| _id | dd4bbc5d6 |
| title |  |
| text | 22 general mills 2014 annual report 23 gross margin declined 1 percent in fiscal 2014 versus fiscal 2013 .
gross margin as a percent of net sales of 36 percent was relatively flat compared to fiscal 2013 .
selling , general and administrative ( sg&a ) expenses decreased $ 78 million in fiscal 2014 versus fiscal 2013 .

the decrease in sg&a expenses was primarily driven by a 3 percent decrease in advertising and media expense , a smaller contribution to the general mills foundation , a decrease in incentive compensation expense and lower pension expense compared to fiscal 2013 .
in fiscal 2014 , we recorded a $ 39 million charge related to venezuela currency devaluation compared to a $ 9 million charge in fiscal 2013 .

in addition , we recorded $ 12 million of inte- gration costs in fiscal 2013 related to our acquisition of yoki .
sg&a expenses as a percent of net sales decreased 1 percent compared to fiscal 2013 .
restructuring , impairment , and other exit costs totaled $ 4 million in fiscal 2014 .
the restructuring charge related to a productivity and cost savings plan approved in the fourth quarter of fiscal 2012 .
these restructuring actions were completed in fiscal 2014 .

in fiscal 2014 , we paid $ 22 million in cash related to restructuring actions .
during fiscal 2014 , we recorded a divestiture gain of $ 66 million related to the sale of certain grain elevators in our u.s .
retail segment .
there were no divestitures in fiscal 2013 .
interest , net for fiscal 2014 totaled $ 302 million , $ 15 million lower than fiscal 2013 .
the average interest rate decreased 41 basis points , including the effect of the mix of debt , generating a $ 31 million decrease in net interest .

average interest bearing instruments increased $ 367 million , generating a $ 16 million increase in net interest .
our consolidated effective tax rate for fiscal 2014 was 33.3 percent compared to 29.2 percent in fiscal 2013 .

the 4.1 percentage point increase was primarily related to the restructuring of our general mills cereals , llc ( gmc ) subsidiary during the first quarter of 2013 which resulted in a $ 63 million decrease to deferred income tax liabilities related to the tax basis of the investment in gmc and certain distributed assets , with a correspond- ing non-cash reduction to income taxes .

during fiscal 2013 , we also recorded a $ 34 million discrete decrease in income tax expense and an increase in our deferred tax assets related to certain actions taken to restore part of the tax benefits associated with medicare part d subsidies which had previously been reduced in fiscal 2010 with the enactment of the patient protection and affordable care act , as amended by the health care and education reconciliation act of 2010 .

our fiscal 2013 tax expense also includes a $ 12 million charge associated with the liquidation of a corporate investment .
after-tax earnings from joint ventures for fiscal 2014 decreased to $ 90 million compared to $ 99 million in fiscal 2013 primarily driven by increased consumer spending at cereal partners worldwide ( cpw ) and unfavorable foreign currency exchange from h e4agen- dazs japan , inc .
( hdj ) .

( hdj ) .
the change in net sales for each joint venture is set forth in the following table : joint venture change in net sales as reported constant currency basis fiscal 2014 fiscal 2014 vs .
2013 vs .
2013 cpw ( 1 ) % (  % ) flat .

in fiscal 2014 , cpw net sales declined by 1 percent- age point due to unfavorable foreign currency exchange .
contribution from volume growth was flat compared to fiscal 2013 .

in fiscal 2014 , net sales for hdj decreased 8 percentage points from fiscal 2013 as 11 percentage points of contributions from volume growth was offset by 17 percentage points of net sales decline from unfa- vorable foreign currency exchange and 2 percentage points of net sales decline attributable to unfavorable net price realization and mix .

average diluted shares outstanding decreased by 20 million in fiscal 2014 from fiscal 2013 due primar- ily to the repurchase of 36 million shares , partially offset by the issuance of 7 million shares related to stock compensation plans .
fiscal 2014 consolidated balance sheet analysis cash and cash equivalents increased $ 126 million from fiscal 2013 .
receivables increased $ 37 million from fiscal 2013 pri- marily driven by timing of sales .
inventories increased $ 14 million from fiscal 2013 .

prepaid expenses and other current assets decreased $ 29 million from fiscal 2013 , mainly due to a decrease in other receivables related to the liquidation of a corporate investment .
land , buildings , and equipment increased $ 64 million from fiscal 2013 , as $ 664 million of capital expenditures

 |
| table | cpw            | as reported fiscal 2014 vs . 2013 ( 1 ) % (  % ) | constant currency basis fiscal 2014 vs . 2013 flat |
-------------- | ------------------------------------------------ | -------------------------------------------------- | --------
hdj            | -8 ( 8 )                                         | 9                                                  | % (  % )
joint ventures | ( 2 ) % (  % )                                   | 2                                                  | % (  % ) |


| _id | dd4ba8f36 |
| title |  |
| text | 13 .
pension and other postretirement benefit plans the company has defined benefit pension plans covering eligible employees in the united states and in certain of its international subsidiaries .
as a result of plan design changes approved in 2011 , beginning on january 1 , 2013 , active participants in merck 2019s primary u.s .
defined benefit pension plans are accruing pension benefits using new cash balance formulas based on age , service , pay and interest .

however , during a transition period from january 1 , 2013 through december 31 , 2019 , participants will earn the greater of the benefit as calculated under the employee 2019s legacy final average pay formula or their new cash balance formula .
for all years of service after december 31 , 2019 , participants will earn future benefits under only the cash balance formula .
in addition , the company provides medical benefits , principally to its eligible u.s .

retirees and their dependents , through its other postretirement benefit plans .
the company uses december 31 as the year-end measurement date for all of its pension plans and other postretirement benefit plans .
net periodic benefit cost the net periodic benefit cost for pension and other postretirement benefit plans consisted of the following components: .

the increase in net periodic benefit cost for pension and other postretirement benefit plans in 2013 as compared with 2012 is largely attributable to a change in the discount rate .
the net periodic benefit cost attributable to u.s .

pension plans included in the above table was $ 348 million in 2013 , $ 268 million in 2012 and $ 406 million in in connection with restructuring actions ( see note 3 ) , termination charges were recorded in 2013 , 2012 and 2011 on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting merck .
also , in connection with these restructuring activities , curtailments were recorded in 2013 , 2012 and 2011 on pension and other postretirement benefit plans .

in addition , settlements were recorded in 2013 , 2012 and 2011 on certain domestic and international pension plans .
table of contents

 |
| table | years ended december 31        | pension benefits 2013 | pension benefits 2012 | pension benefits 2011 | pension benefits 2013 | pension benefits 2012 | 2011
------------------------------ | --------------------- | --------------------- | --------------------- | --------------------- | --------------------- | ------------
service cost                   | $ 682                 | $ 555                 | $ 619                 | $ 102                 | $ 82                  | $ 110
interest cost                  | 665                   | 661                   | 718                   | 107                   | 121                   | 141
expected return on plan assets | -1097 ( 1097 )        | -970 ( 970 )          | -972 ( 972 )          | -126 ( 126 )          | -136 ( 136 )          | -142 ( 142 )
net amortization               | 336                   | 185                   | 201                   | -50 ( 50 )            | -35 ( 35 )            | -17 ( 17 )
termination benefits           | 58                    | 27                    | 59                    | 50                    | 18                    | 29
curtailments                   | -23 ( 23 )            | -10 ( 10 )            | -86 ( 86 )            | -11 ( 11 )            | -7 ( 7 )              | 1
settlements                    | 23                    | 18                    | 4                     | 2014                  | 2014                  | 2014
net periodic benefit cost      | $ 644                 | $ 466                 | $ 543                 | $ 72                  | $ 43                  | $ 122 |


| _id | dd4c5a7ea |
| title |  |
| text | entergy mississippi , inc .
management 2019s financial discussion and analysis results of operations net income 2016 compared to 2015 net income increased $ 16.5 million primarily due to lower other operation and maintenance expenses , higher net revenues , and a lower effective income tax rate , partially offset by higher depreciation and amortization expenses .

2015 compared to 2014 net income increased $ 17.9 million primarily due to the write-off in 2014 of the regulatory assets associated with new nuclear generation development costs as a result of a joint stipulation entered into with the mississippi public utilities staff , subsequently approved by the mpsc , partially offset by higher depreciation and amortization expenses , higher taxes other than income taxes , higher other operation and maintenance expenses , and lower net revenue .

see note 2 to the financial statements for discussion of the new nuclear generation development costs and the joint stipulation .
net revenue 2016 compared to 2015 net revenue consists of operating revenues net of : 1 ) fuel , fuel-related expenses , and gas purchased for resale , 2 ) purchased power expenses , and 3 ) other regulatory charges ( credits ) .
following is an analysis of the change in net revenue comparing 2016 to 2015 .
amount ( in millions ) .

the retail electric price variance is primarily due to a $ 19.4 million net annual increase in revenues , as approved by the mpsc , effective with the first billing cycle of july 2016 , and an increase in revenues collected through the storm damage rider .
see note 2 to the financial statements for more discussion on the formula rate plan and the storm damage rider .

the volume/weather variance is primarily due to an increase of 153 gwh , or 1% ( 1 % ) , in billed electricity usage , including an increase in industrial usage , partially offset by the effect of less favorable weather on residential and commercial sales .
the increase in industrial usage is primarily due to expansion projects in the pulp and paper industry , increased demand for existing customers , primarily in the metals industry , and new customers in the wood products industry.

 |
| table | | amount ( in millions )
--------------------- | ----------------------
2015 net revenue      | $ 696.3
retail electric price | 12.9
volume/weather        | 4.7
net wholesale revenue | -2.4 ( 2.4 )
reserve equalization  | -2.8 ( 2.8 )
other                 | -3.3 ( 3.3 )
2016 net revenue      | $ 705.4 |


| _id | dd4b94266 |
| title |  |
| text | related expenses incurred by our logistics subsidiaries for external transportation and increased crew transportation and lodging due to volumes and a slower network .
in addition , higher consulting fees and higher contract expenses ( including equipment maintenance ) increased costs compared to 2013 .

locomotive and freight car material expenses increased in 2014 compared to 2013 due to additional volumes , including the impact of activating stored equipment to address operational issues caused by demand and a slower network .
expenses for purchased services increased 10% ( 10 % ) in 2013 compared to 2012 due to logistics management fees , an increase in locomotive overhauls and repairs on jointly owned property .

depreciation 2013 the majority of depreciation relates to road property , including rail , ties , ballast , and other track material .
depreciation was up 7% ( 7 % ) compared to 2013 .
a higher depreciable asset base , reflecting higher ongoing capital spending drove the increase .
depreciation was up 1% ( 1 % ) in 2013 compared to 2012 .

recent depreciation studies allowed us to use longer estimated service lives for certain equipment , which partially offset the impact of a higher depreciable asset base resulting from larger capital spending in recent years .
equipment and other rents 2013 equipment and other rents expense primarily includes rental expense that the railroad pays for freight cars owned by other railroads or private companies ; freight car , intermodal , and locomotive leases ; and office and other rent expenses .

higher intermodal volumes and longer cycle times increased short-term freight car rental expense in 2014 compared to 2013 .
lower equipment leases essentially offset the higher freight car rental expense , as we exercised purchase options on some of our leased equipment .

additional container costs resulting from the logistics management arrangement , and increased automotive shipments , partially offset by lower cycle times drove a $ 51 million increase in our short-term freight car rental expense in 2013 versus 2012 .
conversely , lower locomotive and freight car lease expenses partially offset the higher freight car rental expense .

other 2013 other expenses include state and local taxes , freight , equipment and property damage , utilities , insurance , personal injury , environmental , employee travel , telephone and cellular , computer software , bad debt , and other general expenses .
higher property taxes , personal injury expense and utilities costs partially offset by lower environmental expense and costs associated with damaged freight drove the increase in other costs in 2014 compared to 2013 .

higher property taxes and costs associated with damaged freight and property increased other costs in 2013 compared to 2012 .
continued improvement in our safety performance and lower estimated liability for personal injury , which reduced our personal injury expense year-over-year , partially offset increases in other costs .
non-operating items millions 2014 2013 2012 % (  % ) change 2014 v 2013 % (  % ) change 2013 v 2012 .

other income 2013 other income increased in 2014 versus 2013 due to higher gains from real estate sales and a sale of a permanent easement .
these gains were partially offset by higher environmental costs on non-operating property in 2014 and lower lease income due to the $ 17 million settlement of a land lease contract in 2013 .

other income increased in 2013 versus 2012 due to higher gains from real estate sales and increased lease income , including the favorable impact from the $ 17 million settlement of a land lease contract .
these increases were partially offset by interest received from a tax refund in 2012.

 |
| table | millions         | 2014           | 2013           | 2012           | % (  % ) change 2014 v 2013 | % (  % ) change2013 v 2012
---------------- | -------------- | -------------- | -------------- | --------------------------- | --------------------------
other income     | $ 151          | $ 128          | $ 108          | 18% ( 18 % )                | 19% ( 19 % )
interest expense | -561 ( 561 )   | -526 ( 526 )   | -535 ( 535 )   | 7                           | -2 ( 2 )
income taxes     | -3163 ( 3163 ) | -2660 ( 2660 ) | -2375 ( 2375 ) | 19% ( 19 % )                | 12% ( 12 % ) |


| _id | dd4ba72a8 |
| title |  |
| text | each clearing firm is required to deposit and maintain balances in the form of cash , u.s .
government securities , certain foreign government securities , bank letters of credit or other approved investments to satisfy performance bond and guaranty fund requirements .
all non-cash deposits are marked-to-market and haircut on a daily basis .

securities deposited by the clearing firms are not reflected in the consolidated financial statements and the clearing house does not earn any interest on these deposits .
these balances may fluctuate significantly over time due to investment choices available to clearing firms and changes in the amount of contributions required .

in addition , the rules and regulations of cbot require that collateral be provided for delivery of physical commodities , maintenance of capital requirements and deposits on pending arbitration matters .
to satisfy these requirements , clearing firms that have accounts that trade certain cbot products have deposited cash , u.s .
treasury securities or letters of credit .

treasury securities or letters of credit .
the clearing house marks-to-market open positions at least once a day ( twice a day for futures and options contracts ) , and require payment from clearing firms whose positions have lost value and make payments to clearing firms whose positions have gained value .
the clearing house has the capability to mark-to-market more frequently as market conditions warrant .

under the extremely unlikely scenario of simultaneous default by every clearing firm who has open positions with unrealized losses , the maximum exposure related to positions other than credit default and interest rate swap contracts would be one half day of changes in fair value of all open positions , before considering the clearing houses 2019 ability to access defaulting clearing firms 2019 collateral deposits .

for cleared credit default swap and interest rate swap contracts , the maximum exposure related to cme 2019s guarantee would be one full day of changes in fair value of all open positions , before considering cme 2019s ability to access defaulting clearing firms 2019 collateral .

during 2017 , the clearing house transferred an average of approximately $ 2.4 billion a day through the clearing system for settlement from clearing firms whose positions had lost value to clearing firms whose positions had gained value .
the clearing house reduces the guarantee exposure through initial and maintenance performance bond requirements and mandatory guaranty fund contributions .

the company believes that the guarantee liability is immaterial and therefore has not recorded any liability at december 31 , 2017 .
at december 31 , 2016 , performance bond and guaranty fund contribution assets on the consolidated balance sheets included cash as well as u.s .
treasury and u.s .
government agency securities with maturity dates of 90 days or less .
the u.s .
treasury and u.s .
government agency securities were purchased by cme , at its discretion , using cash collateral .

the benefits , including interest earned , and risks of ownership accrue to cme .
interest earned is included in investment income on the consolidated statements of income .
there were no u.s .
treasury and u.s .
government agency securities held at december 31 , 2017 .
the amortized cost and fair value of these securities at december 31 , 2016 were as follows : ( in millions ) amortized .

cme has been designated as a systemically important financial market utility by the financial stability oversight council and maintains a cash account at the federal reserve bank of chicago .
at december 31 , 2017 and december 31 , 2016 , cme maintained $ 34.2 billion and $ 6.2 billion , respectively , within the cash account at the federal reserve bank of chicago .
clearing firms , at their option , may instruct cme to deposit the cash held by cme into one of the ief programs .

the total principal in the ief programs was $ 1.1 billion at december 31 , 2017 and $ 6.8 billion at december 31

 |
| table | ( in millions )                    | 2016 amortizedcost | 2016 fairvalue
---------------------------------- | ------------------ | --------------
u.s . treasury securities          | $ 5548.9           | $ 5549.0
u.s . government agency securities | 1228.3             | 1228.3 |


| _id | dd4bccc06 |
| title |  |
| text | ( 2 ) in 2013 , our principal u.k subsidiary agreed with the trustees of one of the u.k .
plans to contribute an average of $ 11 million per year to that pension plan for the next three years .
the trustees of the plan have certain rights to request that our u.k .
subsidiary advance an amount equal to an actuarially determined winding-up deficit .
as of december 31 , 2015 , the estimated winding-up deficit was a3240 million ( $ 360 million at december 31 , 2015 exchange rates ) .

the trustees of the plan have accepted in practice the agreed-upon schedule of contributions detailed above and have not requested the winding-up deficit be paid .
( 3 ) purchase obligations are defined as agreements to purchase goods and services that are enforceable and legally binding on us , and that specifies all significant terms , including what is to be purchased , at what price and the approximate timing of the transaction .

most of our purchase obligations are related to purchases of information technology services or other service contracts .
( 4 ) excludes $ 12 million of unfunded commitments related to an investment in a limited partnership due to our inability to reasonably estimate the period ( s ) when the limited partnership will request funding .

( 5 ) excludes $ 218 million of liabilities for uncertain tax positions due to our inability to reasonably estimate the period ( s ) when potential cash settlements will be made .
financial condition at december 31 , 2015 , our net assets were $ 6.2 billion , representing total assets minus total liabilities , a decrease from $ 6.6 billion at december 31 , 2014 .

the decrease was due primarily to share repurchases of $ 1.6 billion , dividends of $ 323 million , and an increase in accumulated other comprehensive loss of $ 289 million related primarily to an increase in the post- retirement benefit obligation , partially offset by net income of $ 1.4 billion for the year ended december 31 , 2015 .
working capital increased by $ 77 million from $ 809 million at december 31 , 2014 to $ 886 million at december 31 , 2015 .

accumulated other comprehensive loss increased $ 289 million at december 31 , 2015 as compared to december 31 , 2014 , which was primarily driven by the following : 2022 negative net foreign currency translation adjustments of $ 436 million , which are attributable to the strengthening of the u.s .
dollar against certain foreign currencies , 2022 a decrease of $ 155 million in net post-retirement benefit obligations , and 2022 net financial instrument losses of $ 8 million .

review by segment general we serve clients through the following segments : 2022 risk solutions acts as an advisor and insurance and reinsurance broker , helping clients manage their risks , via consultation , as well as negotiation and placement of insurance risk with insurance carriers through our global distribution network .

2022 hr solutions partners with organizations to solve their most complex benefits , talent and related financial challenges , and improve business performance by designing , implementing , communicating and administering a wide range of human capital , retirement , investment management , health care , compensation and talent management strategies .
risk solutions .

the demand for property and casualty insurance generally rises as the overall level of economic activity increases and generally falls as such activity decreases , affecting both the commissions and fees generated by our brokerage business .
the economic activity that impacts property and casualty insurance is described as exposure units , and is most closely correlated

 |
| table | years ended december 31 ( millions except percentage data ) | 2015             | 2014             | 2013
----------------------------------------------------------- | ---------------- | ---------------- | ----------------
revenue                                                     | $ 7426           | $ 7834           | $ 7789
operating income                                            | 1506             | 1648             | 1540
operating margin                                            | 20.3% ( 20.3 % ) | 21.0% ( 21.0 % ) | 19.8% ( 19.8 % ) |


| _id | dd4b86df0 |
| title |  |
| text | substantially all of the goodwill and other intangible assets recorded related to the acquisition of allied are not deductible for tax purposes .
pro forma information the consolidated financial statements presented for republic include the operating results of allied from the date of the acquisition .
the following pro forma information is presented assuming the merger had been completed as of january 1 , 2007 .

the unaudited pro forma information presented below has been prepared for illustrative purposes and is not intended to be indicative of the results of operations that would have actually occurred had the acquisition been consummated at the beginning of the periods presented or of future results of the combined operations ( in millions , except share and per share amounts ) .
year ended december 31 , year ended december 31 , ( unaudited ) ( unaudited ) .

the above unaudited pro forma financial information includes adjustments for amortization of identifiable intangible assets , accretion of discounts to fair value associated with debt , environmental , self-insurance and other liabilities , accretion of capping , closure and post-closure obligations and amortization of the related assets , and provision for income taxes .

assets held for sale as a condition of the merger with allied in december 2008 , we reached a settlement with the doj requiring us to divest of certain operations serving fifteen metropolitan areas including los angeles , ca ; san francisco , ca ; denver , co ; atlanta , ga ; northwestern indiana ; lexington , ky ; flint , mi ; cape girardeau , mo ; charlotte , nc ; cleveland , oh ; philadelphia , pa ; greenville-spartanburg , sc ; and fort worth , houston and lubbock , tx .

the settlement requires us to divest 87 commercial waste collection routes , nine landfills and ten transfer stations , together with ancillary assets and , in three cases , access to landfill disposal capacity .
we have classified the assets and liabilities we expect to divest ( including accounts receivable , property and equipment , goodwill , and accrued landfill and environmental costs ) as assets held for sale in our consolidated balance sheet at december 31 , 2008 .

the assets held for sale related to operations that were republic 2019s prior to the merger with allied have been adjusted to the lower of their carrying amounts or estimated fair values less costs to sell , which resulted in us recognizing an asset impairment loss of $ 6.1 million in our consolidated statement of income for the year ended december 31 , 2008 .

the assets held for sale related to operations that were allied 2019s prior to the merger are recorded at their estimated fair values in our consolidated balance sheet as of december 31 , 2008 in accordance with the purchase method of accounting .
in february 2009 , we entered into an agreement to divest certain assets to waste connections , inc .

the assets covered by the agreement include six municipal solid waste landfills , six collection operations and three transfer stations across the following seven markets : los angeles , ca ; denver , co ; houston , tx ; lubbock , tx ; greenville-spartanburg , sc ; charlotte , nc ; and flint , mi .
the transaction with waste connections is subject to closing conditions regarding due diligence , regulatory approval and other customary matters .
closing is expected to occur in the second quarter of 2009 .

republic services , inc .
and subsidiaries notes to consolidated financial statements %%transmsg*** transmitting job : p14076 pcn : 106000000 ***%%pcmsg|104 |00046|yes|no|02/28/2009 21:07|0|0|page is valid , no graphics -- color : d|

 |
| table | | year ended december 31 2008 ( unaudited ) | year ended december 31 2007 ( unaudited )
------------------------------------------------------------------ | ----------------------------------------- | -----------------------------------------
revenue                                                            | $ 9362.2                                  | $ 9244.9
income from continuing operations available to common stockholders | 285.7                                     | 423.2
basic earnings per share                                           | .76                                       | 1.10
diluted earnings per share                                         | .75                                       | 1.09 |


| _id | dd4989e76 |
| title |  |
| text | table of contents item 7 2013 management 2019s discussion and analysis of financial condition and results of operations liquidity and capital resources we recorded net earnings of $ 35.4 million or $ 1.18 per share in 2004 , compared with $ 52.2 million or $ 1.76 per share recorded in 2003 and $ 51.3 million or $ 1.86 per share in 2002 .

net earnings recorded in 2004 were negatively impacted by cost increases to steel and freight , as well as manufacturing inefficiencies during the first nine months of the year in our ashland city plant and higher selling , general and administrative expense ( sg&a ) .
while net earnings were flat in 2003 compared with 2002 , the lower earnings per share amount in 2003 as compared with 2002 reflected the full-year impact of our stock offering in may 2002 .

our individual segment performance will be discussed later in this section .
our working capital , excluding short-term debt , was $ 339.8 million at december 31 , 2004 , compared with $ 305.9 million and $ 225.1 million at december 31 , 2003 , and december 31 , 2002 , respectively .
the $ 33.9 million increase in 2004 reflects $ 44.9 million higher receivable balances due to longer payment terms experienced by both of our businesses as well as higher sales levels in the fourth quarter .

offsetting the increase in receivable balances were $ 13.5 million lower inventory levels split about equally between water systems and electrical products and $ 14.3 million higher accounts payable balances .
the $ 80.8 million increase in 2003 reflects $ 46.6 million higher inventory balances due primarily to extensive manufacturing repositioning in our electric motor business and several new product introductions and manufacturing consolidation in our water systems business .

additionally , receivable balances were $ 21.2 million higher due to price increases associated with new product introductions in our water systems business and an increase in international sales , which tend to have longer payment terms .
finally , a $ 13.1 million increase in accounts payable balances was largely offset by $ 9.4 million in restructuring expenses paid out in 2003 .
reducing working capital is one of our major initiatives in 2005 .

cash provided by operating activities during 2004 was $ 67.2 million compared with $ 29.0 million during 2003 and $ 116.0 million during 2002 .
despite lower earnings in 2004 , a smaller investment in working capital explains the majority of the improvement in cash flow compared with 2003 .

the higher investment in working capital in 2003 ( as discussed above ) , explains the majority of the difference between 2003 and our capital expenditures were $ 48.5 million in 2004 , essentially the same as in 2003 and approximately $ 2.2 million higher than in 2002 .
the increase in 2003 was associated with new product launches in our water systems business .
we are projecting 2005 capital expenditures to be approximately $ 55 million , essentially the same as our projected 2005 depreciation expense .

we believe that our present facilities and planned capital expenditures are sufficient to provide adequate capacity for our operations in 2005 .
in june 2004 , we completed a $ 265 million , five-year revolving credit facility with a group of eight banks .
the new facility expires on june 10 , 2009 , and it replaced a $ 250 million credit facility which expired on august 2 , 2004 , and was terminated on june 10 , 2004 .
the new facility backs up commercial paper and credit line borrowings .

as a result of the long-term nature of this facility , the commercial paper and credit line borrowings are now classified as long-term debt .
at december 31 , 2004 , we had available borrowing capacity of $ 153.9 million under this facility .
we believe that the combination of available borrowing capacity and operating cash flow will provide sufficient funds to finance our existing operations for the foreseeable future .

to take advantage of historically low long-term borrowing rates , we issued $ 50.0 million in senior notes with two insurance companies in june 2003 .
the notes range in maturity between 2013 and 2016 and carry a weighted average interest rate of slightly less than 4.5 percent .
the proceeds of the notes were used to repay commercial paper and borrowing under the credit facility .

our leverage , as measured by the ratio of total debt to total capitalization , was 32 percent at the end of 2004 and the end of 2003 .
aggregate contractual obligations a summary of our contractual obligations as of december 31 , 2004 , is as follows: .

 |
| table | ( dollars in millions ) contractual obligation | ( dollars in millions ) total | ( dollars in millions ) less than 1 year | ( dollars in millions ) 1 - 3 years | ( dollars in millions ) 3 - 5 years | more than 5 years
---------------------------------------------- | ----------------------------- | ---------------------------------------- | ----------------------------------- | ----------------------------------- | -----------------
long-term debt                                 | $ 275.1                       | $ 8.6                                    | $ 13.8                              | $ 138.2                             | $ 114.5
capital leases                                 | 6.0                           | 2014                                     | 2014                                | 6.0                                 | 2014
operating leases                               | 62.9                          | 14.4                                     | 20.7                                | 11.6                                | 16.2
purchase obligations                           | 177.3                         | 176.6                                    | 0.7                                 | 2014                                | 2014
total                                          | $ 521.3                       | $ 199.6                                  | $ 35.2                              | $ 155.8                             | $ 130.7 |


| _id | dd4bd0162 |
| title |  |
| text | united parcel service , inc .
and subsidiaries management's discussion and analysis of financial condition and results of operations liquidity and capital resources operating activities the following is a summary of the significant sources ( uses ) of cash from operating activities ( amounts in millions ) : .

( a ) represents depreciation and amortization , gains and losses on derivative and foreign exchange transactions , deferred income taxes , provisions for uncollectible accounts , pension and postretirement benefit expense , stock compensation expense , impairment charges and other non-cash items .
cash from operating activities remained strong throughout the 2011 to 2013 time period .

operating cash flow was favorably impacted in 2013 , compared with 2012 , by lower contributions into our defined benefit pension and postretirement benefit plans ; however , this was partially offset by certain tnt express transaction-related charges , as well as changes in income tax receivables and payables .
we paid a termination fee to tnt express of 20ac200 million ( $ 268 million ) under the agreement to terminate the merger protocol in the first quarter of 2013 .

additionally , the cash payments for income taxes increased in 2013 compared with 2012 , and were impacted by the timing of current tax deductions .
except for discretionary or accelerated fundings of our plans , contributions to our company-sponsored pension plans have largely varied based on whether any minimum funding requirements are present for individual pension plans .

2022 in 2013 , we did not have any required , nor make any discretionary , contributions to our primary company-sponsored pension plans in the u.s .
2022 in 2012 , we made a $ 355 million required contribution to the ups ibt pension plan .
2022 in 2011 , we made a $ 1.2 billion contribution to the ups ibt pension plan , which satisfied our 2011 contribution requirements and also approximately $ 440 million in contributions that would not have been required until after 2011 .

2022 the remaining contributions in the 2011 through 2013 period were largely due to contributions to our international pension plans and u.s .
postretirement medical benefit plans .
as discussed further in the 201ccontractual commitments 201d section , we have minimum funding requirements in the next several years , primarily related to the ups ibt pension , ups retirement and ups pension plans .

as of december 31 , 2013 , the total of our worldwide holdings of cash and cash equivalents was $ 4.665 billion .
approximately 45%-55% ( 45%-55 % ) of cash and cash equivalents was held by foreign subsidiaries throughout the year .
the amount of cash held by our u.s .
and foreign subsidiaries fluctuates throughout the year due to a variety of factors , including the timing of cash receipts and disbursements in the normal course of business .

cash provided by operating activities in the united states continues to be our primary source of funds to finance domestic operating needs , capital expenditures , share repurchases and dividend payments to shareowners .

to the extent that such amounts represent previously untaxed earnings , the cash held by foreign subsidiaries would be subject to tax if such amounts were repatriated in the form of dividends ; however , not all international cash balances would have to be repatriated in the form of a dividend if returned to the u.s .
when amounts earned by foreign subsidiaries are expected to be indefinitely reinvested , no accrual for taxes is provided.

 |
| table | | 2013         | 2012         | 2011
---------------------------------------------------------------------- | ------------ | ------------ | --------------
net income                                                             | $ 4372       | $ 807        | $ 3804
non-cash operating activities ( a )                                    | 3318         | 7313         | 4578
pension and postretirement plan contributions ( ups-sponsored plans )  | -212 ( 212 ) | -917 ( 917 ) | -1436 ( 1436 )
income tax receivables and payables                                    | -155 ( 155 ) | 280          | 236
changes in working capital and other noncurrent assets and liabilities | 121          | -148 ( 148 ) | -12 ( 12 )
other operating activities                                             | -140 ( 140 ) | -119 ( 119 ) | -97 ( 97 )
net cash from operating activities                                     | $ 7304       | $ 7216       | $ 7073 |


| _id | dd4974062 |
| title |  |
| text | note 17 financial derivatives we use derivative financial instruments ( derivatives ) primarily to help manage exposure to interest rate , market and credit risk and reduce the effects that changes in interest rates may have on net income , fair value of assets and liabilities , and cash flows .
we also enter into derivatives with customers to facilitate their risk management activities .

derivatives represent contracts between parties that usually require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a notional amount and an underlying as specified in the contract .
derivative transactions are often measured in terms of notional amount , but this amount is generally not exchanged and it is not recorded on the balance sheet .

the notional amount is the basis to which the underlying is applied to determine required payments under the derivative contract .
the underlying is a referenced interest rate ( commonly libor ) , security price , credit spread or other index .
residential and commercial real estate loan commitments associated with loans to be sold also qualify as derivative instruments .

the following table presents the notional amounts and gross fair values of all derivative assets and liabilities held by pnc : table 127 : total gross derivatives .

( a ) included in other assets on our consolidated balance sheet .
( b ) included in other liabilities on our consolidated balance sheet .
all derivatives are carried on our consolidated balance sheet at fair value .
derivative balances are presented on the consolidated balance sheet on a net basis taking into consideration the effects of legally enforceable master netting agreements and any related cash collateral exchanged with counterparties .

further discussion regarding the rights of setoff associated with these legally enforceable master netting agreements is included in the offsetting , counterparty credit risk , and contingent features section below .
our exposure related to risk participations where we sold protection is discussed in the credit derivatives section below .
any nonperformance risk , including credit risk , is included in the determination of the estimated net fair value of the derivatives .

further discussion on how derivatives are accounted for is included in note 1 accounting policies .
derivatives designated as hedging instruments under gaap certain derivatives used to manage interest rate risk as part of our asset and liability risk management activities are designated as accounting hedges under gaap .

derivatives hedging the risks associated with changes in the fair value of assets or liabilities are considered fair value hedges , derivatives hedging the variability of expected future cash flows are considered cash flow hedges , and derivatives hedging a net investment in a foreign subsidiary are considered net investment hedges .

designating derivatives as accounting hedges allows for gains and losses on those derivatives , to the extent effective , to be recognized in the income statement in the same period the hedged items affect earnings .
the pnc financial services group , inc .
2013 form 10-k 189

 |
| table | in millions                                                  | december 31 2013 notional/contractamount | december 31 2013 assetfairvalue ( a ) | december 31 2013 liabilityfairvalue ( b ) | december 31 2013 notional/contractamount | december 31 2013 assetfairvalue ( a ) | liabilityfairvalue ( b )
------------------------------------------------------------ | ---------------------------------------- | ------------------------------------- | ----------------------------------------- | ---------------------------------------- | ------------------------------------- | ------------------------
derivatives designated as hedging instruments under gaap     | $ 36197                                  | $ 1189                                | $ 364                                     | $ 29270                                  | $ 1872                                | $ 152
derivatives not designated as hedging instruments under gaap | 345059                                   | 3604                                  | 3570                                      | 337086                                   | 6696                                  | 6458
total gross derivatives                                      | $ 381256                                 | $ 4793                                | $ 3934                                    | $ 366356                                 | $ 8568                                | $ 6610 |


| _id | dd4bbee44 |
| title |  |
| text | increased over 4% ( 4 % ) in 2005 , costs for trucking services provided by intermodal carriers remained flat as we substantially reduced expenses associated with network inefficiencies .
higher diesel fuel prices increased sales and use taxes in 2005 , which resulted in higher state and local taxes .
other contract expenses for equipment maintenance and other services increased in 2005 .

the 2005 january west coast storm and hurricanes katrina and rita also contributed to higher expenses in 2005 ( net of insurance settlements received ) .
partially offsetting these increases was a reduction in relocation expenses as we incurred higher relocation costs associated with moving support personnel to omaha , nebraska during 2004 .
non-operating items millions of dollars 2006 2005 2004 % (  % ) change 2006 v 2005 % (  % ) change 2005 v 2004 .

other income 2013 lower net gains from non-operating asset sales and higher expenses due to rising interest rates associated with our sale of receivables program resulted in a reduction in other income in 2006 , which was partially offset by higher rental income for the use of our right-of-way ( including 2006 settlements of rate disputes from prior years ) and cash investment returns due to higher interest rates .

in 2005 , other income increased largely as a result of higher gains from real estate sales partially offset by higher expenses due to rising interest rates associated with our sale of receivables program .
interest expense 2013 lower interest expense in 2006 and 2005 was primarily due to declining weighted-average debt levels of $ 7.1 billion , $ 7.8 billion , and $ 8.1 billion in 2006 , 2005 , and 2004 , respectively .

a higher effective interest rate of 6.7% ( 6.7 % ) in 2006 , compared to 6.5% ( 6.5 % ) in both 2005 and 2004 , partially offset the effects of the declining debt level .
income taxes 2013 income tax expense was $ 509 million higher in 2006 than 2005 .
higher pre-tax income resulted in additional taxes of $ 414 million and $ 118 million of the increase resulted from the one-time reduction in 2005 described below .

our effective tax rate was 36.4% ( 36.4 % ) and 28.6% ( 28.6 % ) in 2006 and 2005 , respectively .
income taxes were greater in 2005 than 2004 due to higher pre-tax income partially offset by a previously reported reduction in income tax expense .
in our quarterly report on form 10-q for the quarter ended june 30 , 2005 , we reported that the corporation analyzed the impact that final settlements of pre-1995 tax years had on previously recorded estimates of deferred tax assets and liabilities .

the completed analysis of the final settlements for pre-1995 tax years , along with internal revenue service examination reports for tax years 1995 through 2002 were considered , among other things , in a review and re-evaluation of the corporation 2019s estimated deferred tax assets and liabilities as of september 30 , 2005 , resulting in an income tax expense reduction of $ 118 million in

 |
| table | millions of dollars | 2006         | 2005         | 2004         | % (  % ) change 2006 v 2005 | % (  % ) change 2005 v 2004
------------------- | ------------ | ------------ | ------------ | --------------------------- | ---------------------------
other income        | $ 118        | $ 145        | $ 88         | ( 19 ) % (  % )             | 65% ( 65 % )
interest expense    | -477 ( 477 ) | -504 ( 504 ) | -527 ( 527 ) | -5 ( 5 )                    | -4 ( 4 )
income taxes        | -919 ( 919 ) | -410 ( 410 ) | -252 ( 252 ) | 124                         | 63 |


| _id | dd4970098 |
| title |  |
| text | item 7 .
management 2019s discussion and analysis of financial condition and results of operations our management 2019s discussion and analysis of financial condition and results of operations ( md&a ) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations , financial condition , and cash flows .
md&a is organized as follows : 2022 overview .

md&a is organized as follows : 2022 overview .
discussion of our business and overall analysis of financial and other highlights affecting the company in order to provide context for the remainder of md&a .
2022 critical accounting estimates .
accounting estimates that we believe are most important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts .
2022 results of operations .

2022 results of operations .
an analysis of our financial results comparing 2013 to 2012 and comparing 2012 to 2022 liquidity and capital resources .
an analysis of changes in our balance sheets and cash flows , and discussion of our financial condition and potential sources of liquidity .
2022 fair value of financial instruments .
discussion of the methodologies used in the valuation of our financial instruments .
2022 contractual obligations and off-balance-sheet arrangements .

overview of contractual obligations , contingent liabilities , commitments , and off-balance-sheet arrangements outstanding as of december 28 , 2013 , including expected payment schedule .
the various sections of this md&a contain a number of forward-looking statements that involve a number of risks and uncertainties .

words such as 201canticipates , 201d 201cexpects , 201d 201cintends , 201d 201cplans , 201d 201cbelieves , 201d 201cseeks , 201d 201cestimates , 201d 201ccontinues , 201d 201cmay , 201d 201cwill , 201d 201cshould , 201d and variations of such words and similar expressions are intended to identify such forward-looking statements .

in addition , any statements that refer to projections of our future financial performance , our anticipated growth and trends in our businesses , uncertain events or assumptions , and other characterizations of future events or circumstances are forward-looking statements .
such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in 201crisk factors 201d in part i , item 1a of this form 10-k .

our actual results may differ materially , and these forward-looking statements do not reflect the potential impact of any divestitures , mergers , acquisitions , or other business combinations that had not been completed as of february 14 , 2014 .
overview our results of operations for each period were as follows: .

revenue for 2013 was down 1% ( 1 % ) from 2012 .
pccg experienced lower platform unit sales in the first half of the year , but saw offsetting growth in the back half as the pc market began to show signs of stabilization .
dcg continued to benefit from the build out of internet cloud computing and the strength of our product portfolio resulting in increased platform volumes for dcg for the year .

higher factory start-up costs for our next-generation 14nm process technology led to a decrease in gross margin compared to 2012 .
in response to the current business environment and to better align resources , management approved several restructuring actions including targeted workforce reductions as well as the exit of certain businesses and facilities .
these actions resulted in restructuring and asset impairment charges of $ 240 million for 2013 .
table of contents

 |
| table | ( dollars in millions except per share amounts ) | three months ended dec . 282013 | three months ended sept . 282013 | three months ended change | three months ended dec . 282013 | three months ended dec . 292012 | change
------------------------------------------------ | ------------------------------- | -------------------------------- | ------------------------- | ------------------------------- | ------------------------------- | ----------------
net revenue                                      | $ 13834                         | $ 13483                          | $ 351                     | $ 52708                         | $ 53341                         | $ -633 ( 633 )
gross margin                                     | $ 8571                          | $ 8414                           | $ 157                     | $ 31521                         | $ 33151                         | $ -1630 ( 1630 )
gross margin percentage                          | 62.0% ( 62.0 % )                | 62.4% ( 62.4 % )                 | ( 0.4 ) % (  % )          | 59.8% ( 59.8 % )                | 62.1% ( 62.1 % )                | ( 2.3 ) % (  % )
operating income                                 | $ 3549                          | $ 3504                           | $ 45                      | $ 12291                         | $ 14638                         | $ -2347 ( 2347 )
net income                                       | $ 2625                          | $ 2950                           | $ -325 ( 325 )            | $ 9620                          | $ 11005                         | $ -1385 ( 1385 )
diluted earnings per common share                | $ 0.51                          | $ 0.58                           | $ -0.07 ( 0.07 )          | $ 1.89                          | $ 2.13                          | $ -0.24 ( 0.24 ) |


| _id | dd4c2a40a |
| title |  |
| text | for the estimates of our oil sands mining reserves has 33 years of experience in petroleum engineering and has conducted surface mineable oil sands evaluations since 1986 .
he is a member of spe , having served as regional director from 1998 through 2001 and is a registered practicing professional engineer in the province of alberta .

audits of estimates third-party consultants are engaged to provide independent estimates for fields that comprise 80 percent of our total proved reserves over a rolling four-year period for the purpose of auditing the in-house reserve estimates .
we met this goal for the four-year period ended december 31 , 2011 .
we established a tolerance level of 10 percent such that initial estimates by the third-party consultants are accepted if they are within 10 percent of our internal estimates .

should the third-party consultants 2019 initial analysis fail to reach our tolerance level , both our team and the consultants re-examine the information provided , request additional data and refine their analysis if appropriate .
this resolution process is continued until both estimates are within 10 percent .
this process did not result in significant changes to our reserve estimates in 2011 or 2009 .
there were no third-party audits performed in 2010 .

during 2011 , netherland , sewell & associates , inc .
( 201cnsai 201d ) prepared a certification of december 31 , 2010 reserves for the alba field in equatorial guinea .
the nsai summary report is filed as an exhibit to this annual report on form 10-k .
the senior members of the nsai team have over 50 years of industry experience between them , having worked for large , international oil and gas companies before joining nsai .

the team lead has a master of science in mechanical engineering and is a member of spe .
the senior technical advisor has a bachelor of science degree in geophysics and is a member of the society of exploration geophysicists , the american association of petroleum geologists and the european association of geoscientists and engineers .
both are licensed in the state of texas .
ryder scott company ( 201cryder scott 201d ) performed audits of several of our fields in 2011 and 2009 .

their summary report on audits performed in 2011 is filed as an exhibit to this annual report on form 10-k .
the team lead for ryder scott has over 20 years of industry experience , having worked for a major international oil and gas company before joining ryder scott .
he has a bachelor of science degree in mechanical engineering , is a member of spe and is a registered professional engineer in the state of texas .

the corporate reserves group also performs separate , detailed technical reviews of reserve estimates for significant fields that were acquired recently or for properties with other indicators such as excessively short or long lives , performance above or below expectations or changes in economic or operating conditions .
changes in proved undeveloped reserves as of december 31 , 2011 , 395 mmboe of proved undeveloped reserves were reported , a decrease of 10 mmboe from december 31 , 2010 .

the following table shows changes in total proved undeveloped reserves for 2011: .

significant additions to proved undeveloped reserves during 2011 include 91 mmboe due to acreage acquisition in the eagle ford shale , 26 mmboe related to anadarko woodford shale development , 10 mmboe for development drilling in the bakken shale play and 8 mmboe for additional drilling in norway .
additionally , 139 mmboe were transferred from proved undeveloped to proved developed reserves due to startup of the jackpine upgrader expansion in canada .

costs incurred in 2011 , 2010 and 2009 relating to the development of proved undeveloped reserves , were $ 1107 million , $ 1463 million and $ 792 million .
projects can remain in proved undeveloped reserves for extended periods in certain situations such as behind-pipe zones where reserves will not be accessed until the primary producing zone depletes , large development projects which take more than five years to complete , and the timing of when additional gas compression is needed .

of the 395 mmboe of proved undeveloped reserves at year end 2011 , 34 percent of the volume is associated with projects that have been included in proved reserves for more than five years .
the majority of this volume is related to a compression project in equatorial guinea that was sanctioned by our board of directors in 2004 and is expected to be completed by 2016 .

performance of this field has exceeded expectations , and estimates of initial dry gas in place increased by roughly 10 percent between 2004 and 2010 .
production is not expected to experience a natural decline from facility-limited plateau production until 2014 , or possibly 2015 .
the timing of the installation of compression is being driven by the reservoir performance.

 |
| table | beginning of year                          | 405
------------------------------------------ | ------------
revisions of previous estimates            | 15
improved recovery                          | 1
purchases of reserves in place             | 91
extensions discoveries and other additions | 49
transfer to proved developed               | -166 ( 166 )
end of year                                | 395 |


| _id | dd4bb82e2 |
| title |  |
| text | note 2 2013 earnings per share the weighted average number of shares outstanding used to compute earnings per common share were as follows ( in millions ) : .

we compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented .
our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units ( rsus ) , performance stock units ( psus ) and exercise of outstanding stock options based on the treasury stock method .

there were no significant anti-dilutive equity awards for the years ended december 31 , 2018 , 2017 and 2016 .
note 3 2013 acquisition and divestitures consolidation of awe management limited on august 24 , 2016 , we increased our ownership interest in the awe joint venture , which operates the united kingdom 2019s nuclear deterrent program , from 33% ( 33 % ) to 51% ( 51 % ) .

consequently , we began consolidating awe and our operating results include 100% ( 100 % ) of awe 2019s sales and 51% ( 51 % ) of its operating profit .
prior to increasing our ownership interest , we accounted for our investment in awe using the equity method of accounting .
under the equity method , we recognized only 33% ( 33 % ) of awe 2019s earnings or losses and no sales .

accordingly , prior to august 24 , 2016 , the date we obtained control , we recorded 33% ( 33 % ) of awe 2019s net earnings in our operating results and subsequent to august 24 , 2016 , we recognized 100% ( 100 % ) of awe 2019s sales and 51% ( 51 % ) of its operating profit .
we accounted for this transaction as a 201cstep acquisition 201d ( as defined by u.s .
gaap ) , which requires us to consolidate and record the assets and liabilities of awe at fair value .

accordingly , we recorded intangible assets of $ 243 million related to customer relationships , $ 32 million of net liabilities , and noncontrolling interests of $ 107 million .
the intangible assets are being amortized over a period of eight years in accordance with the underlying pattern of economic benefit reflected by the future net cash flows .

in 2016 , we recognized a non-cash net gain of $ 104 million associated with obtaining a controlling interest in awe , which consisted of a $ 127 million pretax gain recognized in the operating results of our space business segment and $ 23 million of tax-related items at our corporate office .
the gain represented the fair value of our 51% ( 51 % ) interest in awe , less the carrying value of our previously held investment in awe and deferred taxes .

the gain was recorded in other income , net on our consolidated statements of earnings .
the fair value of awe ( including the intangible assets ) , our controlling interest , and the noncontrolling interests were determined using the income approach .
divestiture of the information systems & global solutions business on august 16 , 2016 , we divested our former is&gs business , which merged with leidos , in a reverse morris trust transaction ( the 201ctransaction 201d ) .

the transaction was completed in a multi-step process pursuant to which we initially contributed the is&gs business to abacus innovations corporation ( abacus ) , a wholly owned subsidiary of lockheed martin created to facilitate the transaction , and the common stock of abacus was distributed to participating lockheed martin stockholders through an exchange offer .

under the terms of the exchange offer , lockheed martin stockholders had the option to exchange shares of lockheed martin common stock for shares of abacus common stock .
at the conclusion of the exchange offer , all shares of abacus common stock were exchanged for 9369694 shares of lockheed martin common stock held by lockheed martin stockholders that elected to participate in the exchange .

the shares of lockheed martin common stock that were exchanged and accepted were retired , reducing the number of shares of our common stock outstanding by approximately 3% ( 3 % ) .
following the exchange offer , abacus merged with a subsidiary of leidos , with abacus continuing as the surviving corporation and a wholly-owned subsidiary of leidos .
as part of the merger , each share of abacus common stock was automatically converted into one share of leidos common stock .

we did not receive any shares of leidos common stock as part of the transaction and do not hold any shares of leidos or abacus common stock following the transaction .
based on an opinion of outside tax counsel , subject to customary qualifications and based on factual representations , the exchange offer and merger will qualify as tax-free transactions to lockheed martin and its stockholders , except to the extent that cash was paid to lockheed martin stockholders in lieu of fractional shares .

in connection with the transaction , abacus borrowed an aggregate principal amount of approximately $ 1.84 billion under term loan facilities with third party financial institutions , the proceeds of which were used to make a one-time special cash payment of $ 1.80 billion to lockheed martin and to pay associated borrowing fees and expenses .
the entire special cash payment was used to repay debt , pay dividends and repurchase stock during the third and fourth quarters of 2016 .

the obligations under the abacus term loan facilities were guaranteed by leidos as part of the transaction.

 |
| table | | 2018  | 2017  | 2016
------------------------------------------------------------------- | ----- | ----- | -----
weighted average common shares outstanding for basic computations   | 284.5 | 287.8 | 299.3
weighted average dilutive effect of equity awards                   | 2.3   | 2.8   | 3.8
weighted average common shares outstanding for diluted computations | 286.8 | 290.6 | 303.1 |


| _id | dd4b9df82 |
| title |  |
| text | we operated the following factory stores as of march 29 , 2014: .

( a ) includes australia , china , hong kong , japan , malaysia , south korea , and taiwan .
our factory stores in the americas offer selections of our menswear , womenswear , childrenswear , accessories , home furnishings , and fragrances .
ranging in size from approximately 2700 to 20000 square feet , with an average of approximately 10400 square feet , these stores are principally located in major outlet centers in 40 states in the u.s. , canada , and puerto rico .

our factory stores in europe offer selections of our menswear , womenswear , childrenswear , accessories , home furnishings , and fragrances .
ranging in size from approximately 1400 to 19700 square feet , with an average of approximately 7000 square feet , these stores are located in 12 countries , principally in major outlet centers .
our factory stores in asia offer selections of our menswear , womenswear , childrenswear , accessories , and fragrances .

ranging in size from approximately 1100 to 11800 square feet , with an average of approximately 6200 square feet , these stores are primarily located throughout china and japan , in hong kong , and in or near other major cities in asia and australia .
our factory stores are principally located in major outlet centers .

factory stores obtain products from our suppliers , our product licensing partners , and our other retail stores and e-commerce operations , and also serve as a secondary distribution channel for our excess and out-of-season products .
concession-based shop-within-shops the terms of trade for shop-within-shops are largely conducted on a concession basis , whereby inventory continues to be owned by us ( not the department store ) until ultimate sale to the end consumer .

the salespeople involved in the sales transactions are generally our employees and not those of the department store .
as of march 29 , 2014 , we had 503 concession-based shop-within-shops at 243 retail locations dedicated to our products , which were located in asia , australia , new zealand , and europe .
the size of our concession-based shop-within-shops ranges from approximately 140 to 7400 square feet .

we may share in the cost of building-out certain of these shop-within-shops with our department store partners .

e-commerce websites in addition to our stores , our retail segment sells products online through our e-commerce channel , which includes : 2022 our north american e-commerce sites located at www.ralphlauren.com and www.clubmonaco.com , as well as our club monaco site in canada located at www.clubmonaco.ca ; 2022 our ralph lauren e-commerce sites in europe , including www.ralphlauren.co.uk ( servicing the united kingdom ) , www.ralphlauren.fr ( servicing belgium , france , italy , luxembourg , the

belgium , france , italy , luxembourg , the netherlands , portugal , and spain ) , and www.ralphlauren.de ( servicing germany and austria ) ; and 2022 our ralph lauren e-commerce sites in asia , including www.ralphlauren.co.jp servicing japan and www.ralphlauren.co.kr servicing south korea .

our ralph lauren e-commerce sites in the u.s. , europe , and asia offer our customers access to a broad array of ralph lauren , rrl , polo , and denim & supply apparel , accessories , fragrance , and home products , and reinforce the luxury image of our brands .

while investing in e-commerce operations remains a primary focus , it is an extension of our investment in the integrated omni-channel strategy used to operate our overall retail business , in which our e-commerce operations are interdependent with our physical stores .
our club monaco e-commerce sites in the u.s .
and canada offer our domestic and canadian customers access to our club monaco global assortment of womenswear , menswear , and accessories product lines , as well as select online exclusives.

 |
| table | location     | factory stores
------------ | --------------
the americas | 150
europe       | 50
asia ( a )   | 35
total        | 235 |


| _id | dd4b8f1c6 |
| title |  |
| text | sales of unregistered securities not applicable .
repurchase of equity securities the following table provides information regarding our purchases of our equity securities during the period from october 1 , 2016 to december 31 , 2016 .

total number of shares ( or units ) purchased 1 average price paid per share ( or unit ) 2 total number of shares ( or units ) purchased as part of publicly announced plans or programs 3 maximum number ( or approximate dollar value ) of shares ( or units ) that may yet be purchased under the plans or programs 3 .

1 included shares of our common stock , par value $ 0.10 per share , withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that occurred upon vesting and release of restricted shares ( the 201cwithheld shares 201d ) .
we repurchased no withheld shares in october 2016 , 1353 withheld shares in november 2016 and 10749 withheld shares in december 2016 , for a total of 12102 withheld shares during the three-month period .

2 the average price per share for each of the months in the fiscal quarter and for the three-month period was calculated by dividing the sum of the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our share repurchase program , described in note 5 to the consolidated financial statements , by the sum of the number of withheld shares and the number of shares acquired in our share repurchase program .

3 in february 2016 , the board authorized a share repurchase program to repurchase from time to time up to $ 300.0 million , excluding fees , of our common stock ( the 201c2016 share repurchase program 201d ) .
on february 10 , 2017 , we announced that our board had approved a new share repurchase program to repurchase from time to time up to $ 300.0 million , excluding fees , of our common stock .

the new authorization is in addition to any amounts remaining for repurchase under the 2016 share repurchase program .
there is no expiration date associated with the share repurchase programs.

 |
| table | | total number ofshares ( or units ) purchased1 | average price paidper share ( or unit ) 2 | total number ofshares ( or units ) purchased as part ofpublicly announcedplans or programs3 | maximum number ( orapproximate dollar value ) of shares ( or units ) that may yet be purchasedunder the plans orprograms3
--------------- | --------------------------------------------- | ----------------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------
october 1 - 31  | 2099169                                       | $ 22.28                                   | 2099169                                                                                | $ 218620420
november 1 - 30 | 1454402                                       | $ 22.79                                   | 1453049                                                                                | $ 185500851
december 1 - 31 | 1269449                                       | $ 23.93                                   | 1258700                                                                                | $ 155371301
total           | 4823020                                       | $ 22.87                                   | 4810918                                                                                | |


| _id | dd4c14416 |
| title |  |
| text | abiomed , inc .
and subsidiaries notes to consolidated financial statements 2014 ( continued ) note 15 .
commitments and contingencies ( continued ) the company applies the disclosure provisions of fin no .
45 , guarantor 2019s accounting and disclosure requirements for guarantees , including guarantees of indebtedness of others , and interpretation of fasb statements no .
5 , 57 and 107 and rescission of fasb interpretation no .
34 ( fin no .

34 ( fin no .
45 ) to its agreements that contain guarantee or indemnification clauses .
these disclosure provisions expand those required by sfas no .
5 , accounting for contingencies , by requiring that guarantors disclose certain types of guarantees , even if the likelihood of requiring the guarantor 2019s performance is remote .
in addition to product warranties , the following is a description of arrangements in which the company is a guarantor .

indemnifications 2014in many sales transactions , the company indemnifies customers against possible claims of patent infringement caused by the company 2019s products .
the indemnifications contained within sales contracts usually do not include limits on the claims .
the company has never incurred any material costs to defend lawsuits or settle patent infringement claims related to sales transactions .
under the provisions of fin no .
45 , intellectual property indemnifications require disclosure only .

the company enters into agreements with other companies in the ordinary course of business , typically with underwriters , contractors , clinical sites and customers that include indemnification provisions .
under these provisions the company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of its activities .
these indemnification provisions generally survive termination of the underlying agreement .

the maximum potential amount of future payments the company could be required to make under these indemnification provisions is unlimited .
abiomed has never incurred any material costs to defend lawsuits or settle claims related to these indemnification agreements .
as a result , the estimated fair value of these agreements is minimal .
accordingly , the company has no liabilities recorded for these agreements as of march 31 , 2008 .

clinical study agreements 2014in the company 2019s clinical study agreements , abiomed has agreed to indemnify the participating institutions against losses incurred by them for claims related to any personal injury of subjects taking part in the study to the extent they relate to uses of the company 2019s devices in accordance with the clinical study agreement , the protocol for the device and abiomed 2019s instructions .

the indemnification provisions contained within the company 2019s clinical study agreements do not generally include limits on the claims .
the company has never incurred any material costs related to the indemnification provisions contained in its clinical study agreements .
facilities leases 2014as of march 31 , 2008 , the company had entered into leases for its facilities , including its primary operating facility in danvers , massachusetts with terms through fiscal 2010 .

the danvers lease may be extended , at the company 2019s option , for two successive additional periods of five years each with monthly rent charges to be determined based on then current fair rental values .
the company 2019s lease for its aachen location expires in december 2012 .

total rent expense under these leases , included in the accompanying consolidated statements of operations approximated $ 2.2 million , $ 1.6 million , and $ 1.3 million for the fiscal years ended march 31 , 2008 , 2007 and 2006 , respectively .
future minimum lease payments under all significant non-cancelable operating leases as of march 31 , 2008 are approximately as follows : fiscal year ending march 31 , operating leases ( in $ 000 2019s ) .

litigation 2014from time-to-time , the company is involved in legal and administrative proceedings and claims of various types .
while any litigation contains an element of uncertainty , management presently believes that the outcome of each such other proceedings or claims which are pending or known to be threatened , or all of them combined , is not expected to have a material adverse effect on the company 2019s financial position , cash flow and results.

 |
| table | fiscal year ending march 31,        | operating leases ( in $ 000 2019s )
----------------------------------- | -----------------------------------
2009                                | 2544
2010                                | 2220
2011                                | 1287
2012                                | 973
2013                                | 730
thereafter                          | 2014
total future minimum lease payments | $ 7754 |


| _id | dd4c4dfcc |
| title |  |
| text | item 2 .
properties our principal offices are located in boston , southborough and woburn , massachusetts ; atlanta , georgia ; mexico city , mexico ; and sao paulo , brazil .
details of each of these offices are provided below: .

( 1 ) of the total 30000 square feet in our current leasehold , we are consolidating our operations into 20000 square feet during 2004 and are currently offering the remaining 10000 square feet for re-lease or sub-lease .
we have seven additional area offices in the united states through which our tower leasing and services businesses are operated on a local basis .

these offices are located in ontario , california ; marietta , georgia ; crest hill , illinois ; worcester , massachusetts ; new hudson , michigan ; mount pleasant , south carolina ; and kent , washington .
in addition , we maintain smaller field offices within each of the areas at locations as needed from time to time .
our interests in individual communications sites are comprised of a variety of fee and leasehold interests in land and/or buildings ( rooftops ) .

of the approximately 15000 towers comprising our portfolio , approximately 16% ( 16 % ) are located on parcels of land that we own and approximately 84% ( 84 % ) are either located on parcels of land that have leasehold interests created by long-term lease agreements , private easements and easements , licenses or rights-of-way granted by government entities , or are sites that we manage for third parties .

in rural areas , a wireless communications site typically consists of a 10000 square foot tract , which supports towers , equipment shelters and guy wires to stabilize the structure , whereas a broadcast tower site typically consists of a tract of land of up to twenty-acres .
less than 2500 square feet are required for a monopole or self-supporting tower structure of the kind typically used in metropolitan areas for wireless communication tower sites .

land leases generally have an initial term of five years with three or four additional automatic renewal periods of five years , for a total of twenty to twenty-five years .
pursuant to our credit facilities , our lenders have liens on , among other things , all towers , leasehold interests , tenant leases and contracts relating to the management of towers for others .
we believe that our owned and leased facilities are suitable and adequate to meet our anticipated needs .
item 3 .

item 3 .
legal proceedings we periodically become involved in various claims and lawsuits that are incidental to our business .
we believe , after consultation with counsel , that no matters currently pending would , in the event of an adverse outcome , have a material impact on our consolidated financial position , results of operations or liquidity .
item 4 .
submission of matters to a vote of security holders

 |
| table | location     | function                                    | size ( square feet )               | property interest
------------ | ------------------------------------------- | ---------------------------------- | -----------------
boston       | corporate headquarters ; us tower division  | 30000 ( 1 )                        | leased
southborough | data center                                 | 13900                              | leased
woburn       | lease administration                        | 34000                              | owned
atlanta      | us tower and services division ; accounting | 17900 ( rental ) 4800 ( services ) | leased
mexico city  | mexico headquarters                         | 12300                              | leased
sao paulo    | brazil headquarters                         | 3200                               | leased |


| _id | dd4c246b8 |
| title |  |
| text | the company 2019s stock performance the following graph compares cumulative total return of the company 2019s common stock with the cumulative total return of ( i ) the nasdaq stock market-united states , and ( ii ) the nasdaq biotechnology index .

the graph assumes ( a ) $ 100 was invested on july 31 , 2001 in each of the company 2019s common stock , the stocks comprising the nasdaq stock market-united states and the stocks comprising the nasdaq biotechnology index , and ( b ) the reinvestment of dividends .
comparison of 65 month cumulative total return* among alexion pharmaceuticals , inc. , the nasdaq composite index and the nasdaq biotechnology index alexion pharmaceuticals , inc .
nasdaq composite nasdaq biotechnology .

 |
| table | | 7/02   | 7/03   | 7/04   | 7/05   | 12/05  | 12/06  | 12/07
----------------------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------
alexion pharmaceuticals inc . | 100.00 | 108.38 | 102.64 | 167.89 | 130.56 | 260.41 | 483.75
nasdaq composite              | 100.00 | 128.98 | 142.51 | 164.85 | 168.24 | 187.43 | 204.78
nasdaq biotechnology          | 100.00 | 149.29 | 146.51 | 176.75 | 186.10 | 183.89 | 187.04 |


| _id | dd4c57766 |
| title |  |
| text | undesignated hedges was $ 41.2 million and $ 42.1 million , respectively .
the fair value of these hedging instruments in the company 2019s consolidated balance sheets as of october 29 , 2011 and october 30 , 2010 was immaterial .

interest rate exposure management 2014 on june 30 , 2009 , the company entered into interest rate swap transactions related to its outstanding 5.0% ( 5.0 % ) senior unsecured notes where the company swapped the notional amount of its $ 375 million of fixed rate debt at 5.0% ( 5.0 % ) into floating interest rate debt through july 1 , 2014 .

under the terms of the swaps , the company will ( i ) receive on the $ 375 million notional amount a 5.0% ( 5.0 % ) annual interest payment that is paid in two installments on the 1st of every january and july , commencing january 1 , 2010 through and ending on the maturity date ; and ( ii ) pay on the $ 375 million notional amount an annual three month libor plus 2.05% ( 2.05 % ) ( 2.42% ( 2.42 % ) as of october 29 , 2011 ) interest payment , payable in four installments on the 1st of every january ,

four installments on the 1st of every january , april , july and october , commencing on october 1 , 2009 and ending on the maturity date .

the libor- based rate is set quarterly three months prior to the date of the interest payment .
the company designated these swaps as fair value hedges .
the fair value of the swaps at inception was zero and subsequent changes in the fair value of the interest rate swaps were reflected in the carrying value of the interest rate swaps on the balance sheet .
the carrying value of the debt on the balance sheet was adjusted by an equal and offsetting amount .

the gain or loss on the hedged item ( that is , the fixed-rate borrowings ) attributable to the hedged benchmark interest rate risk and the offsetting gain or loss on the related interest rate swaps for fiscal year 2011 and fiscal year 2010 were as follows : statement of income .

the amounts earned and owed under the swap agreements are accrued each period and are reported in interest expense .
there was no ineffectiveness recognized in any of the periods presented .
the market risk associated with the company 2019s derivative instruments results from currency exchange rate or interest rate movements that are expected to offset the market risk of the underlying transactions , assets and liabilities being hedged .

the counterparties to the agreements relating to the company 2019s derivative instruments consist of a number of major international financial institutions with high credit ratings .
based on the credit ratings of our counterparties as of october 29 , 2011 , we do not believe that there is significant risk of nonperformance by them .

furthermore , none of the company 2019s derivative transactions are subject to collateral or other security arrangements and none contain provisions that are dependent on the company 2019s credit ratings from any credit rating agency .
while the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions , they do not represent the amount of the company 2019s exposure to credit risk .

the amounts potentially subject to credit risk ( arising from the possible inability of counterparties to meet the terms of their contracts ) are generally limited to the amounts , if any , by which the counterparties 2019 obligations under the contracts exceed the obligations of the company to the counterparties .
as a result of the above considerations , the company does not consider the risk of counterparty default to be significant .

the company records the fair value of its derivative financial instruments in the consolidated financial statements in other current assets , other assets or accrued liabilities , depending on their net position , regardless of the purpose or intent for holding the derivative contract .
changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders 2019 equity as a component of oci .

changes in the fair value of cash flow hedges are recorded in oci and reclassified into earnings when the underlying contract matures .
changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur .

the total notional amounts of derivative instruments designated as hedging instruments as of october 29 , 2011 and october 30 , 2010 were $ 375 million of interest rate swap agreements accounted for as fair value hedges and $ 153.7 million and $ 139.9 million , respectively , of cash flow hedges denominated in euros , british pounds and analog devices , inc .
notes to consolidated financial statements 2014 ( continued )

 |
| table | statement of income classification | statement of income loss on swaps | statement of income gain on note | statement of income net income effect | statement of income gain on swaps | loss on note       | net income effect
---------------------------------- | --------------------------------- | -------------------------------- | ------------------------------------- | --------------------------------- | ------------------ | -----------------
other income                       | $ -4614 ( 4614 )                  | $ 4614                           | $ 2014                                | $ 20692                           | $ -20692 ( 20692 ) | $ 2014 |


| _id | dd4b8d39e |
| title |  |
| text | the following table summarizes the changes in the company 2019s valuation allowance: .

included in 2013 is a discrete tax benefit totaling $ 2979 associated with an entity re-organization within the company 2019s market-based segment that allowed for the utilization of state net operating loss carryforwards and the release of an associated valuation allowance .
note 14 : employee benefits pension and other postretirement benefits the company maintains noncontributory defined benefit pension plans covering eligible employees of its regulated utility and shared services operations .

benefits under the plans are based on the employee 2019s years of service and compensation .
the pension plans have been closed for all employees .
the pension plans were closed for most employees hired on or after january 1 , 2006 .
union employees hired on or after january 1 , 2001 had their accrued benefit frozen and will be able to receive this benefit as a lump sum upon termination or retirement .

union employees hired on or after january 1 , 2001 and non-union employees hired on or after january 1 , 2006 are provided with a 5.25% ( 5.25 % ) of base pay defined contribution plan .
the company does not participate in a multiemployer plan .
the company 2019s pension funding practice is to contribute at least the greater of the minimum amount required by the employee retirement income security act of 1974 or the normal cost .

further , the company will consider additional contributions if needed to avoid 201cat risk 201d status and benefit restrictions under the pension protection act of 2006 .
the company may also consider increased contributions , based on other financial requirements and the plans 2019 funded position .

pension plan assets are invested in a number of actively managed and indexed investments including equity and bond mutual funds , fixed income securities , guaranteed interest contracts with insurance companies and real estate investment trusts ( 201creits 201d ) .
pension expense in excess of the amount contributed to the pension plans is deferred by certain regulated subsidiaries pending future recovery in rates charged for utility services as contributions are made to the plans .

( see note 6 ) the company also has unfunded noncontributory supplemental non-qualified pension plans that provide additional retirement benefits to certain employees .
the company maintains other postretirement benefit plans providing varying levels of medical and life insurance to eligible retirees .
the retiree welfare plans are closed for union employees hired on or after january 1 , 2006 .
the plans had previously closed for non-union employees hired on or after january 1 , 2002 .

the company 2019s policy is to fund other postretirement benefit costs for rate-making purposes .
assets of the plans are invested in equity mutual funds , bond mutual funds and fixed income securities.

 |
| table | balance at january 1 2011                 | $ 23788
----------------------------------------- | --------------
increases in current period tax positions | 1525
decreases in current period tax positions | -3734 ( 3734 )
balance at december 31 2011               | $ 21579
increases in current period tax positions | 0
decreases in current period tax positions | -2059 ( 2059 )
balance at december 31 2012               | $ 19520
increases in current period tax positions | 0
decreases in current period tax positions | -5965 ( 5965 )
balance at december 31 2013               | $ 13555 |


| _id | dd4baa80e |
| title |  |
| text | third-party sales for this segment increased 4% ( 4 % ) in 2014 compared with 2013 , primarily due to higher volumes and the acquisition of firth rixson ( $ 81 2014see above ) .
the higher volumes were mostly related to the aerospace ( commercial ) and commercial transportation end markets , somewhat offset by lower volumes in the industrial gas turbine end market .

atoi for the engineered products and solutions segment increased $ 16 in 2015 compared with 2014 , principally the result of net productivity improvements across most businesses , a positive contribution from inorganic growth , and overall higher volumes in this segment 2019s organic businesses .
these positive impacts were partially offset by unfavorable price/product mix , higher costs related to growth projects , and net unfavorable foreign currency movements , primarily related to a weaker euro .

atoi for this segment climbed $ 10 in 2014 compared with 2013 , mainly due to net productivity improvements across all businesses and overall higher volumes , partially offset by higher costs , primarily labor , and unfavorable product in 2016 , demand in the commercial aerospace end market is expected to remain strong , driven by significant order backlog .
also , third-party sales will include a positive impact due to a full year of sales related to the acquisitions of rti and tital .

additionally , net productivity improvements are anticipated while pricing pressure across all markets is expected .
transportation and construction solutions .

this segment represents a portion of alcoa 2019s downstream operations and produces products that are used mostly in the nonresidential building and construction and commercial transportation end markets .
such products include integrated aluminum structural systems , architectural extrusions , and forged aluminum commercial vehicle wheels , which are sold directly to customers and through distributors .
a small part of this segment also produces aluminum products for the industrial products end market .

generally , the sales and costs and expenses of this segment are transacted in the local currency of the respective operations , which are mostly the u.s .
dollar , the euro , and the brazilian real .

dollar , the euro , and the brazilian real .
third-party sales for the transportation and construction solutions segment decreased 7% ( 7 % ) in 2015 compared with 2014 , primarily driven by unfavorable foreign currency movements , principally caused by a weaker euro and brazilian real , and lower volume related to the building and construction end market , somewhat offset by higher volume related to the commercial transportation end market .

third-party sales for this segment increased 4% ( 4 % ) in 2014 compared with 2013 , mostly the result of higher volume related to the commercial transportation and building and construction end markets , somewhat offset by lower volume in the industrial products and market .

atoi for the transportation and construction solutions segment declined $ 14 in 2015 compared with 2014 , mainly due to higher costs , net unfavorable foreign currency movements , primarily related to a weaker euro and brazilian real , and unfavorable price/product mix .
these negative impacts were mostly offset by net productivity improvements across all businesses .

atoi for this segment improved $ 13 in 2014 compared with 2013 , principally attributable to net productivity improvements across all businesses and overall higher volumes , partially offset by unfavorable product mix and higher costs , primarily labor .
in 2016 , the non-residential building and construction end market is expected to improve through growth in north america but will be slightly offset by overall weakness in europe .
also , north america build rates in the commercial

 |
| table | | 2015   | 2014   | 2013
----------------- | ------ | ------ | ------
third-party sales | $ 1882 | $ 2021 | $ 1951
atoi              | $ 166  | $ 180  | $ 167 |