10-k .
funding deposits we provide products and services including custody , accounting , administration , daily pricing , foreign exchange services , cash management , financial asset management , securities finance and investment advisory services .
as a provider of these products and services , we generate client deposits , which have generally provided a stable , low-cost source of funds .
as a global custodian , clients place deposits with state street entities in various currencies .
as of december 31 , 2017 and december 31 , 2016 , approximately 60% ( 60 % ) of our average client deposit balances were denominated in u.s .
dollars , approximately 20% ( 20 % ) in eur , 10% ( 10 % ) in gbp and 10% ( 10 % ) in all other currencies .
for the past several years , we have frequently experienced higher client deposit inflows toward the end of each fiscal quarter or the end of the fiscal year .
as a result , we believe average client deposit balances are more reflective of ongoing funding than period-end balances.


american tower corporation and subsidiaries notes to consolidated financial statements assessments in each of the tax jurisdictions resulting from these examinations .
the company believes that adequate provisions have been made for income taxes for all periods through december 31 , 2010 .
12 .
stock-based compensation the company recognized stock-based compensation of $ 52.6 million , $ 60.7 million and $ 54.8 million for the years ended december 31 , 2010 , 2009 and 2008 , respectively .
stock-based compensation for the year ended december 31 , 2009 included $ 6.9 million related to the modification of the vesting and exercise terms for certain employee 2019s equity awards .
the company did not capitalize any stock-based compensation during the years ended december 31 , 2010 and 2009 .
summary of stock-based compensation plans 2014the company maintains equity incentive plans that provide for the grant of stock-based awards to its directors , officers and employees .
under the 2007 equity incentive plan ( 201c2007 plan 201d ) , which provides for the grant of non-qualified and incentive stock options , as well as restricted stock units , restricted stock and other stock-based awards , exercise prices in the case of non-qualified and incentive stock options are not less than the fair market value of the underlying common stock on the date of grant .
equity awards typically vest ratably over various periods , generally four years , and generally expire ten years from the date of grant .
stock options 2014as of december 31 , 2010 , the company had the ability to grant stock-based awards with respect to an aggregate of 22.0 million shares of common stock under the 2007 plan .
the fair value of each option grant is estimated on the date of grant using the black-scholes option pricing model based on the assumptions noted in the table below .
the risk-free treasury rate is based on the u.s .
treasury yield in effect at the accounting measurement date .
the expected life ( estimated period of time outstanding ) was estimated using the vesting term and historical exercise behavior of company employees .
the expected volatility was based on historical volatility for a period equal to the expected life of the stock options .
key assumptions used to apply this pricing model are as follows: .

                                                               | 2010                                       | 2009                                       | 2008
-------------------------------------------------------------- | ------------------------------------------ | ------------------------------------------ | ------------------------------------------
range of risk-free interest rate                               | 1.41% ( 1.41 % ) 2013 2.39% ( 2.39 % )     | 1.41% ( 1.41 % ) 2013 2.04% ( 2.04 % )     | 1.44% ( 1.44 % ) 2013 3.05% ( 3.05 % )
weighted average risk-free interest rate                       | 2.35% ( 2.35 % )                           | 1.71% ( 1.71 % )                           | 1.89% ( 1.89 % )
expected life of option grants                                 | 4.60 years                                 | 4.00 years                                 | 4.00 years
range of expected volatility of underlying stock price         | 37.11% ( 37.11 % ) 2013 37.48% ( 37.48 % ) | 36.00% ( 36.00 % ) 2013 36.63% ( 36.63 % ) | 28.51% ( 28.51 % ) 2013 35.30% ( 35.30 % )
weighted average expected volatility of underlying stock price | 37.14% ( 37.14 % )                         | 36.23% ( 36.23 % )                         | 29.10% ( 29.10 % )
expected annual dividends                                      | n/a                                        | n/a                                        | n/a

the weighted average grant date fair value per share during the years ended december 31 , 2010 , 2009 and 2008 was $ 15.03 , $ 8.90 and $ 9.55 , respectively .
the intrinsic value of stock options exercised during the years ended december 31 , 2010 , 2009 and 2008 was $ 62.7 million , $ 40.1 million and $ 99.1 million , respectively .
as of december 31 , 2010 , total unrecognized compensation expense related to unvested stock options was approximately $ 27.7 million and is expected to be recognized over a weighted average period of approximately two years .
the amount of cash received from the exercise of stock options was approximately $ 129.1 million during the year ended december 31 , 2010 .
during the year ended december 31 , 2010 , the company realized approximately $ 0.3 million of state tax benefits from the exercise of stock options.


assumed health care cost trend rates for the u.s .
retiree health care benefit plan as of december 31 are as follows: .

                                                  | 2017             | 2016
------------------------------------------------- | ---------------- | ----------------
assumed health care cost trend rate for next year | 7.50% ( 7.50 % ) | 6.75% ( 6.75 % )
ultimate trend rate                               | 5.00% ( 5.00 % ) | 5.00% ( 5.00 % )
year in which ultimate trend rate is reached      | 2028             | 2024

a one percentage point increase or decrease in health care cost trend rates over all future periods would have increased or decreased the accumulated postretirement benefit obligation for the u.s .
retiree health care benefit plan as of december 31 , 2017 , by $ 1 million .
the service cost and interest cost components of 2017 plan expense would have increased or decreased by less than $ 1 million .
deferred compensation arrangements we have a deferred compensation plan that allows u.s .
employees whose base salary and management responsibility exceed a certain level to defer receipt of a portion of their cash compensation .
payments under this plan are made based on the participant 2019s distribution election and plan balance .
participants can earn a return on their deferred compensation based on notional investments in the same investment funds that are offered in our defined contribution plans .
as of december 31 , 2017 , our liability to participants of the deferred compensation plans was $ 255 million and is recorded in other long-term liabilities on our consolidated balance sheets .
this amount reflects the accumulated participant deferrals and earnings thereon as of that date .
as of december 31 , 2017 , we held $ 236 million in mutual funds related to these plans that are recorded in long-term investments on our consolidated balance sheets , and serve as an economic hedge against changes in fair values of our other deferred compensation liabilities .
we record changes in the fair value of the liability and the related investment in sg&a as discussed in note 8 .
11 .
debt and lines of credit short-term borrowings we maintain a line of credit to support commercial paper borrowings , if any , and to provide additional liquidity through bank loans .
as of december 31 , 2017 , we had a variable-rate revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $ 2 billion until march 2022 .
the interest rate on borrowings under this credit facility , if drawn , is indexed to the applicable london interbank offered rate ( libor ) .
as of december 31 , 2017 , our credit facility was undrawn and we had no commercial paper outstanding .
long-term debt we retired $ 250 million of maturing debt in march 2017 and another $ 375 million in june 2017 .
in may 2017 , we issued an aggregate principal amount of $ 600 million of fixed-rate , long-term debt .
the offering consisted of the reissuance of $ 300 million of 2.75% ( 2.75 % ) notes due in 2021 at a premium and the issuance of $ 300 million of 2.625% ( 2.625 % ) notes due in 2024 at a discount .
we incurred $ 3 million of issuance and other related costs .
the proceeds of the offerings were $ 605 million , net of the original issuance discount and premium , and were used for the repayment of maturing debt and general corporate purposes .
in november 2017 , we issued a principal amount of $ 500 million of fixed-rate , long-term debt due in 2027 .
we incurred $ 3 million of issuance and other related costs .
the proceeds of the offering were $ 494 million , net of the original issuance discount , and were used for general corporate purposes .
in may 2016 , we issued a principal amount of $ 500 million of fixed-rate , long-term debt due in 2022 .
we incurred $ 3 million of issuance and other related costs .
the proceeds of the offering were $ 499 million , net of the original issuance discount , and were used toward the repayment of a portion of $ 1.0 billion of maturing debt retired in may 2016 .
in may 2015 , we issued a principal amount of $ 500 million of fixed-rate , long-term debt due in 2020 .
we incurred $ 3 million of issuance and other related costs .
the proceeds of the offering were $ 498 million , net of the original issuance discount , and were used toward the repayment of a portion of the debt that matured in august 2015 .
we retired $ 250 million of maturing debt in april 2015 and another $ 750 million in august 2015 .
texas instruments 2022 2017 form 10-k 51


the internal revenue code .
therefore , cash needed to execute our strategy and invest in new properties , as well as to pay our debt at maturity , must come from one or more of the following sources : 2022 cash not distributed to shareholders , 2022 proceeds of property dispositions , or 2022 proceeds derived from the issuance of new debt or equity securities .
it is management 2019s intention that we continually have access to the capital resources necessary to expand and develop our business .
as a result , we intend to operate with and maintain a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings .
we may , from time to time , seek to obtain funds by the following means : 2022 additional equity offerings , 2022 unsecured debt financing and/or mortgage financings , and 2022 other debt and equity alternatives , including formation of joint ventures , in a manner consistent with our intention to operate with a conservative debt structure .
cash and cash equivalents were $ 30.5 million and $ 35.0 million at december 31 , 2004 and december 31 , 2003 , respectively .
summary of cash flows for the year ended december 31 , 2004 ( in thousands ) .

                                              | for the year ended december 31 2004 ( in thousands )
--------------------------------------------- | ----------------------------------------------------
cash provided by operating activities         | $ 161113
cash used in investing activities             | -154273 ( 154273 )
cash used by financing activities             | -11333 ( 11333 )
decrease in cash and cash equivalents         | -4493 ( 4493 )
cash and cash equivalents beginning of period | 34968
cash and cash equivalents end of period       | $ 30475

the cash provided by operating activities is primarily attributable to the operation of our properties and the change in working capital related to our operations .
we used cash of $ 154.3 million during the twelve months ended december 31 , 2004 in investing activities , including the following : 2022 $ 101.7 million for our acquisition of westgate mall , shaw 2019s plaza and several parcels of land , 2022 capital expenditures of $ 59.2 million for development and redevelopment of properties including santana row , 2022 maintenance capital expenditures of approximately $ 36.9 million , 2022 $ 9.4 million capital contribution to a real estate partnership , and 2022 an additional $ 3.2 million net advance under an existing mortgage note receivable ; offset by 2022 $ 41.8 million in net sale proceeds from the sale of properties , and


( c ) includes the effects of items not considered in the assessment of the operating performance of our business segments which increased operating profit by $ 230 million , $ 150 million after tax ( $ 0.34 per share ) .
also includes expenses of $ 16 million , $ 11 million after tax ( $ 0.03 per share ) for a debt exchange , and a reduction in income tax expense of $ 62 million ( $ 0.14 per share ) resulting from a tax benefit related to claims we filed for additional extraterritorial income exclusion ( eti ) tax benefits .
on a combined basis , these items increased earnings by $ 201 million after tax ( $ 0.45 per share ) .
( d ) includes the effects of items not considered in the assessment of the operating performance of our business segments which , on a combined basis , increased operating profit by $ 173 million , $ 113 million after tax ( $ 0.25 per share ) .
( e ) includes the effects of items not considered in the assessment of the operating performance of our business segments which decreased operating profit by $ 61 million , $ 54 million after tax ( $ 0.12 per share ) .
also includes a charge of $ 154 million , $ 100 million after tax ( $ 0.22 per share ) for the early repayment of debt , and a reduction in income tax expense resulting from the closure of an internal revenue service examination of $ 144 million ( $ 0.32 per share ) .
on a combined basis , these items reduced earnings by $ 10 million after tax ( $ 0.02 per share ) .
( f ) includes the effects of items not considered in the assessment of the operating performance of our business segments which , on a combined basis , decreased operating profit by $ 7 million , $ 6 million after tax ( $ 0.01 per share ) .
also includes a charge of $ 146 million , $ 96 million after tax ( $ 0.21 per share ) for the early repayment of debt .
( g ) we define return on invested capital ( roic ) as net earnings plus after-tax interest expense divided by average invested capital ( stockholders 2019 equity plus debt ) , after adjusting stockholders 2019 equity by adding back adjustments related to postretirement benefit plans .
we believe that reporting roic provides investors with greater visibility into how effectively we use the capital invested in our operations .
we use roic to evaluate multi-year investment decisions and as a long-term performance measure , and also use it as a factor in evaluating management performance under certain of our incentive compensation plans .
roic is not a measure of financial performance under generally accepted accounting principles , and may not be defined and calculated by other companies in the same manner .
roic should not be considered in isolation or as an alternative to net earnings as an indicator of performance .
we calculate roic as follows : ( in millions ) 2007 2006 2005 2004 2003 .

( in millions )                                   | 2007             | 2006             | 2005             | 2004             | 2003
------------------------------------------------- | ---------------- | ---------------- | ---------------- | ---------------- | --------------
net earnings                                      | $ 3033           | $ 2529           | $ 1825           | $ 1266           | $ 1053
interest expense ( multiplied by 65% ( 65 % ) ) 1 | 229              | 235              | 241              | 276              | 317
return                                            | $ 3262           | $ 2764           | $ 2066           | $ 1542           | $ 1370
average debt2 5                                   | $ 4416           | $ 4727           | $ 5077           | $ 5932           | $ 6612
average equity3 5                                 | 7661             | 7686             | 7590             | 7015             | 6170
average benefit plan adjustments3 4 5             | 3171             | 2006             | 1545             | 1296             | 1504
average invested capital                          | $ 15248          | $ 14419          | $ 14212          | $ 14243          | $ 14286
return on invested capital                        | 21.4% ( 21.4 % ) | 19.2% ( 19.2 % ) | 14.5% ( 14.5 % ) | 10.8% ( 10.8 % ) | 9.6% ( 9.6 % )

1 represents after-tax interest expense utilizing the federal statutory rate of 35% ( 35 % ) .
2 debt consists of long-term debt , including current maturities of long-term debt , and short-term borrowings ( if any ) .
3 equity includes non-cash adjustments , primarily for unrecognized benefit plan actuarial losses and prior service costs in 2007 and 2006 , the adjustment for the adoption of fas 158 in 2006 , and the additional minimum pension liability in years prior to 2007 .
4 average benefit plan adjustments reflect the cumulative value of entries identified in our statement of stockholders equity under the captions 201cpostretirement benefit plans , 201d 201cadjustment for adoption of fas 158 201d and 201cminimum pension liability . 201d the total of annual benefit plan adjustments to equity were : 2007 = $ 1706 million ; 2006 = ( $ 1883 ) million ; 2005 = ( $ 105 ) million ; 2004 = ( $ 285 ) million ; 2003 = $ 331 million ; 2002 = ( $ 1537 million ) ; and 2001 = ( $ 33 million ) .
as these entries are recorded in the fourth quarter , the value added back to our average equity in a given year is the cumulative impact of all prior year entries plus 20% ( 20 % ) of the current year entry value .
5 yearly averages are calculated using balances at the start of the year and at the end of each quarter.


table of contents configuration , amenities provided to passengers , loyalty programs , the automation of travel agent reservation systems , onboard products , markets served and other services .
we compete with both major network airlines and low-cost carriers throughout our network .
international in addition to our extensive domestic service , we provide international service to canada , central and south america , asia , europe , australia and new zealand .
in providing international air transportation , we compete with u.s .
airlines , foreign investor-owned airlines and foreign state- owned or state-affiliated airlines , including carriers based in the middle east , the three largest of which we believe benefit from significant government subsidies .
in order to increase our ability to compete for international air transportation service , which is subject to extensive government regulation , u.s .
and foreign carriers have entered into marketing relationships , alliances , cooperation agreements and jbas to exchange traffic between each other 2019s flights and route networks .
see 201cticket distribution and marketing agreements 201d above for further discussion .
employees and labor relations the airline business is labor intensive .
in 2016 , mainline and regional salaries , wages and benefits were our largest expense and represented approximately 35% ( 35 % ) of our total operating expenses .
labor relations in the air transportation industry are regulated under the railway labor act ( rla ) , which vests in the national mediation board ( nmb ) certain functions with respect to disputes between airlines and labor unions relating to union representation and collective bargaining agreements ( cbas ) .
when an rla cba becomes amendable , if either party to the agreement wishes to modify its terms , it must notify the other party in the manner prescribed under the rla and as agreed by the parties .
under the rla , the parties must meet for direct negotiations , and , if no agreement is reached , either party may request the nmb to appoint a federal mediator .
the rla prescribes no set timetable for the direct negotiation and mediation process .
it is not unusual for those processes to last for many months and even for several years .
if no agreement is reached in mediation , the nmb in its discretion may declare under the rla at some time that an impasse exists , and if an impasse is declared , the nmb proffers binding arbitration to the parties .
either party may decline to submit to binding arbitration .
if arbitration is rejected by either party , an initial 30-day 201ccooling off 201d period commences .
following the conclusion of that 30-day 201ccooling off 201d period , if no agreement has been reached , 201cself-help 201d ( as described below ) can begin unless a presidential emergency board ( peb ) is established .
a peb examines the parties 2019 positions and recommends a solution .
the peb process lasts for 30 days and ( if no resolution is reached ) is followed by another 201ccooling off 201d period of 30 days .
at the end of a 201ccooling off 201d period ( unless an agreement is reached , a peb is established or action is taken by congress ) , the labor organization may exercise 201cself-help , 201d such as a strike , and the airline may resort to its own 201cself-help , 201d including the imposition of any or all of its proposed amendments to the cba and the hiring of new employees to replace any striking workers .
the table below presents our approximate number of active full-time equivalent employees as of december 31 , 2016 .
mainline operations wholly-owned regional carriers total .

                                            | mainline operations | wholly-owned regional carriers | total
------------------------------------------- | ------------------- | ------------------------------ | ------
pilots and flight crew training instructors | 13400               | 3400                           | 16800
flight attendants                           | 24700               | 2200                           | 26900
maintenance personnel                       | 14900               | 2000                           | 16900
fleet service personnel                     | 16600               | 3500                           | 20100
passenger service personnel                 | 15900               | 7100                           | 23000
administrative and other                    | 16000               | 2600                           | 18600
total                                       | 101500              | 20800                          | 122300


marathon oil corporation notes to consolidated financial statements restricted stock awards the following is a summary of restricted stock award activity .
awards weighted-average grant date fair value .

                             | awards             | weighted-averagegrant datefair value
---------------------------- | ------------------ | ------------------------------------
unvested at december 31 2008 | 2049255            | $ 47.72
granted                      | 251335             | 24.74
vested                       | -762466 ( 762466 ) | 46.03
forfeited                    | -96625 ( 96625 )   | 43.56
unvested at december 31 2009 | 1441499            | 44.89

the vesting date fair value of restricted stock awards which vested during 2009 , 2008 and 2007 was $ 24 million , $ 38 million and $ 29 million .
the weighted average grant date fair value of restricted stock awards was $ 44.89 , $ 47.72 , and $ 39.87 for awards unvested at december 31 , 2009 , 2008 and 2007 .
as of december 31 , 2009 , there was $ 43 million of unrecognized compensation cost related to restricted stock awards which is expected to be recognized over a weighted average period of 1.6 years .
stock-based performance awards all stock-based performance awards have either vested or been forfeited .
the vesting date fair value of stock- based performance awards which vested during 2007 was $ 38 .
24 .
stockholders 2019 equity in each year , 2009 and 2008 , we issued 2 million in common stock upon the redemption of the exchangeable shares described below in addition to treasury shares issued for employee stock-based awards .
the board of directors has authorized the repurchase of up to $ 5 billion of marathon common stock .
purchases under the program may be in either open market transactions , including block purchases , or in privately negotiated transactions .
we will use cash on hand , cash generated from operations , proceeds from potential asset sales or cash from available borrowings to acquire shares .
this program may be changed based upon our financial condition or changes in market conditions and is subject to termination prior to completion .
the repurchase program does not include specific price targets or timetables .
as of december 31 , 2009 , we have acquired 66 million common shares at a cost of $ 2922 million under the program .
no shares have been acquired since august 2008 .
securities exchangeable into marathon common stock 2013 as discussed in note 6 , we acquired all of the outstanding shares of western on october 18 , 2007 .
the western shareholders who were canadian residents received , at their election , cash , marathon common stock , securities exchangeable into marathon common stock ( the 201cexchangeable shares 201d ) or a combination thereof .
the western shareholders elected to receive 5 million exchangeable shares as part of the acquisition consideration .
the exchangeable shares are shares of an indirect canadian subsidiary of marathon and , at the acquisition date , were exchangeable on a one-for-one basis into marathon common stock .
subsequent to the acquisition , the exchange ratio is adjusted to reflect cash dividends , if any , paid on marathon common stock and cash dividends , if any , paid on the exchangeable shares .
the exchange ratio at december 31 , 2009 , was 1.06109 common shares for each exchangeable share .
the exchangeable shares are exchangeable at the option of the holder at any time and are automatically redeemable on october 18 , 2011 .
holders of exchangeable shares are entitled to instruct a trustee to vote ( or obtain a proxy from the trustee to vote directly ) on all matters submitted to the holders of marathon common stock .
the number of votes to which each holder is entitled is equal to the whole number of shares of marathon common stock into which such holder 2019s exchangeable shares would be exchangeable based on the exchange ratio in effect on the record date for the vote .
the voting right is attached to voting preferred shares of marathon that were issued to a trustee in an amount


construction of cvn-79 john f .
kennedy , construction of the u.s .
coast guard 2019s fifth national security cutter ( unnamed ) , advance planning efforts for the cvn-72 uss abraham lincoln rcoh , and continued execution of the cvn-71 uss theodore roosevelt rcoh .
2010 2014the value of new contract awards during the year ended december 31 , 2010 , was approximately $ 3.6 billion .
significant new awards during this period included $ 480 million for the construction of the u.s .
coast guard 2019s fourth national security cutter hamilton , $ 480 million for design and long-lead material procurement activities for the cvn-79 john f .
kennedy aircraft carrier , $ 377 million for cvn-78 gerald r .
ford , $ 224 million for lha-7 ( unnamed ) , $ 184 million for lpd-26 john p .
murtha , $ 114 million for ddg-114 ralph johnson and $ 62 million for long-lead material procurement activities for lpd-27 ( unnamed ) .
liquidity and capital resources we endeavor to ensure the most efficient conversion of operating results into cash for deployment in operating our businesses and maximizing stockholder value .
we use various financial measures to assist in capital deployment decision making , including net cash provided by operating activities and free cash flow .
we believe these measures are useful to investors in assessing our financial performance .
the table below summarizes key components of cash flow provided by ( used in ) operating activities: .

( $ in millions )                                          | year ended december 31 2011 | year ended december 31 2010 | year ended december 31 2009
---------------------------------------------------------- | --------------------------- | --------------------------- | ---------------------------
net earnings ( loss )                                      | $ -94 ( 94 )                | $ 135                       | $ 124
goodwill impairment                                        | 290                         | 0                           | 0
deferred income taxes                                      | 27                          | -19 ( 19 )                  | -98 ( 98 )
depreciation and amortization                              | 190                         | 183                         | 186
stock-based compensation                                   | 42                          | 0                           | 0
retiree benefit funding less than ( in excess of ) expense | 122                         | 33                          | -28 ( 28 )
trade working capital decrease ( increase )                | -49 ( 49 )                  | 27                          | -272 ( 272 )
net cash provided by ( used in ) operating activities      | $ 528                       | $ 359                       | $ -88 ( 88 )

cash flows we discuss below our major operating , investing and financing activities for each of the three years in the period ended december 31 , 2011 , as classified on our consolidated statements of cash flows .
operating activities 2011 2014cash provided by operating activities was $ 528 million in 2011 compared with $ 359 million in 2010 .
the increase of $ 169 million was due principally to increased earnings net of impairment charges and lower pension contributions , offset by an increase in trade working capital .
net cash paid by northrop grumman on our behalf for u.s .
federal income tax obligations was $ 53 million .
we expect cash generated from operations for 2012 to be sufficient to service debt , meet contract obligations , and finance capital expenditures .
although 2012 cash from operations is expected to be sufficient to service these obligations , we may from time to time borrow funds under our credit facility to accommodate timing differences in cash flows .
2010 2014net cash provided by operating activities was $ 359 million in 2010 compared with cash used of $ 88 million in 2009 .
the change of $ 447 million was due principally to a decrease in discretionary pension contributions of $ 97 million , a decrease in trade working capital of $ 299 million , and a decrease in deferred income taxes of $ 79 million .
in 2009 , trade working capital balances included the unfavorable impact of delayed customer billings associated with the negative performance adjustments on the lpd-22 through lpd-25 contract due to projected cost increases at completion .
see note 7 : contract charges in item 8 .
the change in deferred taxes was due principally to the timing of contract related deductions .
u.s .
federal income tax payments made by northrop grumman on our behalf were $ 89 million in 2010.


masco corporation notes to consolidated financial statements ( continued ) t .
other commitments and contingencies litigation .
we are subject to claims , charges , litigation and other proceedings in the ordinary course of our business , including those arising from or related to contractual matters , intellectual property , personal injury , environmental matters , product liability , construction defect , insurance coverage , personnel and employment disputes and other matters , including class actions .
we believe we have adequate defenses in these matters and that the outcome of these matters is not likely to have a material adverse effect on us .
however , there is no assurance that we will prevail in these matters , and we could in the future incur judgments , enter into settlements of claims or revise our expectations regarding the outcome of these matters , which could materially impact our results of operations .
in july 2012 , the company reached a settlement agreement related to the columbus drywall litigation .
the company and its insulation installation companies named in the suit agreed to pay $ 75 million in return for dismissal with prejudice and full release of all claims .
the company and its insulation installation companies continue to deny that the challenged conduct was unlawful and admit no wrongdoing as part of the settlement .
a settlement was reached to eliminate the considerable expense and uncertainty of this lawsuit .
the company recorded the settlement expense in the second quarter of 2012 and the amount was paid in the fourth quarter of 2012 .
warranty .
at the time of sale , the company accrues a warranty liability for the estimated cost to provide products , parts or services to repair or replace products in satisfaction of warranty obligations .
during the third quarter of 2012 , a business in the other specialty products segment recorded a $ 12 million increase in expected future warranty claims resulting from the completion of an analysis prepared by the company based upon its periodic assessment of recent business unit specific operating trends including , among others , home ownership demographics , sales volumes , manufacturing quality , an analysis of recent warranty claim activity and an estimate of current costs to service anticipated claims .
changes in the company 2019s warranty liability were as follows , in millions: .

                                                     | 2012       | 2011
---------------------------------------------------- | ---------- | ----------
balance at january 1                                 | $ 102      | $ 107
accruals for warranties issued during the year       | 42         | 28
accruals related to pre-existing warranties          | 16         | 8
settlements made ( in cash or kind ) during the year | -38 ( 38 ) | -38 ( 38 )
other net ( including currency translation )         | -4 ( 4 )   | -3 ( 3 )
balance at december 31                               | $ 118      | $ 102

investments .
with respect to the company 2019s investments in private equity funds , the company had , at december 31 , 2012 , commitments to contribute up to $ 19 million of additional capital to such funds representing the company 2019s aggregate capital commitment to such funds less capital contributions made to date .
the company is contractually obligated to make additional capital contributions to certain of its private equity funds upon receipt of a capital call from the private equity fund .
the company has no control over when or if the capital calls will occur .
capital calls are funded in cash and generally result in an increase in the carrying value of the company 2019s investment in the private equity fund when paid.


discounted cash flow model ( dcf ) to estimate the current fair value of its reporting units when testing for impairment , as management believes forecasted cash flows are the best indicator of such fair value .
a number of significant assumptions and estimates are involved in the application of the dcf model to forecast operating cash flows , including sales growth ( volumes and pricing ) , production costs , capital spending , and discount rate .
most of these assumptions vary significantly among the reporting units .
cash flow forecasts are generally based on approved business unit operating plans for the early years and historical relationships in later years .
the wacc rate for the individual reporting units is estimated with the assistance of valuation experts .
arconic would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit 2019s fair value without exceeding the total amount of goodwill allocated to that reporting unit .
in connection with the interim impairment evaluation of long-lived assets for the disks operations ( an asset group within the aen business unit ) in the second quarter of 2018 , which resulted from a decline in forecasted financial performance for the business in connection with its updated three-year strategic plan , the company also performed an interim impairment evaluation of goodwill for the aen reporting unit .
the estimated fair value of the reporting unit was substantially in excess of the carrying value ; thus , there was no impairment of goodwill .
goodwill impairment tests in 2017 and 2016 indicated that goodwill was not impaired for any of the company 2019s reporting units , except for the arconic forgings and extrusions ( afe ) business whose estimated fair value was lower than its carrying value .
as such , arconic recorded an impairment for the full amount of goodwill in the afe reporting unit of $ 719 .
the decrease in the afe fair value was primarily due to unfavorable performance that was impacting operating margins and a higher discount rate due to an increase in the risk-free rate of return , while the carrying value increased compared to prior year .
other intangible assets .
intangible assets with indefinite useful lives are not amortized while intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited .
the following table details the weighted- average useful lives of software and other intangible assets by reporting segment ( numbers in years ) : .

                                          | software | other intangible assets
----------------------------------------- | -------- | -----------------------
engineered products and solutions         | 5        | 33
global rolled products                    | 5        | 9
transportation and construction solutions | 5        | 16

revenue recognition .
the company's contracts with customers are comprised of acknowledged purchase orders incorporating the company 2019s standard terms and conditions , or for larger customers , may also generally include terms under negotiated multi-year agreements .
these contracts with customers typically consist of the manufacture of products which represent single performance obligations that are satisfied upon transfer of control of the product to the customer .
the company produces fastening systems ; seamless rolled rings ; investment castings , including airfoils and forged jet engine components ; extruded , machined and formed aircraft parts ; aluminum sheet and plate ; integrated aluminum structural systems ; architectural extrusions ; and forged aluminum commercial vehicle wheels .
transfer of control is assessed based on alternative use of the products we produce and our enforceable right to payment for performance to date under the contract terms .
transfer of control and revenue recognition generally occur upon shipment or delivery of the product , which is when title , ownership and risk of loss pass to the customer and is based on the applicable shipping terms .
the shipping terms vary across all businesses and depend on the product , the country of origin , and the type of transportation ( truck , train , or vessel ) .
an invoice for payment is issued at time of shipment .
the company 2019s objective is to have net 30-day terms .
our business units set commercial terms on which arconic sells products to its customers .
these terms are influenced by industry custom , market conditions , product line ( specialty versus commodity products ) , and other considerations .
in certain circumstances , arconic receives advanced payments from its customers for product to be delivered in future periods .
these advanced payments are recorded as deferred revenue until the product is delivered and title and risk of loss have passed to the customer in accordance with the terms of the contract .
deferred revenue is included in other current liabilities and other noncurrent liabilities and deferred credits on the accompanying consolidated balance sheet .
environmental matters .
expenditures for current operations are expensed or capitalized , as appropriate .
expenditures relating to existing conditions caused by past operations , which will not contribute to future revenues , are expensed .
liabilities are recorded when remediation costs are probable and can be reasonably estimated .
the liability may include costs such as site investigations , consultant fees , feasibility studies , outside contractors , and monitoring expenses .
estimates are generally not discounted or reduced by potential claims for recovery .
claims for recovery are recognized when probable and as agreements are reached with third parties .
the estimates also include costs related to other potentially responsible parties to the extent that arconic has reason to believe such parties will not fully pay their proportionate share .
the liability is continuously reviewed and adjusted to reflect current remediation progress , prospective estimates of required activity , and other factors that may be relevant , including changes in technology or regulations .
litigation matters .
for asserted claims and assessments , liabilities are recorded when an unfavorable outcome of a matter is


table of contents although our ownership interest in each of our cellulose derivatives ventures exceeds 20% ( 20 % ) , we account for these investments using the cost method of accounting because we determined that we cannot exercise significant influence over these entities due to local government investment in and influence over these entities , limitations on our involvement in the day-to-day operations and the present inability of the entities to provide timely financial information prepared in accordance with generally accepted accounting principles in the united states of america ( "us gaap" ) .
other equity method investments infraservs .
we hold indirect ownership interests in several german infraserv groups that own and develop industrial parks and provide on-site general and administrative support to tenants .
our ownership interest in the equity investments in infraserv affiliates are as follows : as of december 31 , 2016 ( in percentages ) .

                                  | as of december 31 2016 ( in percentages )
--------------------------------- | -----------------------------------------
infraserv gmbh & co . gendorf kg  | 39
infraserv gmbh & co . hoechst kg  | 32
infraserv gmbh & co . knapsack kg | 27

research and development our businesses are innovation-oriented and conduct research and development activities to develop new , and optimize existing , production technologies , as well as to develop commercially viable new products and applications .
research and development expense was $ 78 million , $ 119 million and $ 86 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively .
we consider the amounts spent during each of the last three fiscal years on research and development activities to be sufficient to execute our current strategic initiatives .
intellectual property we attach importance to protecting our intellectual property , including safeguarding our confidential information and through our patents , trademarks and copyrights , in order to preserve our investment in research and development , manufacturing and marketing .
patents may cover processes , equipment , products , intermediate products and product uses .
we also seek to register trademarks as a means of protecting the brand names of our company and products .
patents .
in most industrial countries , patent protection exists for new substances and formulations , as well as for certain unique applications and production processes .
however , we do business in regions of the world where intellectual property protection may be limited and difficult to enforce .
confidential information .
we maintain stringent information security policies and procedures wherever we do business .
such information security policies and procedures include data encryption , controls over the disclosure and safekeeping of confidential information and trade secrets , as well as employee awareness training .
trademarks .
aoplus ae , ateva ae , avicor ae , britecoat ae , celanese ae , celanex ae , celcon ae , celfx ae , celstran ae , celvolit ae , clarifoil ae , duroset ae , ecovae ae , factor ae , fortron ae , gur ae , hostaform ae , impet ae , mowilith ae , metalx ae , mt ae , nutrinova ae , qorus ae , riteflex ae , slidex 2122 , sunett ae , tcx ae , thermx ae , tufcor ae , vantage ae , vantageplus 2122 , vectra ae , vinamul ae , vitaldose ae , zenite ae and certain other branded products and services named in this document are registered or reserved trademarks or service marks owned or licensed by celanese .
the foregoing is not intended to be an exhaustive or comprehensive list of all registered or reserved trademarks and service marks owned or licensed by celanese .
fortron ae is a registered trademark of fortron industries llc .
hostaform ae is a registered trademark of hoechst gmbh .
mowilith ae is a registered trademark of celanese in most european countries .
we monitor competitive developments and defend against infringements on our intellectual property rights .
neither celanese nor any particular business segment is materially dependent upon any one patent , trademark , copyright or trade secret .
environmental and other regulation matters pertaining to environmental and other regulations are discussed in item 1a .
risk factors , as well as note 2 - summary of accounting policies , note 16 - environmental and note 24 - commitments and contingencies in the accompanying consolidated financial statements.


issuer purchases of equity securities the following table provides information regarding purchases of our common stock that were made by us during the fourth quarter of 2011 .
period total number of shares purchased ( 2 ) average price paid per share total number of shares purchased as part of publicly announced plans or programs ( 1 ) maximum dollar value of shares that may yet be purchased under the plans or programs ( 1 ) ( in millions ) .

period                      | total number of shares purchased ( 2 ) | average price paid per share | total number of shares purchased as part ofpublicly announced plans or programs ( 1 ) | maximum dollar value of shares that may yetbe purchased under the plans or programs ( 1 ) ( in millions )
--------------------------- | -------------------------------------- | ---------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------
october 1 2013 october 31   | 3228557                                | $ 58.52                      | 3227800                                                                               | $ 108
november 1 2013 november 30 | 1813994                                | $ 66.38                      | 1618110                                                                               | $ 2014
december 1 2013 december 31 | 475685                                 | $ 64.68                      | 2014                                                                                | $ 2014
total                       | 5518236                                | $ 61.64                      | 4845910                                                                               |

( 1 ) in may 2010 , our board of directors approved a $ 3.5 billion share repurchase program .
we completed this program in the fourth quarter of 2011 .
in total , we repurchased 49.2 million common shares for $ 3.5 billion , or $ 71.18 per share , under this program .
( 2 ) during the fourth quarter of 2011 , we repurchased 672326 shares from company employees for the payment of personal income tax withholdings resulting from restricted stock vesting and stock option exercises .
such repurchases are in addition to the $ 3.5 billion repurchase program .
under the devon energy corporation incentive savings plan ( the 201cplan 201d ) , eligible employees may purchase shares of our common stock through an investment in the devon stock fund ( the 201cstock fund 201d ) , which is administered by an independent trustee , fidelity management trust company .
eligible employees purchased approximately 45000 shares of our common stock in 2011 , at then-prevailing stock prices , that they held through their ownership in the stock fund .
we acquired the shares of our common stock sold under the plan through open-market purchases .
we filed a registration statement on form s-8 on january 26 , 2012 registering any offers and sales of interests in the plan or the stock fund and of the underlying shares of our common stock purchased by plan participants after that date .
similarly , under the devon canada corporation savings plan ( the 201ccanadian plan 201d ) , eligible canadian employees may purchase shares of our common stock through an investment in the canadian plan , which is administered by an independent trustee , sun life assurance company of canada .
eligible canadian employees purchased approximately 9000 shares of our common stock in 2011 , at then-prevailing stock prices , that they held through their ownership in the canadian plan .
we acquired the shares sold under the canadian plan through open-market purchases .
these shares and any interest in the canadian plan were offered and sold in reliance on the exemptions for offers and sales of securities made outside of the u.s. , including under regulation s for offers and sales of securities to employees pursuant to an employee benefit plan established and administered in accordance with the law of a country other than the u.s.


the hartford financial services group , inc .
notes to consolidated financial statements ( continued ) 10 .
sales inducements accounting policy the company currently offers enhanced crediting rates or bonus payments to contract holders on certain of its individual and group annuity products .
the expense associated with offering a bonus is deferred and amortized over the life of the related contract in a pattern consistent with the amortization of deferred policy acquisition costs .
amortization expense associated with expenses previously deferred is recorded over the remaining life of the contract .
consistent with the unlock , the company unlocked the amortization of the sales inducement asset .
see note 7 for more information concerning the unlock .
changes in deferred sales inducement activity were as follows for the years ended december 31: .

                               | 2011       | 2010     | 2009
------------------------------ | ---------- | -------- | ------------
balance beginning of year      | $ 459      | $ 438    | $ 553
sales inducements deferred     | 20         | 31       | 59
amortization charged to income | -17 ( 17 ) | -8 ( 8 ) | -105 ( 105 )
amortization 2014 unlock       | -28 ( 28 ) | -2 ( 2 ) | -69 ( 69 )
balance end of year            | $ 434      | $ 459    | $ 438

11 .
reserves for future policy benefits and unpaid losses and loss adjustment expenses life insurance products accounting policy liabilities for future policy benefits are calculated by the net level premium method using interest , withdrawal and mortality assumptions appropriate at the time the policies were issued .
the methods used in determining the liability for unpaid losses and future policy benefits are standard actuarial methods recognized by the american academy of actuaries .
for the tabular reserves , discount rates are based on the company 2019s earned investment yield and the morbidity/mortality tables used are standard industry tables modified to reflect the company 2019s actual experience when appropriate .
in particular , for the company 2019s group disability known claim reserves , the morbidity table for the early durations of claim is based exclusively on the company 2019s experience , incorporating factors such as gender , elimination period and diagnosis .
these reserves are computed such that they are expected to meet the company 2019s future policy obligations .
future policy benefits are computed at amounts that , with additions from estimated premiums to be received and with interest on such reserves compounded annually at certain assumed rates , are expected to be sufficient to meet the company 2019s policy obligations at their maturities or in the event of an insured 2019s death .
changes in or deviations from the assumptions used for mortality , morbidity , expected future premiums and interest can significantly affect the company 2019s reserve levels and related future operations and , as such , provisions for adverse deviation are built into the long-tailed liability assumptions .
liabilities for the company 2019s group life and disability contracts , as well as its individual term life insurance policies , include amounts for unpaid losses and future policy benefits .
liabilities for unpaid losses include estimates of amounts to fully settle known reported claims , as well as claims related to insured events that the company estimates have been incurred but have not yet been reported .
these reserve estimates are based on known facts and interpretations of circumstances , and consideration of various internal factors including the hartford 2019s experience with similar cases , historical trends involving claim payment patterns , loss payments , pending levels of unpaid claims , loss control programs and product mix .
in addition , the reserve estimates are influenced by consideration of various external factors including court decisions , economic conditions and public attitudes .
the effects of inflation are implicitly considered in the reserving process.


2011 compared to 2010 mfc 2019s net sales for 2011 increased $ 533 million , or 8% ( 8 % ) , compared to 2010 .
the increase was attributable to higher volume of about $ 420 million on air and missile defense programs ( primarily pac-3 and thaad ) ; and about $ 245 million from fire control systems programs primarily related to the sof clss program , which began late in the third quarter of 2010 .
partially offsetting these increases were lower net sales due to decreased volume of approximately $ 75 million primarily from various services programs and approximately $ 20 million from tactical missile programs ( primarily mlrs and jassm ) .
mfc 2019s operating profit for 2011 increased $ 96 million , or 10% ( 10 % ) , compared to 2010 .
the increase was attributable to higher operating profit of about $ 60 million for air and missile defense programs ( primarily pac-3 and thaad ) as a result of increased volume and retirement of risks ; and approximately $ 25 million for various services programs .
adjustments not related to volume , including net profit rate adjustments described above , were approximately $ 35 million higher in 2011 compared to 2010 .
backlog backlog increased in 2012 compared to 2011 mainly due to increased orders and lower sales on fire control systems programs ( primarily lantirn ae and sniper ae ) and on various services programs , partially offset by lower orders and higher sales volume on tactical missiles programs .
backlog increased in 2011 compared to 2010 primarily due to increased orders on air and missile defense programs ( primarily thaad ) .
trends we expect mfc 2019s net sales for 2013 will be comparable with 2012 .
we expect low double digit percentage growth in air and missile defense programs , offset by an expected decline in volume on logistics services programs .
operating profit and margin are expected to be comparable with 2012 results .
mission systems and training our mst business segment provides surface ship and submarine combat systems ; sea and land-based missile defense systems ; radar systems ; mission systems and sensors for rotary and fixed-wing aircraft ; littoral combat ships ; simulation and training services ; unmanned technologies and platforms ; ship systems integration ; and military and commercial training systems .
mst 2019s major programs include aegis , mk-41 vertical launching system ( vls ) , tpq-53 radar system , mh-60 , lcs , and ptds .
mst 2019s operating results included the following ( in millions ) : .

                    | 2012           | 2011           | 2010
------------------- | -------------- | -------------- | --------------
net sales           | $ 7579         | $ 7132         | $ 7443
operating profit    | 737            | 645            | 713
operating margins   | 9.7% ( 9.7 % ) | 9.0% ( 9.0 % ) | 9.6% ( 9.6 % )
backlog at year-end | 10700          | 10500          | 10600

2012 compared to 2011 mst 2019s net sales for 2012 increased $ 447 million , or 6% ( 6 % ) , compared to 2011 .
the increase in net sales for 2012 was attributable to higher volume and risk retirements of approximately $ 395 million from ship and aviation system programs ( primarily ptds ; lcs ; vls ; and mh-60 ) ; about $ 115 million for training and logistics solutions programs primarily due to net sales from sim industries , which was acquired in the fourth quarter of 2011 ; and approximately $ 30 million as a result of increased volume on integrated warfare systems and sensors programs ( primarily aegis ) .
partially offsetting the increases were lower net sales of approximately $ 70 million from undersea systems programs due to lower volume on an international combat system program and towed array systems ; and about $ 25 million due to lower volume on various other programs .
mst 2019s operating profit for 2012 increased $ 92 million , or 14% ( 14 % ) , compared to 2011 .
the increase was attributable to higher operating profit of approximately $ 175 million from ship and aviation system programs , which reflects higher volume and risk retirements on certain programs ( primarily vls ; ptds ; mh-60 ; and lcs ) and reserves of about $ 55 million for contract cost matters on ship and aviation system programs recorded in the fourth quarter of 2011 ( including the terminated presidential helicopter program ) .
partially offsetting the increase was lower operating profit of approximately $ 40 million from undersea systems programs due to reduced profit booking rates on certain programs and lower volume on an international combat system program and towed array systems ; and about $ 40 million due to lower volume on various other programs .
adjustments not related to volume , including net profit booking rate adjustments and other matters described above , were approximately $ 150 million higher for 2012 compared to 2011.


research and development we are committed to investing in highly productive research and development capabilities , particularly in electro-mechanical systems .
our research and development ( "r&d" ) expenditures were approximately $ 48.3 million , $ 47.3 million and $ 45.2 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively .
we concentrate on developing technology innovations that will deliver growth through the introduction of new products and solutions , and also on driving continuous improvements in product cost , quality , safety and sustainability .
we manage our r&d team as a global group with an emphasis on a global collaborative approach to identify and develop new technologies and worldwide product platforms .
we are organized on a regional basis to leverage expertise in local standards and configurations .
in addition to regional engineering centers in each geographic region , we also operate a global engineering center of excellence in bangalore , india .
seasonality our business experiences seasonality that varies by product line .
because more construction and do-it-yourself projects occur during the second and third calendar quarters of each year in the northern hemisphere , our security product sales , typically , are higher in those quarters than in the first and fourth calendar quarters .
however , our interflex business typically experiences higher sales in the fourth calendar quarter due to project timing .
revenue by quarter for the years ended december 31 , 2017 , 2016 and 2015 are as follows: .

     | first quarter | second quarter | third quarter | fourth quarter
---- | ------------- | -------------- | ------------- | --------------
2017 | 23% ( 23 % )  | 26% ( 26 % )   | 25% ( 25 % )  | 26% ( 26 % )
2016 | 22% ( 22 % )  | 26% ( 26 % )   | 26% ( 26 % )  | 26% ( 26 % )
2015 | 22% ( 22 % )  | 25% ( 25 % )   | 26% ( 26 % )  | 27% ( 27 % )

employees we currently have approximately 10000 employees .
environmental regulation we have a dedicated environmental program that is designed to reduce the utilization and generation of hazardous materials during the manufacturing process as well as to remediate identified environmental concerns .
as to the latter , we are currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former production facilities .
the company regularly evaluates its remediation programs and considers alternative remediation methods that are in addition to , or in replacement of , those currently utilized by the company based upon enhanced technology and regulatory changes .
we are sometimes a party to environmental lawsuits and claims and have received notices of potential violations of environmental laws and regulations from the u.s .
environmental protection agency ( the "epa" ) and similar state authorities .
we have also been identified as a potentially responsible party ( "prp" ) for cleanup costs associated with off-site waste disposal at federal superfund and state remediation sites .
for all such sites , there are other prps and , in most instances , our involvement is minimal .
in estimating our liability , we have assumed that we will not bear the entire cost of remediation of any site to the exclusion of other prps who may be jointly and severally liable .
the ability of other prps to participate has been taken into account , based on our understanding of the parties 2019 financial condition and probable contributions on a per site basis .
additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future .
we incurred $ 3.2 million , $ 23.3 million , and $ 4.4 million of expenses during the years ended december 31 , 2017 , 2016 , and 2015 , respectively , for environmental remediation at sites presently or formerly owned or leased by us .
as of december 31 , 2017 and 2016 , we have recorded reserves for environmental matters of $ 28.9 million and $ 30.6 million .
of these amounts $ 8.9 million and $ 9.6 million , respectively , relate to remediation of sites previously disposed by us .
given the evolving nature of environmental laws , regulations and technology , the ultimate cost of future compliance is uncertain.


notes to consolidated financial statements 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 $ 32.41 billion and $ 31.94 billion as of december 2012 and december 2011 , 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 $ 300 million of protection had been provided as of both december 2012 and december 2011 .
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 commercial mortgage 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 .
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 .
investment commitments the firm 2019s investment commitments consist of commitments to invest in private equity , real estate and other assets directly and through funds that the firm raises and manages .
these commitments include $ 872 million and $ 1.62 billion as of december 2012 and december 2011 , respectively , related to real estate private investments and $ 6.47 billion and $ 7.50 billion as of december 2012 and december 2011 , respectively , related to corporate and other private investments .
of these amounts , $ 6.21 billion and $ 8.38 billion as of december 2012 and december 2011 , respectively , relate to commitments to invest in funds managed by the firm , which will be funded at market value on the date of investment .
leases the firm has contractual obligations under long-term noncancelable lease agreements , principally 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 2012 .

in millions       | as of december 2012
----------------- | -------------------
2013              | $ 439
2014              | 407
2015              | 345
2016              | 317
2017              | 306
2018 - thereafter | 1375
total             | $ 3189

rent charged to operating expense for the years ended december 2012 , december 2011 and december 2010 was $ 374 million , $ 475 million and $ 508 million , respectively .
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 .
goldman sachs 2012 annual report 175