| _id | dd4bb1a6e |
| title |  |
| text | ( 2 ) our union-represented mainline employees are covered by agreements that are not currently amendable .
joint collective bargaining agreements ( jcbas ) have been reached with post-merger employee groups , except the maintenance , fleet service , stock clerks , maintenance control technicians and maintenance training instructors represented by the twu-iam association who are covered by separate cbas that become amendable in the third quarter of 2018 .

until those agreements become amendable , negotiations for jcbas will be conducted outside the traditional rla bargaining process as described above , and , in the meantime , no self-help will be permissible .
( 3 ) among our wholly-owned regional subsidiaries , the psa mechanics and flight attendants have agreements that are now amendable and are engaged in traditional rla negotiations .
the envoy passenger service employees are engaged in traditional rla negotiations for an initial cba .

the piedmont fleet and passenger service employees have reached a tentative five-year agreement which is subject to membership ratification .
for more discussion , see part i , item 1a .
risk factors 2013 201cunion disputes , employee strikes and other labor-related disruptions may adversely affect our operations . 201d aircraft fuel our operations and financial results are significantly affected by the availability and price of jet fuel , which is our second largest expense .

based on our 2018 forecasted mainline and regional fuel consumption , we estimate that a one cent per gallon increase in aviation fuel price would increase our 2018 annual fuel expense by $ 45 million .
the following table shows annual aircraft fuel consumption and costs , including taxes , for our mainline and regional operations for 2017 , 2016 and 2015 ( gallons and aircraft fuel expense in millions ) .
year gallons average price per gallon aircraft fuel expense percent of total operating expenses .

as of december 31 , 2017 , we did not have any fuel hedging contracts outstanding to hedge our fuel consumption .
as such , and assuming we do not enter into any future transactions to hedge our fuel consumption , we will continue to be fully exposed to fluctuations in fuel prices .
our current policy is not to enter into transactions to hedge our fuel consumption , although we review that policy from time to time based on market conditions and other factors .

fuel prices have fluctuated substantially over the past several years .
we cannot predict the future availability , price volatility or cost of aircraft fuel .
natural disasters ( including hurricanes or similar events in the u.s .
southeast and on the gulf coast where a significant portion of domestic refining capacity is located ) , political disruptions or wars involving oil-producing countries , changes in fuel-related governmental policy , the strength of the u.s .

dollar against foreign currencies , changes in access to petroleum product pipelines and terminals , speculation in the energy futures markets , changes in aircraft fuel production capacity , environmental concerns and other unpredictable events may result in fuel supply shortages , distribution challenges , additional fuel price volatility and cost increases in the future .
see part i , item 1a .
risk factors 2013 201cour business is very dependent on the price and availability of aircraft fuel .

continued periods of high volatility in fuel costs , increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity . 201d seasonality and other factors due to the greater demand for air travel during the summer months , revenues in the airline industry in the second and third quarters of the year tend to be greater than revenues in the first and fourth quarters of the year .

general economic conditions , fears of terrorism or war , fare initiatives , fluctuations in fuel prices , labor actions , weather , natural disasters , outbreaks of disease and other factors could impact this seasonal pattern .
therefore , our quarterly results of operations are not necessarily indicative of operating results for the entire year , and historical operating results in a quarterly or annual period are not necessarily indicative of future operating results.

 |
| table | year | gallons | average priceper gallon | aircraft fuelexpense | percent of totaloperating expenses
---- | ------- | ----------------------- | -------------------- | ----------------------------------
2017 | 4352    | $ 1.73                  | $ 7510               | 19.7% ( 19.7 % )
2016 | 4347    | 1.42                    | 6180                 | 17.7% ( 17.7 % )
2015 | 4323    | 1.72                    | 7456                 | 21.4% ( 21.4 % ) |


| _id | dd4c12b5c |
| title |  |
| text | in the fourth quarter of 2002 , aes lost voting control of one of the holding companies in the cemig ownership structure .
this holding company indirectly owns the shares related to the cemig investment and indirectly holds the project financing debt related to cemig .
as a result of the loss of voting control , aes stopped consolidating this holding company at december 31 , 2002 .
other .

other .
during the fourth quarter of 2003 , the company sold its 25% ( 25 % ) ownership interest in medway power limited ( 2018 2018mpl 2019 2019 ) , a 688 mw natural gas-fired combined cycle facility located in the united kingdom , and aes medway operations limited ( 2018 2018aesmo 2019 2019 ) , the operating company for the facility , in an aggregate transaction valued at approximately a347 million ( $ 78 million ) .

the sale resulted in a gain of $ 23 million which was recorded in continuing operations .
mpl and aesmo were previously reported in the contract generation segment .
in the second quarter of 2002 , the company sold its investment in empresa de infovias s.a .
( 2018 2018infovias 2019 2019 ) , a telecommunications company in brazil , for proceeds of $ 31 million to cemig , an affiliated company .

the loss recorded on the sale was approximately $ 14 million and is recorded as a loss on sale of assets and asset impairment expenses in the accompanying consolidated statements of operations .
in the second quarter of 2002 , the company recorded an impairment charge of approximately $ 40 million , after income taxes , on an equity method investment in a telecommunications company in latin america held by edc .

the impairment charge resulted from sustained poor operating performance coupled with recent funding problems at the invested company .
during 2001 , the company lost operational control of central electricity supply corporation ( 2018 2018cesco 2019 2019 ) , a distribution company located in the state of orissa , india .
the state of orissa appointed an administrator to take operational control of cesco .
cesco is accounted for as a cost method investment .
aes 2019s investment in cesco is negative .

aes 2019s investment in cesco is negative .
in august 2000 , a subsidiary of the company acquired a 49% ( 49 % ) interest in songas for approximately $ 40 million .
the company acquired an additional 16.79% ( 16.79 % ) of songas for approximately $ 12.5 million , and the company began consolidating this entity in 2002 .
songas owns the songo songo gas-to-electricity project in tanzania .

in december 2002 , the company signed a sales purchase agreement to sell 100% ( 100 % ) of our ownership interest in songas .
the sale of songas closed in april 2003 ( see note 4 for further discussion of the transaction ) .
the following tables present summarized comparative financial information ( in millions ) of the entities in which the company has the ability to exercise significant influence but does not control and that are accounted for using the equity method. .

( 1 ) includes information pertaining to eletropaulo and light prior to february 2002 .
in 2002 and 2001 , the results of operations and the financial position of cemig were negatively impacted by the devaluation of the brazilian real and the impairment charge recorded in 2002 .
the brazilian real devalued 32% ( 32 % ) and 19% ( 19 % ) for the years ended december 31 , 2002 and 2001 , respectively.

 |
| table | as of and for the years ended december 31, | 2003   | 2002 ( 1 ) | 2001 ( 1 )
------------------------------------------ | ------ | ---------- | ----------
revenues                                   | $ 2758 | $ 2832     | $ 6147
operating income                           | 1039   | 695        | 1717
net income                                 | 407    | 229        | 650
current assets                             | 1347   | 1097       | 3700
noncurrent assets                          | 7479   | 6751       | 14942
current liabilities                        | 1434   | 1418       | 3510
noncurrent liabilities                     | 3795   | 3349       | 8297
stockholder's equity                       | 3597   | 3081       | 6835 |


| _id | dd4bfa8cc |
| title |  |
| text | which , $ 44.9 million , or $ 38.2 million , net of taxes , is expected to be reclassified to earnings over the next twelve months .
we also enter into foreign currency forward exchange contracts with terms of one month to manage currency exposures for assets and liabilities denominated in a currency other than an entity 2019s functional currency .
as a result , any foreign currency translation gains/losses recognized in earnings under sfas no .

52 , 201cforeign currency translation 201d are generally offset with gains/losses on the foreign currency forward exchange contracts in the same reporting period .
other comprehensive income 2013 other comprehensive income refers to revenues , expenses , gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net earnings as these amounts are recorded directly as an adjustment to stockholders 2019 equity .

other comprehensive income is comprised of foreign currency translation adjustments , unrealized foreign currency hedge gains and losses , unrealized gains and losses on available-for-sale securities and amortization of prior service costs and unrecognized gains and losses in actuarial assumptions .
the components of accumulated other comprehensive income are as follows ( in millions ) : balance at december 31 , comprehensive income ( loss ) balance at december 31 .

treasury stock 2013 we account for repurchases of common stock under the cost method and present treasury stock as a reduction of shareholders equity .
we may reissue common stock held in treasury only for limited purposes .
accounting pronouncements 2013 in june 2006 , the fasb issued interpretation no .

48 , 201caccounting for uncertainty in income taxes , an interpretation of fas 109 , accounting for income taxes 201d ( fin 48 ) , to create a single model to address accounting for uncertainty in tax positions .
see our income tax disclosures in note 11 for more information regarding the adoption of fin 48 .
in september 2006 , the fasb issued sfas no .
158 , 201cemployers 2019 accounting for defined benefit pension and other postretirement plans 2013 an amendment of fasb statements no .

87 , 88 , 106 and 132 ( r ) . 201d this statement requires recognition of the funded status of a benefit plan in the statement of financial position .
sfas no .
158 also requires recognition in other comprehensive income of certain gains and losses that arise during the period but are deferred under pension accounting rules , as well as modifies the timing of reporting and adds certain disclosures .

the statement provides recognition and disclosure elements to be effective as of the end of the fiscal year after december 15 , 2006 and measurement elements to be effective for fiscal years ending after december 15 , 2008 .
we adopted sfas no .
158 on december 31 , 2006 .
see our pension and other postretirement disclosures in note 10 .
in december 2004 , the fasb issued sfas no .
123 ( r ) , 201cshare-based payment 201d , which is a revision to sfas no .
123 .

123 .
sfas 123 ( r ) requires all share-based payments to employees , including stock options , to be expensed based on their fair values .
we adopted sfas 123 ( r ) on january 1 , 2006 using the modified prospective method and did not restate prior periods .
in september 2006 , the fasb issued sfas no .

in september 2006 , the fasb issued sfas no .
157 , 201cfair value measurements 201d , which defines fair value , establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements .
this statement does not require any new fair value measurements , but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information .
sfas no .

sfas no .
157 is effective for financial statements issued for fiscal years beginning after november 15 , 2007 and interim periods within those fiscal years .
in february 2008 , the fasb issued fasb staff position ( fsp ) no .
sfas 157-2 , which delays the effective date of certain provisions of sfas no .
157 relating to non-financial assets and liabilities measured at fair value on a non-recurring basis until fiscal years beginning after november 15 , 2008 .
the adoption of sfas no .

the adoption of sfas no .
157 is not expected to have a material impact on our consolidated financial statements or results of operations .
in february 2007 , the fasb issued sfas no .
159 , 201cthe fair value option for financial assets and financial liabilities 2013 including an amendment of fasb statement no .
115 201d ( sfas no .
159 ) .
sfas no .

115 201d ( sfas no .
159 ) .
sfas no .
159 creates a 201cfair value option 201d under which an entity may elect to record certain financial assets or liabilities at fair value upon their initial recognition .
subsequent changes in fair value would be recognized in earnings as those changes occur .
the election of the fair value option would be made on a contract-by-contract basis and would need to be supported by concurrent documentation or a preexisting documented policy .
sfas no .

sfas no .
159 requires an entity to separately disclose the fair z i m m e r h o l d i n g s , i n c .
2 0 0 7 f o r m 1 0 - k a n n u a l r e p o r t notes to consolidated financial statements ( continued )

 |
| table | | balance at december 31 2006 | other comprehensive income ( loss ) | balance at december 31 2007
----------------------------------------------------------------------------------------- | --------------------------- | ----------------------------------- | ---------------------------
foreign currency translation                                                              | $ 267.7                     | $ 101.1                             | $ 368.8
foreign currency hedges                                                                   | -22.6 ( 22.6 )              | -22.8 ( 22.8 )                      | -45.4 ( 45.4 )
unrealized gains ( losses ) on securities                                                 | -0.5 ( 0.5 )                | -1.4 ( 1.4 )                        | -1.9 ( 1.9 )
unrecognized prior service cost and unrecognized ( gain ) / loss in actuarial assumptions | -35.4 ( 35.4 )              | 4.2                                 | -31.2 ( 31.2 )
accumulated other comprehensive income                                                    | $ 209.2                     | $ 81.1                              | $ 290.3 |


| _id | dd4bf49c2 |
| title |  |
| text | 2022 selling costs increased $ 25.0 million to $ 94.6 million in 2010 from $ 69.6 million in 2009 .
this increase was primarily due to higher personnel and other costs incurred for the continued expansion of our direct to consumer distribution channel and higher selling personnel costs , including increased expenses for our performance incentive plan as compared to the prior year .

as a percentage of net revenues , selling costs increased to 8.9% ( 8.9 % ) in 2010 from 8.1% ( 8.1 % ) in 2009 primarily due to higher personnel and other costs incurred for the continued expansion of our factory house stores .

2022 product innovation and supply chain costs increased $ 25.0 million to $ 96.8 million in 2010 from $ 71.8 million in 2009 primarily due to higher personnel costs for the design and sourcing of our expanding apparel , footwear and accessories lines and higher distribution facilities operating and personnel costs as compared to the prior year to support our growth in net revenues .
in addition , we incurred higher expenses for our performance incentive plan as compared to the prior year .

as a percentage of net revenues , product innovation and supply chain costs increased to 9.1% ( 9.1 % ) in 2010 from 8.4% ( 8.4 % ) in 2009 primarily due to the items noted above .
2022 corporate services costs increased $ 24.0 million to $ 98.6 million in 2010 from $ 74.6 million in 2009 .

this increase was attributable primarily to higher corporate facility costs , information technology initiatives and corporate personnel costs , including increased expenses for our performance incentive plan as compared to the prior year .
as a percentage of net revenues , corporate services costs increased to 9.3% ( 9.3 % ) in 2010 from 8.7% ( 8.7 % ) in 2009 primarily due to the items noted above .

income from operations increased $ 27.1 million , or 31.8% ( 31.8 % ) , to $ 112.4 million in 2010 from $ 85.3 million in 2009 .
income from operations as a percentage of net revenues increased to 10.6% ( 10.6 % ) in 2010 from 10.0% ( 10.0 % ) in 2009 .
this increase was a result of the items discussed above .
interest expense , net remained unchanged at $ 2.3 million in 2010 and 2009 .
other expense , net increased $ 0.7 million to $ 1.2 million in 2010 from $ 0.5 million in 2009 .

the increase in 2010 was due to higher net losses on the combined foreign currency exchange rate changes on transactions denominated in the euro and canadian dollar and our derivative financial instruments as compared to 2009 .
provision for income taxes increased $ 4.8 million to $ 40.4 million in 2010 from $ 35.6 million in 2009 .

our effective tax rate was 37.1% ( 37.1 % ) in 2010 compared to 43.2% ( 43.2 % ) in 2009 , primarily due to tax planning strategies and federal and state tax credits reducing the effective tax rate , partially offset by a valuation allowance recorded against our foreign net operating loss carryforward .
segment results of operations year ended december 31 , 2011 compared to year ended december 31 , 2010 net revenues by geographic region are summarized below: .

net revenues in our north american operating segment increased $ 385.5 million to $ 1383.3 million in 2011 from $ 997.8 million in 2010 primarily due to the items discussed above in the consolidated results of operations .
net revenues in other foreign countries increased by $ 23.2 million to $ 89.3 million in 2011 from $ 66.1 million in 2010 primarily due to footwear shipments to our dome licensee , as well as unit sales growth to our distributors in our latin american operating segment.

 |
| table | ( in thousands )        | year ended december 31 , 2011 | year ended december 31 , 2010 | year ended december 31 , $ change | year ended december 31 , % (  % ) change
----------------------- | ----------------------------- | ----------------------------- | --------------------------------- | ----------------------------------------
north america           | $ 1383346                     | $ 997816                      | $ 385530                          | 38.6% ( 38.6 % )
other foreign countries | 89338                         | 66111                         | 23227                             | 35.1
total net revenues      | $ 1472684                     | $ 1063927                     | $ 408757                          | 38.4% ( 38.4 % ) |


| _id | dd4bd05a4 |
| title |  |
| text | contractual obligations in 2011 , we issued $ 1200 million of senior notes and entered into the credit facility with third-party lenders in the amount of $ 1225 million .
as of december 31 , 2011 , total outstanding long-term debt was $ 1859 million , consisting of these senior notes and the credit facility , in addition to $ 105 million of third party debt that remained outstanding subsequent to the spin-off .

in connection with the spin-off , we entered into a transition services agreement with northrop grumman , under which northrop grumman or certain of its subsidiaries provides us with certain services to help ensure an orderly transition following the distribution .

under the transition services agreement , northrop grumman provides , for up to 12 months following the spin-off , certain enterprise shared services ( including information technology , resource planning , financial , procurement and human resource services ) , benefits support services and other specified services .

the original term of the transition services agreement ends on march 31 , 2012 , although we have the right to and have cancelled certain services as we transition to new third-party providers .
the services provided by northrop grumman are charged to us at cost , and a limited number of these services may be extended for a period of approximately six months to allow full information systems transition .
see note 20 : related party transactions and former parent company equity in item 8 .

in connection with the spin-off , we entered into a tax matters agreement with northrop grumman ( the 201ctax matters agreement 201d ) that governs the respective rights , responsibilities and obligations of northrop grumman and us after the spin-off with respect to tax liabilities and benefits , tax attributes , tax contests and other tax sharing regarding u.s .
federal , state , local and foreign income taxes , other taxes and related tax returns .

we have several liabilities with northrop grumman to the irs for the consolidated u.s .
federal income taxes of the northrop grumman consolidated group relating to the taxable periods in which we were part of that group .
however , the tax matters agreement specifies the portion of this tax liability for which we will bear responsibility , and northrop grumman has agreed to indemnify us against any amounts for which we are not responsible .

the tax matters agreement also provides special rules for allocating tax liabilities in the event that the spin-off , together with certain related transactions , is not tax-free .
see note 20 : related party transactions and former parent company equity in item 8 .
we do not expect either the transition services agreement or the tax matters agreement to have a significant impact on our financial condition and results of operations .

the following table presents our contractual obligations as of december 31 , 2011 , and the related estimated timing of future cash payments : ( $ in millions ) total 2012 2013 - 2014 2015 - 2016 2017 and beyond .

( 1 ) interest payments include interest on $ 554 million of variable interest rate debt calculated based on interest rates at december 31 , 2011 .
( 2 ) a 201cpurchase obligation 201d is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms , including : fixed or minimum quantities to be purchased ; fixed , minimum , or variable price provisions ; and the approximate timing of the transaction .

these amounts are primarily comprised of open purchase order commitments to vendors and subcontractors pertaining to funded contracts .
( 3 ) other long-term liabilities primarily consist of total accrued workers 2019 compensation reserves , deferred compensation , and other miscellaneous liabilities , of which $ 201 million is the current portion of workers 2019 compensation liabilities .

it excludes obligations for uncertain tax positions of $ 9 million , as the timing of the payments , if any , cannot be reasonably estimated .
the above table excludes retirement related contributions .
in 2012 , we expect to make minimum and discretionary contributions to our qualified pension plans of approximately $ 153 million and $ 65 million , respectively , exclusive of any u.s .
government recoveries .

government recoveries .
we will continue to periodically evaluate whether to make additional discretionary contributions .
in 2012 , we expect to make $ 35 million in contributions for our other postretirement plans , exclusive of any

 |
| table | ( $ in millions )                         | total  | 2012   | 2013 - 2014 | 2015 - 2016 | 2017 and beyond
----------------------------------------- | ------ | ------ | ----------- | ----------- | ---------------
long-term debt                            | $ 1859 | $ 29   | $ 129       | $ 396       | $ 1305
interest payments on long-term debt ( 1 ) | 854    | 112    | 219         | 202         | 321
operating leases                          | 124    | 21     | 32          | 23          | 48
purchase obligations ( 2 )                | 2425   | 1409   | 763         | 209         | 44
other long-term liabilities ( 3 )         | 587    | 66     | 96          | 67          | 358
total contractual obligations             | $ 5849 | $ 1637 | $ 1239      | $ 897       | $ 2076 |


| _id | dd4c25234 |
| title |  |
| text | in september 2006 , the fasb issued sfas no .
158 , 201cemployers 2019 accounting for defined benefit pension and other postretirement plans , an amendment of fasb statements no .
87 , 88 , 106 and 132 ( r ) . 201d this standard eliminated the requirement for a 201cminimum pension liability adjustment 201d that was previously required under sfas no .

87 and required employers to recognize the underfunded or overfunded status of a defined benefit plan as an asset or liability in its statement of financial position .
in 2006 , as a result of the implementation of sfas no .
158 , the company recognized an after-tax decrease in accumulated other comprehensive income of $ 1.187 billion and $ 513 million for the u.s .

and international pension benefit plans , respectively , and $ 218 million for the postretirement health care and life insurance benefit plan .
see note 11 for additional detail .
reclassification adjustments are made to avoid double counting in comprehensive income items that are also recorded as part of net income .

in 2007 , as disclosed in the net periodic benefit cost table in note 11 , $ 198 million pre-tax ( $ 123 million after-tax ) were reclassified to earnings from accumulated other comprehensive income to pension and postretirement expense in the income statement .
these pension and postretirement expense amounts are shown in the table in note 11 as amortization of transition ( asset ) obligation , amortization of prior service cost ( benefit ) and amortization of net actuarial ( gain ) loss .

other reclassification adjustments ( except for cash flow hedging instruments adjustments provided in note 12 ) were not material .
no tax provision has been made for the translation of foreign currency financial statements into u.s .
dollars .
note 7 .
supplemental cash flow information .

individual amounts in the consolidated statement of cash flows exclude the impacts of acquisitions , divestitures and exchange rate impacts , which are presented separately .
201cother 2013 net 201d in the consolidated statement of cash flows within operating activities in 2007 and 2006 includes changes in liabilities related to 3m 2019s restructuring actions ( note 4 ) and in 2005 includes the non-cash impact of adopting fin 47 ( $ 35 million cumulative effect of accounting change ) .

transactions related to investing and financing activities with significant non-cash components are as follows : in 2007 , 3m purchased certain assets of diamond productions , inc .
for approximately 150 thousand shares of 3m common stock , which has a market value of approximately $ 13 million at the acquisition 2019s measurement date .
liabilities assumed from acquisitions are provided in the tables in note 2.

 |
| table | ( millions )             | 2007   | 2006   | 2005
------------------------ | ------ | ------ | ------
cash income tax payments | $ 1999 | $ 1842 | $ 1277
cash interest payments   | 162    | 119    | 79
capitalized interest     | 25     | 16     | 12 |


| _id | dd4b917dc |
| title |  |
| text | performance graph the performance graph below shows the five-year cumulative total stockholder return on applied common stock during the period from october 28 , 2012 through october 29 , 2017 .
this is compared with the cumulative total return of the standard & poor 2019s 500 stock index and the rdg semiconductor composite index over the same period .

the comparison assumes $ 100 was invested on october 28 , 2012 in applied common stock and in each of the foregoing indices and assumes reinvestment of dividends , if any .
dollar amounts in the graph are rounded to the nearest whole dollar .
the performance shown in the graph represents past performance and should not be considered an indication of future performance .

comparison of 5 year cumulative total return* among applied materials , inc. , the s&p 500 index and the rdg semiconductor composite index *assumes $ 100 invested on 10/28/12 in stock or 10/31/12 in index , including reinvestment of dividends .
indexes calculated on month-end basis .
copyright a9 2017 standard & poor 2019s , a division of s&p global .
all rights reserved. .

dividends during each of fiscal 2017 , 2016 and 2015 , applied 2019s board of directors declared four quarterly cash dividends in the amount of $ 0.10 per share .

applied currently anticipates that cash dividends will continue to be paid on a quarterly basis , although the declaration of any future cash dividend is at the discretion of the board of directors and will depend on applied 2019s financial condition , results of operations , capital requirements , business conditions and other factors , as well as a determination by the board of directors that cash dividends are in the best interests of applied 2019s stockholders .

10/28/12 10/27/13 10/26/14 10/25/15 10/30/16 10/29/17 applied materials , inc .
s&p 500 rdg semiconductor composite

 |
| table | | 10/28/2012 | 10/27/2013 | 10/26/2014 | 10/25/2015 | 10/30/2016 | 10/29/2017
--------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
applied materials                 | 100.00     | 171.03     | 207.01     | 165.34     | 293.64     | 586.91
s&p 500 index                     | 100.00     | 127.18     | 149.14     | 156.89     | 163.97     | 202.72
rdg semiconductor composite index | 100.00     | 131.94     | 167.25     | 160.80     | 193.36     | 288.96 |


| _id | dd4bc0dd4 |
| title |  |
| text | levels during 2008 , an indication that efforts to improve network operations translated into better customer service .
2022 fuel prices 2013 crude oil prices increased at a steady rate through the first seven months of 2008 , closing at a record high of $ 145.29 a barrel in early july .
as the economy worsened during the third and fourth quarters , fuel prices dropped dramatically , hitting $ 33.87 per barrel in december , a near five-year low .

despite these price declines toward the end of the year , our 2008 average fuel price increased by 39% ( 39 % ) and added $ 1.1 billion of operating expenses compared to 2007 .
our fuel surcharge programs helped offset the impact of higher fuel prices .
in addition , we reduced our consumption rate by 4% ( 4 % ) , saving approximately 58 million gallons of fuel during the year .

the use of newer , more fuel efficient locomotives ; our fuel conservation programs ; improved network operations ; and a shift in commodity mix , primarily due to growth in bulk shipments , contributed to the improvement .
2022 free cash flow 2013 cash generated by operating activities totaled a record $ 4.1 billion , yielding free cash flow of $ 825 million in 2008 .
free cash flow is defined as cash provided by operating activities , less cash used in investing activities and dividends paid .

free cash flow is not considered a financial measure under accounting principles generally accepted in the united states ( gaap ) by sec regulation g and item 10 of sec regulation s-k .
we believe free cash flow is important in evaluating our financial performance and measures our ability to generate cash without additional external financings .
free cash flow should be considered in addition to , rather than as a substitute for , cash provided by operating activities .

the following table reconciles cash provided by operating activities ( gaap measure ) to free cash flow ( non-gaap measure ) : millions of dollars 2008 2007 2006 .

2009 outlook 2022 safety 2013 operating a safe railroad benefits our employees , our customers , our shareholders , and the public .
we will continue using a multi-faceted approach to safety , utilizing technology , risk assessment , quality control , and training and engaging our employees .
we plan to continue implementation of total safety culture ( tsc ) throughout our operations .

tsc , an employee-focused initiative that has helped improve safety , is a process designed to establish , maintain , and promote safety among co-workers .
with respect to public safety , we will continue our efforts to maintain , upgrade , and close crossings , install video cameras on locomotives , and educate the public about crossing safety through various railroad and industry programs , along with other activities .

2022 transportation plan 2013 in 2009 , we will continue to evaluate traffic flows and network logistic patterns to identify additional opportunities to simplify operations and improve network efficiency and asset utilization .
we plan to maintain adequate manpower and locomotives , and improve productivity using industrial engineering techniques .
2022 fuel prices 2013 on average , we expect fuel prices to decrease substantially from the average price we paid in 2008 .

however , due to economic uncertainty , other global pressures , and weather incidents , fuel prices again could be volatile during the year .
to reduce the impact of fuel price on earnings , we

 |
| table | millions of dollars                   | 2008           | 2007           | 2006
------------------------------------- | -------------- | -------------- | --------------
cash provided by operating activities | $ 4070         | $ 3277         | $ 2880
cash used in investing activities     | -2764 ( 2764 ) | -2426 ( 2426 ) | -2042 ( 2042 )
dividends paid                        | -481 ( 481 )   | -364 ( 364 )   | -322 ( 322 )
free cash flow                        | $ 825          | $ 487          | $ 516 |


| _id | dd4c31dd6 |
| title |  |
| text | the following is a summary of our floor space by business segment at december 31 , 2010 : ( square feet in millions ) owned leased government- owned total .

some of our owned properties , primarily classified under corporate activities , are leased to third parties .
in the area of manufacturing , most of the operations are of a job-order nature , rather than an assembly line process , and productive equipment has multiple uses for multiple products .
management believes that all of our major physical facilities are in good condition and are adequate for their intended use .
item 3 .

item 3 .
legal proceedings we are a party to or have property subject to litigation and other proceedings , including matters arising under provisions relating to the protection of the environment .
we believe the probability is remote that the outcome of these matters will have a material adverse effect on the corporation as a whole , notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings in any particular quarter .

we cannot predict the outcome of legal proceedings with certainty .
these matters include the proceedings summarized in note 14 2013 legal proceedings , commitments , and contingencies beginning on page 78 of this form 10-k .
from time-to-time , agencies of the u.s .
government investigate whether our operations are being conducted in accordance with applicable regulatory requirements .
u.s .

u.s .
government investigations of us , whether relating to government contracts or conducted for other reasons , could result in administrative , civil , or criminal liabilities , including repayments , fines , or penalties being imposed upon us , or could lead to suspension or debarment from future u.s .
government contracting .
u.s .
government investigations often take years to complete and many result in no adverse action against us .

we are subject to federal and state requirements for protection of the environment , including those for discharge of hazardous materials and remediation of contaminated sites .
as a result , we are a party to or have our property subject to various lawsuits or proceedings involving environmental protection matters .
due in part to their complexity and pervasiveness , such requirements have resulted in us being involved with related legal proceedings , claims , and remediation obligations .

the extent of our financial exposure cannot in all cases be reasonably estimated at this time .

for information regarding these matters , including current estimates of the amounts that we believe are required for remediation or clean-up to the extent estimable , see 201ccritical accounting policies 2013 environmental matters 201d in management 2019s discussion and analysis of financial condition and results of operations beginning on page 45 , and note 14 2013 legal proceedings , commitments , and contingencies beginning on page 78 of this form 10-k .
item 4 .
( removed and reserved ) item 4 ( a ) .

item 4 .
( removed and reserved ) item 4 ( a ) .
executive officers of the registrant our executive officers are listed below , as well as information concerning their age at december 31 , 2010 , positions and offices held with the corporation , and principal occupation and business experience over the past five years .
there were no family relationships among any of our executive officers and directors .
all officers serve at the pleasure of the board of directors .
linda r .

linda r .
gooden ( 57 ) , executive vice president 2013 information systems & global solutions ms .
gooden has served as executive vice president 2013 information systems & global solutions since january 2007 .
she previously served as deputy executive vice president 2013 information & technology services from october 2006 to december 2006 , and president , lockheed martin information technology from september 1997 to december 2006 .
christopher j .

christopher j .
gregoire ( 42 ) , vice president and controller ( chief accounting officer ) mr .
gregoire has served as vice president and controller ( chief accounting officer ) since march 2010 .
he previously was employed by sprint nextel corporation from august 2006 to may 2009 , most recently as principal accounting officer and assistant controller , and was a partner at deloitte & touche llp from september 2003 to july 2006.

 |
| table | ( square feet in millions )            | owned | leased | government-owned | total
-------------------------------------- | ----- | ------ | ---------------- | -----
aeronautics                            | 5.2   | 3.7    | 15.2             | 24.1
electronic systems                     | 10.3  | 11.5   | 7.1              | 28.9
information systems & global solutions | 2.6   | 7.9    | 2014             | 10.5
space systems                          | 8.6   | 1.6    | .9               | 11.1
corporate activities                   | 2.9   | .8     | 2014             | 3.7
total                                  | 29.6  | 25.5   | 23.2             | 78.3 |


| _id | dd4c32ede |
| title |  |
| text | notes to five year summary ( a ) includes the effects of items not considered in the assessment of the operating performance of our business segments ( see the section , 201cresults of operations 2013 unallocated corporate ( expense ) income , net 201d in management 2019s discussion and analysis of financial condition and results of operations ( md&a ) ) which , on a combined basis , increased earnings from continuing operations before income taxes by $ 214 million , $ 139 million after tax ( $ 0.31 per

million , $ 139 million after tax ( $ 0.31 per share ) .

also includes a reduction in income tax expense of $ 62 million ( $ 0.14 per share ) resulting from a tax benefit related to claims we filed for additional extraterritorial income exclusion ( eti ) tax benefits .
these items increased earnings by $ 201 million after tax ( $ 0.45 per share ) .

( b ) includes the effects of items not considered in the assessment of the operating performance of our business segments ( see the section , 201cresults of operations 2013 unallocated corporate ( expense ) income , net 201d in md&a ) which , on a combined basis , increased earnings from continuing operations before income taxes by $ 173 million , $ 113 million after tax ( $ 0.25 per share ) .

( c ) includes the effects of items not considered in the assessment of the operating performance of our business segments ( see the section , 201cresults of operations 2013 unallocated corporate ( expense ) income , net 201d in md&a ) which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 215 million , $ 154 million after tax ( $ 0.34 per share ) .

also includes a reduction in income tax expense resulting from the closure of an internal revenue service examination of $ 144 million ( $ 0.32 per share ) .
these items reduced earnings by $ 10 million after tax ( $ 0.02 per share ) .

( d ) includes the effects of items not considered in the assessment of the operating performance of our business segments which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 153 million , $ 102 million after tax ( $ 0.22 per share ) .

( e ) includes the effects of items not considered in the assessment of the operating performance of our business segments which , on a combined basis , decreased earnings from continuing operations before income taxes by $ 1112 million , $ 632 million after tax ( $ 1.40 per share ) .

( f ) we define return on invested capital ( roic ) as net earnings plus after-tax interest expense divided by average invested capital ( stockholders 2019 equity plus debt ) , after adjusting stockholders 2019 equity by adding back adjustments related to postretirement benefit plans .
we believe that reporting roic provides investors with greater visibility into how effectively we use the capital invested in our operations .

we use roic to evaluate multi-year investment decisions and as a long-term performance measure , and also use it as a factor in evaluating management performance under certain of our incentive compensation plans .
roic is not a measure of financial performance under gaap , and may not be defined and calculated by other companies in the same manner .
roic should not be considered in isolation or as an alternative to net earnings as an indicator of performance .

we calculate roic as follows : ( in millions ) 2006 2005 2004 2003 2002 .

1 represents after-tax interest expense utilizing the federal statutory rate of 35% ( 35 % ) .
2 debt consists of long-term debt , including current maturities , and short-term borrowings ( if any ) .
3 equity includes non-cash adjustments , primarily for the additional minimum pension liability in all years and the adoption of fas 158 in 2006 .

4 average benefit plan adjustments reflect the cumulative value of entries identified in our statement of stockholders equity under the captions 201cadjustment for adoption of fas 158 201d and 201cminimum pension liability . 201d the annual benefit plan adjustments to equity were : 2006 = ( $ 1883 ) million ; 2005 = ( $ 105 ) million ; 2004 = ( $ 285 ) million ; 2003 = $ 331 million ; and 2002 = ( $ 1537 ) million .

as these entries are recorded in the fourth quarter , the value added back to our average equity in a given year is the cumulative impact of all prior year entries plus 20% ( 20 % ) of the current year entry value .
5 yearly averages are calculated using balances at the start of the year and at the end of each quarter.

 |
| table | ( in millions )                                   | 2006             | 2005             | 2004             | 2003           | 2002
------------------------------------------------- | ---------------- | ---------------- | ---------------- | -------------- | --------------
net earnings                                      | $ 2529           | $ 1825           | $ 1266           | $ 1053         | $ 500
interest expense ( multiplied by 65% ( 65 % ) ) 1 | 235              | 241              | 276              | 317            | 378
return                                            | $ 2764           | $ 2066           | $ 1542           | $ 1370         | $ 878
average debt2 5                                   | $ 4727           | $ 5077           | $ 5932           | $ 6612         | $ 7491
average equity3 5                                 | 7686             | 7590             | 7015             | 6170           | 6853
average benefit plan adjustments3 45              | 2006             | 1545             | 1296             | 1504           | 341
average invested capital                          | $ 14419          | $ 14212          | $ 14243          | $ 14286        | $ 14685
return on invested capital                        | 19.2% ( 19.2 % ) | 14.5% ( 14.5 % ) | 10.8% ( 10.8 % ) | 9.6% ( 9.6 % ) | 6.0% ( 6.0 % ) |


| _id | dd4bc1504 |
| title |  |
| text | the following table sets forth our refined products sales by product group and our average sales price for each of the last three years .
refined product sales ( thousands of barrels per day ) 2009 2008 2007 .

we sell gasoline , gasoline blendstocks and no .
1 and no .
2 fuel oils ( including kerosene , jet fuel and diesel fuel ) to wholesale marketing customers in the midwest , upper great plains , gulf coast and southeastern regions of the united states .
we sold 51 percent of our gasoline volumes and 87 percent of our distillates volumes on a wholesale or spot market basis in 2009 .

the demand for gasoline is seasonal in many of our markets , with demand typically being at its highest levels during the summer months .
we have blended ethanol into gasoline for over 20 years and began expanding our blending program in 2007 , in part due to federal regulations that require us to use specified volumes of renewable fuels .
ethanol volumes sold in blended gasoline were 60 mbpd in 2009 , 54 mbpd in 2008 and 40 mbpd in 2007 .

the future expansion or contraction of our ethanol blending program will be driven by the economics of the ethanol supply and by government regulations .
we sell reformulated gasoline , which is also blended with ethanol , in parts of our marketing territory , including : chicago , illinois ; louisville , kentucky ; northern kentucky ; milwaukee , wisconsin , and hartford , illinois .
we also sell biodiesel-blended diesel in minnesota , illinois and kentucky .

we produce propane at all seven of our refineries .
propane is primarily used for home heating and cooking , as a feedstock within the petrochemical industry , for grain drying and as a fuel for trucks and other vehicles .
our propane sales are typically split evenly between the home heating market and industrial consumers .
we are a producer and marketer of petrochemicals and specialty products .

product availability varies by refinery and includes benzene , cumene , dilute naphthalene oil , molten maleic anhydride , molten sulfur , propylene , toluene and xylene .
we market propylene , cumene and sulfur domestically to customers in the chemical industry .
we sell maleic anhydride throughout the united states and canada .

we also have the capacity to produce 1400 tons per day of anode grade coke at our robinson refinery , which is used to make carbon anodes for the aluminum smelting industry , and 5500 tons per day of fuel grade coke at the garyville refinery , which is used for power generation and in miscellaneous industrial applications .
in early 2009 , we discontinued production and sales of petroleum pitch and aliphatic solvents at our catlettsburg refinery .

we produce and market heavy residual fuel oil or related components at all seven of our refineries .
another product of crude oil , heavy residual fuel oil , is primarily used in the utility and ship bunkering ( fuel ) industries , though there are other more specialized uses of the product .
we have refinery based asphalt production capacity of up to 108 mbpd .
we market asphalt through 33 owned or leased terminals throughout the midwest and southeast .

we have a broad customer base , including approximately 675 asphalt-paving contractors , government entities ( states , counties , cities and townships ) and asphalt roofing shingle manufacturers .
we sell asphalt in the wholesale and cargo markets via rail and barge .
we also produce asphalt cements , polymer modified asphalt , emulsified asphalt and industrial asphalts .

in 2007 , we acquired a 35 percent interest in an entity which owns and operates a 110-million-gallon-per-year ethanol production facility in clymers , indiana .
we also own a 50 percent interest in an entity which owns a 110-million-gallon-per-year ethanol production facility in greenville , ohio .
the greenville plant began production in february 2008 .
both of these facilities are managed by a co-owner.

 |
| table | ( thousands of barrels per day )           | 2009    | 2008     | 2007
------------------------------------------ | ------- | -------- | -------
gasoline                                   | 830     | 756      | 791
distillates                                | 357     | 375      | 377
propane                                    | 23      | 22       | 23
feedstocks and special products            | 75      | 100      | 103
heavy fuel oil                             | 24      | 23       | 29
asphalt                                    | 69      | 76       | 87
total                                      | 1378    | 1352     | 1410
average sales price ( dollars per barrel ) | $ 70.86 | $ 109.49 | $ 86.53 |


| _id | dd497aec6 |
| title |  |
| text | 38 2013 ppg annual report and form 10-k notes to the consolidated financial statements 1 .
summary of significant accounting policies principles of consolidation the accompanying consolidated financial statements include the accounts of ppg industries , inc .
( 201cppg 201d or the 201ccompany 201d ) and all subsidiaries , both u.s .
and non-u.s. , that it controls .
ppg owns more than 50% ( 50 % ) of the voting stock of most of the subsidiaries that it controls .

for those consolidated subsidiaries in which the company 2019s ownership is less than 100% ( 100 % ) , the outside shareholders 2019 interests are shown as noncontrolling interests .
investments in companies in which ppg owns 20% ( 20 % ) to 50% ( 50 % ) of the voting stock and has the ability to exercise significant influence over operating and financial policies of the investee are accounted for using the equity method of accounting .

as a result , ppg 2019s share of the earnings or losses of such equity affiliates is included in the accompanying consolidated statement of income and ppg 2019s share of these companies 2019 shareholders 2019 equity is included in "investments" in the accompanying consolidated balance sheet .
transactions between ppg and its subsidiaries are eliminated in consolidation .
use of estimates in the preparation of financial statements the preparation of financial statements in conformity with u.s .

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported amounts of income and expenses during the reporting period .
such estimates also include the fair value of assets acquired and liabilities assumed as a result of allocations of purchase price of business combinations consummated .

actual outcomes could differ from those estimates .
revenue recognition the company recognizes revenue when the earnings process is complete .
revenue from sales is recognized by all operating segments when goods are shipped and title to inventory and risk of loss passes to the customer or when services have been rendered .
shipping and handling costs amounts billed to customers for shipping and handling are reported in 201cnet sales 201d in the accompanying consolidated statement of income .

shipping and handling costs incurred by the company for the delivery of goods to customers are included in 201ccost of sales , exclusive of depreciation and amortization 201d in the accompanying consolidated statement of income .

selling , general and administrative costs amounts presented as 201cselling , general and administrative 201d in the accompanying consolidated statement of income are comprised of selling , customer service , distribution and advertising costs , as well as the costs of providing corporate- wide functional support in such areas as finance , law , human resources and planning .

distribution costs pertain to the movement and storage of finished goods inventory at company- owned and leased warehouses , terminals and other distribution facilities .
advertising costs advertising costs are expensed in the year incurred and totaled $ 345 million , $ 288 million and $ 245 million in 2013 , 2012 and 2011 , respectively .
research and development research and development costs , which consist primarily of employee related costs , are charged to expense as incurred .

the following are the research and development costs for the years ended december 31: .

legal costs legal costs are expensed as incurred .
legal costs incurred by ppg include legal costs associated with acquisition and divestiture transactions , general litigation , environmental regulation compliance , patent and trademark protection and other general corporate purposes .
foreign currency translation the functional currency of most significant non-u.s .
operations is their local currency .
assets and liabilities of those operations are translated into u.s .

dollars using year-end exchange rates ; income and expenses are translated using the average exchange rates for the reporting period .
unrealized foreign currency translation adjustments are deferred in accumulated other comprehensive loss , a separate component of shareholders 2019 equity .
cash equivalents cash equivalents are highly liquid investments ( valued at cost , which approximates fair value ) acquired with an original maturity of three months or less .

short-term investments short-term investments are highly liquid , high credit quality investments ( valued at cost plus accrued interest ) that have stated maturities of greater than three months to one year .
the purchases and sales of these investments are classified as investing activities in the consolidated statement of cash flows .

marketable equity securities the company 2019s investment in marketable equity securities is recorded at fair market value and reported in 201cother current assets 201d and 201cinvestments 201d in the accompanying consolidated balance sheet with changes in fair market value recorded in income for those securities designated as trading securities and in other comprehensive income , net of tax , for those designated as available for sale securities.

 |
| table | ( millions )                             | 2013  | 2012  | 2011
---------------------------------------- | ----- | ----- | -----
research and development 2013 total      | $ 505 | $ 468 | $ 443
less depreciation on research facilities | 17    | 15    | 15
research and development net             | $ 488 | $ 453 | $ 428 |


| _id | dd4b8a7fc |
| title |  |
| text | adobe systems incorporated notes to consolidated financial statements ( continued ) note 8 .
other assets other assets as of november 27 , 2009 and november 28 , 2008 consisted of the following ( in thousands ) : .

acquired rights to use technology purchased during fiscal 2009 and fiscal 2008 was $ 6.0 million and $ 100.4 million , respectively .
of the cost for fiscal 2008 , an estimated $ 56.4 million was related to future licensing rights and has been capitalized and is being amortized on a straight-line basis over the estimated useful lives up to fifteen years .

of the remaining costs for fiscal 2008 , we estimated that $ 27.2 million was related to historical use of licensing rights which was expensed as cost of sales and the residual of $ 16.8 million for fiscal 2008 was expensed as general and administrative costs .
in connection with these licensing arrangements , we have the ability to acquire additional rights to use technology in the future .
see note 17 for further information regarding our contractual commitments .

in general , acquired rights to use technology are amortized over their estimated useful lives of 3 to 15 years .
included in investments are our indirect investments through our limited partnership interest in adobe ventures of approximately $ 37.1 million and $ 39.0 million as of november 27 , 2009 and november 28 , 2008 , respectively , which is consolidated in accordance with the provisions for consolidating variable interest entities .

the partnership is controlled by granite ventures , an independent venture capital firm and sole general partner of adobe ventures .
we are the primary beneficiary of adobe ventures and bear virtually all of the risks and rewards related to our ownership .
our investment in adobe ventures does not have a significant impact on our consolidated financial position , results of operations or cash flows .

adobe ventures carries its investments in equity securities at estimated fair value and investment gains and losses are included in our consolidated statements of income .
substantially all of the investments held by adobe ventures at november 27 , 2009 and november 28 , 2008 are not publicly traded and , therefore , there is no established market for these securities .

in order to determine the fair value of these investments , we use the most recent round of financing involving new non-strategic investors or estimates of current market value made by granite ventures .
it is our policy to evaluate the fair value of these investments held by adobe ventures , as well as our direct investments , on a regular basis .

this evaluation includes , but is not limited to , reviewing each company 2019s cash position , financing needs , earnings and revenue outlook , operational performance , management and ownership changes and competition .
in the case of privately-held companies , this evaluation is based on information that we request from these companies .
this information is not subject to the same disclosure regulations as u.s .

publicly traded companies and as such , the basis for these evaluations is subject to the timing and the accuracy of the data received from these companies .
see note 4 for further information regarding adobe ventures .
also included in investments are our direct investments in privately-held companies of approximately $ 26.4 million and $ 37.6 million as of november 27 , 2009 and november 28 , 2008 , respectively , which are accounted for based on the cost method .

we assess these investments for impairment in value as circumstances dictate .
see note 4 for further information regarding our cost method investments .
we entered into a purchase and sale agreement , effective may 12 , 2008 , for the acquisition of real property located in waltham , massachusetts .
we purchased the property upon completion of construction of an office building shell and core , parking structure , and site improvements .

the purchase price for the property was $ 44.7 million and closed on june 16 , 2009 .
we made an initial deposit of $ 7.0 million which was included in security and other deposits as of november 28 , 2008 and the remaining balance was paid at closing .
this deposit was held in escrow until closing and then applied to the purchase price.

 |
| table | | 2009     | 2008
--------------------------------- | -------- | --------
acquired rights to use technology | $ 84313  | $ 90643
investments                       | 63526    | 76589
security and other deposits       | 11692    | 16087
prepaid royalties                 | 12059    | 9026
deferred compensation plan assets | 9045     | 7560
restricted cash                   | 4650     | 7361
prepaid land lease                | 3209     | 3185
prepaid rent                      | 1377     | 2658
other                             | 1394     | 3420
other assets                      | $ 191265 | $ 216529 |


| _id | dd4bf03ea |
| title |  |
| text | the company has a restricted stock plan for non-employee directors which reserves for issuance of 300000 shares of the company 2019s common stock .
no restricted shares were issued in 2009 .
the company has a directors 2019 deferral plan , which provides a means to defer director compensation , from time to time , on a deferred stock or cash basis .

as of september 30 , 2009 , 86643 shares were held in trust , of which 4356 shares represented directors 2019 compensation in 2009 , in accordance with the provisions of the plan .
under this plan , which is unfunded , directors have an unsecured contractual commitment from the company .
the company also has a deferred compensation plan that allows certain highly-compensated employees , including executive officers , to defer salary , annual incentive awards and certain equity-based compensation .

as of september 30 , 2009 , 557235 shares were issuable under this plan .
note 16 2014 earnings per share the weighted average common shares used in the computations of basic and diluted earnings per share ( shares in thousands ) for the years ended september 30 were as follows: .

average common and common equivalent shares outstanding 2014 assuming dilution .
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246798 252681 254810 note 17 2014 segment data the company 2019s organizational structure is based upon its three principal business segments : bd medical ( 201cmedical 201d ) , bd diagnostics ( 201cdiagnostics 201d ) and bd biosciences ( 201cbiosciences 201d ) .

the principal product lines in the medical segment include needles , syringes and intravenous catheters for medication delivery ; safety-engineered and auto-disable devices ; prefilled iv flush syringes ; syringes and pen needles for the self-injection of insulin and other drugs used in the treatment of diabetes ; prefillable drug delivery devices provided to pharmaceutical companies and sold to end-users as drug/device combinations ; surgical blades/scalpels and regional anesthesia needles and trays ;

and regional anesthesia needles and trays ; critical care monitoring devices ; ophthalmic surgical instruments ; and sharps disposal containers .

the principal products and services in the diagnostics segment include integrated systems for specimen collection ; an extensive line of safety-engineered specimen blood collection products and systems ; plated media ; automated blood culturing systems ; molecular testing systems for sexually transmitted diseases and healthcare-associated infections ; microorganism identification and drug susceptibility systems ; liquid-based cytology systems for cervical cancer screening ; and rapid diagnostic assays .

the principal product lines in the biosciences segment include fluorescence activated cell sorters and analyzers ; cell imaging systems ; monoclonal antibodies and kits for performing cell analysis ; reagent systems for life sciences research ; tools to aid in drug discovery and growth of tissue and cells ; cell culture media supplements for biopharmaceutical manufacturing ; and diagnostic assays .
the company evaluates performance of its business segments based upon operating income .

segment operating income represents revenues reduced by product costs and operating expenses .
the company hedges against certain forecasted sales of u.s.-produced products sold outside the united states .
gains and losses associated with these foreign currency translation hedges are reported in segment revenues based upon their proportionate share of these international sales of u.s.-produced products .
becton , dickinson and company notes to consolidated financial statements 2014 ( continued )

 |
| table | | 2009   | 2008   | 2007
----------------------------------------------------------------------------- | ------ | ------ | ------
average common shares outstanding                                             | 240479 | 244323 | 244929
dilutive share equivalents from share-based plans                             | 6319   | 8358   | 9881
average common and common equivalent sharesoutstanding 2014 assuming dilution | 246798 | 252681 | 254810 |


| _id | dd4c47582 |
| title |  |
| text | the retail electric price variance is primarily due to an increase in formula rate plan revenues , implemented with the first billing cycle of march 2016 , to collect the estimated first-year revenue requirement related to the purchase of power blocks 3 and 4 of the union power station in march 2016 and a provision recorded in 2016 related to the settlement of the waterford 3 replacement steam generator prudence review proceeding .

see note 2 to the financial statements for further discussion of the formula rate plan revenues and the waterford 3 replacement steam generator prudence review proceeding .
the louisiana act 55 financing savings obligation variance results from a regulatory charge recorded in 2016 for tax savings to be shared with customers per an agreement approved by the lpsc .

the tax savings resulted from the 2010-2011 irs audit settlement on the treatment of the louisiana act 55 financing of storm costs for hurricane gustav and hurricane ike .
see note 3 to the financial statements for additional discussion of the settlement and benefit sharing .
the volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales and decreased usage during the unbilled sales period .

the decrease was partially offset by an increase of 1237 gwh , or 4% ( 4 % ) , in industrial usage primarily due to an increase in demand from existing customers and expansion projects in the chemicals industry .
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 .
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 an increase in formula rate plan revenues , implemented with the first billing cycle of march 2016 , to collect the estimated first-year revenue requirement related to the purchase of power blocks 3 and 4 of the union power station .
see note 2 to the financial statements for further discussion .

the volume/weather variance is primarily due to the effect of less favorable weather on residential sales , partially offset by an increase in industrial usage and an increase in volume during the unbilled period .
the increase in industrial usage is primarily due to increased demand from new customers and expansion projects , primarily in the chemicals industry .

the louisiana act 55 financing savings obligation variance results from a regulatory charge for tax savings to be shared with customers per an agreement approved by the lpsc .
the tax savings resulted from the 2010-2011 irs audit settlement on the treatment of the louisiana act 55 financing of storm costs for hurricane gustav and hurricane ike .
see note 3 to the financial statements for additional discussion of the settlement and benefit sharing .

included in other is a provision of $ 23 million recorded in 2016 related to the settlement of the waterford 3 replacement steam generator prudence review proceeding , offset by a provision of $ 32 million recorded in 2015 related to the uncertainty at that time associated with the resolution of the waterford 3 replacement steam generator prudence entergy louisiana , llc and subsidiaries management 2019s financial discussion and analysis

 |
| table | | amount ( in millions )
--------------------------------------------- | ----------------------
2015 net revenue                              | $ 2408.8
retail electric price                         | 62.5
volume/weather                                | -6.7 ( 6.7 )
louisiana act 55 financing savings obligation | -17.2 ( 17.2 )
other                                         | -9.0 ( 9.0 )
2016 net revenue                              | $ 2438.4 |


| _id | dd4b97e7a |
| title |  |
| text | notes to consolidated financial statements 2013 ( continued ) ( amounts in millions , except per share amounts ) assumptions can materially affect the estimate of fair value , and our results of operations could be materially impacted .
there were no stock options granted during the years ended december 31 , 2015 and 2014 .
the weighted-average grant-date fair value per option during the year ended december 31 , 2013 was $ 4.14 .

the fair value of each option grant has been estimated with the following weighted-average assumptions. .

expected volatility 1 .
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40.2% ( 40.2 % ) expected term ( years ) 2 .
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6.9 risk-free interest rate 3 .
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1.3% ( 1.3 % ) expected dividend yield 4 .
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2.4% ( 2.4 % ) 1 the expected volatility used to estimate the fair value of stock options awarded is based on a blend of : ( i ) historical volatility of our common stock for periods equal to the expected term of our stock options and ( ii ) implied volatility of tradable forward put and call options to purchase and sell shares of our common stock .

2 the estimate of our expected term is based on the average of : ( i ) an assumption that all outstanding options are exercised upon achieving their full vesting date and ( ii ) an assumption that all outstanding options will be exercised at the midpoint between the current date ( i.e. , the date awards have ratably vested through ) and their full contractual term .

in determining the estimate , we considered several factors , including the historical option exercise behavior of our employees and the terms and vesting periods of the options .
3 the risk-free interest rate is determined using the implied yield currently available for zero-coupon u.s .
government issuers with a remaining term equal to the expected term of the options .
4 the expected dividend yield was calculated based on an annualized dividend of $ 0.30 per share in 2013 .

stock-based compensation we grant other stock-based compensation awards such as stock-settled awards , cash-settled awards and performance- based awards ( settled in cash or shares ) to certain key employees .
the number of shares or units received by an employee for performance-based awards depends on company performance against specific performance targets and could range from 0% ( 0 % ) to 300% ( 300 % ) of the target amount of shares originally granted .

incentive awards are subject to certain restrictions and vesting requirements as determined by the compensation committee .
the fair value of the shares on the grant date is amortized over the vesting period , which is generally three years .
upon completion of the vesting period for cash-settled awards , the grantee is entitled to receive a payment in cash based on the fair market value of the corresponding number of shares of common stock .

no monetary consideration is paid by a recipient for any incentive award .
the fair value of cash-settled awards is adjusted each quarter based on our share price .
the holders of stock-settled awards have absolute ownership interest in the underlying shares of common stock prior to vesting , which includes the right to vote and receive dividends .
dividends declared on common stock are accrued during the vesting period and paid when the award vests .

the holders of cash-settled and performance-based awards have no ownership interest in the underlying shares of common stock until the awards vest and the shares of common stock are issued.

 |
| table | | year ended december 31 2013
------------------------- | ---------------------------
expected volatility1      | 40.2% ( 40.2 % )
expected term ( years ) 2 | 6.9
risk-free interest rate3  | 1.3% ( 1.3 % )
expected dividend yield4  | 2.4% ( 2.4 % ) |


| _id | dd4c39c3e |
| title |  |
| text | contribution incurred in 2013 and foreign currency remeasurement , partially offset by the $ 50 million reduction of an indemnification asset .
as adjusted .
expense , as adjusted , increased $ 362 million , or 6% ( 6 % ) , to $ 6518 million in 2014 from $ 6156 million in 2013 .
the increase in total expense , as adjusted , is primarily attributable to higher employee compensation and benefits and direct fund expense .

amounts related to the reduction of the indemnification asset and the charitable contribution have been excluded from as adjusted results .
2013 compared with 2012 gaap .
expense increased $ 510 million , or 9% ( 9 % ) , from 2012 , primarily reflecting higher revenue-related expense and the $ 124 million expense related to the charitable contribution .

employee compensation and benefits expense increased $ 273 million , or 8% ( 8 % ) , to $ 3560 million in 2013 from $ 3287 million in 2012 , reflecting higher headcount and higher incentive compensation driven by higher operating income , including higher performance fees .
employees at december 31 , 2013 totaled approximately 11400 compared with approximately 10500 at december 31 , 2012 .
distribution and servicing costs totaled $ 353 million in 2013 compared with $ 364 million in 2012 .

these costs included payments to bank of america/merrill lynch under a global distribution agreement and payments to pnc , as well as other third parties , primarily associated with the distribution and servicing of client investments in certain blackrock products .
distribution and servicing costs for 2013 and 2012 included $ 184 million and $ 195 million , respectively , attributable to bank of america/merrill lynch .

direct fund expense increased $ 66 million , reflecting higher average aum , primarily related to ishares , where blackrock pays certain nonadvisory expense of the funds .
general and administration expense increased $ 181 million , largely driven by the $ 124 million expense related to the charitable contribution , higher marketing and promotional costs and various lease exit costs .
the full year 2012 included a one-time $ 30 million contribution to stifs .
as adjusted .

as adjusted .
expense , as adjusted , increased $ 393 million , or 7% ( 7 % ) , to $ 6156 million in 2013 from $ 5763 million in 2012 .
the increase in total expense , as adjusted , is primarily attributable to higher employee compensation and benefits , direct fund expense and general and administration expense .

nonoperating results nonoperating income ( expense ) , less net income ( loss ) attributable to nci for 2014 , 2013 and 2012 was as follows : ( in millions ) 2014 2013 2012 nonoperating income ( expense ) , gaap basis $ ( 79 ) $ 116 $ ( 54 ) less : net income ( loss ) attributable to nci ( 1 ) ( 30 ) 19 ( 18 ) nonoperating income ( expense ) ( 2 ) ( 49 ) 97 ( 36 ) gain related to the charitable contribution 2014 ( 80 ) 2014 compensation expense related to ( appreciation ) depreciation on deferred

to ( appreciation ) depreciation on deferred compensation plans ( 7 ) ( 10 ) ( 6 ) nonoperating income ( expense ) , as adjusted ( 2 ) $ ( 56 ) $ 7 $ ( 42 ) ( 1 ) amounts included losses of $ 41 million and $ 38 million attributable to consolidated variable interest entities ( 201cvies 201d ) for 2014 and 2012 , respectively .

during 2013 , the company did not record any nonoperating income ( loss ) or net income ( loss ) attributable to vies on the consolidated statements of income .
( 2 ) net of net income ( loss ) attributable to nci. .

contribution incurred in 2013 and foreign currency remeasurement , partially offset by the $ 50 million reduction of an indemnification asset .
as adjusted .
expense , as adjusted , increased $ 362 million , or 6% ( 6 % ) , to $ 6518 million in 2014 from $ 6156 million in 2013 .
the increase in total expense , as adjusted , is primarily attributable to higher employee compensation and benefits and direct fund expense .

amounts related to the reduction of the indemnification asset and the charitable contribution have been excluded from as adjusted results .
2013 compared with 2012 gaap .
expense increased $ 510 million , or 9% ( 9 % ) , from 2012 , primarily reflecting higher revenue-related expense and the $ 124 million expense related to the charitable contribution .

employee compensation and benefits expense increased $ 273 million , or 8% ( 8 % ) , to $ 3560 million in 2013 from $ 3287 million in 2012 , reflecting higher headcount and higher incentive compensation driven by higher operating income , including higher performance fees .
employees at december 31 , 2013 totaled approximately 11400 compared with approximately 10500 at december 31 , 2012 .
distribution and servicing costs totaled $ 353 million in 2013 compared with $ 364 million in 2012 .

these costs included payments to bank of america/merrill lynch under a global distribution agreement and payments to pnc , as well as other third parties , primarily associated with the distribution and servicing of client investments in certain blackrock products .
distribution and servicing costs for 2013 and 2012 included $ 184 million and $ 195 million , respectively , attributable to bank of america/merrill lynch .

direct fund expense increased $ 66 million , reflecting higher average aum , primarily related to ishares , where blackrock pays certain nonadvisory expense of the funds .
general and administration expense increased $ 181 million , largely driven by the $ 124 million expense related to the charitable contribution , higher marketing and promotional costs and various lease exit costs .
the full year 2012 included a one-time $ 30 million contribution to stifs .
as adjusted .

as adjusted .
expense , as adjusted , increased $ 393 million , or 7% ( 7 % ) , to $ 6156 million in 2013 from $ 5763 million in 2012 .
the increase in total expense , as adjusted , is primarily attributable to higher employee compensation and benefits , direct fund expense and general and administration expense .

nonoperating results nonoperating income ( expense ) , less net income ( loss ) attributable to nci for 2014 , 2013 and 2012 was as follows : ( in millions ) 2014 2013 2012 nonoperating income ( expense ) , gaap basis $ ( 79 ) $ 116 $ ( 54 ) less : net income ( loss ) attributable to nci ( 1 ) ( 30 ) 19 ( 18 ) nonoperating income ( expense ) ( 2 ) ( 49 ) 97 ( 36 ) gain related to the charitable contribution 2014 ( 80 ) 2014 compensation expense related to ( appreciation ) depreciation on deferred

to ( appreciation ) depreciation on deferred compensation plans ( 7 ) ( 10 ) ( 6 ) nonoperating income ( expense ) , as adjusted ( 2 ) $ ( 56 ) $ 7 $ ( 42 ) ( 1 ) amounts included losses of $ 41 million and $ 38 million attributable to consolidated variable interest entities ( 201cvies 201d ) for 2014 and 2012 , respectively .

during 2013 , the company did not record any nonoperating income ( loss ) or net income ( loss ) attributable to vies on the consolidated statements of income .
( 2 ) net of net income ( loss ) attributable to nci.

 |
| table | ( in millions )                                                                              | 2014         | 2013       | 2012
-------------------------------------------------------------------------------------------- | ------------ | ---------- | ------------
nonoperating income ( expense ) gaap basis                                                   | $ -79 ( 79 ) | $ 116      | $ -54 ( 54 )
less : net income ( loss ) attributableto nci ( 1 )                                          | -30 ( 30 )   | 19         | -18 ( 18 )
nonoperating income ( expense ) ( 2 )                                                        | -49 ( 49 )   | 97         | -36 ( 36 )
gain related to the charitable contribution                                                  | 2014         | -80 ( 80 ) | 2014
compensation expense related to ( appreciation ) depreciation on deferred compensation plans | -7 ( 7 )     | -10 ( 10 ) | -6 ( 6 )
nonoperating income ( expense ) asadjusted ( 2 )                                             | $ -56 ( 56 ) | $ 7        | $ -42 ( 42 ) |


| _id | dd4980f7e |
| title |  |
| text | 54| | duke realty corporation annual report 2009 net income ( loss ) per common share basic net income ( loss ) per common share is computed by dividing net income ( loss ) attributable to common shareholders , less dividends on share-based awards expected to vest , by the weighted average number of common shares outstanding for the period .

diluted net income ( loss ) per common share is computed by dividing the sum of basic net income ( loss ) attributable to common shareholders and the noncontrolling interest in earnings allocable to units not owned by us ( to the extent the units are dilutive ) , by the sum of the weighted average number of common shares outstanding and , to the extent they are dilutive , limited partnership units outstanding , as well as any potential dilutive securities for the period .

during the first quarter of 2009 , we adopted a new accounting standard ( fasb asc 260-10 ) on participating securities , which we have applied retrospectively to prior period calculations of basic and diluted earnings per common share .
pursuant to this new standard , certain of our share-based awards are considered participating securities because they earn dividend equivalents that are not forfeited even if the underlying award does not vest .

the following table reconciles the components of basic and diluted net income ( loss ) per common share ( in thousands ) : .

weighted average number of common shares and potential diluted securities 201206 154553 149250 ( 1 ) the partnership units are anti-dilutive for the year ended december 31 , 2009 , as a result of the net loss for that period .

therefore , 6687 units ( in thousands ) are excluded from the weighted average number of common shares and potential dilutive securities for the year ended december 31 , 2009 and $ 11099 noncontrolling interest in earnings of common unitholders ( in thousands ) is excluded from diluted net loss attributable to common shareholders for the year ended december 31 , 2009 .

( 2 ) excludes ( in thousands of shares ) 7872 ; 8219 and 1144 of anti-dilutive shares for the years ended december 31 , 2009 , 2008 and 2007 , respectively related to stock-based compensation plans .
also excludes ( in thousands of shares ) the exchangeable notes that have 8089 ; 11771 and 11751 of anti-dilutive shares for the years ended december 31 , 2009 , 2008 and 2007 , respectively .

federal income taxes we have elected to be taxed as a real estate investment trust ( 201creit 201d ) under the internal revenue code of 1986 , as amended .
to qualify as a reit , we must meet a number of organizational and operational requirements , including a requirement to distribute at least 90% ( 90 % ) of our adjusted taxable income to our stockholders .
management intends to continue to adhere to these requirements and to maintain our reit status .

as a reit , we are entitled to a tax deduction for some or all of the dividends we pay to shareholders .
accordingly , we generally will not be subject to federal income taxes as long as we distribute an amount equal to or in excess of our taxable income currently to shareholders .
we are also generally subject to federal income taxes on any taxable income that is not currently distributed to our shareholders .

if we fail to qualify as a reit in any taxable year , we will be subject to federal income taxes and may not be able to qualify as a reit for four subsequent taxable years .
reit qualification reduces , but does not eliminate , the amount of state and local taxes we pay .
in addition , our financial statements include the operations of taxable corporate subsidiaries that are not entitled to a dividends paid deduction and are subject to corporate federal , state and local income taxes .

as a reit , we may also be subject to certain federal excise taxes if we engage in certain types of transactions.

 |
| table | | 2009                 | 2008           | 2007
-------------------------------------------------------------------------- | -------------------- | -------------- | --------------
net income ( loss ) attributable to common shareholders                    | $ -333601 ( 333601 ) | $ 50408        | $ 211942
less : dividends on share-based awards expected to vest                    | -1759 ( 1759 )       | -1631 ( 1631 ) | -1149 ( 1149 )
basic net income ( loss ) attributable to common shareholders              | -335360 ( 335360 )   | 48777          | 210793
noncontrolling interest in earnings of common unitholders ( 1 )            | -                    | 2640           | 13998
diluted net income ( loss ) attributable to common shareholders            | $ -335360 ( 335360 ) | $ 51417        | $ 224791
weighted average number of common shares outstanding                       | 201206               | 146915         | 139255
weighted average partnership units outstanding                             | -                    | 7619           | 9204
other potential dilutive shares ( 2 )                                      | -                    | 19             | 791
weighted average number of common shares and potential dilutive securities | 201206               | 154553         | 149250 |


| _id | dd4c24b7c |
| title |  |
| text | the fair value of our grants receivable is determined using a discounted cash flow model , which discounts future cash flows using an appropriate yield curve .
as of december 28 , 2013 , and december 29 , 2012 , the carrying amount of our grants receivable was classified within other current assets and other long-term assets , as applicable .
our long-term debt recognized at amortized cost is comprised of our senior notes and our convertible debentures .

the fair value of our senior notes is determined using active market prices , and it is therefore classified as level 1 .
the fair value of our convertible long-term debt is determined using discounted cash flow models with observable market inputs , and it takes into consideration variables such as interest rate changes , comparable securities , subordination discount , and credit-rating changes , and it is therefore classified as level 2 .

the nvidia corporation ( nvidia ) cross-license agreement liability in the preceding table was incurred as a result of entering into a long-term patent cross-license agreement with nvidia in january 2011 .
we agreed to make payments to nvidia over six years .
as of december 28 , 2013 , and december 29 , 2012 , the carrying amount of the liability arising from the agreement was classified within other accrued liabilities and other long-term liabilities , as applicable .

the fair value is determined using a discounted cash flow model , which discounts future cash flows using our incremental borrowing rates .
note 5 : cash and investments cash and investments at the end of each period were as follows : ( in millions ) dec 28 , dec 29 .

in the third quarter of 2013 , we sold our shares in clearwire corporation , which had been accounted for as available-for-sale marketable equity securities , and our interest in clearwire communications , llc ( clearwire llc ) , which had been accounted for as an equity method investment .

in total , we received proceeds of $ 470 million on these transactions and recognized a gain of $ 439 million , which is included in gains ( losses ) on equity investments , net on the consolidated statements of income .
proceeds received and gains recognized for each investment are included in the "available-for-sale investments" and "equity method investments" sections that follow .
table of contents intel corporation notes to consolidated financial statements ( continued )

 |
| table | ( in millions )                        | dec 282013 | dec 292012
-------------------------------------- | ---------- | ----------
available-for-sale investments         | $ 18086    | $ 14001
cash                                   | 854        | 593
equity method investments              | 1038       | 992
loans receivable                       | 1072       | 979
non-marketable cost method investments | 1270       | 1202
reverse repurchase agreements          | 800        | 2850
trading assets                         | 8441       | 5685
total cash and investments             | $ 31561    | $ 26302 |


| _id | dd497d504 |
| title |  |
| text | 2014 compared to 2013 mst 2019s net sales decreased $ 305 million , or 3% ( 3 % ) , in 2014 as compared to 2013 .

net sales decreased by approximately $ 305 million due to the wind-down or completion of certain c4isr programs ( primarily ptds ) ; about $ 85 million for undersea systems programs due to decreased volume and deliveries ; and about $ 55 million related to the settlements of contract cost matters on certain programs in 2013 that were not repeated in 2014 ( including a portion of the terminated presidential helicopter program ) .

the decreases were partially offset by higher net sales of approximately $ 80 million for integrated warfare systems and sensors programs due to increased volume ( primarily space fence ) ; and approximately $ 40 million for training and logistics solutions programs due to increased deliveries ( primarily close combat tactical trainer ) .
mst 2019s operating profit decreased $ 129 million , or 12% ( 12 % ) , in 2014 as compared to 2013 .

the decrease was primarily attributable to lower operating profit of approximately $ 120 million related to the settlements of contract cost matters on certain programs in 2013 that were not repeated in 2014 ( including a portion of the terminated presidential helicopter program ) ; approximately $ 55 million due to the reasons described above for lower c4isr program sales , as well as performance matters on an international program ; and approximately $ 45 million due to higher reserves recorded on

$ 45 million due to higher reserves recorded on certain training and logistics solutions programs .

the decreases were partially offset by higher operating profit of approximately $ 45 million for performance matters and reserves recorded in 2013 that were not repeated in 2014 ; and about $ 60 million for various programs due to increased risk retirements ( including mh-60 and radar surveillance programs ) .
adjustments not related to volume , including net profit booking rate adjustments and other matters , were approximately $ 85 million lower for 2014 compared to 2013 .

backlog backlog increased in 2015 compared to 2014 primarily due to the addition of sikorsky backlog , as well as higher orders on new program starts ( such as australian defence force pilot training system ) .
backlog increased in 2014 compared to 2013 primarily due to higher orders on new program starts ( such as space fence ) .

trends we expect mst 2019s 2016 net sales to increase in the mid-double digit percentage range compared to 2015 net sales due to the inclusion of sikorsky programs for a full year , partially offset by a decline in volume due to the wind-down or completion of certain programs .

operating profit is expected to be equivalent to 2015 on higher volume , and operating margin is expected to decline due to costs associated with the sikorsky acquisition , including the impact of purchase accounting adjustments , integration costs and inherited restructuring costs associated with actions committed to by sikorsky prior to acquisition .

space systems our space systems business segment is engaged in the research and development , design , engineering and production of satellites , strategic and defensive missile systems and space transportation systems .
space systems provides network-enabled situational awareness and integrates complex global systems to help our customers gather , analyze , and securely distribute critical intelligence data .

space systems is also responsible for various classified systems and services in support of vital national security systems .
space systems 2019 major programs include the trident ii d5 fleet ballistic missile ( fbm ) , orion , space based infrared system ( sbirs ) , aehf , gps-iii , geostationary operational environmental satellite r-series ( goes-r ) , and muos .

operating profit for our space systems business segment includes our share of earnings for our investment in ula , which provides expendable launch services to the u.s .
government .
space systems 2019 operating results included the following ( in millions ) : .

2015 compared to 2014 space systems 2019 net sales in 2015 decreased $ 97 million , or 1% ( 1 % ) , compared to 2014 .
the decrease was attributable to approximately $ 335 million lower net sales for government satellite programs due to decreased volume ( primarily aehf ) and the wind-down or completion of mission solutions programs ; and approximately $ 55 million for strategic missile and defense systems due to lower volume .

these decreases were partially offset by higher net sales of approximately $ 235 million for businesses acquired in 2014 ; and approximately $ 75 million for the orion program due to increased volume.

 |
| table | | 2015             | 2014             | 2013
------------------- | ---------------- | ---------------- | ----------------
net sales           | $ 9105           | $ 9202           | $ 9288
operating profit    | 1171             | 1187             | 1198
operating margins   | 12.9% ( 12.9 % ) | 12.9% ( 12.9 % ) | 12.9% ( 12.9 % )
backlog at year-end | $ 17400          | $ 20300          | $ 21400 |