portion of that profit to employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit excluding profit sharing and special items, such as MTM adjustments and restructuring and other items. Our profit sharing program pays 10% to employees on the first $2.5 billion of annual profits and 20% of annual profits above $2.5 billion.  

 

We paid $506 million in profit sharing in February 2014 related to our 2013 pre-tax profit and $372 million in 2013 related to our 2012 pre-tax profit in recognition of our employees' contributions toward meeting our financial goals. During the year ended December 2014, we recorded $1.1 billion in profit sharing expense based on 2014 pre-tax profit. To further show our appreciation to our employees, we made an advanced 2014 profit sharing payment totaling more than $300 million, equal to 5% of pay for eligible employees, in October 2014.  

 

Investing Activities  

 

Capital Expenditures. We incurred capital expenditures of $2.2 billion in 2014 , $2.6 billion in 2013 and $2.0 billion in 2012 . Our capital expenditures were primarily for the purchase of aircraft and aircraft modifications that upgraded aircraft interiors and enhanced our product offering.  

 

We have committed to future aircraft purchases that will require significant capital investment, and have obtained long-term financing commitments for a substantial portion of the purchase price of these aircraft. We expect that we will invest approximately $2.8 billion in 2015 primarily for (1) aircraft, including deliveries of B-737-900ERs and A330-300s, along with advance deposit payments for these and our new A321200, A330-900neo and A350-900 orders, as well as for (2) aircraft modifications, the majority of which relate to enhancing the cabins of our international fleet. We expect that the 2015 investments will be funded primarily through cash flows from operations.  

 

Short-Term Investments. During the September 2014 quarter, we modified our approach to managing short-term investments by investing $1.5 billion of cash reserves in externally managed investment accounts. These new investments are comprised of U.S. government and agency securities, asset- and mortgage-backed securities, corporate obligations and other fixed term securities. The new approach is expected to generate a greater return with a low level of risk due to diversification.  

 

Financing Activities  

 

Debt and Capital Leases. Our principal amount of debt and capital leases has declined from $14.4 billion at the beginning of 2012 to $9.9 billion at December 31, 2014 . Since December 31, 2009, we have reduced our principal amount of debt and capital leases by $8.4 billion. We have focused on reducing our total debt in recent years as part of our strategy to strengthen our balance sheet. In addition, we have refinanced debt to reduce our total future interest expense.  

 

Capital Returns to Shareholders. In May 2013, we announced a plan to return more than $1 billion to shareholders over the next three years. As part of this plan, our Board of Directors initiated a quarterly dividend program and a $500 million share repurchase