| _id | dd4c4fde0 |
| title |  |
| text | hologic , inc .
notes to consolidated financial statements ( continued ) ( in thousands , except per share data ) company 2019s consolidated financial statements from the date of acquisition as part of its other business segment .
the company has concluded that the acquisition of aeg does not represent a material business combination and therefore no pro forma financial information has been provided herein .

aeg specializes in the manufacture of photoconductor materials for use in a variety of electro photographic applications including for the coating of the company 2019s digital detectors .
the acquisition of aeg allows the company to have control over a critical step in its detector manufacturing process 2013 to efficiently manage its supply chain and improve manufacturing margins .

the combination of the companies should also facilitate further manufacturing efficiencies and accelerate research and development of new detector products .
aeg was a privately held group of companies headquartered in warstein , germany , with manufacturing operations in germany , china and the united states .

the aggregate purchase price for aeg was approximately $ 31300 ( subject to adjustment ) consisting of eur $ 24100 in cash and 110 shares of hologic common stock valued at $ 5300 , and approximately $ 1900 for acquisition related fees and expenses .
the company determined the fair value of the shares issued in connection with the acquisition in accordance with eitf issue no .

99-12 , determination of the measurement date for the market price of acquirer securities issued in a purchase business combination .
these 110 shares are subject to contingent put options pursuant to which the holders have the option to resell the shares to the company during a period of one year following the completion of the acquisition if the closing price of the company 2019s stock falls and remains below a threshold price .

the repurchase price would be the closing price of the company 2019s common stock on the date of exercise .
the company 2019s maximum aggregate obligation under these put options would be approximately $ 4100 if the put option were exercised for all the shares covered by those options and the closing price of our common stock on the date of exercise equaled the maximum threshold price permitting the exercise of the option .

no shares were subject to the put option as of september 30 , 2006 as the company 2019s stock price was in excess of the minimum value .
the acquisition also provides for a one-year earn out of eur 1700 ( approximately $ 2000 usd ) which will be payable in cash if aeg calendar year 2006 earnings , as defined , exceeds a pre-determined amount .
the company has considered the provision of eitf issue no .

95-8 , accounting for contingent consideration paid to the shareholders of and acquired enterprise in a purchase business combination , and concluded that this contingent consideration represents additional purchase price .
as a result , goodwill will be increased by the amount of the additional consideration , if any , when it becomes due and payable .
the components and allocation of the purchase price , consists of the following approximate amounts: .

the purchase price allocation above has been revised from that included in the company 2019s form 10-q for the period ended june 24 , 2006 , to decrease the net tangible asset acquired and increased the deferred income tax liability with a corresponding increase to goodwill for both .
the decrease to the net tangible assets primarily

 |
| table | net tangible assets acquired as of may 2 2006 | $ 23700
--------------------------------------------- | --------------
in-process research and development           | 600
developed technology and know how             | 1900
customer relationship                         | 800
trade name                                    | 400
deferred income taxes                         | -3000 ( 3000 )
goodwill                                      | 6900
estimated purchase price                      | $ 31300 |


| _id | dd4b8cb06 |
| title |  |
| text | item 7a .
quantitative and qualitative disclosures about market risk ( amounts in millions ) in the normal course of business , we are exposed to market risks related to interest rates , foreign currency rates and certain balance sheet items .
from time to time , we use derivative instruments , pursuant to established guidelines and policies , to manage some portion of these risks .

derivative instruments utilized in our hedging activities are viewed as risk management tools and are not used for trading or speculative purposes .
interest rates our exposure to market risk for changes in interest rates relates primarily to the fair market value and cash flows of our debt obligations .
the majority of our debt ( approximately 91% ( 91 % ) and 86% ( 86 % ) as of december 31 , 2014 and 2013 , respectively ) bears interest at fixed rates .

we do have debt with variable interest rates , but a 10% ( 10 % ) increase or decrease in interest rates would not be material to our interest expense or cash flows .
the fair market value of our debt is sensitive to changes in interest rates , and the impact of a 10% ( 10 % ) change in interest rates is summarized below .
increase/ ( decrease ) in fair market value as of december 31 , 10% ( 10 % ) increase in interest rates 10% ( 10 % ) decrease in interest rates .

we have used interest rate swaps for risk management purposes to manage our exposure to changes in interest rates .
we do not have any interest rate swaps outstanding as of december 31 , 2014 .
we had $ 1667.2 of cash , cash equivalents and marketable securities as of december 31 , 2014 that we generally invest in conservative , short-term bank deposits or securities .
the interest income generated from these investments is subject to both domestic and foreign interest rate movements .

during 2014 and 2013 , we had interest income of $ 27.4 and $ 24.7 , respectively .
based on our 2014 results , a 100-basis-point increase or decrease in interest rates would affect our interest income by approximately $ 16.7 , assuming that all cash , cash equivalents and marketable securities are impacted in the same manner and balances remain constant from year-end 2014 levels .

foreign currency rates we are subject to translation and transaction risks related to changes in foreign currency exchange rates .
since we report revenues and expenses in u.s .
dollars , changes in exchange rates may either positively or negatively affect our consolidated revenues and expenses ( as expressed in u.s .
dollars ) from foreign operations .

dollars ) from foreign operations .
the primary foreign currencies that impacted our results during 2014 included the argentine peso , australian dollar , brazilian real and british pound sterling .
based on 2014 exchange rates and operating results , if the u.s .

dollar were to strengthen or weaken by 10% ( 10 % ) , we currently estimate operating income would decrease or increase approximately 4% ( 4 % ) , assuming that all currencies are impacted in the same manner and our international revenue and expenses remain constant at 2014 levels .
the functional currency of our foreign operations is generally their respective local currency .

assets and liabilities are translated at the exchange rates in effect at the balance sheet date , and revenues and expenses are translated at the average exchange rates during the period presented .
the resulting translation adjustments are recorded as a component of accumulated other comprehensive loss , net of tax , in the stockholders 2019 equity section of our consolidated balance sheets .

our foreign subsidiaries generally collect revenues and pay expenses in their functional currency , mitigating transaction risk .
however , certain subsidiaries may enter into transactions in currencies other than their functional currency .
assets and liabilities denominated in currencies other than the functional currency are susceptible to movements in foreign currency until final settlement .

currency transaction gains or losses primarily arising from transactions in currencies other than the functional currency are included in office and general expenses .
we have not entered into a material amount of foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of potential adverse fluctuations in foreign currency exchange rates.

 |
| table | as of december 31, | increase/ ( decrease ) in fair market value 10% ( 10 % ) increasein interest rates | increase/ ( decrease ) in fair market value 10% ( 10 % ) decreasein interest rates
------------------ | ---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------
2014               | $ -35.5 ( 35.5 )                                                                   | $ 36.6
2013               | -26.9 ( 26.9 )                                                                     | 27.9 |


| _id | dd4c42c8a |
| title |  |
| text | analog devices , inc .
notes to consolidated financial statements 2014 ( continued ) the total intrinsic value of options exercised ( i.e .

the difference between the market price at exercise and the price paid by the employee to exercise the options ) during fiscal 2016 , 2015 and 2014 was $ 46.6 million , $ 99.2 million and $ 130.6 million , respectively , and the total amount of proceeds received by the company from exercise of these options during fiscal 2016 , 2015 and 2014 was $ 61.5 million , $ 122.6 million and $ 200.1 million , respectively .

a summary of the company 2019s restricted stock unit award activity as of october 29 , 2016 and changes during the fiscal year then ended is presented below : restricted stock units outstanding ( in thousands ) weighted- average grant- date fair value per share .

as of october 29 , 2016 , there was $ 112.3 million of total unrecognized compensation cost related to unvested share- based awards comprised of stock options and restricted stock units .
that cost is expected to be recognized over a weighted- average period of 1.4 years .
the total grant-date fair value of shares that vested during fiscal 2016 , 2015 and 2014 was approximately $ 62.8 million , $ 65.6 million and $ 57.4 million , respectively .

common stock repurchases the company 2019s common stock repurchase program has been in place since august 2004 .
in the aggregate , the board of directors has authorized the company to repurchase $ 6.2 billion of the company 2019s common stock under the program .
the company may repurchase outstanding shares of its common stock from time to time in the open market and through privately negotiated transactions .

unless terminated earlier by resolution of the company 2019s board of directors , the repurchase program will expire when the company has repurchased all shares authorized under the program .
as of october 29 , 2016 , the company had repurchased a total of approximately 147.0 million shares of its common stock for approximately $ 5.4 billion under this program .
an additional $ 792.5 million remains available for repurchase of shares under the current authorized program .

the repurchased shares are held as authorized but unissued shares of common stock .
as a result of the company's planned acquisition of linear technology corporation , see note 6 , acquisitions , of these notes to consolidated financial statements , the company temporarily suspended the common stock repurchase plan in the third quarter of 2016 .

the company also , from time to time , repurchases shares in settlement of employee minimum tax withholding obligations due upon the vesting of restricted stock units or the exercise of stock options .
the withholding amount is based on the employees minimum statutory withholding requirement .
any future common stock repurchases will be dependent upon several factors , including the company's financial performance , outlook , liquidity and the amount of cash the company has available in the united states .

preferred stock the company has 471934 authorized shares of $ 1.00 par value preferred stock , none of which is issued or outstanding .
the board of directors is authorized to fix designations , relative rights , preferences and limitations on the preferred stock at the time of issuance.

 |
| table | | restrictedstock unitsoutstanding ( in thousands ) | weighted-average grant-date fair valueper share
----------------------------------------------------- | ------------------------------------------------- | -----------------------------------------------
restricted stock units outstanding at october 31 2015 | 2698                                              | $ 47.59
units granted                                         | 1099                                              | $ 51.59
restrictions lapsed                                   | -905 ( 905 )                                      | $ 44.30
forfeited                                             | -202 ( 202 )                                      | $ 50.34
restricted stock units outstanding at october 29 2016 | 2690                                              | $ 50.11 |


| _id | dd4c602bc |
| title |  |
| text | approximately 710 asphalt-paving contractors , government entities ( states , counties , cities and townships ) and asphalt roofing shingle manufacturers .
we also produce asphalt cements , polymerized asphalt , asphalt emulsions and industrial asphalts .
retail marketing ssa , our wholly-owned subsidiary , sells gasoline and merchandise through owned and operated retail outlets primarily under the speedway ae and superamerica ae brands .
diesel fuel is also sold at a number of these outlets .

ssa retail outlets offer a wide variety of merchandise , such as prepared foods , beverages , and non-food items , as well as a significant number of proprietary items .
as of december 31 , 2008 , ssa had 1617 retail outlets in nine states .
sales of refined products through these retail outlets accounted for 15 percent of our refined product sales volumes in 2008 .

revenues from sales of non-petroleum merchandise through these retail outlets totaled $ 2838 million in 2008 , $ 2796 million in 2007 and $ 2706 million in 2006 .
the demand for gasoline is seasonal in a majority of ssa markets , usually with the highest demand during the summer driving season .
profit levels from the sale of merchandise and services tend to be less volatile than profit levels from the retail sale of gasoline and diesel fuel .

in october 2008 , we sold our interest in pilot travel centers llc ( 201cptc 201d ) , an operator of travel centers in the united states .
pipeline transportation we own a system of pipelines through marathon pipe line llc ( 201cmpl 201d ) and ohio river pipe line llc ( 201corpl 201d ) , our wholly-owned subsidiaries .
our pipeline systems transport crude oil and refined products primarily in the midwest and gulf coast regions to our refineries , our terminals and other pipeline systems .

our mpl and orpl wholly-owned and undivided interest common carrier systems consist of 1815 miles of crude oil lines and 1826 miles of refined product lines comprising 34 systems located in 11 states .
the mpl common carrier pipeline network is one of the largest petroleum pipeline systems in the united states , based on total barrels delivered .

our common carrier pipeline systems are subject to state and federal energy regulatory commission regulations and guidelines , including published tariffs for the transportation of crude oil and refined products .
third parties generated 11 percent of the crude oil and refined product shipments on our mpl and orpl common carrier pipelines in 2008 .
our mpl and orpl common carrier pipelines transported the volumes shown in the following table for each of the last three years .

pipeline barrels handled ( thousands of barrels per day ) 2008 2007 2006 .

we also own 176 miles of private crude oil pipelines and 850 miles of private refined products pipelines , and we lease 217 miles of common carrier refined product pipelines .
we have partial ownership interests in several pipeline companies that have approximately 780 miles of crude oil pipelines and 3000 miles of refined products pipelines , including about 800 miles operated by mpl .

in addition , mpl operates most of our private pipelines and 985 miles of crude oil and 160 miles of natural gas pipelines owned by our e&p segment .
our major refined product lines include the cardinal products pipeline and the wabash pipeline .
the cardinal products pipeline delivers refined products from kenova , west virginia , to columbus , ohio .
the wabash pipeline system delivers product from robinson , illinois , to various terminals in the area of chicago , illinois .

other significant refined product pipelines owned and operated by mpl extend from : robinson , illinois , to louisville , kentucky ; garyville , louisiana , to zachary , louisiana ; and texas city , texas , to pasadena , texas.

 |
| table | ( thousands of barrels per day ) | 2008 | 2007 | 2006
-------------------------------- | ---- | ---- | ----
crude oil trunk lines            | 1405 | 1451 | 1437
refined products trunk lines     | 960  | 1049 | 1101
total                            | 2365 | 2500 | 2538 |


| _id | dd4b9e8ce |
| title |  |
| text | backlog applied manufactures systems to meet demand represented by order backlog and customer commitments .
backlog consists of : ( 1 ) orders for which written authorizations have been accepted and assigned shipment dates are within the next 12 months , or shipment has occurred but revenue has not been recognized ; and ( 2 ) contractual service revenue and maintenance fees to be earned within the next 12 months .

backlog by reportable segment as of october 25 , 2015 and october 26 , 2014 was as follows : 2015 2014 ( in millions , except percentages ) .

applied 2019s backlog on any particular date is not necessarily indicative of actual sales for any future periods , due to the potential for customer changes in delivery schedules or order cancellations .
customers may delay delivery of products or cancel orders prior to shipment , subject to possible cancellation penalties .
delays in delivery schedules or a reduction of backlog during any particular period could have a material adverse effect on applied 2019s business and results of operations .

manufacturing , raw materials and supplies applied 2019s manufacturing activities consist primarily of assembly , test and integration of various proprietary and commercial parts , components and subassemblies that are used to manufacture systems .
applied has implemented a distributed manufacturing model under which manufacturing and supply chain activities are conducted in various countries , including germany , israel , italy , singapore , taiwan , the united states and other countries in asia .

applied uses numerous vendors , including contract manufacturers , to supply parts and assembly services for the manufacture and support of its products , including some systems being completed at customer sites .
although applied makes reasonable efforts to assure that parts are available from multiple qualified suppliers , this is not always possible .
accordingly , some key parts may be obtained from only a single supplier or a limited group of suppliers .

applied seeks to reduce costs and to lower the risks of manufacturing and service interruptions by selecting and qualifying alternate suppliers for key parts ; monitoring the financial condition of key suppliers ; maintaining appropriate inventories of key parts ; qualifying new parts on a timely basis ; and ensuring quality and performance of parts.

 |
| table | | 2015   | 2014           |        | ( in millions except percentages )
---------------------------------- | ------ | -------------- | ------ | ----------------------------------
silicon systems                    | $ 1720 | 55% ( 55 % )   | $ 1400 | 48% ( 48 % )
applied global services            | 812    | 26% ( 26 % )   | 775    | 27% ( 27 % )
display                            | 525    | 16% ( 16 % )   | 593    | 20% ( 20 % )
energy and environmental solutions | 85     | 3% ( 3 % )     | 149    | 5% ( 5 % )
total                              | $ 3142 | 100% ( 100 % ) | $ 2917 | 100% ( 100 % ) |


| _id | dd4bfa584 |
| title |  |
| text | cases ; ( ii ) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any of the pending tobacco-related cases ; and ( iii ) accordingly , management has not provided any amounts in the consolidated financial statements for unfavorable outcomes , if any .
legal defense costs are expensed as incurred .
altria group , inc .
and its subsidiaries have achieved substantial success in managing litigation .

nevertheless , litigation is subject to uncertainty and significant challenges remain .
it is possible that the consolidated results of operations , cash flows or financial position of altria group , inc. , or one or more of its subsidiaries , could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain pending litigation .
altria group , inc .

altria group , inc .
and each of its subsidiaries named as a defendant believe , and each has been so advised by counsel handling the respective cases , that it has valid defenses to the litigation pending against it , as well as valid bases for appeal of adverse verdicts .
each of the companies has defended , and will continue to defend , vigorously against litigation challenges .
however , altria group , inc .

however , altria group , inc .
and its subsidiaries may enter into settlement discussions in particular cases if they believe it is in the best interests of altria group , inc .
to do so .
overview of altria group , inc .

and/or pm usa tobacco-related litigation types and number of cases : claims related to tobacco products generally fall within the following categories : ( i ) smoking and health cases alleging personal injury brought on behalf of individual plaintiffs ; ( ii ) smoking and health cases primarily alleging personal injury or seeking court- supervised programs for ongoing medical monitoring and purporting to be brought on behalf of a class of individual plaintiffs , including cases in which the aggregated

, including cases in which the aggregated claims of a number of individual plaintiffs are to be tried in a single proceeding ; ( iii ) health care cost recovery cases brought by governmental ( both domestic and foreign ) plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette smoking and/or disgorgement of profits ; ( iv ) class action suits alleging that the uses of the terms 201clights 201d and 201cultra lights 201d constitute deceptive and unfair trade practices ,

constitute deceptive and unfair trade practices , common law or statutory fraud , unjust enrichment , breach of warranty or violations of the racketeer influenced and corrupt organizations act ( 201crico 201d ) ; and ( v ) other tobacco- related litigation described below .

plaintiffs 2019 theories of recovery and the defenses raised in pending smoking and health , health care cost recovery and 201clights/ultra lights 201d cases are discussed below .
the table below lists the number of certain tobacco-related cases pending in the united states against pm usa and , in some instances , altria group , inc .
as of december 31 , 2014 , december 31 , 2013 and december 31 , 2012 .

type of case number of cases pending as of december 31 , 2014 number of cases pending as of december 31 , 2013 number of cases pending as of december 31 , 2012 individual smoking and health cases ( 1 ) 67 67 77 smoking and health class actions and aggregated claims litigation ( 2 ) 5 6 7 health care cost recovery actions ( 3 ) 1 1 1 .

( 1 ) does not include 2558 cases brought by flight attendants seeking compensatory damages for personal injuries allegedly caused by exposure to environmental tobacco smoke ( 201cets 201d ) .
the flight attendants allege that they are members of an ets smoking and health class action in florida , which was settled in 1997 ( broin ) .

the terms of the court-approved settlement in that case allow class members to file individual lawsuits seeking compensatory damages , but prohibit them from seeking punitive damages .
also , does not include individual smoking and health cases brought by or on behalf of plaintiffs in florida state and federal courts following the decertification of the engle case ( discussed below in smoking and health litigation - engle class action ) .

( 2 ) includes as one case the 600 civil actions ( of which 346 were actions against pm usa ) that were to be tried in a single proceeding in west virginia ( in re : tobacco litigation ) .
the west virginia supreme court of appeals has ruled that the united states constitution did not preclude a trial in two phases in this case .
issues related to defendants 2019 conduct and whether punitive damages are permissible were tried in the first phase .
trial in the first phase of this case began in april 2013 .

in may 2013 , the jury returned a verdict in favor of defendants on the claims for design defect , negligence , failure to warn , breach of warranty , and concealment and declined to find that the defendants 2019 conduct warranted punitive damages .
plaintiffs prevailed on their claim that ventilated filter cigarettes should have included use instructions for the period 1964 - 1969 .

the second phase , if any , will consist of individual trials to determine liability and compensatory damages on that claim only .
in august 2013 , the trial court denied all post-trial motions .
the trial court entered final judgment in october 2013 and , in november 2013 , plaintiffs filed their notice of appeal to the west virginia supreme court of appeals .
on november 3 , 2014 , the west virginia supreme court of appeals affirmed the final judgment .

plaintiffs filed a petition for rehearing with the west virginia supreme court of appeals , which the court denied on january 8 , 2015 .
( 3 ) see health care cost recovery litigation - federal government 2019s lawsuit below .
altria group , inc .
and subsidiaries notes to consolidated financial statements _________________________ altria_mdc_2014form10k_nolinks_crops.pdf 68 2/25/15 5:56 pm

 |
| table | type of case                                                            | number of casespending as ofdecember 31 2014 | number of casespending as ofdecember 31 2013 | number of casespending as ofdecember 31 2012
----------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------- | --------------------------------------------
individual smoking and health cases ( 1 )                               | 67                                           | 67                                           | 77
smoking and health class actions and aggregated claims litigation ( 2 ) | 5                                            | 6                                            | 7
health care cost recovery actions ( 3 )                                 | 1                                            | 1                                            | 1
201clights/ultra lights 201d class actions                              | 12                                           | 15                                           | 14 |


| _id | dd4bcab5e |
| title |  |
| text | notes to consolidated financial statements ( continued ) | 72 snap-on incorporated following is a reconciliation of the beginning and ending amount of unrecognized tax benefits : ( amounts in millions ) amount .

of the $ 18.7 million of unrecognized tax benefits at the end of 2007 , approximately $ 16.2 million would impact the effective income tax rate if recognized .
interest and penalties related to unrecognized tax benefits are recorded in income tax expense .
during the years ended december 29 , 2007 , december 30 , 2006 , and december 31 , 2005 , the company recognized approximately $ 1.2 million , $ 0.5 million and ( $ 0.5 ) million in net interest expense ( benefit ) , respectively .

the company has provided for approximately $ 3.4 million , $ 2.2 million , and $ 1.7 million of accrued interest related to unrecognized tax benefits at the end of fiscal year 2007 , 2006 and 2005 , respectively .
during the next 12 months , the company does not anticipate any significant changes to the total amount of unrecognized tax benefits , other than the accrual of additional interest expense in an amount similar to the prior year 2019s expense .

with few exceptions , snap-on is no longer subject to u.s .
federal and state/local income tax examinations by tax authorities for years prior to 2003 , and snap-on is no longer subject to non-u.s .
income tax examinations by tax authorities for years prior to 2001 .
the undistributed earnings of all non-u.s .
subsidiaries totaled $ 338.5 million , $ 247.4 million and $ 173.6 million at the end of fiscal 2007 , 2006 and 2005 , respectively .

snap-on has not provided any deferred taxes on these undistributed earnings as it considers the undistributed earnings to be permanently invested .
determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable .
the american jobs creation act of 2004 ( the 201cajca 201d ) created a one-time tax incentive for u.s .

corporations to repatriate accumulated foreign earnings by providing a tax deduction of 85% ( 85 % ) of qualifying dividends received from foreign affiliates .
under the provisions of the ajca , snap-on repatriated approximately $ 93 million of qualifying dividends in 2005 that resulted in additional income tax expense of $ 3.3 million for the year .

note 9 : short-term and long-term debt notes payable and long-term debt as of december 29 , 2007 , was $ 517.9 million ; no commercial paper was outstanding at december 29 , 2007 .
as of december 30 , 2006 , notes payable and long-term debt was $ 549.2 million , including $ 314.9 million of commercial paper .
snap-on presented $ 300 million of the december 30 , 2006 , outstanding commercial paper as 201clong-term debt 201d on the accompanying december 30 , 2006 , consolidated balance sheet .

on january 12 , 2007 , snap-on sold $ 300 million of unsecured notes consisting of $ 150 million of floating rate notes that mature on january 12 , 2010 , and $ 150 million of fixed rate notes that mature on january 15 , 2017 .
interest on the floating rate notes accrues at a rate equal to the three-month london interbank offer rate plus 0.13% ( 0.13 % ) per year and is payable quarterly .
interest on the fixed rate notes accrues at a rate of 5.50% ( 5.50 % ) per year and is payable semi-annually .

snap-on used the proceeds from the sale of the notes , net of $ 1.5 million of transaction costs , to repay commercial paper obligations issued to finance the acquisition of business solutions .
on january 12 , 2007 , the company also terminated a $ 250 million bridge credit agreement that snap-on established prior to its acquisition of business solutions.

 |
| table | ( amounts in millions )                                  | amount
-------------------------------------------------------- | ------------
unrecognized tax benefits as of december 31 2006         | $ 21.3
gross increases 2013 tax positions in prior periods      | 0.5
gross decreases 2013 tax positions in prior periods      | -0.4 ( 0.4 )
gross increases 2013 tax positions in the current period | 0.5
settlements with taxing authorities                      | -3.0 ( 3.0 )
lapsing of statutes of limitations                       | -0.2 ( 0.2 )
unrecognized tax benefits as of december 29 2007         | $ 18.7 |


| _id | dd497e4cc |
| title |  |
| text | proportional free cash flow ( a non-gaap measure ) we define proportional free cash flow as cash flows from operating activities less maintenance capital expenditures ( including non-recoverable environmental capital expenditures ) , adjusted for the estimated impact of noncontrolling interests .
the proportionate share of cash flows and related adjustments attributable to noncontrolling interests in our subsidiaries comprise the proportional adjustment factor presented in the reconciliation below .

upon the company's adoption of the accounting guidance for service concession arrangements effective january 1 , 2015 , capital expenditures related to service concession assets that would have been classified as investing activities on the consolidated statement of cash flows are now classified as operating activities .
see note 1 2014general and summary of significant accounting policies of this form 10-k for further information on the adoption of this guidance .

beginning in the quarter ended march 31 , 2015 , the company changed the definition of proportional free cash flow to exclude the cash flows for capital expenditures related to service concession assets that are now classified within net cash provided by operating activities on the consolidated statement of cash flows .
the proportional adjustment factor for these capital expenditures is presented in the reconciliation below .

we also exclude environmental capital expenditures that are expected to be recovered through regulatory , contractual or other mechanisms .
an example of recoverable environmental capital expenditures is ipl's investment in mats-related environmental upgrades that are recovered through a tracker .
see item 1 . 2014us sbu 2014ipl 2014environmental matters for details of these investments .
the gaap measure most comparable to proportional free cash flow is cash flows from operating activities .

we believe that proportional free cash flow better reflects the underlying business performance of the company , as it measures the cash generated by the business , after the funding of maintenance capital expenditures , that may be available for investing or repaying debt or other purposes .
factors in this determination include the impact of noncontrolling interests , where aes consolidates the results of a subsidiary that is not wholly-owned by the company .

the presentation of free cash flow has material limitations .
proportional free cash flow should not be construed as an alternative to cash from operating activities , which is determined in accordance with gaap .
proportional free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed , such as debt service requirements and dividend payments .

our definition of proportional free cash flow may not be comparable to similarly titled measures presented by other companies .
calculation of proportional free cash flow ( in millions ) 2015 2014 2013 2015/2014change 2014/2013 change .

( 1 ) service concession asset expenditures excluded from proportional free cash flow non-gaap metric .
( 2 ) the proportional adjustment factor , proportional maintenance capital expenditures ( net of reinsurance proceeds ) and proportional non-recoverable environmental capital expenditures are calculated by multiplying the percentage owned by noncontrolling interests for each entity by its corresponding consolidated cash flow metric and are totaled to the resulting figures .

for example , parent company a owns 20% ( 20 % ) of subsidiary company b , a consolidated subsidiary .
thus , subsidiary company b has an 80% ( 80 % ) noncontrolling interest .
assuming a consolidated net cash flow from operating activities of $ 100 from subsidiary b , the proportional adjustment factor for subsidiary b would equal $ 80 ( or $ 100 x 80% ( 80 % ) ) .

the company calculates the proportional adjustment factor for each consolidated business in this manner and then sums these amounts to determine the total proportional adjustment factor used in the reconciliation .
the proportional adjustment factor may differ from the proportion of income attributable to noncontrolling interests as a result of ( a ) non-cash items which impact income but not cash and ( b ) aes' ownership interest in the subsidiary where such items occur .

( 3 ) includes proportional adjustment amount for service concession asset expenditures of $ 84 million for the year ended december 31 , 2015 .
the company adopted service concession accounting effective january 1 , 2015 .
( 4 ) excludes ipl's proportional recoverable environmental capital expenditures of $ 205 million , $ 163 million and $ 110 million for the years december 31 , 2015 , 2014 and 2013 , respectively.

 |
| table | calculation of proportional free cash flow ( in millions )                             | 2015         | 2014         | 2013         | 2015/2014 change | 2014/2013 change
-------------------------------------------------------------------------------------- | ------------ | ------------ | ------------ | ---------------- | ----------------
net cash provided by operating activities                                              | $ 2134       | $ 1791       | $ 2715       | $ 343            | $ -924 ( 924 )
add : capital expenditures related to service concession assets ( 1 )                  | 165          | 2014         | 2014         | 165              | 2014
adjusted operating cash flow                                                           | 2299         | 1791         | 2715         | 508              | -924 ( 924 )
less : proportional adjustment factor on operating cash activities ( 2 ) ( 3 )         | -558 ( 558 ) | -359 ( 359 ) | -834 ( 834 ) | -199 ( 199 )     | 475
proportional adjusted operating cash flow                                              | 1741         | 1432         | 1881         | 309              | -449 ( 449 )
less : proportional maintenance capital expenditures net of reinsurance proceeds ( 2 ) | -449 ( 449 ) | -485 ( 485 ) | -535 ( 535 ) | 36               | 50
less : proportional non-recoverable environmental capital expenditures ( 2 ) ( 4 )     | -51 ( 51 )   | -56 ( 56 )   | -75 ( 75 )   | 5                | 19
proportional free cash flow                                                            | $ 1241       | $ 891        | $ 1271       | $ 350            | $ -380 ( 380 ) |


| _id | dd4bc2bac |
| title |  |
| text | 9 .
junior subordinated debt securities payable in accordance with the provisions of the junior subordinated debt securities which were issued on march 29 , 2004 , holdings elected to redeem the $ 329897 thousand of 6.2% ( 6.2 % ) junior subordinated debt securities outstanding on may 24 , 2013 .
as a result of the early redemption , the company incurred pre-tax expense of $ 7282 thousand related to the immediate amortization of the remaining capitalized issuance costs on the trust preferred securities .

interest expense incurred in connection with these junior subordinated debt securities is as follows for the periods indicated: .

holdings considered the mechanisms and obligations relating to the trust preferred securities , taken together , constituted a full and unconditional guarantee by holdings of capital trust ii 2019s payment obligations with respect to their trust preferred securities .
10 .

10 .
reinsurance and trust agreements certain subsidiaries of group have established trust agreements , which effectively use the company 2019s investments as collateral , as security for assumed losses payable to certain non-affiliated ceding companies .
at december 31 , 2014 , the total amount on deposit in trust accounts was $ 322285 thousand .

on april 24 , 2014 , the company entered into two collateralized reinsurance agreements with kilimanjaro re limited ( 201ckilimanjaro 201d ) , a bermuda based special purpose reinsurer , to provide the company with catastrophe reinsurance coverage .
these agreements are multi-year reinsurance contracts which cover specified named storm and earthquake events .

the first agreement provides up to $ 250000 thousand of reinsurance coverage from named storms in specified states of the southeastern united states .

the second agreement provides up to $ 200000 thousand of reinsurance coverage from named storms in specified states of the southeast , mid-atlantic and northeast regions of the united states and puerto rico as well as reinsurance coverage from earthquakes in specified states of the southeast , mid-atlantic , northeast and west regions of the united states , puerto rico and british columbia .

on november 18 , 2014 , the company entered into a collateralized reinsurance agreement with kilimanjaro re to provide the company with catastrophe reinsurance coverage .
this agreement is a multi-year reinsurance contract which covers specified earthquake events .
the agreement provides up to $ 500000 thousand of reinsurance coverage from earthquakes in the united states , puerto rico and canada .

kilimanjaro has financed the various property catastrophe reinsurance coverage by issuing catastrophe bonds to unrelated , external investors .
on april 24 , 2014 , kilimanjaro issued $ 450000 thousand of variable rate notes ( 201cseries 2014-1 notes 201d ) .
on november 18 , 2014 , kilimanjaro issued $ 500000 thousand of variable rate notes ( 201cseries 2014-2 notes 201d ) .

the proceeds from the issuance of the series 2014-1 notes and the series 2014-2 notes are held in reinsurance trust throughout the duration of the applicable reinsurance agreements and invested solely in us government money market funds with a rating of at least 201caaam 201d by standard & poor 2019s.

 |
| table | ( dollars in thousands )  | years ended december 31 , 2014 | years ended december 31 , 2013 | years ended december 31 , 2012
------------------------- | ------------------------------ | ------------------------------ | ------------------------------
interest expense incurred | $ -                            | $ 8181                         | $ 20454 |


| _id | dd4c1fa00 |
| title |  |
| text | pro forma financial information the following pro forma consolidated condensed financial results of operations are presented as if the acquisition of the valves & controls business occurred on october 1 , 2015 .
the pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time. .

the pro forma results for 2016 were adjusted to include first year acquisition accounting charges related to inventory and backlog of $ 122 in 2017 .
the pro forma 2016 results also include acquisition costs of $ 52 , while the 2017 pro forma results were adjusted to exclude these charges .

on october 2 , 2017 , the company sold its residential storage business for $ 200 in cash , subject to post-closing adjustments , and expects to recognize a loss of approximately $ 40 in 2018 due to income taxes resulting from nondeductible goodwill .
the company expects to realize approximately $ 140 in after-tax cash proceeds from the sale .

this business , with sales of $ 298 and pretax earnings of $ 15 in 2017 , is a leader in home organization and storage systems , and was reported within the tools & home products segment .
assets and liabilities were classified as held-for-sale as of september 30 , 2017 .
the company acquired six businesses in 2016 , four in automation solutions and two in climate technologies .
total cash paid for these businesses was $ 132 , net of cash acquired .

annualized sales for these businesses were approximately $ 51 in 2016 .
the company recognized goodwill of $ 83 ( $ 27 of which is expected to be tax deductible ) and other identifiable intangible assets of $ 50 , primarily customer relationships and intellectual property with a weighted-average life of approximately nine years .
the company completed eight acquisitions in 2015 , seven in automation solutions and one in tools & home products , which had combined annualized sales of approximately $ 115 .

total cash paid for all businesses was $ 324 , net of cash acquired .
the company recognized goodwill of $ 178 ( $ 42 of which is expected to be tax deductible ) and other intangible assets of $ 128 , primarily customer relationships and intellectual property with a weighted-average life of approximately ten years .

in january 2015 , the company completed the sale of its mechanical power transmission solutions business for $ 1.4 billion , and recognized a pretax gain from the transaction of $ 939 ( $ 532 after-tax , $ 0.78 per share ) .

assets and liabilities sold were as follows : current assets , $ 182 ( accounts receivable , inventories , other current assets ) ; other assets , $ 374 ( property , plant and equipment , goodwill , other noncurrent assets ) ; accrued expenses , $ 56 ( accounts payable , other current liabilities ) ; and other liabilities , $ 41 .
proceeds from the divestiture were used for share repurchase .

this business was previously reported in the former industrial automation segment , and had partial year sales in 2015 of $ 189 and related pretax earnings of $ 21 .
power transmission solutions designs and manufactures market-leading couplings , bearings , conveying components and gearing and drive components , and provides supporting services and solutions .

on september 30 , 2015 , the company sold its intermetro commercial storage business for $ 411 in cash and recognized a pretax gain from the transaction of $ 100 ( $ 79 after-tax , $ 0.12 per share ) .
this business had annual sales of $ 288 and pretax earnings of $ 42 in 2015 and was reported in the former commercial & residential solutions segment .

assets and liabilities sold were as follows : current assets , $ 62 ( accounts receivable , inventories , other current assets ) ; other assets , $ 292 ( property , plant and equipment , goodwill , other noncurrent assets ) ; current liabilities , $ 34 ( accounts payable , other current liabilities ) ; and other liabilities , $ 9 .
intermetro is a leading manufacturer and supplier of storage and transport products in the food service , commercial products and health care industries .

the results of operations of the acquired businesses discussed above have been included in the company 2019s consolidated results of operations since the respective dates of acquisition .
( 4 ) discontinued operations in 2017 , the company completed the previously announced strategic actions to streamline its portfolio and drive growth in its core businesses .

on november 30 , 2016 , the company completed the sale of its network power systems business for $ 4.0 billion in cash and retained a subordinated interest in distributions , contingent upon the equity holders first receiving a threshold return on their initial investment .
this business comprised the former network power segment .

additionally , on january 31 , 2017 , the company completed the sale of its power generation , motors and drives business for approximately $ 1.2 billion , subject to post-closing

 |
| table | | 2016    | 2017
----------------------------------------------------------- | ------- | -----
net sales                                                   | $ 16201 | 16112
net earnings from continuing operations common stockholders | $ 1482  | 1692
diluted earnings per share from continuing operations       | $ 2.28  | 2.62 |


| _id | dd496f454 |
| title |  |
| text | american tower corporation and subsidiaries notes to consolidated financial statements 2014 ( continued ) a description of the company 2019s reporting units and the results of the related transitional impairment testing are as follows : verestar 2014verestar was a single segment and reporting unit until december 2002 , when the company committed to a plan to dispose of verestar .
the company recorded an impairment charge of $ 189.3 million relating to the impairment of goodwill in this reporting unit .

the fair value of this reporting unit was determined based on an independent third party appraisal .
network development services 2014as of january 1 , 2002 , the reporting units in the company 2019s network development services segment included kline , specialty constructors , galaxy , mts components and flash technologies .

the company estimated the fair value of these reporting units utilizing future discounted cash flows and market information as to the value of each reporting unit on january 1 , 2002 .
the company recorded an impairment charge of $ 387.8 million for the year ended december 31 , 2002 related to the impairment of goodwill within these reporting units .
such charge included full impairment for all of the goodwill within the reporting units except kline , for which only a partial impairment was recorded .

as discussed in note 2 , the assets of all of these reporting units were sold as of december 31 , 2003 , except for those of kline and our tower construction services unit , which were sold in march and november 2004 , respectively .
rental and management 2014the company obtained an independent third party appraisal of the rental and management reporting unit that contains goodwill and determined that goodwill was not impaired .

the company 2019s other intangible assets subject to amortization consist of the following as of december 31 , ( in thousands ) : .

the company amortizes its intangible assets over periods ranging from three to fifteen years .
amortization of intangible assets for the years ended december 31 , 2004 and 2003 aggregated approximately $ 97.8 million and $ 94.6 million , respectively ( excluding amortization of deferred financing costs , which is included in interest expense ) .

the company expects to record amortization expense of approximately $ 97.8 million , $ 95.9 million , $ 92.0 million , $ 90.5 million and $ 88.8 million , respectively , for the years ended december 31 , 2005 , 2006 , 2007 , 2008 and 2009 , respectively .
5 .
notes receivable in 2000 , the company loaned tv azteca , s.a .
de c.v .
( tv azteca ) , the owner of a major national television network in mexico , $ 119.8 million .

the loan , which initially bore interest at 12.87% ( 12.87 % ) , payable quarterly , was discounted by the company , as the fair value interest rate at the date of the loan was determined to be 14.25% ( 14.25 % ) .
the loan was amended effective january 1 , 2003 to increase the original interest rate to 13.11% ( 13.11 % ) .

as of december 31 , 2004 , and 2003 , approximately $ 119.8 million undiscounted ( $ 108.2 million discounted ) under the loan was outstanding and included in notes receivable and other long-term assets in the accompanying consolidated balance sheets .
the term of the loan is seventy years ; however , the loan may be prepaid by tv

 |
| table | | 2004               | 2003
------------------------------------------------------- | ------------------ | ------------------
acquired customer base and network location intangibles | $ 1369607          | $ 1299521
deferred financing costs                                | 89736              | 111484
acquired licenses and other intangibles                 | 43404              | 43125
total                                                   | 1502747            | 1454130
less accumulated amortization                           | -517444 ( 517444 ) | -434381 ( 434381 )
other intangible assets net                             | $ 985303           | $ 1019749 |


| _id | dd4bb6398 |
| title |  |
| text | notes to consolidated financial statements 2014 ( continued ) the following table summarizes the changes in non-vested restricted stock awards for the year ended may 31 , 2009 ( share awards in thousands ) : share awards weighted average grant-date fair value .

the weighted average grant-date fair value of share awards granted in the years ended may 31 , 2008 and 2007 was $ 38 and $ 45 , respectively .
the total fair value of share awards vested during the years ended may 31 , 2009 , 2008 and 2007 was $ 6.2 million , $ 4.1 million and $ 1.7 million , respectively .
we recognized compensation expense for restricted stock of $ 9.0 million , $ 5.7 million , and $ 2.7 million in the years ended may 31 , 2009 , 2008 and 2007 .

as of may 31 , 2009 , there was $ 23.5 million of total unrecognized compensation cost related to unvested restricted stock awards that is expected to be recognized over a weighted average period of 2.9 years .
employee stock purchase plan we have an employee stock purchase plan under which the sale of 2.4 million shares of our common stock has been authorized .
employees may designate up to the lesser of $ 25000 or 20% ( 20 % ) of their annual compensation for the purchase of stock .

the price for shares purchased under the plan is 85% ( 85 % ) of the market value on the last day of the quarterly purchase period .
as of may 31 , 2009 , 0.8 million shares had been issued under this plan , with 1.6 million shares reserved for future issuance .
the weighted average grant-date fair value of each designated share purchased under this plan was $ 6 , $ 6 and $ 8 in the years ended may 31 , 2009 , 2008 and 2007 , respectively .

these values represent the fair value of the 15% ( 15 % ) discount .
note 12 2014segment information general information during fiscal 2009 , we began assessing our operating performance using a new segment structure .
we made this change as a result of our june 30 , 2008 acquisition of 51% ( 51 % ) of hsbc merchant services llp in the united kingdom , in addition to anticipated future international expansion .

beginning with the quarter ended august 31 , 2008 , the reportable segments are defined as north america merchant services , international merchant services , and money transfer .
the following tables reflect these changes and such reportable segments for fiscal years 2009 , 2008 , and 2007.

 |
| table | | share awards | weighted average grant-date fair value
------------------------- | ------------ | --------------------------------------
non-vested at may 31 2007 | 278          | $ 37
granted                   | 400          | 38
vested                    | -136 ( 136 ) | 30
forfeited                 | -24 ( 24 )   | 40
non-vested at may 31 2008 | 518          | 39
granted                   | 430          | 43
vested                    | -159 ( 159 ) | 39
forfeited                 | -27 ( 27 )   | 41
non-vested at may 31 2009 | 762          | 42 |


| _id | dd497d70c |
| title |  |
| text | during 2015 , $ 82 million of provision recapture was recorded for purchased impaired loans compared to $ 91 million of provision recapture during 2014 .
charge-offs ( which were specifically for commercial loans greater than a defined threshold ) during 2015 were $ 12 million compared to $ 42 million during 2014 .
at december 31 , 2015 and december 31 , 2014 , the alll on total purchased impaired loans was $ .3 billion and $ .9 billion , respectively .

the decline in alll was primarily due to the change in our derecognition policy .
for purchased impaired loan pools where an allowance has been recognized , subsequent increases in the net present value of cash flows will result in a provision recapture of any previously recorded alll to the extent applicable , and/or a reclassification from non-accretable difference to accretable yield , which will be recognized prospectively .

individual loan transactions where final dispositions have occurred ( as noted above ) result in removal of the loans from their applicable pools for cash flow estimation purposes .
the cash flow re- estimation process is completed quarterly to evaluate the appropriateness of the alll associated with the purchased impaired loans .
activity for the accretable yield during 2015 and 2014 follows : table 66 : purchased impaired loans 2013 accretable yield .

note 5 allowances for loan and lease losses and unfunded loan commitments and letters of credit allowance for loan and lease losses we maintain the alll at levels that we believe to be appropriate to absorb estimated probable credit losses incurred in the portfolios as of the balance sheet date .

we use the two main portfolio segments 2013 commercial lending and consumer lending 2013 and develop and document the alll under separate methodologies for each of these segments as discussed in note 1 accounting policies .
a rollforward of the alll and associated loan data follows .
the pnc financial services group , inc .
2013 form 10-k 141

 |
| table | in millions                                             | 2015         | 2014
------------------------------------------------------- | ------------ | ------------
january 1                                               | $ 1558       | $ 2055
accretion ( including excess cash recoveries )          | -466 ( 466 ) | -587 ( 587 )
net reclassifications to accretable from non-accretable | 226          | 208
disposals                                               | -68 ( 68 )   | -118 ( 118 )
december 31                                             | $ 1250       | $ 1558 |


| _id | dd4baed28 |
| title |  |
| text | performance graph the graph below compares the cumulative total shareholder return on pmi's common stock with the cumulative total return for the same period of pmi's peer group and the s&p 500 index .
the graph assumes the investment of $ 100 as of december 31 , 2012 , in pmi common stock ( at prices quoted on the new york stock exchange ) and each of the indices as of the market close and reinvestment of dividends on a quarterly basis .
date pmi pmi peer group ( 1 ) s&p 500 index .

( 1 ) the pmi peer group presented in this graph is the same as that used in the prior year , except reynolds american inc .
was removed following the completion of its acquisition by british american tobacco p.l.c .
on july 25 , 2017 .
the pmi peer group was established based on a review of four characteristics : global presence ; a focus on consumer products ; and net revenues and a market capitalization of a similar size to those of pmi .

the review also considered the primary international tobacco companies .

as a result of this review , the following companies constitute the pmi peer group : altria group , inc. , anheuser-busch inbev sa/nv , british american tobacco p.l.c. , the coca-cola company , colgate-palmolive co. , diageo plc , heineken n.v. , imperial brands plc , japan tobacco inc. , johnson & johnson , kimberly-clark corporation , the kraft-heinz company , mcdonald's corp. , mondel z international , inc. , nestl e9 s.a. , pepsico , inc. , the procter & gamble company , roche holding ag , and unilever

gamble company , roche holding ag , and unilever nv and plc .

note : figures are rounded to the nearest $ 0.10.

 |
| table | date             | pmi      | pmi peer group ( 1 ) | s&p 500 index
---------------- | -------- | -------------------- | -------------
december 31 2012 | $ 100.00 | $ 100.00             | $ 100.00
december 31 2013 | $ 108.50 | $ 122.80             | $ 132.40
december 31 2014 | $ 106.20 | $ 132.50             | $ 150.50
december 31 2015 | $ 120.40 | $ 143.50             | $ 152.60
december 31 2016 | $ 130.80 | $ 145.60             | $ 170.80
december 31 2017 | $ 156.80 | $ 172.70             | $ 208.10 |


| _id | dd4c2131e |
| title |  |
| text | table of contents hologic , inc .
notes to consolidated financial statements ( continued ) ( in thousands , except per share data ) the acquisition also provides for up to two annual earn-out payments not to exceed $ 15000 in the aggregate based on biolucent 2019s achievement of certain revenue targets .
the company considered the provision of eitf 95-8 , and concluded that this contingent consideration represents additional purchase price .

as a result , goodwill will be increased by the amount of the additional consideration , if any , as it is earned .
as of september 26 , 2009 , the company has not recorded any amounts for these potential earn-outs .
the allocation of the purchase price was based upon estimates of the fair value of assets acquired and liabilities assumed as of september 18 , 2007 .
the components and allocation of the purchase price consisted of the following approximate amounts: .

as part of the purchase price allocation , all intangible assets that were a part of the acquisition were identified and valued .
it was determined that only customer relationship , trade name and developed technology had separately identifiable values .
the fair value of these intangible assets was determined through the application of the income approach .
customer relationship represented a large customer base that was expected to purchase the disposable mammopad product on a regular basis .

trade name represented the biolucent product name that the company intended to continue to use .
developed technology represented currently marketable purchased products that the company continues to sell as well as utilize to enhance and incorporate into the company 2019s existing products .

the deferred income tax liability relates to the tax effect of acquired identifiable intangible assets and fair value adjustments to acquired inventory , as such amounts are not deductible for tax purposes , partially offset by acquired net operating loss carryforwards of approximately $ 2400 .
4 .
sale of gestiva on january 16 , 2008 , the company entered into a definitive agreement pursuant to which it agreed to sell full u.s .

and world-wide rights to gestiva to k-v pharmaceutical company upon approval of the pending gestiva new drug application ( the 201cgestiva nda 201d ) by the fda for a purchase price of $ 82000 .
the company received $ 9500 of the purchase price in fiscal 2008 , and the balance is due upon final approval of the gestiva nda by the fda on or before february 19 , 2010 and the production of a quantity of gestiva suitable to enable the commercial launch of the product .

either party has the right to terminate the agreement if fda approval is not obtained by february 19 , 2010 .
the company agreed to continue its efforts to obtain fda approval of the nda for gestiva as part of this arrangement .
all costs incurred in these efforts will be reimbursed by k-v pharmaceutical and are being recorded as a credit against research and development expenses .
during fiscal 2009 and 2008 , these reimbursed costs were not material .

the company recorded the $ 9500 as a deferred gain within current liabilities in the consolidated balance sheet .
the company expects that the gain will be recognized upon the closing of the transaction following final fda approval of the gestiva nda or if the agreement is terminated .
the company cannot assure that it will be able to obtain the requisite fda approval , that the transaction will be completed or that it will receive the balance of the purchase price .

moreover , if k-v pharmaceutical terminates the agreement as a result of a breach by the company of a material representation , warranty , covenant or agreement , the company will be required to return the funds previously received as well as expenses reimbursed by k-v .
source : hologic inc , 10-k , november 24 , 2009 powered by morningstar ae document research 2120 the information contained herein may not be copied , adapted or distributed and is not warranted to be accurate , complete or timely .

the user assumes all risks for any damages or losses arising from any use of this information , except to the extent such damages or losses cannot be limited or excluded by applicable law .
past financial performance is no guarantee of future results.

 |
| table | net tangible assets acquired as of september 18 2007 | $ 2800
---------------------------------------------------- | --------------
developed technology and know how                    | 12300
customer relationship                                | 17000
trade name                                           | 2800
deferred income tax liabilities net                  | -9500 ( 9500 )
goodwill                                             | 47800
final purchase price                                 | $ 73200 |


| _id | dd496daaa |
| title |  |
| text | net revenues include $ 3.8 billion in 2017 and $ 739 million in 2016 related to the sale of rrps , mainly driven by japan .
these net revenue amounts include excise taxes billed to customers .
excluding excise taxes , net revenues for rrps were $ 3.6 billion in 2017 and $ 733 million in 2016 .
in some jurisdictions , including japan , we are not responsible for collecting excise taxes .

in 2017 , approximately $ 0.9 billion of our $ 3.6 billion in rrp net revenues , excluding excise taxes , were from iqos devices and accessories .
excise taxes on products increased by $ 1.1 billion , due to : 2022 higher excise taxes resulting from changes in retail prices and tax rates ( $ 4.6 billion ) , partially offset by 2022 favorable currency ( $ 1.9 billion ) and 2022 lower excise taxes resulting from volume/mix ( $ 1.6 billion ) .

our cost of sales ; marketing , administration and research costs ; and operating income were as follows : for the years ended december 31 , variance .

cost of sales increased by $ 1.0 billion , due to : 2022 higher cost of sales resulting from volume/mix ( $ 1.1 billion ) , partly offset by 2022 lower manufacturing costs ( $ 36 million ) and 2022 favorable currency ( $ 30 million ) .

marketing , administration and research costs increased by $ 320 million , due to : 2022 higher expenses ( $ 570 million , largely reflecting increased investment behind reduced-risk products , predominately in the european union and asia ) , partly offset by 2022 favorable currency ( $ 250 million ) .

operating income increased by $ 688 million , due primarily to : 2022 price increases ( $ 1.4 billion ) , partly offset by 2022 higher marketing , administration and research costs ( $ 570 million ) and 2022 unfavorable currency ( $ 157 million ) .
interest expense , net , of $ 914 million increased by $ 23 million , due primarily to unfavorably currency and higher average debt levels , partly offset by higher interest income .

our effective tax rate increased by 12.8 percentage points to 40.7% ( 40.7 % ) .
the 2017 effective tax rate was unfavorably impacted by $ 1.6 billion due to the tax cuts and jobs act .
for further details , see item 8 , note 11 .
income taxes to our consolidated financial statements .
we are continuing to evaluate the impact that the tax cuts and jobs act will have on our tax liability .

based upon our current interpretation of the tax cuts and jobs act , we estimate that our 2018 effective tax rate will be approximately 28% ( 28 % ) , subject to future regulatory developments and earnings mix by taxing jurisdiction .
we are regularly examined by tax authorities around the world , and we are currently under examination in a number of jurisdictions .

it is reasonably possible that within the next 12 months certain tax examinations will close , which could result in a change in unrecognized tax benefits along with related interest and penalties .
an estimate of any possible change cannot be made at this time .
net earnings attributable to pmi of $ 6.0 billion decreased by $ 932 million ( 13.4% ( 13.4 % ) ) .
this decrease was due primarily to a higher effective tax rate as discussed above , partly offset by higher operating income .

diluted and basic eps of $ 3.88 decreased by 13.4% ( 13.4 % ) .
excluding

 |
| table | ( in millions )                             | for the years ended december 31 , 2017 | for the years ended december 31 , 2016 | for the years ended december 31 , $ | % (  % )
------------------------------------------- | -------------------------------------- | -------------------------------------- | ----------------------------------- | ----------------
cost of sales                               | $ 10432                                | $ 9391                                 | $ 1041                              | 11.1% ( 11.1 % )
marketing administration and research costs | 6725                                   | 6405                                   | 320                                 | 5.0% ( 5.0 % )
operating income                            | 11503                                  | 10815                                  | 688                                 | 6.4% ( 6.4 % ) |


| _id | dd49736c6 |
| title |  |
| text | 14 .
capital stock shares outstanding .
the following table presents information regarding capital stock: .

cme group has no shares of preferred stock issued and outstanding .
associated trading rights .
members of cme , cbot , nymex and comex own or lease trading rights which entitle them to access open outcry trading , discounts on trading fees and the right to vote on certain exchange matters as provided for by the rules of the particular exchange and cme group 2019s or the subsidiaries 2019 organizational documents .

each class of cme group class b common stock is associated with a membership in a specific division for trading at cme .
a cme trading right is a separate asset that is not part of or evidenced by the associated share of class b common stock of cme group .
the class b common stock of cme group is intended only to ensure that the class b shareholders of cme group retain rights with respect to representation on the board of directors and approval rights with respect to the core rights described below .

trading rights at cbot are evidenced by class b memberships in cbot , at nymex by class a memberships in nymex and at comex by comex division memberships .
members of cbot , nymex and comex do not have any rights to elect members of the board of directors and are not entitled to receive dividends or other distributions on their memberships or trading permits .
core rights .

core rights .
holders of cme group class b common shares have the right to approve changes in specified rights relating to the trading privileges at cme associated with those shares .
these core rights relate primarily to trading right protections , certain trading fee protections and certain membership benefit protections .
votes on changes to these core rights are weighted by class .

each class of class b common stock has the following number of votes on matters relating to core rights : class b-1 , six votes per share ; class b-2 , two votes per share ; class b-3 , one vote per share ; and class b-4 , 1/6th of one vote per share .
the approval of a majority of the votes cast by the holders of shares of class b common stock is required in order to approve any changes to core rights .
holders of shares of class a common stock do not have the right to vote on changes to core rights .

voting rights .
with the exception of the matters reserved to holders of cme group class b common stock , holders of cme group common stock vote together on all matters for which a vote of common shareholders is required .
in these votes , each holder of shares of class a or class b common stock of cme group has one vote per share .
transfer restrictions .
each class of cme group class b common stock is subject to transfer restrictions contained in the certificate of incorporation of cme group .

these transfer restrictions prohibit the sale or transfer of any shares of class b common stock separate from the sale of the associated trading rights .
election of directors .
the cme group board of directors is currently comprised of 20 members .
holders of class b-1 , class b-2 and class b-3 common stock have the right to elect six directors , of which three are elected by class b-1 shareholders , two are elected by class b-2 shareholders and one is elected by class b-3 shareholders .

the remaining directors are elected by the class a and class b shareholders voting as a single class.

 |
| table | ( in thousands )                                         | december 31 , 2017 | december 31 , 2016
-------------------------------------------------------- | ------------------ | ------------------
class a common stock authorized                          | 1000000            | 1000000
class a common stock issued and outstanding              | 339235             | 338240
class b-1 common stock authorized issued and outstanding | 0.6                | 0.6
class b-2 common stock authorized issued and outstanding | 0.8                | 0.8
class b-3 common stock authorized issued and outstanding | 1.3                | 1.3
class b-4 common stock authorized issued and outstanding | 0.4                | 0.4 |


| _id | dd4c2e3fc |
| title |  |
| text | ( c ) effective january 1 , 2019 , these assets were transferred from the products pipelines business segment to the natural gas pipelines business segment .
( d ) effective january 1 , 2019 , a small number of terminals were transferred between the products pipelines and terminals business segments .

competition our products pipelines 2019 pipeline operations compete against proprietary pipelines owned and operated by major oil companies , other independent products pipelines , trucking and marine transportation firms ( for short-haul movements of products ) and railcars .

our products pipelines 2019 terminal operations compete with proprietary terminals owned and operated by major oil companies and other independent terminal operators , and our transmix operations compete with refineries owned by major oil companies and independent transmix facilities .

terminals our terminals business segment includes the operations of our refined petroleum product , crude oil , chemical , ethanol and other liquid terminal facilities ( other than those included in the products pipelines business segment ) and all of our petroleum coke , metal and ores facilities .
our terminals are located throughout the u.s .
and in portions of canada .

and in portions of canada .
we believe the location of our facilities and our ability to provide flexibility to customers help attract new and retain existing customers at our terminals and provide expansion opportunities .
we often classify our terminal operations based on the handling of either liquids or dry-bulk material products .

in addition , terminals 2019 marine operations include jones act-qualified product tankers that provide marine transportation of crude oil , condensate and refined petroleum products between u.s .
ports .
the following summarizes our terminals business segment assets , as of december 31 , 2018 : number capacity ( mmbbl ) .

_______ ( a ) effective january 1 , 2019 , a small number of terminals were transferred between the terminals and products pipelines business segments .
competition we are one of the largest independent operators of liquids terminals in north america , based on barrels of liquids terminaling capacity .
our liquids terminals compete with other publicly or privately held independent liquids terminals , and terminals owned by oil , chemical , pipeline , and refining companies .

our bulk terminals compete with numerous independent terminal operators , terminals owned by producers and distributors of bulk commodities , stevedoring companies and other industrial companies opting not to outsource terminaling services .
in some locations , competitors are smaller , independent operators with lower cost structures .
our jones act-qualified product tankers compete with other jones act qualified vessel fleets .

our co2 business segment produces , transports , and markets co2 for use in enhanced oil recovery projects as a flooding medium for recovering crude oil from mature oil fields .
our co2 pipelines and related assets allow us to market a complete package of co2 supply and transportation services to our customers .
we also hold ownership interests in several oil-producing fields and own a crude oil pipeline , all located in the permian basin region of west texas.

 |
| table | | number | capacity ( mmbbl )
----------------------- | ------ | ------------------
liquids terminals ( a ) | 52     | 89.6
bulk terminals          | 34     | 2014
jones act tankers       | 16     | 5.3 |


| _id | dd4ba2654 |
| title |  |
| text | on the underlying exposure .
for derivative contracts that are designated and qualify as cash fl ow hedges , the effective portion of gains and losses on these contracts is reported as a component of other comprehensive income and reclassifi ed into earnings in the same period the hedged transaction affects earnings .
hedge ineffectiveness is immediately recognized in earnings .

derivative contracts that are not designated as hedging instruments are recorded at fair value with the gain or loss recognized in current earnings during the period of change .
we may enter into foreign currency forward and option contracts to reduce the effect of fl uctuating currency exchange rates ( principally the euro , the british pound , and the japanese yen ) .

foreign currency derivatives used for hedging are put in place using the same or like currencies and duration as the underlying exposures .
forward contracts are principally used to manage exposures arising from subsidiary trade and loan payables and receivables denominated in foreign currencies .
these contracts are recorded at fair value with the gain or loss recognized in other 2014net .

the purchased option contracts are used to hedge anticipated foreign currency transactions , primarily intercompany inventory activities expected to occur within the next year .
these contracts are designated as cash fl ow hedges of those future transactions and the impact on earnings is included in cost of sales .
we may enter into foreign currency forward contracts and currency swaps as fair value hedges of fi rm commitments .

forward and option contracts generally have maturities not exceeding 12 months .
in the normal course of business , our operations are exposed to fl uctuations in interest rates .
these fl uctuations can vary the costs of fi nancing , investing , and operating .
we address a portion of these risks through a controlled program of risk management that includes the use of derivative fi nancial instruments .

the objective of controlling these risks is to limit the impact of fl uctuations in interest rates on earnings .
our primary interest rate risk exposure results from changes in short-term u.s .
dollar interest rates .
in an effort to manage interest rate exposures , we strive to achieve an acceptable balance between fi xed and fl oating rate debt and investment positions and may enter into interest rate swaps or collars to help maintain that balance .

interest rate swaps or collars that convert our fi xed- rate debt or investments to a fl oating rate are designated as fair value hedges of the underlying instruments .
interest rate swaps or collars that convert fl oating rate debt or investments to a fi xed rate are designated as cash fl ow hedg- es .
interest expense on the debt is adjusted to include the payments made or received under the swap agreements .
goodwill and other intangibles : goodwill is not amortized .

all other intangibles arising from acquisitions and research alliances have fi nite lives and are amortized over their estimated useful lives , ranging from 5 to 20 years , using the straight-line method .
the weighted-average amortization period for developed product technology is approximately 12 years .
amortization expense for 2008 , 2007 , and 2006 was $ 193.4 million , $ 172.8 million , and $ 7.6 million before tax , respectively .

the estimated amortization expense for each of the fi ve succeeding years approximates $ 280 million before tax , per year .
substantially all of the amortization expense is included in cost of sales .
see note 3 for further discussion of goodwill and other intangibles acquired in 2008 and 2007 .
goodwill and other intangible assets at december 31 were as follows: .

goodwill and net other intangibles are reviewed to assess recoverability at least annually and when certain impairment indicators are present .
no signifi cant impairments occurred with respect to the carrying value of our goodwill or other intangible assets in 2008 , 2007 , or 2006 .
property and equipment : property and equipment is stated on the basis of cost .

provisions for depreciation of buildings and equipment are computed generally by the straight-line method at rates based on their estimated useful lives ( 12 to 50 years for buildings and 3 to 18 years for equipment ) .
we review the carrying value of long-lived assets for potential impairment on a periodic basis and whenever events or changes in circumstances indicate the

 |
| table | | 2008             | 2007
--------------------------------------- | ---------------- | ----------------
goodwill                                | $ 1167.5         | $ 745.7
developed product technology 2014 gross | 3035.4           | 1767.5
less accumulated amortization           | -346.6 ( 346.6 ) | -162.6 ( 162.6 )
developed product technology 2014 net   | 2688.8           | 1604.9
other intangibles 2014 gross            | 243.2            | 142.8
less accumulated amortization           | -45.4 ( 45.4 )   | -38.0 ( 38.0 )
other intangibles 2014 net              | 197.8            | 104.8
total intangibles 2014 net              | $ 4054.1         | $ 2455.4 |


| _id | dd4c60bae |
| title |  |
| text | notes to consolidated financial statements 2013 ( continued ) ( amounts in millions , except per share amounts ) guarantees we have guaranteed certain obligations of our subsidiaries relating principally to operating leases and uncommitted lines of credit of certain subsidiaries .

the amount of parent company guarantees on lease obligations was $ 829.2 and $ 857.3 as of december 31 , 2017 and 2016 , respectively , and the amount of parent company guarantees primarily relating to uncommitted lines of credit was $ 491.0 and $ 395.6 as of december 31 , 2017 and 2016 , respectively .
in the event of non-payment by the applicable subsidiary of the obligations covered by a guarantee , we would be obligated to pay the amounts covered by that guarantee .

as of december 31 , 2017 , there were no material assets pledged as security for such parent company guarantees .
contingent acquisition obligations the following table details the estimated future contingent acquisition obligations payable in cash as of december 31 .

1 we have entered into certain acquisitions that contain both redeemable noncontrolling interests and call options with similar terms and conditions .
the estimated amounts listed would be paid in the event of exercise at the earliest exercise date .
we have certain redeemable noncontrolling interests that are exercisable at the discretion of the noncontrolling equity owners as of december 31 , 2017 .

these estimated payments of $ 24.8 are included within the total payments expected to be made in 2018 , and will continue to be carried forward into 2019 or beyond until exercised or expired .
redeemable noncontrolling interests are included in the table at current exercise price payable in cash , not at applicable redemption value , in accordance with the authoritative guidance for classification and measurement of redeemable securities .

the majority of these payments are contingent upon achieving projected operating performance targets and satisfying other conditions specified in the related agreements and are subject to revision in accordance with the terms of the respective agreements .
see note 4 for further information relating to the payment structure of our acquisitions .

legal matters in the normal course of business , we are involved in various legal proceedings , and subject to investigations , inspections , audits , inquiries and similar actions by governmental authorities .
the types of allegations that arise in connection with such legal proceedings vary in nature , but can include claims related to contract , employment , tax and intellectual property matters .

we evaluate all cases each reporting period and record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount , or potential range , of loss can be reasonably estimated .
in certain cases , we cannot reasonably estimate the potential loss because , for example , the litigation is in its early stages .

while any outcome related to litigation or such governmental proceedings in which we are involved cannot be predicted with certainty , management believes that the outcome of these matters , individually and in the aggregate , will not have a material adverse effect on our financial condition , results of operations or cash flows .

as previously disclosed , on april 10 , 2015 , a federal judge in brazil authorized the search of the records of an agency 2019s offices in s e3o paulo and brasilia , in connection with an ongoing investigation by brazilian authorities involving payments potentially connected to local government contracts .
the company had previously investigated the matter and taken a number of remedial and disciplinary actions .

the company is in the process of concluding a settlement related to these matters with government agencies .
the company confirmed that one of its standalone domestic agencies has been contacted by the department of justice antitrust division for documents regarding video production practices and is cooperating with the government.

 |
| table | | 2018   | 2019   | 2020   | 2021   | 2022   | thereafter | total
--------------------------------------------------------------------- | ------ | ------ | ------ | ------ | ------ | ---------- | -------
deferred acquisition payments                                         | $ 41.9 | $ 27.5 | $ 16.1 | $ 24.4 | $ 4.8  | $ 6.3      | $ 121.0
redeemable noncontrolling interests and call options with affiliates1 | 37.1   | 26.4   | 62.9   | 10.3   | 6.6    | 4.1        | 147.4
total contingent acquisition payments                                 | $ 79.0 | $ 53.9 | $ 79.0 | $ 34.7 | $ 11.4 | $ 10.4     | $ 268.4 |


| _id | dd4b9b93a |
| title |  |
| text | other expense , net increased $ 0.8 million to $ 7.2 million in 2015 from $ 6.4 million in 2014 .
this increase was due to higher net losses on the combined foreign currency exchange rate changes on transactions denominated in foreign currencies and our foreign currency derivative financial instruments in 2015 .
provision for income taxes increased $ 19.9 million to $ 154.1 million in 2015 from $ 134.2 million in 2014 .

our effective tax rate was 39.9% ( 39.9 % ) in 2015 compared to 39.2% ( 39.2 % ) in 2014 .
our effective tax rate for 2015 was higher than the effective tax rate for 2014 primarily due to increased non-deductible costs incurred in connection with our connected fitness acquisitions in 2015 .
year ended december 31 , 2014 compared to year ended december 31 , 2013 net revenues increased $ 752.3 million , or 32.3% ( 32.3 % ) , to $ 3084.4 million in 2014 from $ 2332.1 million in 2013 .

net revenues by product category are summarized below: .

the increase in net sales were driven primarily by : 2022 apparel unit sales growth and new offerings in multiple lines led by training , hunt and golf ; and 2022 footwear unit sales growth , led by running and basketball .
license revenues increased $ 13.3 million , or 24.7% ( 24.7 % ) , to $ 67.2 million in 2014 from $ 53.9 million in 2013 .
this increase in license revenues was primarily a result of increased distribution and continued unit volume growth by our licensees .

connected fitness revenue increased $ 18.1 million to $ 19.2 million in 2014 from $ 1.1 million in 2013 primarily due to a full year of revenue from our connected fitness business in 2014 compared to one month in gross profit increased $ 375.5 million to $ 1512.2 million in 2014 from $ 1136.7 million in 2013 .
gross profit as a percentage of net revenues , or gross margin , increased 30 basis points to 49.0% ( 49.0 % ) in 2014 compared to 48.7% ( 48.7 % ) in 2013 .

the increase in gross margin percentage was primarily driven by the following : 2022 approximate 20 basis point increase driven primarily by decreased sales mix of excess inventory through our factory house outlet stores ; and 2022 approximate 20 basis point increase as a result of higher duty costs recorded during the prior year on certain products imported in previous years .

the above increases were partially offset by : 2022 approximate 10 basis point decrease by unfavorable foreign currency exchange rate fluctuations.

 |
| table | ( in thousands )   | year ended december 31 , 2014 | year ended december 31 , 2013 | year ended december 31 , $ change | year ended december 31 , % (  % ) change
------------------ | ----------------------------- | ----------------------------- | --------------------------------- | ----------------------------------------
apparel            | $ 2291520                     | $ 1762150                     | $ 529370                          | 30.0% ( 30.0 % )
footwear           | 430987                        | 298825                        | 132162                            | 44.2
accessories        | 275409                        | 216098                        | 59311                             | 27.4
total net sales    | 2997916                       | 2277073                       | 720843                            | 31.7
license revenues   | 67229                         | 53910                         | 13319                             | 24.7
connected fitness  | 19225                         | 1068                          | 18157                             | 1700.1
total net revenues | $ 3084370                     | $ 2332051                     | $ 752319                          | 32.3% ( 32.3 % ) |


| _id | dd4bb027c |
| title |  |
| text | 2006 plan prior to december 5 , 2008 became fully vested and nonforfeitable upon the closing of the acquisition .
awards may be granted under the 2006 plan , as amended and restated , after december 5 , 2008 only to employees and consultants of allied waste industries , inc .
and its subsidiaries who were not employed by republic services , inc .
prior to such date .
at december 31 , 2010 , there were approximately 15.3 million shares of common stock reserved for future grants under the 2006 plan .

stock options we use a binomial option-pricing model to value our stock option grants .
we recognize compensation expense on a straight-line basis over the requisite service period for each separately vesting portion of the award , or to the employee 2019s retirement eligible date , if earlier .
expected volatility is based on the weighted average of the most recent one-year volatility and a historical rolling average volatility of our stock over the expected life of the option .

the risk-free interest rate is based on federal reserve rates in effect for bonds with maturity dates equal to the expected term of the option .
we use historical data to estimate future option exercises , forfeitures and expected life of the options .
when appropriate , separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes .

the weighted-average estimated fair values of stock options granted during the years ended december 31 , 2010 , 2009 and 2008 were $ 5.28 , $ 3.79 and $ 4.36 per option , respectively , which were calculated using the following weighted-average assumptions: .

republic services , inc .
notes to consolidated financial statements , continued

 |
| table | | 2010             | 2009             | 2008
----------------------------- | ---------------- | ---------------- | ----------------
expected volatility           | 28.6% ( 28.6 % ) | 28.7% ( 28.7 % ) | 27.3% ( 27.3 % )
risk-free interest rate       | 2.4% ( 2.4 % )   | 1.4% ( 1.4 % )   | 1.7% ( 1.7 % )
dividend yield                | 2.9% ( 2.9 % )   | 3.1% ( 3.1 % )   | 2.9% ( 2.9 % )
expected life ( in years )    | 4.3              | 4.2              | 4.2
contractual life ( in years ) | 7                | 7                | 7
expected forfeiture rate      | 3.0% ( 3.0 % )   | 3.0% ( 3.0 % )   | 3.0% ( 3.0 % ) |


| _id | dd4c57b08 |
| title |  |
| text | notes to consolidated financial statements for the years ended february 3 , 2006 , january 28 , 2005 , and january 30 , 2004 , gross realized gains and losses on the sales of available-for-sale securities were not mate- rial .
the cost of securities sold is based upon the specific identification method .
merchandise inventories inventories are stated at the lower of cost or market with cost determined using the retail last-in , first-out ( 201clifo 201d ) method .

the excess of current cost over lifo cost was approximately $ 5.8 million at february 3 , 2006 and $ 6.3 million at january 28 , 2005 .
current cost is deter- mined using the retail first-in , first-out method .
lifo reserves decreased $ 0.5 million and $ 0.2 million in 2005 and 2004 , respectively , and increased $ 0.7 million in 2003 .
costs directly associated with warehousing and distribu- tion are capitalized into inventory .

in 2005 , the company expanded the number of inven- tory departments it utilizes for its gross profit calculation from 10 to 23 .
the impact of this change in estimate on the company 2019s consolidated 2005 results of operations was an estimated reduction of gross profit and a corre- sponding decrease to inventory , at cost , of $ 5.2 million .
store pre-opening costs pre-opening costs related to new store openings and the construction periods are expensed as incurred .

property and equipment property and equipment are recorded at cost .
the company provides for depreciation and amortization on a straight-line basis over the following estimated useful lives: .

improvements of leased properties are amortized over the shorter of the life of the applicable lease term or the estimated useful life of the asset .
impairment of long-lived assets when indicators of impairment are present , the company evaluates the carrying value of long-lived assets , other than goodwill , in relation to the operating perform- ance and future cash flows or the appraised values of the underlying assets .

the company may adjust the net book value of the underlying assets based upon such cash flow analysis compared to the book value and may also consid- er appraised values .
assets to be disposed of are adjusted to the fair value less the cost to sell if less than the book value .

the company recorded impairment charges of approximately $ 0.5 million and $ 0.6 million in 2004 and 2003 , respectively , and $ 4.7 million prior to 2003 to reduce the carrying value of its homerville , georgia dc ( which was sold in 2004 ) .

the company also recorded impair- ment charges of approximately $ 0.6 million in 2005 and $ 0.2 million in each of 2004 and 2003 to reduce the carrying value of certain of its stores 2019 assets as deemed necessary due to negative sales trends and cash flows at these locations .
these charges are included in sg&a expense .

these charges are included in sg&a expense .
other assets other assets consist primarily of long-term invest- ments , debt issuance costs which are amortized over the life of the related obligations , utility and security deposits , life insurance policies and goodwill .
vendor rebates the company records vendor rebates , primarily con- sisting of new store allowances , volume purchase rebates and promotional allowances , when realized .

the rebates are recorded as a reduction to inventory purchases , at cost , which has the effect of reducing cost of goods sold , as prescribed by emerging issues task force ( 201ceitf 201d ) issue no .
02-16 , 201caccounting by a customer ( including a reseller ) for certain consideration received from a vendor 201d .
rent expense rent expense is recognized over the term of the lease .

the company records minimum rental expense on a straight-line basis over the base , non-cancelable lease term commencing on the date that the company takes physical possession of the property from the landlord , which normally includes a period prior to store opening to make necessary leasehold improvements and install store fixtures .

when a lease contains a predetermined fixed escalation of the minimum rent , the company recognizes the related rent expense on a straight-line basis and records the difference between the recognized rental expense and the amounts payable under the lease as deferred rent .
the company also receives tenant allowances , which are recorded in deferred incentive rent and are amortized as a reduction to rent expense over the term of the lease .

any difference between the calculated expense and the amounts actually paid are reflected as a liability in accrued expenses and other in the consolidated balance sheets and totaled approximately $ 25.0 million

 |
| table | land improvements                | 20
-------------------------------- | -----
buildings                        | 39-40
furniture fixtures and equipment | 3-10 |